tv Press Here NBC October 12, 2014 9:00am-9:31am PDT
paypal founder peter teal praises monopolies and explains why some silicon valley companies are actually betting against progress. our reporters this week sarah lacy of pando daily and laura seidel of national public radio, this week on "press: here." good morning, everyone. i'm scott mcgrew. each week before the program, i meet with our visual editor. she is in charge of all of our
video footage. for instance, if elon musk is going to be on the show, she prepares video of teslas. if waz is going to be on the show, it's archival footage of early apple. when she saw peter teal was on the program this week, she said so i should get everything we have ready to go. that's a pretty good guess on her part. peter teal has been involved in just about everything in silicon valley. he is a venture capitalist, an entrepreneur and a libertarian activist. he is the first outside investor in facebook and sits on the board there. he has invested in yelp and linkedin, and helps the cia use big data to fight terrorists. he has paid college students to drop out of college. >> i now pronounce you spouses for life. initiatives and republican campaigns at the same time.
he warned of a financial bubble and crash fife years before it happened. >> hey, guys, come on back. >> he has been depicted in movies. here is the fictional peter teal in "the social network" and satired on hbo series "silicon valley." >> billions of breads. >> his book "zero to one" is currently number one on the "new york times" best-seller list for business books. it all started here at buck's restaurant when peter thiel pressed a button and sent money from one palmpilot to another and paypal was born. peter was one of the main three founderses of paypal, along with elon musk and max levchin. he has 68,000 followers on twitter but tweeted just once. and he is also one of the best chess players in the united states. i think i have summed up all the things you are. before we start, and this is
laura seidel of npr and sarah lacy of pando daily. before we start, i want it to be to you. you've been very straight forward about pando daily and it's been funded by venture capital one of which is peter. >> it's actually founder's fund through peter. to the viewer, money has passed from him to you? >> it has. and he has probably boat more more in wine at dinners. >> fair enough. >> there is no problem as long as you disclose it. >> that's what i'm getting it. knowing sarah lacy, she will be more harsh because you have funded her just to prove she is that much more objective. >> she doesn't need to prove her on genet objectivity. >> should the government be involved in funding public radio? >> it's better than most of the things the government does. on a relative basis it would be higher on my priority list.
>> fair enough. let's start with the paypal break off from ebay. you founded paypal. what did you think when they announced that? >> well, it's -- the company is in a very different place from when bay acquired paypal in 2002. in 2002, 75% of the payment volume, the paypal process was on ebay. that went down to 50% by '08. it's down to about 25% today. so the companies have gradually diverged over the past 12 years. so i do think it makes sense to have it be a stand-alone company once again circumstances that because we're actually at a moment when apple just announced apple pay where you think we're really going to start to move towards that different payment system, which i think you anticipated early on with paypal, correct? >> well, there was a lot of innovation around internet payments in the late '90s when we started paypal. and i think there is a second wave of innovation happening around the mobile internet today in the last four or five years. and so i think it is going to be critical for paypal to be very focused on a lot of these product questions in the years
ahead. it's going to be somewhat more competition than they've had in a number of years. so i think having sort of stand alone company that is focused on payments is good from a product perspective. >> now, interesting thing about paypal is while a lot of people have criticized that it hasn't innovated very much, it's been very sleepy, it has not been great for paypal to be part of ebay, you know, google, amazon, most of their big competitors aren't really anywhere with payments. from what i understand, some of the concern of spinning off is google is going to come in and put down an ungodly amount of money to own it because it's such a valuable thing. amazon might. facebook spends money on things many people never use. do you think paypal is going to be in play as an acquisition because it has such a powerful effect? >> i think most tech does not make sense. one is cost saving and consolidation. that's like banks combining with each other where they fire lots of people. and the other one is because you have deep product synergies
which happens occasionally. facebook and insta gramm was a great. >> or paypal and ebay. >> most of the time mma does not make sense. so i'm actually not so sure that it would be in play. >> but i got to ask you about occulis and face book. >> the viewers advocate for a second here. occulis is this very small company with this headset. virtual reality there. >> are people who defend instagram and what's up but do not understand occulis. >> we have investors in occulis. >> well, take a guess. to me, it seems like facebook bought a research lab. >> well, there is a judgment that virtual reality is this incredibly important new platform that is just starting to happen.
and occulis is the company with the by far the most advanced technology in this area. so it makes a lot of sense. >> there is a judgment that makes me think that you don't support that. >> well, i was not involved. >> i understand you weren't involved in the decision, but in retrospect. >> we won't know for a few years. but i think there is a tremendous excitement around the technology. i think that -- and i think it is getting -- it is happening right now. so there is sort of -- it is an important way people will experience the world. so there are some natural synergies on product side with social networking. it is -- but it definitely is -- it is definitely a somewhat more speculative deal than instagram or what's up. >> i think it's not clear whether people will get engaged in virtual. i've tried the occulis glasses and they are amazing. but will people really want to spend that much of their time in virtual reality. >> and how does that connect with facebook?
>> communication or education, you can be in one place together or feel like you're in one place with people. >> a great ad platform. >> it could be potentially. can i change the subject? having read your book, which you're out talking about. and one of the things you got some controversy around was saying people think you said don't go to college, and you started these thiel fellowships. that to me is somebody who is a believer in education, i always thought i don't know how i feel about this. i read your book, and i found i agreed with a lot of what you had to say about education right now in the book, that it was stiff, that it wasn't really a place where original thinking is happening. and yet i do wondered, do you really mean -- did you really mean to say that people shouldn't go to university or is what you're trying to say a little more complicated than that? >> i've always said that there is no one size fits all. so i don't think everybody should go to university. i don't think nobody should go to university. i think people should think really hard about what makes sense for themselves.
i don't think everybody should become an entrepreneur. i don't think that makes sense even remotely either. so we have a program for 20 people a year. we don't have a program for a million people a year to be be entrepreneurs. so i think that one of the reasons that we have this education bubble sp that things have gotten so tracked and we have this mind said. you go to yale or you go jail. this is nothing else you can do. and we have to have a wider range of different options for people, for the young people in this country. >> now one thing that struck me when i was reading your book on the topic of education, i think when you and i years ago first talked about this, before you were doing the -- i think you made a joke no one is spending half million a year to study chaucer. it's really about this sort of fake insurance plan more than it is the desire of learning. yet in your book, about business and entrepreneurship, you quote tolstoy, nietzsche, shakespeare at length. your book is almost an advocate for liberal arts education.
discussing is go from zero to something. don't copy. the world doesn't need more than one uber. >> we don't need the fourth online pet food company. with don't need the tenth thin solar panel. we don't need the one thousandth restaurant in san francisco. >> find something nobody is doing. how does one find the thing that nobody is doing? >> well, it's always -- this is always quite hard. but this is the central problem you have to solve. and it's not just what nobody is doing. it's not just a negative thing. it's also what is valuable. so what great business is nobody building. it's not just what dumb ideas nobody is pursuing. it's what great businesses nobody is pursuing. >> a lot of people are sending rockets up, including the government which almost has a monopoly on it, almost. spacex is a copy of something, isn't it? >> well, it was certainly very innovative. it was the first aerospace company to be started in 40 or 50 years at least. it was an attempt to do space flight on a private basis.
and they have over time actually improved things quite dramatically. the big technology spacex is working on the make rockets reusable. >> but would it be fair to say spacex is an nativive company. it's a wonderful company. i fully support private space exploration and everything they're doing. but it was -- somebody is doing this. we're going to do it better. >> the idea that people could retire on mars, that feels pretty zero to one to me. >> certainly the goal. the goal that was there from the very beginning was to go to arrest in. >> the end goal. >> the end goal was transformative. and there were certain parts you had to reinvent. some things you copied. some things you did new. but they have an end to end process for manufacturing rockets, which is not the way it's done right now. >> i want to jump off that you talk about in the book a lot of mistakes that startups make. and it strikes me that a lot of these things are what other people consider the playbook. you talk about focussing on sales, not just product. you talk about not just it
rating your way around, not being too lean. those are all the things that people have taken as givens how you start a company. >> this is another one of the means that people have where the disruptive person in elementary school gets sent to the principal's office. nasa was a disruptive company and you ended up getting disrupted by the government. >> right. >> so i think we have -- i think people are always looking for some kind of a formula. and so iteration is a good formula. what people are doing and copying. those are good formulas. but the great companies do not have a formula. the next mark zuckerberg won't start a social network. larry page won't start a search engine. >> so you shouldn't be a playbook than your issue with those ways of starting companies? >> i think there is not that much of a playbook there is no formula. >> can i ask a question about -- >> the most important thing you have to keep in mind. >> innovation. and one of the things i see happening right now is there are a lot of peoples that are just
iterating a little bit. you try this internet company, that internet company there are spaces like biotech where it seems harder to get people to invest in. and i know you actually do invest there, because it takes longer for the innovation to pay off. and you're somebody who cares a lot about innovation. some things do take longer. how do you get investors in our system not to be thinking about the next quarter and to actually invest in things that are going to take longer that are scientific and may result in huge breakthroughs? >> a lot of people say that is not the job of a venture capitalist. >> i think you have to get some of these things to work. i think one of the things people aren't putting that money into biotech is it's been a bad area for 15 or 20 years. it's had a long history of failure or a lot went wrong with clean tech in the last peck cade. it's important to invest in energy but people get discouraged when you have a whole bunch of company shas have blown up. i think success begets success and failure discourages people. we've had 40 years of success in
computers, internet, mobile internet, the whole world. we've had much spottier track records in the world of atoms. my first cut is we have to get some things to work and that will get more things to work over time. >> how do we do that? i'm asking not just as a venture capitalist, but as somebody interested in innovation, how do we get some investment behind people who are doing really nativive work that may not pay off right away, but may ultimately have huge payoffs? >> well, my answer is we have ask some hard questions why these things haven't worked in the past. so what's gone wrong -- try to with what has gone wrong. i think a lot of the scientist-led companies were delusional about business. scientists often have insane ideas about how business works. one of the things we're very big fans of this pairing really talented scientists with really good business people where you have some complimentary of skills. we have to have an honest accounting of what hasn't worked so we can try to do better.
>> right. you have said some critical things about yahoo!. and i think yesterday or the day before max levchin said on bloomberg that he was permly offended by you saying yahoo! was not a technology company and he was going to take that up with you. has he taken that up with you? >> i'm going to jump in again. max levchin sits on the board of yahoo! and peter and max today founded paypal. so there we go. >> well, it's all these -- what counts as a technology company is always quite a tricky thing. and every company on the nasdaq 100 brands itself as a tech company. but there is a point where investors in them are actually betting against technology. so microsoft is a bet against linux. it's a bet against new platforms. ibm is a bet against software innovation. oracle is a bet against cloud computing. i would say oracle, microsoft, ibm, these are also not technology companies. >> what is yahoo! again? >> it's probably a bet against
changing the way they get information on the internet. so there are certain -- and so it is it is in a weird way i would say actually an old media company at this point. they have tons of viewers, tons of cash flows that come with that. and as long as nothing changes, it will continue to be a very valuable property. >> more significantly thania hao, though, you looked at companies like google and apple which have huge tons of cash that you kind of said that's a sign they're not innovating. they have all this cash sitting there. >> well, of course, google is innovating a lot. but they're not innovating that much relative to the amount of cash that they have. so the critique is they're doing way too many flaky things. but on the other hand they have $60 billion of cash. we have zero percent interest rates. you have bernanke yelling, begging google, anning, find something to invest that money in to grow the economy and they're keeping it in just in cash because they don't have enough ideas relative to the amount of cash they have. >> carl icahn wants the money to
go back to the investors. if you were the head of i/im, would you give it back to the investors, would you buy something? would you let it ride? >> i think what tim cook is doing is generally right. but whenever you give money back to investors it's an admission you're out of ideas. so that's always a step these companies don't want to take. >> peter, hold there. we have to pay for this. the commercial will be back in just a second.
welcome back to "press: here." we're talking with peter thiel. peter, you've been on a number of different outlets and you have said some things that have gotten some press. as a personal favor to me, if you would say something completely bizarre. >> is there anything left to say? >> lizards are running the government. just something. give me something here. >> you know, i don't think i've been saying anything that bizarre. you say we have a bubble in education. this is not even a shocking thing to people anymore. >> i was thinking more that they're smoking pot at twitter.
>> the twitter ceo in good humor tweeted back that he had no time to answer that since he was eating a large bag of doritos. so people didn't push back too much on the facts on that one. look, i think none of this stuff has been that shocking. >> let me ask you a question. >> shock him. >> the only thing in your book where i thought where you really lost me was when you were talking about, which you talk about at length how competition is not this virtue in and of itself, and why monopolies are so good. and i buy all that the part of i didn't buy is you argued that the more money and the more space companies have, the more they can treat employees well, treat the world well, be good civic citizens and global citizens. and you use google and don't be evil as an example. but we just witnessed and we covered intensely a massive wage collusion suit that was started by apple and google, the most powerful tech companies in the world effectively formed a
hiring monopoly and hurt millions of engineers. so is it naive to think that just because these companies have some breathing room and space that they actually will do good? because we've seen a huge example of it not happening. >> well, they won't always do good, certainly. and certainly the wage collusion things was shocking precisely because it was so unnecessary. these companies have so much money. they don't actually need to collude. >> right. >> so that's why it's something so hard to process in silicon valley this actually happened. >> and also, it seemed like steve jobs was kind of the ringleader of this whole thing. >> was heavily involved. the two of of them combined. >> it's very much to sheryl sandburg's credit that she vetoed that on day one. we also should call out the people who didn't go along as real heros in this story. >> i think that's true. but, you know, you talk about, i don't know that it's not controversial to say in some ways, first off, google you say is a monopoly. and that it's not such a bad
thing that sometimes too much competition is not a good thing in certain space. can you explain that a little bit? because that does sound controversial. >> monopolies are bad in a static world. like the parker brothers board game. that's where you become a rent collector, tax collector, toll collector, like a toll at the benjamin. that's a bad monopoly. i think a good monopoly is what you get when you invent something completely new that nobody else has. and that's what is protected with patents, intellectual property. and that's the kind of thing that google got for coming up with a must have better way to do search or that apple got from getting an iphone, the first smartphone that really worked. so that's sort of a creative monopoly, which is very valuable for the company that creates it. but also valuable for consumers at large. >> back in the day when at&t had a monopoly, they used a lot of that money for research and innovation, actually. and committee we can sort of cite certain things that came out of the labs. bell labs invented amazing
things. is that what you would like to see? >> to their credit, they are doing a fair bit of that. i would like to see them do even more. but they're always getting pushback. the wall street analysts are always saying why are you spending so much money on all these flaky things. and ideally i would like to see them do anymore. >> you urge people not to copy, to find something new and build your monopoly on that. you wrote something to the effect that socially inept people are less likely to copy. >> yes. like they're missing the imitation gene. >> they're not trying to be like everybody else. >> to be gentle, we do have lots of socially inept people in silicon valley. that part of why we're successful? >> most of people who started social networks are socially inept. >> that's a very odd fact. i always like to turn this around as a critique of our society. what is it about our society that people who are not socially inept are somehow subtly talked out of all their original ideas. >> don't be weird. >> oh, people will look at me in a funny way, maybe i shouldn't
go down that way. maybe i should just open a restaurant or do something pacific coastly conventional and ultimately not very valuable. >> i think we were talking before about how in these times, and in the education system, there is a lot of pressure to conform. among the millennials, they so desperately want to succeed and our education system is happy to accommodate them with the next task and the next thing. >> it's very hard to measure this. but my sense certainly is the pressure to conformity has gone up dramatically relative to what it was 40 or 50 years ago there is something very destructive about the education system that is tracking all these people into the exact same thing. >> you said something -- go ahead. >> there is no wisdom in crowds. there is only insanity in crowds. when you're doing the same thing as a crowd of other people, you're finding a whole crowd of people to compete against. it's completely frustrating and zero sum. >> i know i'm going back to technology indication thing, but what would you like some of these institutions to do, rather than just disappear or send them
all for thiel philips. >> should we capitalize them so they're not as expensive? >> certainly i'd like them to focus more on learning and less on the tournament part. so at this point, it's all a tournament. and the easy way to a place like harvard or stanford, if you were actually teaching people, there is no reason you have to limit enrollment the way you they. do you should dramatically increase enrollment. that's the one thing if you did this as president of harvard, we're going to double our enrollment because we have twice as many people in the u.s. as we had 50 years ago, you would get fired. the alumni, the students, the faculty, everyone would revolt. that's the proof that they're more interested in having a zero sum tournament. it's like the equivalent of studio 54 with the velvet rope. it's not really about learning. >> time. the time we have. there is a limited amount of monopoly space for that. peter thiel has been our guest this morning. thanks for coming. >> thanks for having me.
hello and welcome to "communidad del valle." i'm damian trujillo. today the topic is common core. what does it really mean and how is it affecting our students? dr. lydia bauer will join us here on your "communidad del valle." >> nbc bay area presents "communidad del valle" with damian trujillo. >> well, we do begin today with a new effort by journalism students at san jose state university to kind of bilingualize the program there at san jose state. with me on "communidad del valle" are sarah and stephanie, two students spearheading this project. welcome to the show. >> hi. thank you for having us. >> it's in the early