Peter was the person who told me this really pithy quote: In a world that's changing so quickly, the biggest risk you can take is not taking any risk. This guy is a tough nut to try to sort of explain. Changed money with PayPal was the first outside investor in Facebook, uh, back paler, which is, I believe, they helped find Osama Bin Laden. Almost certainly the most successful technology investor in the world. I don't think the future is fixed. I think what matters is a question of agency. What I think works really well are sort of one-of-a-kind companies. How do you get from Z to one? What great business is nobody building? Tell me something that's true that nobody agrees with you on. All right, Peter, welcome back. It's good to see [Applause] you. Um, you don't do this too often, uh, so we do appreciate it. U. But when you do do it, you're always super candid and appreciate that as well. You fit right in here. Um, you're sitting this year's

political cycle outright politics. Well, no, I mean, I think this is a question we all have, which is you were very active, um, you bet on Jed in a major way, um, he delivered today. It was a very impressive, uh, discussion. Why aren't you involved this cycle? Where it's very confounding to us because these are your guys, man. How much time do we have supposed to talk about this for two hours or something? Um, um, I don't know. Look, I have a lot of conflicted thoughts on it. Uh, I am still very strongly pro-Trump, pro, uh, pro-JD. I've decided not to, uh, donate any money politically, but, uh, I'm supporting them in every other way, uh, every other way possible. Uh, I, you know, uh, obviously, uh, you know, I think, uh, I think there's my, my pessimistic thought is that, uh, Trump is, is going to win and probably will win by a big margin. Uh, he'll do better than the last time, and it'll still be really disappointing because, you know, the elections are

always a relative choice, and then once someone's president, it's an absolute. And then you get evaluated, you know, do you like Trump or Harris better? And that seems, there seem to be a lot of reasons, you know, and that one would be more anti-Harris than anti-Trump. Let's again, no one's pro any of these people, it's all negative, right? Um, and uh, but then after they win, there will be a lot of buyers' remorse and disappointment. That's sort of, that's sort of the arc that I see of what's going to happen, and it's somewhat under-motivating. Um, I don't know, just to describe it. I think, you know, I think it's, I think the odds are slightly in favor of Trump, but it's basically 50/50. Um, my one contrarian view on the election is that it's not going to be close. You know, most presidential elections aren't, and uh, you know, one side just breaks, you know, 2016, 2020.

we're super close, but two-thirds of the elections aren't. And you know, you can't always line things up and figure it out. I think either the, you know, the comma bubble will burst or, you know, maybe the Trump voters get really demotivated and don't show up. But I think, you know, one side is simply going to collapse in the next, uh, in the next two months. And then, you know, if you want to get involved, you know, with all the headaches that come with being involved, if it makes a difference counterfactually, and if it's a really close election, everything makes a difference. If it's, if it's not even close, I don't think it makes much of a difference. If, if it is going to be close, by the way, if it's, if it's like going to be a razor-thin close election, then, um, then I'm pretty sure KLA will win because, um, because they will cheat, they will fortify it, they will steal the ballots, and so, so, uh, so you know, if we

if we can, if we can, if we can, and so then in the event, in the event that it's close, I don't want to be involved. In the event that it's not close, I don't need to be involved. And so that's sort of a straightforward analysis right there. Jumping off point: much cheating on a percentage basis do you think happens every year? How much? And do you think Trump actually careful with the verb. So you know, um, cheating, stealing, that implies something happened. The dark night. I think the verb you're allowed to use is fortify. Okay, yeah, we don't want to get Canell on YouTube ballot harvesting. I mean, it was, you know, it's all sort of, there were all these rule changes. It was sort of done in plain daylight. And um, but yeah, I think, I think our elections are not, they're not perfectly clean. Otherwise, we could examine it. We could have vigorous debate about it. Well, what would you change then? What should change? 'Cause we all want

everybody's votes to count. We want it to be clean. I'm talking about the audience here. I know at a minimum you'd run them, you'd try to run elections the same way you do it in every other Western democracy. You have one-day voting, you have practically no absentee ballots, and it's one day where everything happens. It's not this two-month elongated process. That's the way you do it in every other country. You'd have somewhat stronger voter ID and make sure that the people who are voting have a right to vote. Make it a national holiday. That's basically what you do in every other Western democracy. And it used to be much more like that in the US. I mean, it's meaningfully decayed over the last 20-30 years.

years ago, 30-40 years ago, you got the results on the day of the vote, and that sort of stopped happening a while ago. What would make you not disappointed? So, Trump gets elected. How do you, what's your counternarrative on, you know, where a year or two years past the election, Trump is president. What makes you say, I'm surprisingly not disappointed? What takes place, man? It's, um, you know, it's, I, I, I think there are some extremely difficult problems that it's, it's, it's really hard to know how, how to solve them. I wouldn't know what to do, but, uh, we have, you know, we have an incredibly big deficit, and, uh, and yeah, if you can, if you can find some way to meaningfully reduce the deficit with no tax hikes and without GDP contraction, well, you, you would do it if you got a lot of GDP growth, maybe, right? But, um, if you could, if you could meaningfully reduce the deficit with, with, um, with no, with no tax

hikes that would be very impressive. You know, I think we're sort of sleepwalking into Armageddon with, you know, the Ukraine and the conflict and Gau are just sort of the warm-ups to the China-Taiwan war. And so, if Trump can find a way to head that off, that would be incredible. If they don't go to war in four years, that would be better than I would expect, possibly in relation to Taiwan. If Trump called you and asked, Should we defend it or not in this acute case? Would you advise to let Taiwan be taken by China in order to avoid a nuclear Holocaust in World War II? Or would you believe that we should defend it and defend free countries like that? Well, I think you're probably not supposed to say no, no, no. If you, no, if you, um, you, I think, look, I think there's so many ways our policies are messed up, but

probably you know the one thing that's roughly correct on the Taiwan policy is that we don't tell China what we're going to do. What we tell them is we don't know what we'll do, and we'll figure it out when you do it, which probably has the virtue of being correct. And then I think if you had a red line at Quoy Matsu, the island, you know, five miles off the coast of China, that's unbelievable. If you say we want some guardrails and we won't defend Taiwan, then they'd get invaded right away. So I think the policy of not saying policy is, and maybe not even having a policy, you know, in some ways is relatively the best. I think anything precise you say is going to just lead to war right away. But what do you believe is worth defending or not worth starting the conflict? Democracy in

this tiny island worth going to war over or not. According to Peter Thiel, it's um, it's not worth uh, it's not worth World War III um, and I I still think it's uh, quite catastrophic if it uh, if it gets taken over by the Communists. How does the world, those can both be true. How does the world divide if we end up in a heightened escalation. Is China, Russia, Iran friends? Is that an Alli? Is that an axis that forms? You know, think out the next decade in kind of your base case, and I don't know what happens, how the world, I don't know what happens militarily if there's a China-Taiwan invasion. I mean, maybe we roll over, maybe it escalates, you know, all the way to nuclear war. Probably it's, it's, you know, some very messy in-between thing, sort of like what you have in the Ukraine. What I think happens economically is very straightforward. I think uh, I think basically um, you know, you have with Russia and Germany, you had

one Northstream Pipeline, and we have the equivalent of 100 pipelines between the US and China, and they all blow up. You, I met the TikTok CEO about a year ago, and um, you know, I not maybe I wouldn't have said this now, but what I told him, and I felt was very honest advice, was, you know, you don't need to worry about the US. We're never going to do anything about TikTok. We're too incompetent. Um, but um, but if I were in your place, I would still get the business out of China. I would get the computers out, the people out. I'd completely decouple it from ByteDance because um, TikTok will be banned 24 hours after the Taiwan invasion. And if you think there's a 50/50 chance this happens, and that will destroy, you know, 100% of the value of the TikTok franchise. What was his reaction? Um, you know, uh, he said that they had done a lot of simulations and the bunch

of companies in World War I and World War II that managed to sell things to both sides. He doesn't seem so bright to me. Do you think he's um, he no, he donly. What your take on him? He he didn't disagree with my frame, and so I always, I always find that flattering if someone basically framing. So, he seemed, he seemed perfectly bright to me, even though a lot of bright people. I saw you give this. I saw you give a talk last summer with Barry Weiss, and you talked about this decoupling should be happening. You weren't saying should, you were recommending that every industry leader consider decoupling from China. I think your comment was, it's like picking up nickels in front of a freight train. You remember saying that the well? I I I think like it's, it's, there are a lot of different, there are a lot of different ways in which businesses are coupled to China, that were investors that tried investing there, are people who tried to compete within China, they people who built factories in China for export, um, and um.

you know there are different parts of that that worked to um to varying degrees, but uh but yeah my um my I I certainly would not try to um to invest in a company that competed domestically inside China. I think that's virtually impossible um I think it's probably quite tricky even to invest in Chinese Chinese businesses um uh and uh and then and then there is there is sort of this model of you know building factories in China uh for uh for export uh to the west and um it was it was a very big arbitrage. These things do work you know I me I visited the Foxconn factory nine years ago and it's you know you have people get paid a dollar and a half $2 an hour and they work 12 hours a day and they live in a dorm room with two bunk beds where uh you know you get eight people in the dorm room someone's sleeping in your bed while you're working and vice versa and uh and you sort of realize they're

really far behind us, or they're really far ahead of us. And either way, you know, it's not that straightforward to just shift the iPhone factories to the United States. So, I sort of understand, you know, why a lot of businesses ended up there and why this is the arrangement that we have. But, uh, but yeah, my intuition for, you know, what is going to happen without making any normative judgments at all is it is going to decouple. How inflationary will that be? It presumably is. It's presumably pretty inflationary. Yeah, that that's probably the, you know, I don't know. It's, and you'd have to sort of look at, you know, what the inelasticities of all these goods are. So, that's true. What's the policy re? Probably not that. It may not be as inflationary as people think because, um, people always model trade in terms of, uh, pairwise, in terms of two countries. So, if you literally have to move the people back to the US.

that's that's insanely expensive. I don't, you know, I don't know how much would cost people to build an iPhone. You just, you just, well, I think India is sort of too messed up, but you shift it to like Vietnam, Mexico. There are, you know, there are 5 billion people living in countries where the incomes are lower than China, and so, um, and so, you know, probably the um, the negative sum trade policy we should have with China is um, you know, we should just shift it to other countries, which is a little bit bad for the US, extremely bad for China, and let's say really good for Vietnam. That's kind of um, and that's kind of the the negative sum policy um, that uh, that's going to manifest as this sort of uh decoupling happens. Let's talk about avoiding it for a second here. Trump seems to be extremely good with dictators and authoritarians. Uh, Kim Jong-un seems like a big fan. I mean that in like as a compliment, as a superpower, right? Like he doesn't have a problem

talking to them, he connects with them, and they seem to like him. So, what would be the path to him working with XI to avoid this? Is there a path to avoid this? Because we were sitting here last year talking about this, and it just seems mind-boggling that if everybody agrees that this is going to happen, that we can't figure out a way to make it not happen. Well, it's not just up to us. So, um, yeah, there's, there's, and so I don't know. It's obviously somewhat of a black box. We don't exactly, we, we, I, I, I feel we just have no clue what people in China think. But um, but I, I, I think it's sort of the, the sense of history is, is strongly the sort of thus trap idea that you have a rising power against an existing power, and it tends to, you know, it's, it's Willham mean Germany versus Britain before World War I, and you know, it's um, you know, Athens against Sparta, the rising power against

the existing power you tend to um get conflict. That's probably what deep down I think is really, really far in the China DNA. So, so I'd say maybe, maybe the first, I don't know, the meta version would be the first, the first step avoiding the conflict would be we have to, we have to start by admitting that China believes the conflict's happening, right? And then if, if, if, if people like you are constantly saying um, well, we just need to have some happy talk, right? Um, that's, that is a recipe, that's a recipe for world. I'm not advocating happy Jo necessarily um. I'm, I get accused of being a bit more hawkish, obviously, obviously um, in, in general. You know, I don't know, I, I'm not, I'm not sure Trump should talked to the North Korean dictator, but yeah, in general um, it's probably a good idea to, to try to um, talk to people even if they're, they're really bad people most of the time and uh, and uh, you know, it's

it's certainly um a very odd dynamic with the US and and uh and Russia at this point where um I I think it is impossible for anybody in the Biden Administration even to have a back channel communication with uh with people like I I don't think Tucker Carlson counts as an emissary from the Biden Administration and if anybody gets tuckered or I don't know what the verb is who talks you know that's that's that seems that seems worse than the alternative can we um talk about technology um you have this you you you have a speech where you talk about some of the misguided things we've done in the past in the name of technology and use like big data as an example of that um what is AI um oh man that's that's sort of a big question I um it's um yeah I I always I I always had this riff where I I don't like the buzzwords and um you know machine learning learning Big Data cloud computing you know I'm going to build a

mobile app brings the cloud to um you know if you have sort of a concatenation of buzzwords um you know my my first instinct is just to run away as fast as possible some really bad group think and um and for many years I I my bias is probably that AI was one of the worst of all these buzzwords it meant you know the next generation of computers the last generation of computers you know anything in between so it's meant all these all these very different things if we if we roll the clock back to the 2010s you know the um probably the AI to the extent you concretize I would say the AI debate was maybe framed by by two the two books the two canonical books that framed it was there was the Bostrom book super intelligence 2014 where AI was going to be this superhuman super duper intelligent um thing and then um the anti- um Boston book was the Kaiu Lee 2018 AI superpowers you can think of the CCP rebuttal to Bostrom.

where basically AI was going to be surveillance tech, face recognition, and China was going to win because they had no qualms about applying this technology. And then, if we now think about what actually happened, let's say with the LLMs and ChatGPT, it was really neither of those two, and it was this in-between thing, which was actually what people would have defined AI as for the previous 60 or 70 years, which is passing the Turing test, which is, you know, this somewhat fuzzy line. It's a computer that can pretend to be a human, or that can fool you into thinking it's a human. And, you know, even with the fuzziness of that line, you could say that pre-ChatGPT wasn't passed, and then ChatGPT passed it, and that seems very, very significant. And then, obviously, leads to all these questions: What does it mean? You know, is it going to complement people? Is it going to substitute for people? You know, what

does it do to the labor market? Do you get paid more, paid less? You know, so there are all these questions, but it seems extremely important. And it's probably, you know, certainly the big picture questions, which I think Silicon Valley is always very bad at talking about, is like, you know, what does it mean to be a human being, right? Sort of the, I don't know, the stupid 2022 answer would be that humans differ from all the other animals because we're good at languages. If you're a three-year-old or an 80-year-old, you speak, you communicate, we tell each other stories. This is what makes us different. And so, um, so yeah, I think there's something about it that's incredibly important and very disorienting. You know, the question I always have as a, I know the narrower question I have as an investor is sort of how do you make money with this stuff? And um, how do you make money? I, it's um

It's pretty confusing, and I think I don't know. This is always where I'm anchored on the late 90s. It's sort of the formative period for me, but I keep thinking that AI in 2023-2024 is like the internet in 1999. It's really big, it's going to be very important, it's going to transform the world, not in 6 months, but in 20 years. And then there are probably all kinds of incredibly catastrophic approximations where, you know, what businesses are going to make money, you know, who's going to have the monopoly, who's going to have pricing power, is super unclear. Probably, you know, one layer deeper of analysis, you know, if attention is all you need, and if you're not post-economic, you need to pay attention to who's making money. And in AI, it's basically one company is making Nvidia, is making over 100% of the

profits. Everybody else is collectively losing money. And so, um, and so there's sort of a, you have to do some sort of, you should do, you should try to do some sort of analysis. You do, you go long Nvidia, do you go short, you know, is it, um, you know, my Monopoly question, is it a, is it a really durable Monopoly, you know, and then I, it's, it's hard for me to know because I'm in Silicon Valley and I haven't done anything, we haven't done anything in semiconductors for a long time, so I have no clue. Do you, um, if you let's debz word, the word Ai and say it's a bunch of process automation, let's just say that's version 0.1, where brains that are roughly the equivalent of a teenager can do a lot of manual stuff. What do you have, have you thought about what it means for, you know, 8 billion people in the world if there's an extra billion that necessarily couldn't work or like whether that in political or economic.

terms I don't know the the the um I I I don't know if this is the same but this is you know the the history of 2050 years the Industrial Revolution. What was that? It, you know, it adds to GDP. It frees people up to do more, more productive things um you know maybe there's you know there was yeah there was a I know there was a lite critique in the 19th century of the factories that people were going to be unemployed and wouldn't have anything to do because the machines would replace the people you know maybe the Lites are right this time around. I'm I'm I'm probably I'm probably pretty pretty skeptical of it but uh but yeah it's it's it's extremely confusing you know uh where where the gains and and losses are there there probably are um you know there there's always sort of a hobby you can always just use it on your hobby horses so I don't know the you know my anti-Hollywood or anti-university hobby.

horse is that uh. It seems to me that you know the um. The AI is quite good at the woke stuff and um. It'll and and so you know if you want to. If you want to be a successful actor you should be maybe a little bit racist or a little bit sexist or just really funny uh. And you won't have any risk of the AI replacing you. Everybody else will get. Everybody else will get replaced and then probably I don't know um. I don't know uh. Claudine gay the plagiarizing Harvard University president um. You know the AI is going to you know the AI will produce end amounts of um. Of these sort of I don't even know what to call them uh. Woke um papers and um. They were all already sort of plagiarizing one another. They were because they were always saying the same thing over and over again. They were using their own version of. Is just going to flood the Zone with with even more of that and that you know I don't know.

obviously they've been able to do it for a long time, and no one's noticed. But, uh, but I think, I think at this point, um, that it doesn't seem promising from a, um, compet compe Point. Obviously, my hobby horses, so I'm, I'm just maybe just wishful thinking on my part. What are the areas of technology that um, you're curious about, that your mind is like, wow, this is really, I have to learn more, pay attention, you know, I'm always, I always think, uh, you, you want to instantiate it more in companies than, than um, things, or you know, you ask sort of like, where is, where is innovation happening, you um, you know, it, it, it in our society. It doesn't have to be this way, but it's, it's um, it's mostly in, in um, in a certain subset of relatively small companies where we have these relatively small teams of people that are really pushing the envelope, and that's, that's sort of, you know, that, that's sort of what I find, you know.

inspiring about venture capital, and then you, and then obviously you don't just want innovation; you also want it to sort of translate into good businesses. But that's where it happens. It somehow doesn't happen in universities; it doesn't happen in government. You know, there was a time it did. I mean, you know, somehow in this very, very weird different country that was the United States in the 1940s, you had, you know, somehow the Army organized the scientists and got them to produce a nuclear bomb in Los Alamos in three and a half years. And you know, the way the New York Times editorialized after that was, you know, it's, you know, it was sort of an anti-libertarian write-up. It was, you know, there were, um, you know, obvious. Maybe you'd left the Primadonna scientists to their own would have taken them 50 years to build a bomb, and uh, the Army could just tell them what to do, and

this will should silence anybody who doesn't believe the government can do things and uh they don't write editorials like that in the New York Times anymore but I think um yeah but I think that's sort of that that's that's sort of where where when where when should look I think it I think I think a crazy amount of it still happens in the United States you know there sort of you know we've we've you know episodically tried to all this investing we probably tried to do tooo much investing in Europe over the years it's always sort of a junk it sort of it's a nice place to go on vacation as an investor and um and it's it's it is it is very it's it's very and I don't have a great explanation but it's a very strange thing that uh so much of it is still the US is somehow still the country where people do new things Peter is that is that a team organizational social evolutionary problem in the United

States what is the root cause of the failure to innovate in the United States relative to the expectation going back 70 years, 50 years, etc. from, you know, the rocket shift and we're all going to live. Yeah, well, this is always one of the big picture and claims I have that we've been in an era of relative tech stagnation the last 40 or 50 years or the, you know, the tagline um that we had they promis flying cars. All we got was 140 characters, which is not an anti-Twitter antix commentary even though the way the way I used to always qualify it was that uh at least you know at least it was at least a good company. You had you know 10,000 people who didn't have to do very much work and could just smoke marijuana all day. Very similar to Europe and so I I think that actually that part actually did get corrected but um um but the um very but I think I I think um like what went wrong because

you you point out that it's not a technology trend tracker that you think about. It's about people and teams that innovate and drive to outcomes based on their view of the world and what's gone wrong with our view of the world and our ability to organize to achieve the seemingly unachievable. With very rare exceptions, obviously, Elon's here later, but yeah, you know, it's overdetermined. The rough frame I always have, and again, it's not that there's been no innovation, there's been a decent amount of innovation in the world of bits—computers, internet, mobile internet, you know, crypto, AI—so there are sort of all these world of bits places where there was a significant but sort of somehow narrow cone of progress, but it was everything having to do with atoms that was slow. This was already the case when I was an undergraduate at Stanford in the late '80s. In retrospect, any applied engineering field was a bad idea. It was

a bad idea to become a chemical engineer. You know, a mechanical engineer, aeroastro, was terrible. Nuclear engineering, everyone KN. I mean, I no one did that, you know, and um, and there's something about, yeah, the world of Adams that um, you know, from a Libertarian point of view, you'd say got regulated to death um, there probably uh, you know, there's, there's some, there's some set of arguments where um, the lwh hanging fruit got picked and got harder to find new things to do. Although I always, I always think that was just a sort of baby boomer excuse for for covering up for the the failures of that generation um, and um, and then um, and then I think but I think maybe, maybe um, maybe a very big picture part of it was that uh, at some point in the 20th century, the idea got took hold that not all forms of technological progress were simply good and simply for the better. And there's, you know, there's something about the two world wars and the you know, the development of nuclear weapons that uh

that gradually pushed people into this more risk-averse society, and it didn't happen overnight, but you know, maybe a quarter-century after the nuclear bomb. It's like by Woodstock, it happened. By Woodstock, it happened. Yeah, 'cause that was the same summer we landed on the moon. Yeah, Woodstock was three weeks after that. Yeah, that's that was the tipping point. Progress stopped in the took over sex. Can we shift gears just to the domestic economy? What do you think's happening in the domestic economy? And just say backdrop, we've had something like 14 straight months of downward revisions to jobs. The revisions are supposed to be completely random, but somehow they've all been down. Prob doesn't mean anything. There's also what's happening with the yield curve, but I'll stop there. What's your take on what's happening in the economy? You know, it's man, it's always hard to know exactly. Yeah, I suspect we're close.

to a recession. I've probably thought this for a while. It's being stopped by really big government spending. So, you know, in May of 2023, the projection for the deficit in the fiscal year 24, which is October of 23 to September 24, was something like 1.5, 1.6 trillion. The deficit is going to come in about 400 billion higher. And so, which, you know, was a sort of a crazy deficit, was projected, and it was way off. And then somehow, um, and so if we had not found another 400 billion um, to add to, you know, this crazy deficit at the top of the economics cycle, you know, you're supposed to, you're supposed to increase deficits in a recession, not at the, not at the top of the cycle. Um, you know, think things would be probably very shaky. There's, yeah, there's, there's, there's some way where um, we, yeah, we have a um, too much debt not

enough sustainable growth. Um, you know, again, I always think it comes back to, you know, Tech Innovation. There probably are other ways to grow an economy without Tech, um, or intensive progress, um, but I think they, we, we, we don't have those, don't seem to be on offer, and then that's, that's where it's very deeply stuck. If you, if you wind back over the last 50 years, you, there's always a question: why did people not realize that this Tech stagnation had happened sooner? And I think there were two one-time things people could do economically that had nothing to do with science or tech. There was a 1980s Reagan-Thatcher move, which was to massively cut taxes, deregulate, allow lots of companies to merge and combine, and, and it was sort of a one-time way to make the economy a lot bigger, even though it had, it was not something that really had the sort of compounding effect. So, it led to one great decade, and then there was, um, you know, and that was sort of the right-wing

capitalist move, and then um, in the 90s, there was sort of a Clinton-Blair um Center-left thing, which was sort of leaning into globalization, and there was a giant global arbitrage you could do, which also had, you know, a lot of negative externalities that came with it, but um, it sort of was a one-time move. I think both of those are not on offer, you know. I don't necessarily think you should undo globalization. I don't think you should raise taxes like crazy, but um, you can't do more globalization or more tax cuts here. That's not going to be the win, and so I think you have to somehow get back to the future. Um, we have time for a couple more questions. You um, I think saw that maybe these Ivy League institutions maybe weren't producing the best and brightest or weren't exactly um hitting their mandate um, and you created the Teal Fellows, and you've been doing that for a while, and I meet them all because they all have crazy ideas, and they pitch

me for Angel investment. What have you learned? Getting people to quit school, giving them $100,000, and then how many parents call you and get really upset that their kids are quitting school. Uh, it's well. I don't know. I've learned a lot. I mean, it's um. I don't know. I. I. I. I think. I think the universities are far worse than I even thought when I started this thing. Um. I think um. Yeah, it's um. You know. I. I. I. I did this. Uh. I did this debate at Yale last week. Um. You know. Resolved higher education's a bubble. And um. And uh. You sort of go through all the different numbers. And um. The. And then you know. And again. I. I was ful to word it in such a way that I. I didn't have to. You know. And then people kept saying well what's your alternative. What should people do instead. And I said nope. That's not was not the debate. I'm not. You know. I'm not

your guidance counselor. I'm not your career counselor. I don't know how to solve your problems, but um, if something's a bubble, you know, the first thing you should do is probably not, you know, lean into it in too crazy a way. And you know, the student debt was 300 billion in 2000. It's uh, it's basically uh, close to two trillion at this point. So, it's just been the sort of runaway um, this runaway process. And um, and then if you look at it by cohort, if you graduated from college in 1997, 12 years later um, people still had student debt, but most of the people had sort of paid it down um, but the first by 2009. We started the teal Fellowship in 2010 and it, you know, it felt uh, two by 2009 was the first cohort where this really stopped. If you take the people graduated from college in 2009 and you fast forward 12 years to 2021, the median person had more student debt 12 years later than they graduated.

with because it's actually just it's just compounding faster and it was you know partially partially the global financial crisis. The people had less well-paying jobs, they stayed in college longer, um, and the colleges, they it's just sort of been this background thing where it's it's decayed in these in these really significant ways and um, you know, again, I I think it's on some level um, there are sort of a lot of um debates in our society that are probably dominated by sort of a boomer narrative and maybe the Baby Boomers were the last generation where College really worked and you know, they think well you know I I worked my way through college and why can't why can't um why can't you know an 18-year-old going to college do that today and um and so I I I think the bubble will will will be done once the Boomers have exited stage left but does the government to it would be good if we figured something out before then you know does does the government need to

stop underwriting the loans because it's the lending. I think the 90 plus percent of the capital in the student loan programs is funded by federal, uh, Federal, the federal government. And there's, if you're an accredited university, you can take out a loan and go to it. And accreditation in a rigid kind of free market system, you would have an underwriter that says, Are you going to be able to graduate, make enough money to pay your loan off? Is this a good school? Are you going to get a good job? And then the market would figure out whether or not to give you a loan, would figure out what the rate should be, and so on. But in this case, the government simply provides capital to support all this, and as a result, everything's gotten more expensive. And the rigidity in the system that basically qualifies schools and the quality of those schools relative to the earning potential over time is gone. We need the government to get out of the student loan business. Yeah, but look, the

the place where I'm. I know I'm sort of some ways I'm right-wing, some ways I'm left-wing on this. So, the place where I'm left-wing is I do think a lot of the students got ripped off. And so, I think there should be some kind of broad debt forgiveness at this point. Who should pick up the T? But it's not just the taxpayers, it's the universities and the bondholders. Got it, the bond. Take a little bit out of those ends, the universities. And then, obviously, if you just make it the taxpayers, then you'll just, then the universities can just charge more and more. No incentive to reform what whatsoever. But had me, you know, it's in 2005, it was under Bush 43 that the bankruptcy laws got rewritten in the US where you cannot discharge student debt even if you go bankrupt. And if you haven't paid it off by the time you're 65, your Social Security wages checks.

will be garnished. It's crazy. So, um, so you know, I think um, but should we stop lending? Should the federal government get out of the student lending business? Well, if we say that uh, if we start with my place where you know, a lot of the student debt should be forgiven and then reform the, then we'll see how many people are willing to lend, you know, how much, how many of the colleges can um, pay for all the student. What's your sense? If it was a totally free market system, how many colleges would shut down because they wouldn't be able to S? There's no tuition support. It probably would be a lot smaller. It might, it might, you might not have to shut them down because there's, you know, a lot of them have gotten extremely a blow. It's like Bal Mall's cost disease where you know, I don't know if I have no idea like a

place like UCLA. It probably has, you know, twice or three times as many bureaucrats as they had 30-40 years ago. So, there's sort of all these sort of, um, parasitic people that have sort of, uh, gradually approved and, uh, and, um, and, and so there's probably a lot of, would be a lot of rational ways to dial this back. But, um, but yeah, um, you know, maybe we're to a new location. If the only, if the only way to lose weight is to cut off your thumb, that's kind of a difficult way to go on a DI. He, um, Peter, three of your collaborators, longtime collaborators Elon Musk, um, Mark Zuckerberg, and, uh, Sam Mman are arguably the three leading AI language model, um, leaders. Which one is going to win? Rank in order and tell us a little bit about each. Peter said he would answer any question. I, I, I, I, I said I would take any question. I didn't say to answer any question. You said you would honestly. You said today you felt extremely honest and

candid. Let's uh I I yeah but I've already been extremely honest and candid so I think qu it's it's it's whoever I talked to last okay they're they're all very very convincing people so you know I cre I I talk a little bit I talked to Elon a while ago and and you know and it was it was just um how ridiculous it was that Sam Altman was getting away with turning open AI from a nonprofit into a for-profit that was such a scam if everybody was allowed to do this everybody would do this that it has to be totally illegal what Sam's doing and it shouldn't be allowed at all and that seemed really really convincing in the moment and then then sort of half an hour later I I thought to myself but you know actually um man it was it's been such a horrifically mismanaged place at open AI with this preposterous nonprofit board they had nobody would do this again and so there actually isn't much of a moral hazard from it so but yeah

who whoever whoever I talk to, I find very convincing in the moment. Well, will that spaces get commoditized? I mean, do you see a path to Monopoly there? Well, again, this is again where, you know, you should, you know, attention is all you need. You need to pay attention to who's making money. It's Nvidia. It's the hardware, the chips layer. And um, and um, and then that's just, it's just what we, you know, it's not what we've done in tech for 30 years. You are, they making 120% of the profits. They're, they're make, they're, I think everybody else is losing money collectively. Yeah, everyone else is just spending money on, on the computer. So it's, it's one, it's one company that's making, I mean, maybe there's a few other people are making some money. I mean, I assume tsmc and asml, but, but uh, but uh, yeah, I think everyone else is collectively losing money. What do you think of Zuckerberg's approach to say

I'm so far behind. This isn't court in my business. I'm going to open source it. Um, is that going to be the winning strategy handicap that for us? Um, again, I, I, I, I, I, I, I would say, um, my, again, my, my, my big, my, my big qualification is, you know, my, my model is AI feels like it does feel uncomfortably close to the bubble of 1999. So, I'm, we haven't invested that much in it. Um, and, uh, I, I, I'd want to have more clarity in investing. But, uh, but the, the, uh, the simple, simplistic question is, you know, who, who's going to make money? Um, you know, I think a year ago, two years ago, in retrospect, Nvidia would have been a good buy. You know, I think at this point, everybody, it's, it's, it's sort of too obvious that they're making too much money. Everyone's going to try to copy them on, on the chip side. Maybe that's straightforward to do. Maybe it's not. But, but that's, you know, I'd say probably um

you should you should if you if you want to figure out the AI thing. You should not be asking this question about um, you know, meta or um, open air or any of these things. You should really be focusing on the Nvidia question, the chips question, and the the fact that we're not able to focus on that. That tells us something about how we've all been trained. You know, I think Nvidia got started in 1993. Yeah, I believe that was the last year where anybody in their right mind would have studied electrical engineering over computer science, right? 94 Netscape takes off, and then yeah, it's probably a really bad idea to start a Semiconductor Company even in '93. But the benefit is there was going to be no one would come after you, no no talented people started semiconductor companies after 1993 because they all went into, you know, into software, score their Monopoly power. Um, it's I I I think it's quite strong because this this this history that I just gave you where none of us know anything about

chips um and then I think the, you know, I think the risk. It's always, you know, if attention is all that you need um, the qualifier to that is, you know, when you get started as an, you know, actress, as a startup, as a, as a company. You need attention, then it's desirable to get more, and at some point, attention becomes the worst thing in the world. And there was the one day where Nvidia had the largest market cap in the world earlier this year, and I do think that represented a phase transition. Once that happened, they probably had um more attention than was good. Hey Peter, as we wrap here um, your brain works in a unique way. You're an incredible strategist. You think, you know, very differently than uh, a lot of the folks um that we get to talk to um. With all of this, are you optimistic for the future uh? I, I always man, I always push back in that question. I, I um, I think, I think extreme optimism and extreme pessimism are both really bad attitudes.

and they're somehow the same thing, you know, extreme pessimism, nothing you can do, extreme optimism, the future will take care of itself. So, if you have to have one, it's probably you want to be somewhere in between, maybe mildly optimistic, mildly pessimistic, but, you know, I believe in human agency and that it's up to us, and it's not, you know, it's not some sort of winning a lottery ticket or some astrological chart that's going to decide things. And I believe in human agency, and that's sort of an axis that's very different from optimism or pessimism. What a great extreme optimism, extreme pessimism. They're both excuses for laziness. What an amazing place to end, ladies and gentlemen. Give it up for Peter J. Thank you, thank you, Peter. Come on now, wow. All right, Peter ch.

Peter Thiel | All-In Summit 2024

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