Debate - Thiel vs Andreessen

Milken Institute Conference 2013, Debate on innovation

Peter Thiel

• Technology - critical factor to take civilization to the next level
• People think tech is not a good think: Hollywood movies 
• Wages have been staggering for 40 years in US
• Challenge: how to measure acceleration and deceleration
• Number of employees working in computer industry
• Market cap of companies
• Intuition
• Any area outside computing, there has been deceleration since 1970 
• Energy, biotechnology (number of patents decreased), cleantech, transportation, food
• Computer revolution, hope computers save us all
• Number of people employed in IT decelerated since 2000 (up 17%) compared to 1990s (up 100%)
• Market cap of tech companies from 2000 are less than Google+Amazon 
• Computer era is at risk of decelerating in the next decade
• Computer 'rust belt' Dell, IBM, Cisco, HP, Oracle:: Microsoft, Apple are close to belt 
• Thiel is optimist and Andreessen is pessimist
• Internet was initially underestimated, in late 90s it was overestimated
• Right now: there is not much hype as in the 90s, there is not much reality either based on market caps of companies from 2000s
• Low tech airport security which take transportation speeds back to 1960s
• 1750-1970 - tech acceleration; 1970-2010 tech deceleration
• In 1970 we were promised cure cancer
• Flying cars are not realistic
• Flying cars would not get off the ground today 
• lack of innovation in energy
• What sector really matters - energy
• Energy input to the economy is very close proxy to GDP growth
• Twitter is good company, great job security
• California - center of innovation, the best state
• World of stuff is regulated and world of bits is not
• Mean wages have gone up 350% after inflation since 1943 to 1973, and 22% 1973-2013
• Median wages were flat
• 92 people 10B or more, 11 made in tech, in computers, 25 made in natural resources - technological failures
• What evidence would convince you that you are wrong?
• life expectancy
• cultural component
• number of scientists - not a good indicator of innovation
• scientific papers - turn out to be inaccurate
• imagination is important
• scientific movies in Hollywood should produce movies to show technology is good
• Star Trek movies
• Emerging markets should copy the technology from the developed world
• The best technology mostly comes from Silicon Valley
• We like to invest in first and best technologies
• Something of somewhere is nothing of nowhere
• 10-20 years, there will be innovations
• Room for innovation Israel, Canada, Scandinavia, Germany
• Japan copied but never overtook

Marc Andreessen

• Agrees exactly 50% with Thiel
• Usually disagrees with Bill Gates but agrees on flying cars which are energy inefficient
• Thiel - transportation decelerated - we are not going faster
• Three categories in changes in transportation
• Advancements in IT that make transportation less necessary 
• Twitter - instant public global messaging for free
• Compared to telegraph era people this is a big deal
• Big deal for business, news, politics, cultural discovery
• Kids from early age get to interact with kids from other countries 
• The whole basis of our civilization is communication
• Communication will be the catalyst to innovation in a lot of industries
• Communication is a platform of all innovations - let innovators communicate to each other
• New York Times had a reporter on internet - Peter Lewis who was hired to write negative things about internet 
• Massive technical innovation in energy but as long as we substitute oil
• The price of solar energy prices dropped like a rock
• The cleantech has to have 2X price/performance to replace oil&gas and then they stall out because of the subsidy imbalance and people say "aha, it didn't work"
• Energy is 100% political problem not innovation problem
• Transportation 
• vehicles themselves 
• including Tesla, did not get to price/performance curves 
• self-driving cars: Google and Mercedes Benz
• optimization
• generally smartphone based to optimize traffic - waze
• What evidence would convince you that you are wrong?
• number of scientists and engineers in the world - raw material of innovation
• 2.1 million natural science degrees in US in 2000
• 2.1 to 3.7 by 2008 worldwide
• number of researchers grew from 3.7-5.9 million in 1995-2007
• per capita GDP
• since 1871 grew from 300 to 45,000 in current dollars
• imagination
• number of scientific papers
• patents become anti indicator
• Number of public tech companies 8800-4100 in 1977-Present
• Regulatory competition - countries can compete in industries that are highly regulated or not allowed in US