Listen to Peter Thiel: video


Peter Thiel, Founders Fund, Paypal, Facebook
Venture capitalist Peter Thiel speaks at PartnerConnect West 2014 with Lawrence Aragon. Photo by Oscar Urizar for Buyouts Insider

We’ve been brainwashed into thinking that the losers are the people who don’t compete intensely enough.

Uber is overvalued because investors like driving in Town Cars.

Engineers tend to be pretty bad at business. Scientists are catastrophic.

Peter Thiel may very well be the most quotable venture capitalist on the planet. He has something interesting and/or funny to say about even the most pedestrian subjects.

At our recent PartnerConnect West conference, the co-founder of PayPal and Founders Fund riffed on Apple, Google, Uber, tech founders, competition, phony technology companies and lots more.

If you don’t have time to watch the video from start to finish, here’s a handy guide to skip to particular topics. The following quotes have been edited for clarity.

(If you think we’ve missed any gems, please let us know in the comments section and we’ll amend the post.)

(If you have trouble streaming this video, watch it on YouTube.)

Why competition is for losers (7:39)

“That is psychologically the mindset we should always try to have, because we’ve been brainwashed into thinking that the losers are the people who don’t compete intensely enough. I would submit to you that the losers are the people who do the exact same things as everybody else and who believe it is about competing more intensely for scraps. It’s like how Henry Kissinger described his fellow professors at Harvard: ‘The battles were so ferocious because the stakes were so small.’”

On “zero to one” companies commonly believed to be “one to n” n companies, such as Google and Facebook (8:45)

“Certainly there had been search companies. I would say Google was the first one to have a computerized algorithm with its PageRank algorithm. That was a fundamental shift which enabled it to do it in a way that was vastly better than anybody else.”

“I think Facebook was the first one to get real identity. You had all these different social networking companies for a long time, but they hadn’t really cracked the real identity thing.”

On Steve Jobs and the importance of founders (10:30)

“The companies that are able to still innovate in a dramatic way are the companies that are founder-led. It was very critical in the case of Apple that [Steve] Jobs came back in 1997 and radically shifted the company from a home-computer company to a consumer-electronics company. If you [have] the kinds of politicians that masquerade as CEOs at most public companies or the sort of supine people that these boards normally feel comfortable appointing, then you will never get that kind of innovation. That’s why truly innovative companies are ones that are still founder led.”

On fake tech companies (11:44)

“There are a lot of so-called technology companies which are fundamentally bets against technology. If you went down the Nasdaq 100, my claim is that most of the investments are bets against technology. Microsoft: You’re betting [the top operating system] will never be Linux, that there will never be a different operating system. IBM: We’re going to have the same kludgy software from the ‘70s and ‘80s forever. Oracle: a bet against cloud computing. … Often these bets actually work pretty well. You’re effectively short gamma and you’re short volatility. You’re assuming there will be no disruption, nothing will change, there will be no innovation. And because we’re in a world where innovation is actually more limited than people think these have often been very good bets. But you shouldn’t fool yourself and pretend that these are technology companies.”

On Apple and whether it is still a technology company (12:58)

“I don’t want to take any potshots at Tim Cook because he has almost impossibly large shoes to fill, but, I think Apple at this point is fundamentally a bet against innovation in smart phones. It will work as an investment if the smart phone is close to [its] final form. It’s actually a brand play. In some ways that was the wrong view when the Apple board hired Sculley in 1985, where they thought home computers were finished and it was just like marketing Coke or Pepsi. [But] it’s possible that that is actually the case with smart phones, that there isn’t that much more you can do with them, [so] it is actually like marketing Coke or Pepsi and it will just generate enormous profit streams for many years to come. Coke and Pepsi are not tech companies but they have been good investments for a long time.”

On whether Google is still a technology company (14:32)

Google is still trying a lot of things. But it is striking that even a company like Google, where the branding is all around the technology, and yet the odd thing is that they are building up more and more cash. So there is some sense that even a founder-led company like Google that wants to do a lot of radical new things finds it hard to find ways to deploy all their capital to do this.”

On tech companies paying dividends (16:01)

“As soon as you start issuing dividends it is a complete admission of failure [as a tech company].”

On VCs and Uber (26:06)

“I think VCs often have a blind spot. They overvalue things they use and undervalue things they don’t use. I think Uber is overvalued because investors like driving in Town Cars.”

Why he’s not bullish about biotech (29:00)

“The thing that I’ve come to think as very important for companies where there is a big science component is actually the business side. Engineers tend to be pretty bad at business. Scientists are catastrophic. And they have all sorts of fantastical delusions about how the world works. They think if they come up with something great, the world will rush to their door and buy it.”

Photo: Peter Thiel, tech entrepreneur and venture capitalist, speaks at PartnerConnect West 2014 on Oct. 7, 2014. Photo by Oscar Urizar for Buyouts Insider