Peter Thiel: Elon Musk's Advice that Transformed Palantir

0:00 I think there was an Elon metaphor he told me once and this is like I I don't remember when it was like maybe 2010 2011 and it was it was it was sort of there were there were these three or four aerospace companies in the US that were like really badly managed and badly run and it was sort of they were these very fat cows on this grassy enclosed field and if you ever got in there there was just going to be a blood bath.

0:26 >> Oh yeah. So it's kind of >> it's like he's like this this there's this this carnivore and there's a big fence and you got to climb this really big fence. Eventually you get in there. It's going to be it's but so so this is a very optimistic thing though because both Elon and and what we built together with Palunteer were able to be great enough and persistent enough to overcome unnatural barriers and and do something very optimistic and fix things. Is should we also be trying to do that in healthcare and education and universities in some sense? Is it cuz it was almost impossible but it turned out after like years of work that we did it.

0:57 Shouldn't we also do that now in other areas? It is it is worth trying in a lot of areas. Look, I I always think it's better to be optimistic than pessimistic. It is it's probably not I the the place where I quibble with the name of your show is that I I don't think it's I don't think it's good to be insanely optimistic or insanely pessimistic. at the extreme optimism and pessimism are the same thing because if you are extremely pessimistic there's nothing you can do. If you're extremely optimistic there's nothing you need to do. you just need to you know the singularity is near. It's the Curtzsw Wild book title very optimistic title and all you need to do is sit back and eat some popcorn and watch the movie of the future unfold. So both extreme optimism and extreme pessimism.

1:50 converge on laziness and on people not doing anything. So so I so I I yeah so I think moderate optimism is the correct thing and then and then I I I think you have to always pick pick your battles. the the part that's the part that's I think more difficult about education and healthc care or historically was more difficult was that these were these were areas that lots of people were trying to reform and there were lots of different attempts people had if whereas let's say the in 2004 2003 2004 2005 when we started Palunteer the idea of trying to to do a military related software startup.

2:40 There was nobody even wanted to give you money as a venture capitalist. People thought we were insane. >> And so there was sort of an element where >> if you could get through you would have no competition and then you know a decade later we still had no competition. There's probably a lot more going on in the in the defense space now than there was in the in the mid 2000s. But and and again and again having zero competition it it's good if it works maybe it just tells you you're insane. So even that's an ambiguous thing >> but then the >> the the place where I've had we probably the two areas where I've had the you know we we've tried to invest I at this venture capital thing we started founders fund 2005 in different ways I've been been at this and I' done some angel investing before that but I've been been doing this for 20 plus years and the area where we've probably had the least success from a returnsbased is in software. The two worst areas are are educational software related companies and healthcare IT companies and and pro like education we felt was so hard we we didn't even we did very little healthcare we tried a few more things but it's and and and the the the rough version of what's gone wrong in the health care sectors we've done so little in education I feel I can't even comment on it but but healthcare What's what's roughly gone wrong is you have all sorts of things that sound like a pretty good plan for reforming the system and it's okay it's this one angle on the pricing model that you need to change but then there are 10 different ways you can do it and it's these complicated ways you have to get the payments to shift from the insurance companies or the government or the hospitals which are very cluji if you can just get consumers or doctors to change that might be easier but the they typically are not the people who pay.

4:40 And so there sort of are there's this, you know, very cluji messed up system. Lots of people try try to do it. My my sociological model is always that I'm I'm deeply skeptical of of investments where a lot of VCs would go to some silly VC networking event and want to brag about it. And I I I feel there there's a lot of that with the healthc care education startups.

5:12 >> this is like the green tech stuff too. It's too popular. >> The green green tech stuff. Yeah. I mean at some point it it loses money and then it's not popular anymore. But but while it lasts it's very popular because there's there's no fast term accountability in venture capital. You know sometimes you have momentum and the valuations go up and that that does give you a feel whether things are working. But in practice you of you know it's five ten years later you get liquidity on on these businesses or even longer.

5:40 it it takes incredibly long and so people tend to overindex on these sociological factors and what's what's popular and that's and so there was there was a there's a way that the healthc care education sectors even though they're very broken people have these often too conventional ideas on how to fix them and and so yeah it's I know you know another trend where I' I've tried investing some over over the last decade is that you know is is are all these marijuana related businesses and it's like yeah it's obviously like a big trend. but it's it's an obvious trend and then it turned out to be extremely hard to figure out what what to do with >> Yeah. As I said some of the things things that are too popular and too obvious. It's just you have to have a totally different take on them or it's not going to work.

6:30 >> yeah you like if you have an unpopular take on it that that that might work.