Anyone familiar with this blog is familiar with my notes from Peter Thiel’s startup course at Stanford. With over 350,000 readers, more than a million page views, and coverage in the New York Times and Forbes (to name a few), the notes have had a good run. But I’m happy to report that they are only the beginning: Peter and I have decided to write a book called Zero to One.
Why a book? For starters, we can make the notes considerably better. Substantively, we are revising, updating, and expanding on the best parts of the class. Everything else will be improved as well. The prose will be stronger and clearer, without losing the atmosphere of openness and experimental thinking that inheres in the notes format. The design and packaging, too, will provide an entirely different readership experience. In short, we can make a book worth owning.
More broadly, though, books remain important, whether digital or in print. Our view is that some degree of sustained attention, not just brief scanning, is essential for real thinking. Stepping back from the parade of distractions and seriously engaging with a text affords opportunity to think, plan, and create. As Peter has said, meaningful progress requires that we think about the future for more than 140 characters or 15 minutes at a time.
Zero to One will be published by Crown Business, a division of Random House, in March of next year. Stay tuned for lots more details—I’ll try and share as much as I can along the way. Meantime, you can sign up for updates or follow along on twitter/fb here. Or pre-order here!
Judicata raises $5.8 million led by Khosla Ventures — Guest post from Keith Rabois
Keith Rabois is a partner at Khosla Ventures and former executive at PayPal, LinkedIn, and Square. Follow him on twitter @rabois.
A long time ago in a galaxy far, far away… I was an attorney.
Indeed, I devoted most of the 1990s to the practice of law, clerking for the United States Court of Appeals for the Fifth Circuit and then litigating for the preeminent Wall Street law firm, Sullivan & Cromwell.
As a young lawyer, most of my billable hours were devoted to legal research and writing. I recall slaving away at my computer, endlessly querying LexisNexis and Westlaw and becoming frustrated with the limitations of crude keyword search and arcane Boolean operators. Indeed, my hack was to spend many days and nights in the library reading cases in printed books to track down the key facts and subtle distinctions that the “computer” could not grasp.
Of course, most of the world of technology has advanced since those dark days. But not legal research. Until now.
Fixing legal research is a major task. To start, it requires a scalable method of extracting meaning from millions of cases, not just adding a more advanced search engine on top of the text.
Judicata is developing an intuitive search technology that groks all of the facets of legal precedent. In a matter of moments, their software helps a lawyer retrieve everything she needs, comprehensively, accurately, and painlessly. By early next year, the team will ship the new tool of choice for California’s 180,000 lawyers.
According to Crunchbase, legal technology attracts fewer investment dollars than any other sector, and perhaps for good reason; the problem is difficult, and most companies are taking incremental approaches. Yet there is a lucrative market awaiting the right team with the right approach: the two industry giants generate over $2 billion annually from their legal research products, and the largest 100 law firms alone generated $70 billion of revenue last year.
Real innovation is possible in legal technology, and it is on the horizon. We at Khosla Ventures are excited to be working with the Judicata team to prove it.
In 1811, when Cornelius Vanderbilt was 17, he borrowed $100 from his mom to buy a small sailboat. He figured he could make some money by ferrying goods and people around New York Harbor. He was right.
When the War of 1812 broke out, Vanderbilt’s competition nearly vanished (presumably, few American transporters were keen on operating in British-infested waters). The demand for effective transport, though—particularly military transport—increased dramatically. Vanderbilt, who quickly acquired the nickname “Commodore” for his prowess on the water, was all too happy to service the need and profit handsomely therefrom.
Vanderbilt, of course, was the sort of guy who thought seriously about the future, and the future, he thought, was steam power. So in 1818 he sold his fleet, leased a steamship called Bellona from a guy named Thomas Gibbons, and began to operate his ferry business 2.0.
But there was trouble on the water. The New York legislature had seen fit to grant a monopoly on steamboat service to a couple of guys named Fulton and Livingston. Some operators, like Gibbons, respected the edict and stayed out of the water. Others, like Aaron Ogden, cowed and paid the Fulton-Livingston partnership for an operating license. But Vanderbilt was made of different stuff. He just wanted to build a great business. What good are rules when they stand in the way of building great businesses?
Unsurprisingly, suits were filed. (Ogden was the plaintiff in the one you’ve probably heard of.) Interestingly, though, this didn’t seem to matter very much. Initially, Vanderbilt paid the litigation no mind; he continued to provide excellent service and ruthlessly undercut his competition on price. Equal parts sword and shield—he employed a “crew of shoulder-hitters, ready for battle” to ensure orderly moorings at competitor’s docks,1 while also deflecting criticism and developing a Robin Hood-ish mythology—Vanderbilt insisted on forging his own future. You might be aware that Jay-Z just executive produced Baz Luhrmann’s Gatsby; so long as we’re anachronistically weaving Hova lyrics into montages of the long-dead nouveau riche, take a moment to imagine Vanderbilt, as his marine hoplites take control of a pier, blasting:
And government, fuck government, niggas politic themselves.2
The end of the legal battle came in 1824, when the Supreme Court heard the case and ruled for Vanderbilt’s side. (Vanderbilt, as merciless in court as he was in business, had helped his cause by hiring Daniel Webster—think Ted Olson and David Boies rolled into one—to represent Gibbons.) Doctrinally, the case was quite important, but that is the stuff of AP US History and 1L year of law school. What matters here is that Vanderbilt was venerated:
“We owe to him,” said a prominent citizen, “the freedom of the seas as applied to us locally.”3
I think this story is pretty cool in its own right. It’s even cooler, though, to the extent it can help us understand the present. Does the Vanderbilt steamship ordeal remind you of anything more… familiar? Say, much of Silicon Valley right now? I’ll let someone else write the manifesto about how technology is and will likely continue to outpace physical-world regulators and solve problems the government can’t. But cf. Uber/Airbnb/Taskrabbit/Exec/Crowdflower/Turk/3D Printing. It’s hard not to notice that CS can be a powerful mechanism to route around inefficiency and unlock a lot of value.
Of course, disruption is risky. People don’t like to be disrupted. Aaron Ogden certainly didn’t. Neither, apparently, do the bureaucrats in DC who are coming after Defense Distributed, ostensibly because they feel weak and techno-libertarianism scored too many points over the weekend, or something. The best path is usually one that avoids head-on confrontation. But still—very often, it’s messy and complicated where the rubber hits the road. So what should we do then this happens? Play by all the rules? Ask for permission? Or just build something great? To ask the question, hopefully, is to answer it. WWVanderbiltD?
Over the last year or so, I’ve had the pleasure of watching my good friends Kyle and Dan build Leap, which, as they bill it, is “a better bus service for San Francisco.” The idea is simple: the city’s MUNI bus system ($2/ride) is slow, overcrowded, and leaves much to be desired.4 But biking (free) isn’t for everyone, and cabs ($20) are expensive. What if we could relieve the MUNI’s load by bringing the private shuttle service that Google and Twitter employees enjoy to… everyone? What if anyone with a smartphone could instantly buy a pass and streamline their commute on a bus with wi-fi, air conditioning, and a comfortable seat? Well, please meet Leap ($6), which launched this week with a line from the Marina to Downtown SF.
It’s always fun to watch your friends start new ventures. It’s also fun to see really good products get built. Throw in the delightful parallels to the Bellona line and it’s not hard to imagine Kyle and Dan and company as a couple of proto-Vanderbilts, just trying to get people from point A to point B in a better way.
May the streets of San Francisco be their New York Harbor.
Stewart H. Holbrook, The Age of the Moguls, 13 (1953). ↩
Jay-Z, Decoded, 214 (2011). Note the esoteric use of “politic,” glossed in p. 215 n20: “I wrote this at a time when I felt the government was irrelevant to the ways we organized, resolved conflict, and took care of ourselves. “Politic” is slang for the kind of talk that works things out.” ↩
Othershavewritten—some quite critically—about the government’s decision to charge Dzhokhar Tsarnaev with “unlawfully using and conspiring to use a weapon of mass destruction.” Colloquially, most people have come to associate WMDs with nuclear, biological, or chemical weapons.1 But 18 USC § 2332a(c)(2)(A) says that “any destructive device as defined in 18 USC § 921" is a "weapon of mass destruction." Section 921(a)(4)(A) in turn, says that bombs, grenades, and rockets, among other things, are “destructive devices.”2
Since the IEDs used in the Boston attacks are clearly “bombs,” the § 2332(a) charge is pretty straightforward. People can argue about whether that statute is too broad, and whether other laws against, say, murder, would suffice. But what caught my eye in § 921(a) was the grenade and rocket stuff.
It turns out that another way to say “grenade launcher” or “rocket launcher” is “flare gun.” The government knows this and doesn’t really care about your flares, so there is an exception in 18 USC § 921(a)(4) (and in 26 USC 845(f)(3), an identical provision in the NFA) that says that a “signaling, pyrotechnic, line throwing, safety, or similar device" is not a destructive device. (Presumably, the ATF would say that a signaling device that is used to launch grenades is no longer a signaling device.)
Whether certain kinds of launchers are WMDs thus depends on what sort of ammunition you use or plan to use.3 Firing unregistered grenades or rockets obviously triggers § 921(a)(4)(A) and an avalanche of criminal liability. That makes sense.
So what’s between a grenade and a flare? Well, according to the ATF, “cartridges containing wood pellets, rubber pellets or balls, or bean bags" are "'anti-personnel' ammunition,” so 37/38mm launchers containing such loads are d̶e̶s̶t̶r̶u̶c̶t̶i̶v̶e̶ ̶d̶e̶v̶i̶c̶e̶s̶ WMDs. That’s right: launcher + bean bag round = WMD.
DYODD and check your state laws, but it appears that in some jurisdictions one can order a pretty serious launcher and have it shipped right to his doorstep; absent “anti-personnel” ammo, the federal government doesn’t even consider it a gun. Just stick to fireworks and take care not to possess (let alone fire) any bean bag rounds if you don’t want to spend “a term of years, up to life” in Leavenworth.
After all, when the government says WMDs, it usually means NBCs. ↩
By this definition, of course, there were tons of WMDs in Iraq. Not that definitions must be consistent across domestic/international or colloquial/technical contexts, but that’s at least worth thinking about. ↩
Under federal law, 40mm launchers are always destructive devices, and thus must be registered to be lawfully possessed. Launchers < 40mm, as far as I can tell, are different. ↩
Well, I am officially a lawyer! Yesterday the Judicata team went over to the James R. Browning Courthouse, where Alex Kozinski, the Chief Judge of the U.S. Court of Appeals for the Ninth Circuit, swore me in to the California Bar. (Or did he? Technically, I affirmed an affirmation instead of swearing an oath. More on that in a bit.)
First, we got a private tour from Kathleen Butterfield, one of the Court’s staff attorneys. The Courthouse is, in a word, incredible. I think that most of what we saw is open to the public during the Court’s bimonthly public tours; if you’re near San Francisco, please, take my advice and attend one. (You might ask if or when Kathleen is leading a tour—she is terrific.)
(1) So much Italian marble it makes the Hearst Castle look budget:
(2) The bar—literally. Before law schools existed, would-be lawyers would study the law under another lawyer’s supervision. Getting admitted to the Bar involved standing behind the bar with your sponsor and fielding a bunch of questions from the judges. Get enough right and you’d be permitted to—wait for it—literally pass the bar.
(3) The bullet hole from the Hindu-German Conspiracy Trial. In 1918, not five feet from where we held our ceremony, a defendant shot and killed his co-defendant and was then promptly shot to death by a U.S. Marshal. (Amazingly, no mistrial occurred; everybody was found guilty the next week.) You can still see the damage caused by one of the bullets when it hit the judges’ bench—check out the aberration in the tilework, just to the right of the seam in the marble:
After the tour, we hung out in Courtroom One until Judge Kozinski freed up.
After the Judge came in and met the rest of the team, I asked if he’d mind if I chose to affirm rather than to swear. Legally, there’s no difference. Swearing is traditionally perceived to have a religious component to it, whereas affirming is completely secular. This is a pretty mainstream option—the U.S. Constitution explicitly follows every “Oath” with “or Affirmation,” and the official California Bar incantation reads “swear (or affirm)”—but I’d bet that it’s seldom exercised. (Of all my lawyer friends, I know just one who affirmed, and we had discussed it beforehand.)
Why would anyone be so fussy? Naturally, atheists or radically liberal First Amendment zealots tend to be quite interested in keeping things as secular as possible. But even theists have their reasons:
But I say unto you, swear not at all: neither by Heaven, for it is God’s throne;1
But let your communication be ‘yea, yea’ or ‘nay, nay’; for whatsoever is more than these cometh of evil.2
Personally, I chose to affirm because (a) I could, and (b) it seems cooler. Presumably, some of our forefathers argued long and hard to win for us the right to affirm. Why not throw them a cosmic wink? Plus, if it was good enough for Franklin Pierce, it’s good enough for me.
Of course, the Judge was cool with it, and we got it done:
Afterwards, we sat down at the Appellant’s table to chat about Judicata and legal technology. For those of you who don’t know, Judge Kozinski is a pretty tech-savvy guy. After we discussed Judicata’s version of man-machine symbiosis, he dialed back the clock and dazzled us with stories about when he used to program in Fortran on IBM punch cards.
The night ended with dinner at a nearby restaurant. Naturally, the Judge and the whip-smart Ninth Circuit clerks that joined us were delightful company.
I’d like to thank Judge Kozinski and everybody at the Court who made our visit especially memorable yesterday!
I did a keynote interview last night at kbs+ ventures for their new book's launch event. Since I talked a bit about CS183 and the Thiel Fellowship program, a few people came up to me afterwards and asked different versions of the same question: if I wanted to be an entrepreneur, why did I get several degrees from Stanford instead of dropping out?
My quick answer was that it’s important to avoid blanket statements about education and entrepreneurship. Certainly many successful entrepreneurs have name brand college degrees. But many don’t.
Last I looked, Wikipedia’s list of college dropout billionaires is 31 people and counting (and only one of them is a drug lord). I thought that was a shockingly high number, as most of us only know the most famous three or four. If we wanted to talk about dropout millionaires, there are so many that we’d probably need scientific notation.
One of the reasons for this is that the market doesn’t necessarily wait 4 years for you to get your BS or 6 or 7 years for your PhD. In 2003 and 2004, Mark Zuckerberg had a huge advantage in that he was working furiously toward something he sensed was important while his peers were still locked into school. Starting Facebook in 2007 would not have worked.
One key distinction is between businesses that require a lot of specialized domain knowledge and businesses that don’t. Often, this tracks the distinction between enterprise/B2B and consumer models. Bright, well-adjusted 18- or 19-year-olds can develop the kind of social insight that’s at the core of many great products, maybe even better than older folks can. If their engineering skills are adequate, they can build the vision and more or less take over the world. This isn’t to say this is easy, of course—only that it’s very possible.
Facebook was one example. Another may be Gumroad, a novel e-commerce company run by 20-year-old Sahil Lavingia. If you aren’t already familiar with it, Gumroad enables anyone to sell something online in a matter of seconds. If you want to sell an e-book, for example, you create a product listing and get a unique link that you can share throughout the web. If, as Sahil says, Gumroad “becomes a thing,” he will have succeeded in turning all of Facebook and Twitter into a global online marketplace, i.e. in building a billion dollar company.
Other businesses require a great deal of domain-specific knowledge, which often entails specialized education. For example, my company, Judicata, builds radically better legal search and analytics software for lawyers. This requires great engineers, but it also requires great lawyers who deeply understand how the law works. For better or worse—and I actually suspect for worse—one almost invariably needs to go to college and then law school to become a lawyer. At the very least, being in law school affords one a structured opportunity to learn how to think about the law.
For some ventures, getting a technical or professional education is unquestionably the right move. For others, college is absolutely the wrong move. More interesting than the drop out vs. not question, I think, is the set of questions that aims at unpacking what a college education really is. To really understand the nexus between education and entrepreneurship, we’d be better off starting there.
In most respects, U.S. Attorney Carmen Ortiz’s statement about the Aaron Swartz prosecution is unremarkable. It’s more or less the standard fare that one expects from government officials who unexpectedly find themselves on their heels.
The most striking thing about the statement is the writing itself, which is terrible. Ortiz begins:
As a parent and a sister, I can only imagine the pain felt by the family and friends of Aaron Swartz, and I want to extend my heartfelt sympathy to everyone who knew and loved this young man.
What is the first clause doing here? Presumably it is either intended to establish empathy or sympathy. Empathy seems odd because Ortiz extends “sympathy” two sentences later. But sympathy doesn’t require mentioning Ortiz’s own family, unless she means to syllogize: “I would be upset if one of my family members killed himself. Aaron killed himself. Therefore I imagine that Aaron’s family is upset.” Much better is to avoid the token contrivance and say something like:
I want to extend my heartfelt sympathy to everyone who knew and loved Aaron Swartz. All of us at the U.S. Attorney’s Office deeply regret that Aaron chose to take his own life.
I know that there is little I can say to abate the anger felt by those who believe that this office’s prosecution of Mr. Swartz was unwarranted and somehow led to the tragic result of him taking his own life.
This isn’t that bad. It sort of feels like it’s missing a sentence at the end. The bigger problem is that “somehow led” is too snarky. Ortiz is basically saying that anyone who believes that Aaron’s suicide was related to his prosecution is an idiot. The problem is that most people do believe that these events are related, which seems quite reasonable absent evidence to the contrary. Ortiz is pushing back on causation where she should be pushing back elsewhere instead. The weak line is “We didn’t do anything that caused Aaron to kill himself.” The strong line is “We did everything right. It sucks that Aaron killed himself. Not our fault.”
Ortiz’s second paragraph begins as haphazardly as the first one ended:
I must, however, make clear that this office’s conduct was appropriate in bringing and handling this case.
This sounds weak and defensive in the worst way. If you didn’t do anything wrong, why not take ownership and avoid the passive voice? She continues to wax Rumsfeldian:
The career prosecutors handling this matter took on the difficult task of enforcing a law they had taken an oath to uphold, and did so reasonably.
At one level, she is defending her prosecutors. On another level, it seems like she is throwing them under the bus. Also, no one wants to hear how hard your job is when you mess up (or if you are perceived to have messed up).
Ortiz then spends the rest of the paragraph aimlessly listing off some facts that she hopes readers will find mitigating. Why she doesn’t use an unordered list is beyond me. (The federal government, after all, knows how to use bullet points.) Before we get there, though, consider whether something like the following would make a better second paragraph:
I have been involved with this case since its inception. I have reviewed the record at length over the past few days. My conclusion is clear: I am absolutely certain that our conduct was appropriate in bringing and handling this case. Prosecutors make odd scapegoats in situations such as these. Our job is to enforce valid laws fairly and effectively. In this case, that meant bringing charges against Aaron. We do not pass judgment on the wisdom of laws that Congress chooses to enact. And, unfortunately, we cannot prevent the small percentage of criminal defendants who elect to commit suicide from doing so.
Ortiz’s fact section is her worst writing of all. Consider the following excerpt:
That is why in the discussions with his counsel about a resolution of the case this office sought an appropriate sentence that matched the alleged conduct – a sentence that we would recommend to the judge of six months in a low security setting. While at the same time, his defense counsel would have been free to recommend a sentence of probation. Ultimately, any sentence imposed would have been up to the judge.
That is atrocious. I don’t think it needs any more explanation than that. If you disagree, you are wrong. If you think that this horror show is necessary legalese, you are wrong. This is not a real estate contract. It does not need to read this way. Whether it’s bad enough to do any damage is unclear, but it is certainly not persuasive writing. AUSAs are typically pretty good lawyers who write well. I seriously question whether Ortiz had any of her people read her statement before releasing it. (Another possibility, as @DanGoldinsuggests, is that too many people worked on it. Either Ortiz has zero proofreaders or an army of them.)
In any case, here is how one might retool the facts section:
We recognized that there was no evidence that indicated that Aaron acted for personal financial gain.
We recognized that Aaron’s crimes did not warrant the maximum punishments authorized by Congress.
We never sought—or told Aaron or his attorney that we intended to seek—the maximum penalties in this case.
When we discussed settlement options with Aaron and his lawyer, we told them that we would recommend a sentence of six months in a low security facility if Aaron agreed to plead guilty. Aaron declined.
Judges, not prosecutors, decide sentences. All prosecutors can do is recommend a particular sentence. Note that even under a plea bargain, Aaron’s counsel would have been free to recommend and advocate for an even lesser sentence than six months.
The statement ends with:
As federal prosecutors, our mission includes protecting the use of computers and the Internet by enforcing the law as fairly and responsibly as possible. We strive to do our best to fulfill this mission every day.
That’s not so bad. But could she have ended stronger?
While anger is understandable in the wake of tragedy, anger at prosecutors, at least in this case, is misplaced. If people believe that the law should be changed, certainly they should contact their representatives in Congress. In the meantime, as federal prosecutors, our mission is to enforce the law as fairly and responsibly as possible. That is what we did in this case, and we will continue to do just that.
I don’t mean to suggest that my edits make the statement appropriate. I did them in 20 minutes on the Caltrain this morning. What I do mean to suggest is that there is lots of room for improvement. Since this was surely a statement worth getting right, I can’t help but wonder what went wrong.
New Year’s resolutions don’t work. Discipline is hard. People yield to temptations. Resolving in abstractions—get fit, watch less TV, be a better person, etc.—is a terrible idea.
Changing specific habits, by contrast, can work. (Interestingly, evidence of habit or routine practice is usually admissible in courts to prove that a person has acted in conformity therewith.1 This is not true of character evidence and traits.2 There’s always a sense in which habit is more concrete than character.)
But even that is tricky. Most of us are aware of our shortcomings and flaws before we decide to change them. Where did they come from? Why did they persist for so long?
This is why I make plans instead of resolutions. My flaws are probably with me for good. I’m too argumentative. I’m horrible at staying in touch with old friends. There are plenty more. For the most part, though, I already behave like I want to. Being fit is important to me, so I’m fit. Eating clean is important to me, so I do. Work-family harmony is important to me, so I try to attain it. But I haven’t yet achieved much of what I want to achieve… not even close.
Whether one should publicly share his plans is an open question. Patri suggests this can be counterproductive. Othersagree. Then again, Wiseman found that public accountability helps, which is the standard intuition. We’ll call it a wash. Since my bias is to share, here are some of my plans for 2013:
Keep working on my startup and do what I can to make it a great business.
Take a certain side project of mine from concept to fruition. Details forthcoming. But it will basically consume all free time until sometime in Q2.
I’m delighted to announce that my startup, Judicata, has raised $2 million from Peter Thiel, David Lee of SV Angel, Keith Rabois, and Box founders Aaron Levie and Dylan Smith.1 Our mission is clear: to build legal research and analytics products that dramatically advance what lawyers can do.
Legal technology is at something of a crossroads. On one hand, it is notoriously inefficient and outdated, and has been for quite some time. On the other hand—to use Marc Andreessen’s parlance—software is eating the world.2 We can imagine a few different futures unfolding. One would entail the continued stagnation of the status quo. Another would involve minor, halting changes that never quite deliver on their promises. A third would see truly innovative technology that empowers lawyers to argue better and do more than ever before.
The latter is clearly ideal. So why hasn’t it happened yet? Why hasn’t software eaten the law?
Our thesis is that it’s actually quite hard. Lots of people have tried. Some are still trying. But most are hacking at the branches. Incremental change is not without value. But software can’t actually improve legal decision making unless we aim higher. Harder, but more promising, is to strike at the root of the problem. The law is information. The future of legal technology involves organizing and understanding that information. All of it.
This is why Judicata is mapping the legal genome—i.e. using highly specialized case law parsing and algorithmically assisted human review to turn unstructured court opinions into structured data. We can leverage that data to build legal research and analytics tools that are an order of magnitude better than existing offerings. The Palantir model is a rough analogue. Palantir’s software can’t tell a CIA analyst who is a terrorist. But it can identify patterns and make sense of massive amounts of information to help the analyst make that call. Great legal technology will do the same—assist lawyers in exercising their skilled, human judgment.
We believe this is possible, and that we can do it. The fusion of legal domain expertise and engineering talent is key; our founding team of three (Adam, Itai and myself) consists of two engineers and two JDs. Chris and Itai built some of the most advanced features in Google Scholar’s legal index. Patrick worked with Adam at Adap.tv. David, Beth, Adam and I were Stanford c/o ’08 together; two of us became engineers, and two went the law route. This team understands not only how law works, but also how to extract, organize, and analyze the underlying information. We revel in this stuff. (Let us know if you do too.)
Justice Holmes once wrote that understanding law is an exercise in prediction: given a dispute, and given all that have come before it, what is the court likely to do? How can lawyering impact legal outcomes? In 1897, he took a guess about what was to come:
“For the rational study of the law the black-letter man may be the man of the present, but the man of the future is the man of statistics and the master of economics.”3
Substitute “computer science” for “economics,” and we aim to prove him right.
We’re thrilled to be working with this group of investors. Peter, David, and Keith—formerly lawyers before their careers in entrepreneurship and venture—deeply understand how technology can augment legal practice. Aaron and Dylan are captaining one of the Valley’s most successful enterprise software companies. The collective wisdom of this bunch is astounding. Their belief in our vision is, to say the least, inspiring. ↩
Peter Thiel on The Future of Legal Technology - Notes Essay
Here is an essay version of my notes from Peter Thiel’s recent guest lecture in Stanford Law’s Legal Technology course. As usual, this is not a verbatim transcript. Errors and omissions are my own. Credit for good stuff is Peter’s.
When thinking about the future of the computer age, we can think of many distant futures where computers do vastly more than humans can do. Whether there will eventually be some sort of superhuman-capable AI remains an open question. Generally speaking, people are probably too skeptical about advances in this area. There’s probably much more potential here than people assume.
It’s worth distinguishing thinking about the distant future—that is, what could happen in, say, 1,000 years—from thinking about the near future of the next 20 to 50 years. When talking about legal technology, it may be useful to talk first about the distant future, and then rewind to evaluate how our legal system is working and whether there are any changes on the horizon.
I. The Distant Future
The one thing that seems safe to say about the very distant future is that people are pretty limited in their thinking about it. There are all sorts of literary references, of course, ranging from 2001: A Space Odyssey to Futurama. But in truth, all the familiar sci-fi probably has much too narrow an intuition about what advanced AI would actually look like.
This follows directly from how we think about computers and people. We tend to think of all computers as more or less identical. Maybe some features are different, but the systems are mostly homogeneous. People, by contrast, are very different from one another. We look at the wide range of human characteristics—from empathy to cruelty, kindness to sociopathy—and perceive people to be quite diverse. Since people run our legal system, this heterogeneity translates into a wide range of outcomes in disputes. After all, if people are all different, it may matter a great deal who is the judge, jury, or prosecutor in your case. The converse of this super naive intuition is that, since all computers are the same, an automized legal system would be one in which you get the same answer in all sorts of different contexts.
This is probably backwards. Suppose you draw 3 concentric circles on a whiteboard: one dot, a ring around that dot, and a larger circle around that ring. The range of all possible humans best corresponds with the dot. The ring around the dot corresponds to all intelligent life forms; it’s a bigger range comprised of the superset of all humans, plus Martians, Alpha Centaurians, Andromedans, and so on. But the diversity of intelligent life is still constrained by evolution, chemistry, and biology. Computers aren’t. So the set of all intelligent machines would be the superset of all aliens. The range and diversity of possible computers is actually much bigger than the range of possible life forms under known rules.
What Hal will be like is thus a much harder question than knowing what would happen if Martians took control of the legal system.
The point is simply this: we have all sorts of these intuitions about computers and the future, and they are very incomplete at best. Implementation of all these diverse machines and AIs might produce better, worse, or totally incomprehensible systems. Certainly we hope for the former as we work toward building this technology. But the tremendous range these systems could occupy is always worth underscoring.
II. The Near Future
Let’s telescope this back to the narrower question of the near future. Forget about 1,000 years from now. Think instead what the world will look like 20 to 50 years from now. It’s conceivable, if not probable, that large parts of the legal system will be automated. Today we have automatic cameras that give speeding tickets if you drive too fast. Maybe in 20 years there will be a similarly automated determination of whether you’re paying your taxes or not. There are many interesting, unanswered questions about what these systems would be like. But our standard intuition is that it’s all pretty scary.
This bias is worth thinking really hard about. Why do we think that a more automated legal future is scary? Of course there may be problems with it. Those merit discussion. But the baseline fear of computers in the near term may actually tells us quite a bit about our current system.
A. Status Quo Bias
Let’s look at our current legal system de novo. Arguably, it’s actually quite scary itself. There are lots of crimes and laws on the books—so many, in fact, that it’s pretty obvious that the system simply wouldn’t work if everybody were actually held accountable for every technical violation. You can guess the thesis of Silverglate’s book Three Felonies A Day. Is that exaggerated? Maybe. But one suspects there’s a lot to it.
The drive for regulation and enforcement by inspection isn’t new or unique to America, of course. In 1945, the English playwright J.B. Priestley wrote a play called An Inspector Calls. The plot involves the mysterious death of a nanny who was working for an upper middle class family. The family insists it was just suicide, but an inspector investigates and finds that the family actually did all these bad things to drive the girl to suicide. The subtext is all of society is like this. The play opened in 1945 at the Bolshevik Theatre in Stalinist Russia. The last line was: “We must have more inspectors!” And the curtains closed to thunderous applause.
B. Fear of the Unknown
Despite firsthand knowledge of what bureaucracy can do, we tend to think that it is a computerized legal system that would be incredibly draconian and totalitarian. For some reason, there is a big fear of automatic implementation and it gets amplified as people extrapolate into the future.
The main pushback to this view is that it ignores the fact that the status quo is actually quite bad. Very often, justice isn’t done. Too often, things are largely arbitrary. Incredibly random events shape legal outcomes. Do people get caught? Given wide discretion, what do prosecutors decide to do? What goes on during jury selection? It seems inarguable that, to a large extent, random and uncertain processes determine guilt or liability. This version isn’t totalitarian, but it’s arbitrary all the same. We just tend not to notice because most of the time we get off the hook for stuff we do. So it sort of works.
C. Deviation from Certainty
But what is the nature of the randomness? That our legal system deviates from algorithmic determinism isn’t necessarily bad. The question is whether the deviation is subrational or superrational. Subrational deviation involves things that don’t make sense, but rather just happen for no reason at all. Maybe a cop is upset about something from earlier in the day and he takes it out on you. Or maybe the people on the jury don’t like how you look. People don’t like to focus on these subrational elements. Instead they prefer to talk as if all deviation were superrational: what’s arbitrary is not in fact arbitrary, but rather is perfect justice. Things are infinitely complex and nuanced. And our current system—but not predictable computers—appropriately factors all that in.
That narrative sounds good, but it probably isn’t true. Most deviation from predictability in our legal system is probably subrational deviation. In many contexts, this doesn’t matter all that much. Take speeding tickets, for example. Everyone gets caught occasionally, with roughly the same frequency. Maybe a system with better enforcement and lesser penalties would be slightly better, but one gets the sense that this isn’t such a big deal.
But there are more serious cases where the sub- vs. superrational nature of the deviation matters more. Drug laws are one example. This past election, Colorado voters just voted to legalize marijuana there. California has done something functionally similar by declaring that simple possession is not an enforcement priority. But that’s only at the state level; possession remains illegal and enforced under federal law. Violation of the federal statute can and does mean big jail time for people who get caught. But the flipside is that there aren’t many federal enforcers, and these states aren’t inclined to enforce the federal law themselves. So people wind up having to do a bunch of probabilistic math. Maybe a regime in which you have a 1 in 1,000 chance of going to jail for a term of 1,000 days works reasonably well. But arguably it’s quite arbitrary; getting caught can feel like getting hit with a lightening bolt. Much better would be to have 1,000 offenders each go to jail for a day.
III. A (More) Transparent Future
It may be that the usual intuition is precisely backwards. Computerizing the legal system could make it much less arbitrary while still avoiding totalitarianism. There is no reason to think that automization is inherently draconian.
Of course, automating systems has consequences. Perhaps the biggest impact that computer tech and the information revolution have had over last few decades has been increased transparency. More things today are brought to the surface than ever before in history. A fully transparent world is one where everyone gets arrested for the same crimes. As a purely descriptive matter, our trajectory certainly points in that direction. Normatively, there’s always the question of whether this trajectory is good or bad.
It’s hard to get a handle on the normative aspect. What does it mean to say that “transparency is good”? One might say that transparency is good because its opposite is criminality, which we know is bad. If people are illegally hiding money in Swiss bank accounts, maybe we should make all that transparent. But it’s just as easy to claim that opposite transparency is privacy, which we also tend to believe is good. Few would argue that the right to privacy is the same thing as the right to commit crimes in total secrecy.
One way to these questions is to first distinguish the descriptive and the normative and then hedge. Yes, the shift toward transparency has its problems. But it’s probably not reversible. Given that it’s happening, and given that it can be good or bad depending on how we adjust, we should probably focus on adjusting well. We’ll have to rethink these systems.
A. Transparency and Procedure
In some sense, Computers are inherently transparent. Almost invariably, codifying and automating things makes them more transparent. From the computer revolution perspective, transparency involves more than simply making people aware of more information. Things become more transparent in a deeper, structural sense if and when code determines how they must happen.
One considerable benefit of this kind of transparency is that it can bring to light the injustices of existing legal or quasi-legal systems. Consider the torture scandals of the last decade. This got a lot of attention when information about what kinds of abuse were going on was published. This, in turn, led to a lot of changes in process, with the end result being a rather creepy formalization under which you can sort of dunk prisoners in water… but don’t you dare shock them.
Why the drive toward transparency? One theory is that lower level people were getting pretty nervous. They understandably wanted the protection of clear guidelines to follow. They didn’t have those guidelines because the higher ups in the Bush administration didn’t really understand how the world was changing around them. So it all came to a head. In an increasingly transparent world, torture gets bureaucratized. And once you formalize and codify something, you can bring it to the surface and have a discussion about whatever injustice you may see.
If you’re skeptical, ask yourself which is safer: being a prisoner at Guantanamo or being a suspected cop killer in New York City. Authorities in the latter case are pretty careful not to formalize rules of procedure. It seems reasonable to assume that’s intentional.
B. Would Transparency Break The Law?
The overarching, more philosophical question is how well a more transparent legal system would work. Transparency makes some systems work better, but it can also make some systems worse.
So which kind of system is the legal system? Maybe it’s like the stock market, which automation generally makes more efficient. Instead of only being able to trade to an eighth of a share, you can now trade to the penny. Traders now have access to all sorts of metrics like bidder volume. Things have become less arbitrary, more precise, and more efficient. If the law is mostly rational, and just slightly off, it may be the case that you can tweak things and make it right with a little automation.
Other systems aren’t like this at all. Many things only work when they are done in the dark, when no one knows exactly what’s going on. The phenomenon of scapegoating is a good example. It only works when people aren’t aware of it. If you were to say “We have a serious problem in the community. No one is happy. We need psychosocial process whereby we can designate someone as a witch and then burn them in order to resolve all this tension,” the idea would be ruined. The whole thing only works if people remain ignorant about it.
The question can thus be reduced to this: is the legal system pretty just already, and perfectible like a market? Or is it more arbitrary and unjust, like a psychosocial phenomenon that breaks down when illuminated?
The standard view is the former, but the better view is the latter. Our legal system is probably more parts crazed psychosocial phenomenon. The naïve rationalistic view of transparency is the market view; small changes move things toward perfectibility. But transparency can be stronger and more destructive than that. Consider the tendency to want to become vegan if you watch a bunch of foie gras videos on YouTube. Afterwards, you’re not terribly concerned about small differences in production techniques or the particulars of the sourcing of the geese. Rather, you have seen the light, and have a big shift in perspective. Truly understanding our legal system probably has this same effect; once you throw more light on it, you’re able to fully appreciate just how bad things are underneath the surface.
C. Law and Order
Once you start to suspect that the status quo is quite bad, you can ask all sorts of interesting questions. Are judges and juries rational deliberating bodies? Are they weighing things in a careful, nuanced way? Or are they behaving irrationally, issuing judgments and verdicts that are more or less random? Are judges supernaturally smart people? The voice of the people? The voice of God? Exemplars of perfect justice? Or is the legal system really just a set of crazy processes?
A good rule of thumb in business is to never get entangled in the legal system in any way whatsoever. Invariably it’s an arbitrary and expensive distraction from what you’re actually trying to do. People underestimate the costs of engaging with plaintiff’s lawyers. It’s very easy to think: “Well, they’re just bringing a case. It will cost a little bit, but ultimately we will figure out the truth.” But that’s pretty idealized. If you’re dealing with a crazy arbitrary system and you never actually know what could happen to you, you end up negotiating with plaintiff’s lawyers just like the government negotiates with terrorists: not at all, except in every specific instance. When the machinery is too many parts random and insane, you always find a way to pay people off.
Looking forward, we can speculate about how things will turn out. The trend is toward automization, and things will probably look very different 20, 50, and 1000 years from now. We could end up with a much better or much worse system. But realizing that our baseline may not be as good as we tend to assume it is opens up new avenues for progress. For example, if uniformly enforcing current laws would land everyone in jail, and transparency is only increasing, we’ll pretty much have to become a more tolerant society. By placing the status quo in proper context, we will get better at adjusting to a changing world.
Questions from the Audience:
Question from the audience: Judge Posner recently opined in a blog post that humans don’t have free will. He argued that it is not objectionable to heavily tax wealthy people because, things being thoroughly deterministic, they made their fortunes through random chance and luck. If the free will point is true, there are also implications for criminal law, since there’s no point punishing people who are not morally culpable. How do you see technological advance interacting with the questions of free will, determinism, and predicting people’s behavior?
Peter Thiel: There are many different takes on this. For starters, it’s worth noting that any one big movement on this question might not shake things up too much. Maybe you don’t aim for retribution on people who aren’t morally culpable. But there are other arguments for jail even if you don’t believe in free will. Since there are several competing rationales for the criminal justice system, practically speaking it may not matter.
More abstractly, it seems clear that we are headed towards a more transparent system. But there are layers and layers of nuance on what that means and how that happens. There is no one day where some switch will be flipped and everything is illuminated. Theoretically, if you could flip that switch and determine all the precise causal connections between things, you would know how everything worked and could create that perfectly just system. But philosophically and neurobiologically, that is probably very far away. Much more likely is a rolling wave of transparency. More things are transparent today than in the past. But there’s a lot that is still hidden.
The order of operations—that is, the specific path the transparency wave takes—matters a great deal too. Take something like WikiLeaks. The basic idea was to make transparent the doings of various government agencies. One of the critical political/legal/social questions there was what became transparent first: all the bad things the US government was doing? Or the fact that Assange was assaulting various Swedish groupies? The sequence in which things become transparent is very important. Some version of this probably applies in all cases.
I agree with Posner that transparency often has a corrosive undermining effect. Existing institutions aren’t geared for it. I do suspect that people’s behavior still responds to incentives in some ways, even if there is no free will in the philosophical, counterfactual sense of the word. But I am sympathetic to part of the free will argument because, if you say that free will exists, you’re essentially saying two things:
the cause of your behavior came from within you, i.e. you were an unmoved mover, and;
that you could have done otherwise, in a counterfactual world.
But if you combine those two claims, the resulting world seems strange and implausible.
Practically, free will arguments are worth scrutiny. Ask yourself: in criminal law, which side makes arguments about free will? Invariably the answer is the prosecution. The line goes: “You killed this person. It was your decision to do that. You’re not even deformed; that’s an extrinsic factor. Rather, you are intrinsically evil.” Anyone who is skeptical about excessive prosecution should probably be skeptical about free will in law. But it makes sense to be less skeptical about it as a philosophical matter.
Question from the audience: There’s the AI joke that says that cars aren’t really autonomous until you order them to go to work and they go to the beach instead. What do you think about the future of encoding free will into computers? Can we imagine mens rea in a machine.
Peter Thiel: In practice it’s most useful to think of questions about free will as political questions. People bring up free will when they want to blame other people.
Theoretically, the nexus between free will and AI does raise interesting questions. If you turn the computer off, are you killing it? There are many different versions of this. My intuition is that we’re really bad at answering these questions. Common sense doesn’t really work; it’s likely to be so off that it’s just not helpful at all. This stuff may just be too weird to figure out in advance. Maybe the biggest lesson is that we should just be skeptical of our intuitions. So I’ll be skeptical of my intuitions, and will not answer your question.
Besides, the easier things are the near term things. Short of full-blown AI, we can automate certain processes and reap large efficiency gains while also avoiding qualms about about turning the computers off at night. We should not conflate super intelligent computers with very good, but still dumber-than-human computers that do things for us. In the near term, we should welcome transparency and automation in our political and legal structures because this will force us to confront present injustices. The fear that all this leads to a Kafkaesque future isn’t illegitimate, but it’s still very speculative.
Question from the audience: How could you ever design a system that responds unpredictably? A cat or gorilla responds to stimulus unpredictably. But computers respond predictably.
Peter Thiel: There are a lot of ways in which computers already respond unpredictably. Microsoft Windows crashes unpredictably. Chess computers make unpredictable moves. These systems are deterministic, of course, in that they’ve been programed. But often it’s not at all clear to their users what they’ll actually do. What move will Deep Blue make next? Practically speaking, we don know. What we do know is that the computer will play chess.
It’s harder if you have a computer that is smarter than humans. This becomes almost a theological question. If God always answers your prayers when you pray, maybe it’s not really God; maybe it’s a super intelligent computer that is working in a completely determinate way.
Question from the audience: One problem with transparency is that it can delegitimize otherwise legitimate authority. For instance, anyone can blog and post inaccurate or harmful information, and the noise drowns out more legitimate information. Couldn’t more transparency in the legal system actually be harmful because it would empower incorrect or illegitimate arguments?
Peter Thiel: This question gets at why it’s important to have an incremental process towards full transparency instead a radical shift. There are certainly various countercurrents that could emerge.
But generally speaking the information age has tended to result in more homogenization of thought, not less. It just doesn’t seem true that transparency has enabled more isolated communities of belief to disingenuously tap into various shreds of data and thereby maintain edifice where they couldn’t have before. It’s probably harder to start a cult today than it was in the ‘60s or ‘70s. Even though you have more data to piece together, your theory would get undermined and attacked from all angles. People wouldn’t buy it. So the big risk isn’t that excessively weird beliefs are sustained, but rather that we end up with one homogenized belief structure under which people mistakenly assume that all truth is known and there’s nothing left to figure out. This is hard to prove, of course. It’s perhaps the classic Internet debate. But generally the Internet probably makes people more alike than different. Think about the self-censorship angle. If everything you say is permanently archived forever, you’re likely to be more careful with your speech. My biggest worry about transparency is that it narrows the range of acceptable debate.
Question from the audience: How important is empathy in law? Human Rights Watch just released a report about fully autonomous robot military drones that actually make all the targeting decisions that humans are currently making. This seems like a pretty ominous development.
Peter Thiel: Briefly recapping my thesis here should help us approach this question. My general bias is pro-computer, pro-AI, and pro-transparency, with reservations here and there. In the main, our legal system deviates from a rational system not in a superrational way—i.e. empathy leading to otherwise unobtainable truth—but rather in subrational way, where people are angry and act unjustly.
If you could have a system with zero empathy but also zero hate, that would probably be a large improvement over the status quo.
Regarding your example of automated killing in war contexts—that’s certainly very jarring. One can see a lot of problems with it. But the fundamental problem is not the machines are killing people without feeling bad about it. The problem is simply that they’re killing people.
Question from the audience: But Human Rights Watch says that the more automated machines will kill more people, because human soldiers and operates sometimes hold back because of emotion and empathy.
Peter Thiel: This sort of opens up a counterfactual debate. Theory would seem to go the other way: more precision in war, such that you kill only actual combatants, results in fewer deaths because there is less collateral damage. Think of the carnage on the front in World War I. Suppose you have 1,000 people getting killed each day, and this continues for 3-4 years straight. Shouldn’t somebody have figured out that this was a bad idea? Why didn’t the people running things put an end to this? These questions suggest that our normal intuitions about war are completely wrong. If you heard that a child was being killed in an adjacent room, your instinct would be to run over and try to stop it. But in war, when many thousands are being killed… well, one sort of wonders how this is even possible. Clearly the normal intuitions don’t work.
One theory is that the politicians and generals who are running things are actually sociopaths who don’t care about the human costs. As we understand more neurobiology, it may come to light that we have a political system in which the people who want and manage to get power are, in fact, sociopaths. You can also get here with a simple syllogism: There’s not much empathy in war. That’s strange because most people have empathy. So it’s very possible that the people making war do not.
So, while it’s obvious that drones killing people in war is very disturbing, it may just be the war that is disturbing, and our intuitions are throwing us off.
Question from the audience: What is your take on building machines that work just like the human brain?
Peter Thiel: If you could model the human brain perfectly, you can probably build a machine version of it. There are all sorts of questions about whether this is possible.
The alternative path, especially in the short term, is smart but not AI-smart computers, like chess computers. We didn’t model the human brain to create these systems. They crunch moves. They play differently and better than humans. But they use the same processes. So most AI that we’ll see, at least first, is likely to be soft AI that’s decidedly non-human.
Question from the audience: But chess computers aren’t even soft AI, right? They are all programmed. If we could just have enough time to crunch the moves and look at the code, we’d know what/s going on, right? So their moves are perfectly predictable.
Peter Thiel: Theoretically, chess computers are predictable. In practice, they aren’t. Arguably it’s the same with humans. We’re all made of atoms. Per quantum mechanics and physics, all our behavior is theoretically predictable. That doesn’t mean you could ever really do it.
Comment from the audience: There’s the anecdote of Kasparov resigning when Deep Blue made a bizarre move that he fatalistically interpreted as a sign that the computer had worked dozens of moves ahead. In reality the move was caused by a bug.
Peter Thiel: Well… I know Kasparov pretty well. There are a lot of things that he’d say happened there…
Question from the audience: I’m concerned about increased transparency not leaving room for tolerable behavior that’s not illegal. What’s your take on that?
Peter Thiel: That we are generally heading toward more transparency on a somewhat unpredictable path is a descriptive claim, not a normative one. This probably can’t be reversed; it’s hard to stop the arc of history. So we have to manage as best we can.
Certain things become harder to do in a more transparent world. Government, for example, might generally work best behind closed doors. Consider the fiscal cliff negotiations. If you said that they had to take place in front of C-SPAN cameras, things might work less well. Of course, it’s possible that they’d work better. But the baseline question is how good or bad the current system is. My view is that it’s actually quite bad, which is why greater transparency is more likely to be good for it.
I spoke with high-ranking official fairly recently about how Facebook is making things more transparent. This person believed that government only works when it’s secret—a “conspiracy against the people, for the people”sort of narrative. His very sincerely held view was that our government essentially stopped working during the Nixon administration, and we haven’t had a functioning government in this country for 40 years. No one can have a strategy. No one can write notes. Everything is recorded and everything becomes a part of history. We can sympathize with this, in that it’s probably very frustrating for officials who are trying to govern. But normatively, perhaps it’s a good thing if we no longer have a functioning government. All it ever really did well was kill people.
If you believe the stories that most people tell—the government is doing public good, and there’s a sense of superhuman rationality to it—transparency will shatter your view. But if you think that our system is incredibly broken and dysfunctional in many ways, transparency forces discussion and retooling. It affords us a chance to end up with a much more tolerant, if very different, world.
Question from the audience: Can you explain what bringing more transparency to government or the legal system would look like? How, specifically, does automating legal system lead to transparency?
Peter Thiel: Transparency can mean lots of things. We must be careful how we use the term. But take the simple example of people taking cell phone pictures of cops arresting people. That would make police-civilian interactions more transparent, in the thinnest sense. Maybe you find out that there are shockingly few procedural violations and that police are really well behaved. If so, this will increase confidence and make a good system even better. Of course, the reality may be that this transparency will expose the violations and arbitrariness in a bad system.
Capital punishment is another example. DNA testing can be seen as adding another layer of transparency to the system. It turns out that something like 20% of people accused of committing a capital crime are wrongly accused. That figure seems extraordinarily high; you’d think that with capital crimes, investigations would be much more serious and thorough and consequently there would be a very low rate of nabbing the wrong person. Today we’re increasingly skeptical of the justice of capital punishment, and for good reason. If the DNA tests had shown that we’ve never ever made an ID mistake in a capital case, we’d probably think very differently about our system.
The general insight is that as you codify things, you tend to bring to the surface what’s actually going on. One of the virtues of a more automated system is that it’s easier to describe accurately. You can actually understand how it works. At least in theory, you bring injustice to light. In practice, you’d then have to change the injustice. And you can’t do that if you don’t know about it.
Question from the audience: Doesn’t transparency to whom matter more than just transparency? Transparency to the programmer re witch-hunting doesn’t expose the existence of witch-hunting to society, right? Should government software be open sourced?
Peter Thiel: I’ll push back on that question a little bit. Just because you have an algorithm doesn’t mean people will always know what it will do—this is the chess computer example again. It’s very possible that people wouldn’t understand some things even with transparency. We have transparency on the U.S. budget, but no one in Congress can actually read or understand it all.
It’s a big mistake to think that one system can be completely transparent to everybody. It’s better to think in terms of many hidden layers that only gradually get uncovered.
Question from the audience: Since there are different countries, there are obviously multiple legal systems that interact, not just one legal system. Is it problematic that we won’t see the same transparency in some systems that we will in others?
Peter Thiel: Again, the push back is that transparency isn’t a unitary concept. The sequencing path is really important. Does the government get more transparency into the people? The people into the government? Government into itself, and the machine just works more efficiently? Depending on just how you sequence it, you can end up with radically different versions.
Look at Twitter and Facebook as they related to the Arab Spring. Which way do these technologies cut in terms of transparency? In 2009, the Iranian government hacked Twitter and used it to identify and locate dissidents. But in Tunisia and Egypt, the numerous protest posts and tweets helped people realize that they weren’t the only ones who were unhappy. The exact same software plays out in extremely different ways depending on the sequencing.
Question from the audience: Is there a point in time where we just shift from current computers to future computers? Or does technological advance follow a gradual spectrum?
Peter Thiel: Maybe there’s a categorical difference at some point. Or maybe it’s just quantitative. It’s conceivable that as some point things are just really, really different. The 20-year story about greater transparency is one where you can make reasonable predictions as to what computers will likely do and what they’re likely to automate, even though the computers themselves will be a little different. But 1,000 years out is much more opaque. Will the computers be just or unjust? We have no good intuition about that. Maybe they’ll be more like God, or we’ll be dealing with something beyond good and evil.
Question from the audience: Traffic cameras are egalitarian. But cops might be racist. Do you think we run the risk of someday having racist or malicious computers?
Peter Thiel: In practice, we can still generally understand computers somewhat better than we can understand people. In the near term at least, more computer automation would produce systems that are more predictable and less arbitrary. There would be less empathy but also less hate.
In the longer term, of course, it could be just the opposite. There may be real problems there. But key to understand is that we’re experiencing an irreversible shift toward greater transparency. This is true whether your time horizon is long-term, where things are mysterious and opaque, or short-term, where things become automized and predictable. Naturally, you have to get to the short-term first. So we should first realize the gains there, and we can figure out any long-term problems later.
I passed the July 2012 California Bar Exam by studying for 100 hours—no more than 5 hours per day between July 1st and July 24th. My approach may not be appropriate for everybody. But here are some details nonetheless; hopefully they will help some future examinee.
I. Bar Contrarianism
I suspect two things about the Bar Exam.
First, it’s probably easier than is commonly thought. The received wisdom is that the exam is quite difficult. Naturally, people who fail believe this because it softens the blow. People who pass tend to believe it because they usually grossly overstudied, and are biased to think that all their preparation was important. (If you pass, the State Bar doesn’t tell you by how much.) Test prep companies do their part to terrify law students into enrollment. Everyone’s incentivized to exaggerate.
This is somewhat bizarre, since there’s really not much reason for fear: in California, first-time takers from ABA-approved law schools have a pass rate of about 75%. Scarier, lower figures in the 50% range are commonly cited, but those are misleading because they include repeat-takers, people from unaccredited schools, foreign-educated students, etc. (The pass rates for those groups all hover around 25%. And things are really bleak for people in two of those groups; unaccredited or foreign-educated repeaters pass just 7-10% of the time.) So, if you speak English fluently, haven’t failed the exam before, and you went to a real law school, you’re very likely to pass. If you went to a good law school, you’re looking at more like 90 to 95% odds.
My second suspicion is that managing one’s psychology about the exam is probably as important as anything else. I don’t think most examinees realize this. People tend to become incredibly stressed before the exam. Certainly some small amount of stress can be motivational. But I’d guess that unchecked stress and fear cause more people to fail than insufficient studying does.
Given all this, I figured I could probably pass by studying much less than conventional wisdom instructs, so long as I avoided panicking or feeling guilty about that and instead re-framed it as optimal.
This framing was easy enough because I didn’t have much of a choice. I could not study full-time since I had other priorities and commitments; over the summer, we at Judicata were raising a round of venture capital, hiring people, building a product, etc. So I had to be relatively cavalier in my preparation and relatively carefree about the results.
I think this approach would probably work for most law students who are capable of passing the Bar. Of course, this doesn’t mean it’s a good approach for most people, or that it’s not risky. Because I work at a legal tech startup, not a law firm, passing the Bar was professionally important but not quite professionally crucial. (In the unlikely event that I’d fail and have to re-take the exam, most of my startup work would continue unchanged in the interim.) It’s hard to know how much of a difference this makes. But it’s worth noting.
I am grateful for what I am & have. My thanksgiving is perpetual. It is surprising how contented one can be with nothing definite — only a sense of existence….O how I laugh when I think of my vague indefinite riches. No run on my bank can drain it, for my wealth is not possession but enjoyment.
Nonmembers often complain about state-granted professional licensure, only to shift to defend it should they succeed in acquiring its protection. Like many of my friends, I received the good news today that I’ve passed the California Bar Exam. I’d like to celebrate by sharing some words that Lysander Spooner wrote in 1835 while advocating the disestablishment of weighty restrictions on admission to the Bar.
[T]he ability [or] learning… of an individual, for the practice of law, cannot, with justice, be made a matter of inquire by the Courts or the Legislature… [those matters] concern solely the lawyer himself and his clients. Any man…has the right to decide for himself whom he will employ as counsel…[I]t is the right of the person so employed to have the same facilities afforded to him for discharging his service as counsel, that are afforded to others, whom the public may think much better or abler lawyers….[T]he professional man, who, from want of intellect or capacity for his profession, is unable to sustain himself against the free competition of his neighbors without the aid of a protective system, has mistaken his calling…
[Moreover,] the present rules operate as a protective system in favor of the rich… against the competition of the poor….Take [the] case…of a poor young man,… fortunate enough to obtain credit and assistance, while getting his education, on the condition that he shall repay after he shall have engaged in his profession—so long is the term of study required, and such is the prohibition upon his attempts to earn any thing in the mean time for his support, that he must then come into practice with such an accumulation of debt upon him as the professional prospects of few or none can justify…. [Yet] no one has ever yet dared to advocate, in direct terms, so monstrous a principle as that the rich ought to be protected by law from the competition of the poor.
The two great parties of the nation appear—at least to an observer somewhat removed from both—to have nearly merged into one another; for they preserve the attitude of political antagonism rather through the effect of their old organizations, than because any great and radical principles are at present in dispute between them.
Of course, this isn’t a new idea. Indeed, what’s remarkable is just how old it is; Hawthorne wrote this in 1852, and there’s no reason to think that it was all that novel even then.
It’s easy to take this quotation out of context. Hawthorne was Pierce’s friendly campaign biographer. He was basically arguing that his guy was different; voters, he hoped, would “put their trust in a new man, whom a life of energy and various activity has tested, but not worn out….”
That wrinkle notwithstanding, the main insight here—and its enduring nature—is perhaps worth remembering as Election Day nears.
Back in January, I declined my offer to work at a prominent law firm that pays first-year associates $160,000 per year. Instead, I decided to co-found a legal technology company called Amicus Labs.
There are 3 primary reasons why choosing a startup over law firm was the right choice (and, frankly, a pretty easy choice) for me:
Practicing law is safe and probably fairly lucrative. But my team and I expect our venture to prove even more lucrative.
I can more efficiently and enjoyably spend my time outside of BigLaw.
Someday I will be old. I want to look back and know that I did really big things.
In this post I will briefly expand a bit on each of these points. If nothing else, hopefully this will be of interest to law students or prospective law students who are interested in entrepreneurship.
1. Expected Futures versus Chosen Futures
A. BigLaw and Predictable Riches
Students at elite law schools tend to be very risk averse. After graduation, almost everybody follows the BigLaw path—i.e., they go work for large law firms that pay really well. As Nassim Taleb would say, this path is expectation rich. The expected variance is pretty low. If all goes perfectly, you will become a partner at a prestigious firm and make one or two million dollars per year. Maybe a select few will even become Senators or judges.
The problem with BigLaw associates counting on such a rosy future is that it probably won’t happen. Not everyone can make partner. Attrition is fierce. People often find it draining, and escape as soon as their law school debt is paid off. Those who do want to stay around for the big money are often forced out regardless. But, financially at least, the worst outcome is still pretty good. Maybe you don’t make partner anywhere and maybe your work sucks. But you’ll be well trained, and as a Yale/Harvard/Stanford-educated lawyer, you’ll have an easy enough time making a good living.
B. Non BigLaw Lawyering – Higher Highs, Lower Lows
The range of possible outcomes is a bit higher for the minority of students that goes into public interest lawyering. In economic terms, the worst outcome (forever making $40,000 while trying to “fight the good fight” while trying to stay on top any of various loan forgiveness programs) can be pretty brutal. Then again, top law students who choose low-paid PI work rarely do so out of necessity. Maybe once we factor in the nonmonetary motivations that are clearly at play, the opportunity cost isn’t as high as it first appears.
More Oprah, Please: Some Critical Thoughts on Cory Booker's Stanford Graduation Speech
In 2008, Oprah was Stanford’s commencement speaker. People were very excited about that. I was less enthusiastic. I expected a disappointing, “Don’t you dare think about your own success. You must save starving orphans” kind of speech. But Oprah surprised us all. She basically reminded us that making money is good, as it is usually correlated with producing value for others. The message was simple: be productive and be happy. I loved it. But most of my friends were very disappointed.
Fast-forward 4 years and it’s Cory Booker speaking to the crowd of 30,000 in Stanford stadium. Booker seemed like a fine choice to me. Though I disagree with him about many things, I admire him quite a bit. I liked Street Fight. I enjoyed his “Finding Your Roots” interview with Henry Louis Gates Jr. Like most everyone else, I’ve been impressed with what’s been going on in Newark. But I thought that Booker’s speech on Sunday was a letdown. This time, I was the one who came away disappointed.
Motivational speeches are strange. At some level, their task is usually to persuade the listener to suspend rational self-interest and ignore (or, more euphemistically, transcend) reality. After all, people are innately reasonably good at acting in their own self-interest. We need fairly little external motivation to do what makes us happy. Motivational speeches tend to be more necessary to convince us to do things that we ordinarily wouldn’t do, such as charging an enemy bunker in wartime or performing some comparable civic sacrifice during peacetime.
Credit for good stuff goes to them and Peter, who gave the closing remarks. I have tried to be accurate. But note that this is not an exact transcript.
Class 19 Notes Essay—Stagnation or Singularity?
Peter Thiel: Let’s start by having each of you outline your vision of what kinds of technological change we might see over the next 30 or 40 years.
Michael Vassar: It’s lot easier to talk about what the world will look like 30 years from now than 40 years from now. Thirty seems tractable. Today, we’ve gone from knowing how to sequence a gene or two to thousand-dollar whole genome sequencing. Paul Allen is running a $500 million experiment that seems to be going very well. This technological trajectory is both exciting and terrifying at the same time. Suppose, after 30 years, we have a million times today’s computing power and achieve a hundred times today’s algorithmic efficiency. At that point we’d be in a place to simulate brains and such. And after that, anything goes.
But this kind of progress over the next 30 years is by no means something we can take for granted. Getting around bottlenecks—energy constraints, for example—is going to be hard. If we can do it, we’re at the very end. But I expect that there will be a lot of turmoil along the way.
Aubrey de Grey: We have a fair idea of what technology might be developed, but a much weaker idea of the timeline for development. It is possible that we are about 25 years away from escape velocity. But there are two caveats to this supposition: first, it is obviously subject to sufficient resources being deployed toward the technological development, and second, even then, it’s 50-50; we probably have a 50% chance of getting there. But there would seem to be at least a 10% chance of not getting there for another 100 years or so.
In a sense, none of this matters. The uncertainty of the timeline should not affect prioritization. We should be doing the same things regardless.
As I finish up the 19th and final set of CS183 notes, I’d like to take a moment and thank the people who have worked on putting the course together.
I’d also like to thank Founders Fund’s Scott Nolan and Michael Solana in particular. They have been working behind the scenes and were responsible for most of the visuals used in the course slides. I’ve borrowed heavily from those visuals in recent posts. It’s fair to assume that Scott and Michael are responsible for any and every nice graphic you might have seen on this blog. In my opinion their work has been no small contribution to the success of the course itself. So thanks, guys, both for doing the work and for letting me use it.
Peter Thiel’s CS183: Startup - Class 18 Notes Essay
Here is an essay version of my class notes. Errors and omissions are mine. Credit for good stuff is Peter’s. Thanks to Joel Cazares for helping proof this.
I. Traits of the Founder
Founders are important. People recognize this. Founders are often discussed. Many companies end up looking like founder’s cults. Let’s talk a bit about the anthropology and psychology of founders. Who are they, and why do they do what they do?
A. The PayPal Origin
PayPal’s founding team was six people. Four of them were born outside of the United States. Five of them were 23 or younger. Four of them built bombs when they were in high school. (Your lecturer was not among them.) Two of these bombmakers did so in communist countries: Max in the Soviet Union, Yu Pan in China. This was not what people normally did in those countries at that time.
The eccentricity didn’t stop there. Russ grew up in a trailer park and managed to escape to the one math and science magnet school in Illinois. Luke and Max had started crazy ventures at Illinois Urbana-Champaign. Max liked to talk about his crazy attributes (he claimed/claims to have 3 kidneys), perhaps even a little too much. His came to the U.S. as sort of a refugee weeks after the Soviet Union collapsed but before other countries were formed. So he liked to say that he was a citizen of no country. It made for incredibly complicated travel issues. Everybody decided that he couldn’t leave the country, since it wasn’t clear that he could get back in if he did.
Ken was somewhat more on the rational side of things. But then again, he took a 66% pay cut to come do PayPal instead of going into investment banking after graduating from Stanford. So there’s that.
One could go on and on with this. The main question is whether there is a connection—and if so what kind—between being a founder and having extreme traits.
Many traits are normally distributed throughout the population. Suppose that all traits are aggregated on a normal distribution chart. On the left tail you’d have a list of negatively perceived traits, such as weakness, disagreeability, and poverty. On the right tail, you’d have traditionally positive traits such as strength, charisma, and wealth.
Where do founders fall? Certainly they seem to be a bit less average and a bit more extreme than normal. So maybe the founder distribution is a fat-tailed one:
But that radically understates things. We can push it further. Perhaps the founder distribution is, however strangely, an inverted normal distribution. Both tails are extremely fat. Perhaps founders are complex combinations of, e.g., extreme insiders and extreme outsiders at the same time. Our ideological narratives tend to isolate and reinforce just one side. But maybe those narratives don’t work for founders. Maybe the truth about founders comes from both sides.
Credit for good stuff goes to them and Peter. I have tried to be accurate. But note that this is not a transcript of the conversation.
Class 17 Notes Essay—Deep Thought
I. The Hugeness of AI
On the surface, we tend to think of people as a very diverse set. People have a wide range of different abilities, interests, characteristics, and intelligence. Some people are good, while others are bad. It really varies.
By contrast, we tend to view computers as being very alike. All computers are more or less the same black box. One way of thinking about the range of possible artificial intelligences is to reverse this standard framework. Arguably it should be the other way around; there is a much larger range of potential AI than there is a range of different people.
There are many ways that intelligence can be described and organized. Not all involve human intelligence. Even accounting for the vast diversity among all different people, human intelligence is probably only a tiny dot relative to all evolved forms of intelligence; imagine all the aliens in all planets of the universe that might or could exist.
Peter Thiel’s CS183: Startup - Class 16 - Decoding Ourselves
He is an essay version of my class notes from Class 16 of CS183: Startup. Errors and omissions are mine. Thanks to @1wu for some supplementary notes!
Three guests joined the class for a conversation after Peter’s remarks:
Brian Slingerland. Co-Founder, President & COO at Stem CentRx;
Balaji S. Srinivasan, CTO of Counsyl; and
Brian Frezza, Co-founder, Emerald Therapeutics
Credit for good stuff goes to them and Peter. I have tried to be accurate. But note that this is not a transcript of the conversation.
Class 16 Notes Essay—Decoding Ourselves
I. The Longevity Project
How much longer can people actually live? It’s a very open ended question. It may not be very easy to answer at all. But there is a sense that biotech may be well positioned to try. Biotech, on the wake of the computer revolution, seems quite exciting if we think that a whole series of problems—e.g. cancer, aging, dying—is close to being solved.
Even without the biotech revolution, life expectancy has been rising impressively. The rate has been something like 2.5% decade over decade. In the mid to late 19th century, expected lifespans were going up at a rate of 2.3 to 2.5 years with each passing decade. If you plot the data points corresponding to each country’s single demographic (typically women) with the longest life expectancy, you get a very straight line on a scattershot basis. This isn’t quite equivalent to Moore’s law, but it’s analogous. In 1840, life expectancy was just 45 or 46 years. For century and a half now, keeping people alive longer has been an exponentially harder problem.
Peter Thiel’s CS183: Startup - Class 15 Notes Essay
Here is an essay version of my class notes from Class 15 of CS183: Startup. Errors and omissions are mine.
Four guests joined the class for a conversation after the lecture:
Danielle Fong, Co-founder and Chief Scientist of LightSail Energy;
Jon Hollander, Business Development at RoboteX;
Greg Smirin, COO of The Climate Corporation; and
Scott Nolan, Principal at Founders Fund and former aerospace engineer at SpaceX (Elon Musk was going to come, but he was busy launching rockets).
Credit for good stuff goes to them and Peter. I have tried to be accurate. But note that this is not a transcript of the conversation.
Class 15 Notes Essay—Back to the Future
I. The Future of The Past
Sometimes the best way to think about the future is to think about the way the future used to be. In the mid-20th century, it was still possible to talk about a future where the weather would be precisely predicted or even controlled. Maybe someone would figure out how to predict tornadoes. Or maybe cloud seeding would work. Transportation was the same way; people expected flying cars and civilian submarines. Robotics was yet another exciting frontier that people thought would be big.
But fast-forward to the present. Things haven’t really worked out as people thought they would in the ‘50s and ‘60s. Weather still kind of just happens to us. People have pretty much accepted that as inevitable. The prevailing sense is that trying to control the weather is dangerous, and we shouldn’t tinker too much with it. Transportation has been similarly disappointing. Forget flying cars—we’re still sitting in traffic. There has been some progress in robotics. But certainly not as much as everybody expected. We wanted the General Utility Non-Theorizing Environmental Control Robot from Lost in Space. Instead we got the Roomba vacuum cleaner.
Today, I am going to participate in ritual. Along with thousands of CrossFitters around the world, I am going to do “Murph.” This means that, starting at about 10 a.m., I will do the following as quickly as possible:
Run one mile
Do 100 pull-ups, 200 push-ups, and 300 air squats (in any order)
Run one mile
Murph is probably the most famous of CrossFit’s 80 or so “Hero WODs.” (WOD = workout of the day, in CrossFit parlance.) Hero WODs are named in honor of soldiers (and, occasionally, first responders) who are killed in action. Murph is named after Lt. Michael Murphy, a Navy SEAL who died in Afghanistan in 2005.
In some sense, this is unproblematic. Honoring fallen soldiers is good. But there’s also a sense in which Hero WODs serve as veiled support for substantive military policies or nationalism generally. Most people who know CrossFit would have to admit that there’s a certain degree of militarism to it. (There’s a good post about this here.) Before its association with Reebok, CrossFit HQ sold clothing labeled “Infidel,” ostensibly to be worn as a badge of pride.
So Hero WODs are rituals, and rituals are worth being skeptical about. One should understand what he or she is doing before participating. Provided that you’re not going to get punished for being public with your freethinking, it is always better to think through your actions than to just go along with the crowd.
The question, then, is whether Hero WODs necessarily imply support for the conflicts in which these people were killed. If so, I would not participate, since I do not support those conflicts.
It’s hard to be critical of Hero WODs once you know the stories behind them. Last year I read Lone Survivor, which was written by Marcus Luttrell, the sole survivor from Michael Murphy’s SEAL team. It is epic and intense. After reading it, it seems completely right to say that Michael Murphy is worth honoring and remembering. But what that means and how one should do that are interesting questions.
I’ve done Murph several times before. It’s never easy. Physically, of course, it’s brutal. It’s enough to floor anybody. But the real wallop is mental and emotional. It’s a long, methodical workout. There is plenty of time to think. Plenty of time to go through your narrative.
So what is that narrative? It’s different for different people, which is probably good. But I think the traditional narrative—the standard, uncontroversial version—goes something like this:
Michael Murphy was a badass soldier. He made unquantifiable sacrifices. He fought bravely to protect his brothers and his country. He believed in America. He fought for justice. Michael Murphy’s life and death show that we, as a people, are strong enough to overcome our losses and still win.
That’s not necessarily a political narrative, but there’s some nationalism and perhaps even militarism to it.
My narrative is different. I try and strip away the military piece. Honoring Michael Murphy is different from honoring his, or any politics. Perhaps Michael would disagree. But my take is more like this:
Michael Murphy was a badass human being. He challenged himself mentally and physically. This workout is an extended metaphor for challenge and improvement. I am angry that Michael died. Death is a horrible thing. War is a horrible thing. Life isn’t always easy. It isn’t always fair. We have to fight death, disease, nature, and, sometimes, maybe even other people. There is honor in physical and mental perseverance. There is honor in humanity. We have to keep moving.
Perhaps some people see no difference between those two narratives. If so, fair enough. But I do. It’s important to me to draw that distinction, because Hero WODs are ambiguous phenomena. If we don’t clarify our thinking—if we don’t earnestly try to understand what we’re doing when we do them—then I’m not sure we are really honoring anybody or anything. We’d just be going through the motions. And when that happens, ritual devolves to mere process, absent meaning.
My dad and me, 39 minutes into Murph on Memorial Day 2011.
Peter Thiel’s CS183: Startup - Class 14 Notes Essay
Here is an essay version of my class notes from Class 14 of CS183: Startup. Errors and omissions are mine. Credit for good stuff is Peter’s.
Class 14 Notes Essay—Seeing Green
I. Thinking About Energy
Alternative energy and cleantech have attracted an enormous amount of investment capital and attention over the last decade. Almost nothing has worked as well as people expected. The cleantech experience can thus be quite instructive. Asking important questions about what went wrong and what can be done better is a very good way to review and apply many of the things we’ve talked about in class.
A. The Right Framework
How should one think about energy as a sector? What’s an appropriate theoretical framework?
Revisiting the 2x2 matrix of determinate/indeterminate and optimistic/pessimistic futures may be useful. To recap, here are examples of those respective quadrants:
Peter Thiel’s CS183: Startup - Class 13 Notes Essay
Here is an essay version of my class notes from Class 13 of CS183: Startup. Errors and omissions are mine. Credit for good stuff is Peter’s entirely.
Class 13 Notes Essay— You Are Not A Lottery Ticket
I. The Question of Luck
A. Nature of the Problem
The biggest philosophical question underlying startups is how much luck is involved when they succeed. As important as the luck vs. skill question is, however, it’s very hard to get a good handle on. Statistical tools are meaningless if you have a sample size of one. It would be great if you could run experiments. Start Facebook 1,000 times under identical conditions. If it works 1,000 out of 1,000 times, you’d conclude it was skill. If it worked just 1 time, you’d conclude it was just luck. But obviously these experiments are impossible.
The first cut at the luck vs. skill question is thus almost just a bias that one can have. Some people gravitate toward explaining things as lucky. Others are inclined to find a greater degree of skill. It depends on which narrative you buy. The internal narrative is that talented people got together, worked hard, and made things work. The external narrative chalks things up to right place, right time. You can change your mind about all this, but it’s tough to have a really principled, well-reasoned view on way or the other.
Peter Thiel’s CS183: Startup - Class 12 Notes Essay
Here is an essay version of my class notes from Class 10 of CS183: Startup. Errors and omissions are mine.
Reid Hoffman, co-founder of LinkedIn and Partner at Greylock Partners, joined this class as a guest speaker. Credit for good stuff goes to him and Peter. I have tried to be accurate. But note that this is not a transcript of the conversation.
Class 12 Notes Essay—War and Peace
I. War Without
For better or for worse, we are all very well acquainted with war. The U.S. has been fighting the War on Terror for over a decade. We’ve had less literal wars on cancer, poverty and drugs.
But most of us don’t spend much time thinking about why war happens. When is it justified? When is it not? It’s important to get a handle on these questions in various contexts because the answers often map over to the startup context as well. The underlying question is a constant: how can we tilt away from destructive activity and towards things that are beneficial and productive?
It often starts as theater. People threaten each other. Governments point missiles at each other. Nations become obsessed with copying one another. We end up with things like the space race. There was underlying geopolitical tension when Fischer faced off with Spassky in the Match of the Century in 1972. Then there was the Miracle on Ice where the U.S. hockey team defeated the Soviets in 1980. These were thrilling and intense events. But they were theater. Theater never seems all that dangerous at first. It seems cool. In a sense, the entire Cold War was essentially theater—instead of fighting and battles, there was just an incredible state of tension, rivalry, and competition.
Several people have asked if they can make ebook versions of the notes essays.
You can, of course, always do this for your own use. But for now at least, please do not distribute to the public. (One guy even tried to sell a version that he made!)
All of these notes are wrapped in a creative commons license.
If we do end up publishing a pdf/ePub/Kindle version, we will likely want to work with a single designer and get things to our liking.
I’m not trying to stifle innovation with IP. Obviously I want Peter’s ideas and the notes to spread far and wide. And to be clear, I’m not interested in making money from them.
But neither do I want dozens of versions of a book alleging to have been written by myself or Peter Thiel floating around when, in fact, neither of us has seen or approved the particular formatting, editing, etc.
Peter Thiel’s CS183: Startup - Class 11 Notes Essay
Here is an essay version of my class notes from Class 11 of CS183: Startup. Errors and omissions are mine. Credit for good stuff is Peter’s.
Class 11 Notes Essay—Secrets
Back in class one, we identified a very key question that you should continually ask yourself: what important truth do very few people agree with you on? To a first approximation, the correct answer is going to be a secret. Secrets are unpopular or unconventional truths. So if you come up with a good answer, that’s your secret.
How many secrets are there in the world? Recall that, reframed in a business context, the key question is: what great company is no one starting? If there are many possible answers, it means that there are many great companies that could be created. If there are no good answers, it’s probably a very bad idea to start a company. From this perspective, the question of how many secrets exist in our world is roughly equivalent to how many startups people should start.
I’ve put 10 class notes essays online so far. That material represents roughly half of the course (there are 19 classes in total).
Several people have asked me what the traffic to the site has been. I always enjoy when people post this kind of data that gives their projects more transparency (e.g. this). So here is some of that for anyone who might be interested.
The date range is April 2nd (when the class started) through this morning, May 10th.
At first glance an average visit duration of 2 minutes seems very low. Many people are not reading material that, at least for a moment, is literally right in front of them. But maybe 2 minutes is actually quite high. While many people may tl;dr click away, many others seem to be reading the full posts.
The image below shows the spike from David Brooks’ Creative Monopoly piece in the NYT. Daily visitors shot up to 25k and have since settled down to about 5k/day since.
(I edited this graphic a bit to get the visits axis labeled on this scale.)
Update: here is the visit duration view:
Some possibly relevant things that people have told me today:
Readers using things like Instapaper or Pocket might not be fully represented.
Google Analytics can’t detect single page time, so visits from people who read in full off a link and then bounce go unrecorded or are logged in the first bucket.
The traffic stuff is interesting. I won’t pretend I know exactly what the stats mean. In some sense it doesn’t matter; it’s the same undertaking whether 2, 200, or 200k people follow along. But truly interesting ideas should spread far and wide, and it’s been fun to see that happening.
Peter Thiel’s CS183: Startup - Class 10 Notes Essay
Here is an essay version of my class notes from Class 10 of CS183: Startup. Errors and omissions are mine.
Marc Andreessen, co-founder and general partner of the venture capital firm Andreessen Horowitz, joined this class as a guest speaker. Credit for good stuff goes to him and Peter. I have tried to be accurate. But note that this is not a transcript of the conversation.
Class 10 Notes Essay—After Web 2.0
I. Hello World
It all started about 40 years ago with ARPANET. Things were asynchronous and fairly low bandwidth. Going “online” could be said to have begun in 1979 with the CompuServe model. In the early ‘80s AOL joined in with its take on the walled garden model, offering games, chat rooms, etc. Having laid the foundations for the modern web, the two companies would merge in ’97.
The Mosaic browser launched in 1993. Netscape announced its browser on October 13th, 1994 and filed to go public in less than a year later. And so began the World Wide Web, which would define the ‘90s in all kinds of ways.
“Web 1.0” and “2.0” are terms of art that can be sort of hard to pin down. But to speak of the shift from 1.0 to 2.0 is basically to speak of what’s changed from decade to decade. When things got going content was mostly static. Now the emphasis is on user generated content, social networking, and collaboration of one sort or another.
Relative usage patterns have shifted quite a bit too. In the early ‘90s, people used FTP. In the late ‘90s they were mostly web browsing or connecting to p2p networks. By 2010, over half of all Internet usage was video transmission. These rapid transitions invite the question of what’s next for the Internet. Will the next era be the massive shift to mobile, as many people think? It’s a plausible view, since many things seem possible there. But also worth putting in context is that relative shifts don’t tell the full story. Total Internet usage has grown dramatically as well. There are perhaps 20x more users today than there were in the late ‘90s. The ubiquity of the net creates a sense in which things today are very, very different.
II. The Wild West
The Internet has felt a lot like the Wild West for last 20 years or so. It’s been a frontier of sorts—a vast, open space where people can do almost anything. For the most part, there haven’t been too many rules or restrictions. People argue over whether that’s good or bad. But it raises interesting questions. What enables this frontier to exist as it does? And is the specter of regulation going to materialize? Is everything about to change?
Peter Thiel’s CS183: Startup - Class 9 Notes Essay
Here is an essay version of my class notes from Class 9 of CS183: Startup. Errors and omissions are my own. Credit for good stuff is Peter’s entirely.
Class 9 Notes Essay—If You Build It, Will They Come?
Distribution is something of a catchall term. It essentially refers to how you get a product out to consumers. More generally, it can refer to how you spread the message about your company. Compared to other components that people generally recognize are important, distribution gets the short shift. People understand that team, structure, and culture are important. Much energy is spent thinking about how to improve these pieces. Even things that are less widely understood—such as the idea that avoiding competition is usually better than competing—are discoverable and are often implemented in practice.
But for whatever reason, people do not get distribution. They tend to overlook it. It is the single topic whose importance people understand least. Even if you have an incredibly fantastic product, you still have to get it out to people. The engineering bias blinds people to this simple fact. The conventional thinking is that great products sell themselves; if you have great product, it will inevitably reach consumers. But nothing is further from the truth.
There are two closely related questions that are worth drilling down on. First is the simple question: how does one actually distribute a product? Second is the meta-level question: why is distribution so poorly understood? When you unpack these, you’ll find that the first question is underestimated or overlooked for the same reason that people fail to understand distribution itself.
The first thing to do is to dispel the belief that the best product always wins. There is a rich history of instances where the best product did not, in fact, win. Nikola Tesla invented the alternating current electrical supply system. It was, for a variety of reasons, technologically better than the direct current system that Thomas Edison developed. Tesla was the better scientist. But Edison was the better businessman, and he went on to start GE. Interestingly, Tesla later developed the idea of radio transmission. But Marconi took it from him and then won the Nobel Prize. Inspiration isn’t all that counts. The best product may not win.
Peter Thiel’s CS183: Startup - Class 8 Notes Essay
Here is an essay version of my class notes from Class 8 of CS183: Startup. Errors and omissions are mine.
Bruce Gibney, partner at Founders Fund, gave the lecture these notes are based on. Credit for good stuff goes to him and Founders Fund.
Class 8 Notes Essay—The Pitch
I. Pitching Context & Goals
One of the most important things to remember when thinking about pitching is that there are huge numbers of pitches in the world. Venture capitalists hear quite a few of them. And they find the process frustrating because it is such a low yield activity (a tiny fraction of first pitches lead to subsequent diligence and even fewer of those lead to a deal). So if you want VCs to listen to you, you need to force them to listen—to break through the clutter. Doing so requires you to hack into the VC mind.
Conceptually, pitching sounds easy. You are smart. You have a great idea and you tell people with money that great idea. They’re rational; they give it to you.
But it’s not that easy. What you essentially have to do is convince a reasonably smart person to exchange his capital for your piece of paper (a stock certificate) that is really nothing more than a promise about something that may be valuable later but, on a blind statistical basis, probably won’t be. It turns out that this is difficult.
Humans are massively cognitively biased in favor of near-term thinking. VCs are no different. That’s curious, because you’d think they would have overcome it, since good long-term thinking is sort of the entire nature of venture capital. But humans are humans. VCs are just sacks of meat with the same cognitive biases as everyone else. They are rational systems infected with emotional viruses (and infused with a tinge of wealth and privilege and all that implies). You must address both sides of their brains; you have to convince VCs that your proposal is economically rational, and then you must exploit their reptilian brains by persuading their emotional selves into doing the deal and overcoming cognitive biases (like near-term focus) against the deal. You should also offer VCs entertainment. They see several pitches a day (most bad) and that gets boring. Be funny and help your cause. In the tech community, even one joke will suffice.
The syllogism consists of propositions, propositions consist of words, words are symbols of notions. Therefore if the notions themselves (which is the root of the matter) are confused and over-hastily abstracted from the facts, there can be no firmness in the superstructure. Our only hope therefore lies in a true induction.
A startup messed up at its foundation cannot be fixed.
For Bacon, you have to get your notios (best translated as “notions” or “concepts,” apparently) right. Then you have a chance at getting your sentences right. Which means you have a chance at getting your paragraphs right, and so on and so forth all the way up the chain. Implicit in this is that you can’t fix a flawed notio. It’s doomed.
Similarly, Peter stresses the importance of getting your company’s foundation right. Do that and you then have a chance of, say, raising VC and/or creating a viable product. Which means you have a chance of generating revenue and then profit. And so on, up the chain toward a successful exit. Get it wrong and you’re doomed.
Peter Thiel’s CS183: Startup - Class 7 Notes Essay
Here is an essay version of my class notes from Class 7 of CS183: Startup. Errors and omissions are mine.
Roelof Botha, partner at Sequoia Capital and former CFO of PayPal, and Paul Graham, partner and co-founder of Y Combinator, joined this class as guest speakers. Credit for good stuff goes to them and Peter. I have tried to be accurate. But note that this is not a transcript of the conversation.
Class 7 Notes Essay—Follow the Money
I. Venture Capital and You
Many people who start businesses never deal with venture capitalists. Founders who do interact with VCs don’t necessarily do that early on. First you get your founders together and get working. Then maybe you get friends, family, or angels to invest. If you do end up needing to raise a larger amount of capital, you need to know how VC works. Understanding how VCs think about money—or, in some cases, how they don’t think about it and thus lose it—is important.
VC started in late 1940s. Before that, wealthy individuals and families were investing in new ventures quite frequently. But the idea of pooling funds that professionals would invest in early stage companies was a product of the ‘40s. The Sand Hill road, Silicon Valley version came in the late 1960s, with Sequoia, Kleiner Perkins, and Mayfield leading the field.
Venture basically works like this: you pool a bunch of money that you get from people called limited partners. Then you take money from that pool and invest it in portfolio companies that you think are promising. Hopefully those companies become more valuable over time and everybody makes money. So VCs have the dual role of encouraging LPs to give them money and then finding (hopefully) successful companies to back.
Most of the profits go back to LPs as returns on their investment. VCs, of course, take a cut. The typical model is called 2-and-20, which means that the VC firm charges an annual management fee of 2% of the fund and then gets 20% of the gains beyond the original investment. The 2% management fee is theoretically just enough to allow the VC firm to continue to operate. In practice, it can end up being a lot more than that; a $200m fund would earn $4m in management fees under a 2-and-20 structure. But it’s certainly true that the real payout that VCs look for come with the 20% cut of the gains, which is called the carry.
VC funds last for several years, because it usually takes years for the companies you invest in to grow in value. Many of the investments in a given fund either don’t make money or go to zero. But the idea is that the companies that do well get you all your money back and then some; you end up with more money in the fund at the end than LPs put in to begin with.
There are many dimensions to being a good VC. You have to be skilled at coming up with reasonable valuations, identifying great entrepreneurs, etc. But there’s one dimension that is particularly important, yet surprisingly poorly understood. It is far and away the most important structural element of venture capital: exponential power. This may seem odd because it’s just basic math. But just as 3rd grade arithmetic—knowing not just how many shares you get, but dividing that by the shares outstanding—was crucial to understand equity, 7th grade math—understanding exponents—is necessary to understand VC.
Peter Thiel’s CS183: Startup - Class 6 Notes Essay
Here is an essay version of my class notes from Class 6 of CS183: Startup. Errors and omissions are my own. Credit for good stuff is Peter’s entirely. This class was kind of a crash course in VC financing. I didn’t include all the examples since you can learn more about VC math elsewhere, e.g. here or here. As usual, though, I’ve tried to include all the key insights from the lecture.
CS183: Startup—Notes Essay—Thiel’s Law
I. Origins, Rules, Culture
Every company is different. But there are certain rules that you simply must follow when you start a business. A corollary of this is what some friends have (somewhat grandiosely) called Thiel’s law: A startup messed up at its foundation cannot be fixed.
Beginnings of things are very important. Beginnings are qualitatively different. Consider the origin of the universe. Different things happened then than what we experience in everyday life. Or think about the origin of a country; it necessarily involves a great many elements that you do not see in the normal course of business. Here in the U.S., the Founders generally got a lot of things right. Some things they got quite wrong. But most of the time they can’t really be fixed. Alaska has 2 senators. So does California. So Alaska, despite having something like 1/50th of California’s population, has equal power in the Senate. Some say that’s a feature, not a bug. Whatever it is, we’re likely to be stuck with it as long as this country exists.
The insight that foundings are crucial is what is behind the Founders Fund name. Founders and founding moments are very important in determining what comes next for a given business. If you focus on the founding and get it right, you have a chance. If you don’t, you’ll be lucky at best, and probably not even that.
The importance of foundings is embedded in companies. Where there’s a debate or controversial claim at Google, one says, “The Founders have scientifically determined that x is true,” where x is his preferred position. If you think that certain perks should be extended since happy people are the most productive, you say that Larry and Sergey have already settled the matter. The point is that all the science is done at the founding. No new data can interfere with the founding moment.
Foundings are obviously temporal. But how long they last can be a hard question. The typical narrative contemplates a founding, first hires, and a first capital raise. But there’s an argument that the founding lasts a lot longer than that. The idea of going from 0 to 1—the idea of technology—parallels founding moments. The 1 to n of globalization, by contrast, parallels post-founding execution. It may be that the founding lasts so long as a company’s technical innovation continues. Founders should arguably stay in charge as long as the paradigm remains 0 to 1. Once the paradigm shifts to 1 to n, the founding is over. At that point, executives should execute.
There is, of course, a limit to how much you can do with rules. Things can and will break down even with perfect rules. There is no real chance of setting things up correctly such that the rest unfold easily. But you should still get the early stuff as right as possible.
Peter Thiel’s CS183: Startup - Class 5 Notes Essay
Here is an essay version of my class notes from Class 5 of CS183: Startup. Errors and omissions are mine.
Stephen Cohen, co-founder and Executive VP of Palantir Technologies, and Max Levchin of PayPal and Slide fame joined this class as guest speakers. Credit for good stuff goes to them and Peter. I have tried to be accurate. But note that this is not a transcript of the conversation.
CS183: Startup—Notes Essay—The Mechanics of Mafia
I. Company Cultures
Everybody knows that company culture is important. But it’s hard to know exactly what makes for an ideal culture. There are obviously some things that work. Even though they didn’t necessarily look like a winning investment at the time, the early Microsoft team clearly got something right.
Then there are some things that don’t work so well. A cult is perhaps the paradigmatic version of a culture that doesn’t work. Cults are crazy and idealistic in a bad way. Cult members all tend to be fanatically wrong about something big.
And then there is what might be called anti-culture, where you really don’t even have a culture at all. Consulting firms are the classic example here. Unfortunately, this is probably the dominant paradigm for companies. Most of the time, they don’t even get to the point of having culture. People are mercenaries. People are nihilistic.
Picture a 1-dimensional axis from consultant-nihilism to cultish dogmatism. You want to be somewhere in the middle of that spectrum. To the extent you gravitate towards an extreme, you probably want to be closer to being a cult than being an army of consultants.
Good company culture is more nuanced than simple homogeneity or heterogeneity. On the homogeneity side, everyone being alike isn’t enough. A robust company culture is one in which people have something in common that distinguishes them quite sharply from rest of the world. If everybody likes ice cream, that probably doesn’t matter. If the core people share a relevant and unique philosophy about something important, you’re onto something.
Similarly, differences qua differences don’t matter much. In strong company cultures, people are different in a way that goes to the core mission. Suppose one key person is on an ice cream only diet. That’s quirky. But it’s also irrelevant. You want your people to be different in a way that gives the company a strong sense of identity and yet still dovetails with the overall mission. Having different kinds of problem-solvers on a team, for example, can make for a stronger culture.
II. Zero Sum vs. Not
A. To Fight or Not To Fight
Generally speaking, capitalism and competition are better seen as antonyms than as synonyms. To compete isn’t what you should set out to do. That doesn’t mean you should slack off. To succeed you probably need to work intensely. But you should work on something that others aren’t doing. That is, focus on an area that’s not zero-sum.
Peter Thiel’s CS183: Startup - Class 4 Notes Essay
Here is an essay version of my class notes from Class 4 of CS183: Startup. Errors and omissions are my own. Credit for good stuff is Peter’s entirely.
CS183: Startup—Notes Essay—April 11—The Last Mover Advantage
I. Escaping Competition
The usual narrative is that capitalism and perfect competition are synonyms. No one is a monopoly. Firms compete and profits are competed away. But that’s a curious narrative. A better one frames capitalism and perfect competition as opposites; capitalism is about the accumulation of capital, whereas the world of perfect competition is one in which you can’t make any money. Why people tend to view capitalism and perfect competition as interchangeable is thus an interesting question that’s worth exploring from several different angles.
The first thing to recognize is that our bias favoring competition is deep-rooted. Competition is seen as almost quintessentially American. It builds character. We learn a lot from it. We see the competitive ideology at work in education. There is a sense in which extreme forms of competition are seen as setting one up for future, non-competitive success. Getting into medical school, for example, is extremely competitive. But then you get to be a well-paid doctor.
There are, of course, cases where perfect competition is just fine. Not all businesses are created to make money; some people might be just fine with not turning a profit, or making just enough to keep the lights on. But to the extent one wants to make money, he should probably be quite skeptical about perfect competition. Some fields, like sports and politics, are incredibly and perhaps inherently competitive. It’s easier to build a good business than it is to become the fastest person alive or to get elected President.
It may upset people to hear that competition may not be unqualifiedly good. We should be clear what we mean here. Some sense of competition seems appropriate. Competition can make for better learning and education. Sometimes credentials do reflect significant degrees of accomplishment. But the worry is that people make a habit of chasing them. Too often, we seem to forget that it’s genuine accomplishment we’re after, and we just train people to compete forever. But that does everyone a great disservice if what’s theoretically optimal is to manage to stop competing, i.e. to become a monopoly and enjoy success.
A law school anecdote will help illustrate the point. By graduation, students at Stanford Law and other elite law schools have been racking up credentials and awards for well over a dozen years. The pinnacle of post law school credentialism is landing a Supreme Court clerkship. After graduating from SLS in ’92 and clerking for a year on the 11th Circuit, Peter Thiel was one of the small handful of clerks who made it to the interview stage with two of the Justices. That capstone credential was within reach. Peter was so close to winning that last competition. There was a sense that, if only he’d get the nod, he’d be set for life. But he didn’t.
Years later, after Peter built and sold PayPal, he reconnected with an old friend from SLS. The first thing the friend said was, “So, aren’t you glad you didn’t get that Supreme Court clerkship?” It was a funny question. At the time, it seemed much better to be chosen than not chosen. But there are many reasons to doubt whether winning that last competition would have been so good after all. Probably it would have meant a future of more insane competition. And no PayPal. The pithy, wry version of this is the line about Rhodes Scholars: they all had a great future in their past.
This is not to say that clerkships, scholarships, and awards don’t often reflect incredible accomplishment. Where that’s the case, we shouldn’t diminish it. But too often in the race to compete, we learn to confuse what is hard with what is valuable. Intense competition makes things hard because you just beat heads with other people. The intensity of competition becomes a proxy for value. But value is a different question entirely. And to the extent it’s not there, you’re competing just for the sake of competition. Henry Kissinger’s anti-academic line aptly describes the conflation of difficulty and value: in academia at least, the battles are so fierce because the stakes are so small.
That seems true, but it also seems odd. If the stakes are so small, why don’t people stop fighting so hard and do something else instead? We can only speculate. Maybe those people just don’t know how to tell what’s valuable. Maybe all they can understand is the difficulty proxy. Maybe they’ve bought into the romanticization of competition. But it’s important to ask at what point it makes sense to get away from competition and shift your life trajectory towards monopoly.
Just look at high school, which, for Stanford students and the like, was not a model of perfect competition. It probably looked more like extreme asymmetric warfare; it was machine guns versus bows and arrows. No doubt that’s fun for the top students. But then you get to college and the competition amps up. Even more so during grad school. Things in the professional world are often worst of all; at every level, people are just competing with each other to get ahead. This is tricky to talk about. We have a pervasive ideology that intense, perfect competition makes the best world. But in many ways that’s deeply problematic.
One problem with fierce competition is that it’s demoralizing. Top high school students who arrive at elite universities quickly find out that the competitive bar has been raised. But instead of questioning the existence of the bar, they tend to try to compete their way higher. That is costly. Universities deal with this problem in different ways. Princeton deals with it through enormous amounts of alcohol, which presumably helps blunt the edges a bit. Yale blunts the pain through eccentricity by encouraging people to pursue extremely esoteric humanities studies. Harvard—most bizarrely of all—sends its students into the eye of the hurricane. Everyone just tries to compete even more. The rationalization is that it’s actually inspiring to be repeatedly beaten by all these high-caliber people. We should question whether that’s right.
Of all the top universities, Stanford is the farthest from perfect competition. Maybe that’s by chance or maybe it’s by design. The geography probably helps, since the east coast doesn’t have to pay much attention to us, and vice versa. But there’s a sense of structured heterogeneity too; there’s a strong engineering piece, the strong humanities piece, and even the best athletics piece in the country. To the extent there’s competition, it’s often a joke. Consider the Stanford-Berkeley rivalry. That’s pretty asymmetric too. In football, Stanford usually wins. But take something that really matters, like starting tech companies. If you ask the question, “Graduates from which of the two universities started the most valuable company?” for each of the last 40 years, Stanford probably wins by something like 40 to zero. It’s monopoly capitalism, far away from a world of perfect competition.
The perfect illustration of competition writ large is war. Everyone just kills everyone. There are always rationalizations for war. Often it’s been romanticized, though perhaps not so much anymore. But it makes sense: if life really is war, you should spend all your time either getting ready for it or doing it. That’s the Harvard mindset.
But what if life isn’t just war? Perhaps there’s more to it than that. Maybe you should sometimes run away. Maybe you should sheath the sword and figure out something else to do. Maybe “life is war” is just a strange lie we’re told, and competition isn’t actually as good as we assume it is.
Peter Thiel’s CS183: Startup - Class 3 Notes Essay
Here is an essay version of my class notes from Class 3 of CS183: Startup. Errors and omissions are my own. Credit for good stuff is Peter’s entirely. Please note that I actually missed this class (I was on my honeymoon!). Thanks to @erikpavia and @danrthompson for sending me their notes to work from.
CS183: Startup—Notes Essay—Value Systems
The history of the ‘90s was in many ways the history of widespread confusion about the question of value. Valuations were psychosocial; value was driven by what people said it was. To avoid herd-like confusion of decades past, we need to try and figure out whether it’s possible to determine businesses’ objective value and, if it is, how to do it.
As we discussed back in Class 1, certain questions and frameworks can anchor our thinking about value. The questions are necessarily personal: What can I do? What do I think is valuable? What do I see others not doing? A good framework might map globalization and technology as the two great axes of the 21st century. Synthesizing all this together forges the higher-level question: What valuable company is nobody building?
A somewhat different perspective on technology—going from 0 to 1, to revisit our earlier terminology—is the financial or economic one. Since that perspective can also shed considerable light on the value question, it’s worth covering in detail now.
Peter Thiel’s CS183: Startup - Class 2 Notes Essay
Here is an essay version of my class notes from Class 2 of CS183: Startup. Errors and omissions are my own. Credit for good stuff is Peter’s entirely.
CS183: Startup—Notes Essay—Party Like It’s 1999?
I. Late to the Party
History is driven by each generation’s experience. We are all born into a particular culture at a particular time. That culture is like an extended dinner conversation; lots of people are talking, some lightly, some angrily, some loudly, some in whispers. As soon as you’re able, you listen in. You try to figure out what that conversation is about. Why are people happy? Why are they upset? Sometimes it’s hard to figure out.
Take someone born in the late 1960s, for instance. There was a lot going on then, culturally. But a toddler in the late ‘60s, despite having technically lived through them, essentially missed the debates on civil rights, Vietnam, and what the U.S. was supposed to look like. The child, being more or less excluded from the dinner table, would later find it hard to get a sense of what those discussions were like.
There is a keen analogue between the cultural intensity of the ‘60s and the technological intensity of the 1990s. But today’s college and perhaps even graduate students, like the toddler in 1969, may have been too young to have viscerally experienced what was going on back in 1999. To participate in the dinner table conversation—to be able to think and talk about businesses and startups today in 2012—we must get a handle on the history of the ‘90s. It is questionable whether one can really understand startups without, say, knowing about Webvan or recognizing the Pets.com mascot.
History is a strange thing in that it often turns out to be quite different than what people who lived through it thought it was. Even technology entrepreneurs of the ‘90s might have trouble piecing together that decade’s events. And even if we look back at what actually happened, it’s not easy to know why things happened as they did. All that’s clear is that the ‘90s powerfully shaped the current landscape. So it’s important to get as good a grasp on them as possible.
II. A Quick History of the 90s
Most of the 1990s was not the dot com bubble. Really, what might be called the mania started in September 1998 and lasted just 18 months. The rest of the decade was a messier, somewhat chaotic picture.
Peter Thiel's CS183: Startup - Class 1 Notes Essay
Here is an essay version of my class notes from Class 1 of CS183: Startup. Errors and omissions are my own. Credit for good stuff is Peter’s entirely.
CS183: Startup—Notes Essay—The Challenge of the Future
Purpose and Preamble
We might describe our world as having retail sanity, but wholesale madness. Details are well understood; the big picture remains unclear. A fundamental challenge—in business as in life—is to integrate the micro and macro such that all things make sense.
Humanities majors may well learn a great deal about the world. But they don’t really learn career skills through their studies. Engineering majors, conversely, learn in great technical detail. But they might not learn why, how, or where they should apply their skills in the workforce. The best students, workers, and thinkers will integrate these questions into a cohesive narrative. This course aims to facilitate that process.
I. The History of Technology
For most of recent human history—from the invention of the steam engine in the late 17th century through about the late 1960’s or so— technological progress has been tremendous, perhaps even relentless. In most prior human societies, people made money by taking it from others. The industrial revolution wrought a paradigm shift in which people make money through trade, not plunder.
The importance of this shift is hard to overstate. Perhaps 100 billion people have ever lived on earth. Most of them lived in essentially stagnant societies; success involved claiming value, not creating it. So the massive technological acceleration of the past few hundred years is truly incredible.
The zenith of optimism about the future of technology might have been the 1960’s. People believed in the future. They thought about the future. Many were supremely confident that the next 50 years would be a half-century of unprecedented technological progress.
But with the exception of the computer industry, it wasn’t. Per capita incomes are still rising, but that rate is starkly decelerating. Median wages have been stagnant since 1973. People find themselves in an alarming Alice-in-Wonderland-style scenario in which they must run harder and harder—that is, work longer hours—just to stay in the same place. This deceleration is complex, and wage data alone don’t explain it. But they do support the general sense that the rapid progress of the last 200 years is slowing all too quickly.