
Peter Thiel & Max Levchin: "Silicon Valley Lacks Radical Innovation" - gatsby
http://www.siliconvalleywatcher.com/mt/archives/2011/02/top_paypal_alum.php
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edw519
_A lot of what our parents generation did: building interstate highways,
Manhattan Project, etc, could not be done today._

Being the only remaining superpower (and having little global military
competition) really takes the wind out of government's sails of achievement.

Interstate highways, the Manhattan project, the space program, national
infrastructure, aerospace, much medical technology, and even computers were
all borne out of military necessity. With so many bad guys around the globe,
only a traitor could vote against these things.

Our parents built the stuff needed to save the world. We're building better
ways to instantly share our bowel habits. I don't know whether to laugh or to
cry.

~~~
shakeshake
Blah Blah Blah. Social networking was crucial for a country of highly
oppressed people to overthrow their tyrannical government. Doctors can
identify diseases from their phone in a way that would have taken days, we can
de-salt water in way that is practical. New times, new problems.

Our generation is pushing innovation at a speed that is unparalleled, don't
confuse the 47 fart apps in the app store as a complete misappropriation of
focus.

~~~
edw519
_Blah Blah Blah._

Normally, I ignore such responses, but how could I resist bait like that?

 _Social networking was crucial for a country of high oppressed people to
overthrow their tyrannical government._

Ahh, the jury's still out on that one. Let's see how much less tyrannical the
next government is. I bet not much.

 _Doctors can identify diseases from their phone in a way that would have
taken days_

To what purpose? This is the first generation with worse health and life
expectency than its parents. What good is providing so much technology at so
much cost to those who push so little value out of the other end of the
pipeline?

 _New times, new problems_

No question. All I'm wondering is, "Where is the new value?"

 _Our generation is pushing innovation at a speed that is unparalleled_

Versus what? Citing, please.

Hmmm, lets see...

From 1910 to 1960: The masses received first value from the automobile, the
airplane, the telephone, radio, television, electricity, indoor plumbing,
sewage treatment, and antibiotics.

From 1960 to 2010: We can carry our phones with us. Cool.

 _don't confuse the 47 fart apps in the app store as a complete
misappropriation of focus_

Opps, I completely forgot about smart phones. I was referring to all the
instant communications we now have that produce so much activity and so little
value. Is that all we've got?

~~~
usaar333
> From 1910 to 1960: The masses received first value from the automobile, the
> airplane, the telephone, radio, television, electricity, indoor plumbing,
> sewage treatment, and antibiotics. > From 1960 to 2010: We can carry our
> phones with us. Cool.

Not to be overly pedantic, but just to compare correct time periods:
electrical distribution really got running in the 1890s, the telephone also is
from the late 1800s, etc.

1960 to 2010 brought space exploration, the internet, economical airplane
travel, computers, all sorts of cures/treatments for diseases, pretty much
100% of what is now called microbiology, and yes.. even mobile phones.

Just 15 years ago it was such a pain to get things done, due to the lack of
widespread web and email. Some may say otherwise, but I feel life is much
easier now - at least for those who can use the technologies well.

~~~
OstiaAntica
The pace of innovation in America has slowed, though, as the government has
consumed a greater share of GDP. For example, cellphone technology was
invented in 1947 but was stifled by the FCC for a generation.

------
dreamux
I think one of the big reasons you don't see startups changing the world
anymore is that the name of the game has changed from 'go public' to 'get
acquired'. Many game changing technologies that big companies have released in
the past 10 years (since the dot-com crash) have been through acquisition.
With the IPO market now completely stagnant, its nearly impossible to aim for
a public offering... and your investors want an exit.

Its not about changes in innovation, its about changes in exit strategy.

~~~
juiceandjuice
I'm not one to bash software, but software only goes so far in radical
innovation.

I think the reason you don't have the radical innovation is because everything
has tipped heavily towards web and consumer/convenience oriented innovation.
This isn't a bad thing, the costs for writing code are much smaller than R&D
costs for most anything else, and it puts people to work and solves problems.

There are still some companies like Tesla/SolarCity in the valley (or
technically, on the East bay) changing the name of the game, but even Tesla is
valued less than Groupon, for instance.

~~~
pnathan
I think this is one of the key factors: most of the buzz today is orienting on
what amounts to entertainment for the moneyed. Since the moneyed, well, have
money, they buy it, and thus the company does well.

What makes my life 1% more fun does nothing for someone in a third-world
country. This is compared to, say, 50 years ago, where something that made my
life better, e.g., an advance in refrigeration tech, could be distributed out
to the third world better. I'm pulling examples out of a hat here, and I'm
sure that other and better examples could be found.

There are a ton of more fundamental projects done by companies, people, and
universities out there. But they don't get the buzz right now, _generally
speaking_.

------
misterbwong
_Max Levchin: Groupon is probably under-valued. The fastest growing company
ever. I came across a startup recently that had a Powerpoint and no engineers,
no product and it had a $16 million valuation. That's an over-valued company._

Interesting how different his opinion of Groupon's valuation is from the
prevailing sentiment.

~~~
loire280
Groupon has had pretty huge revenue growth and is currently bringing in some
hundreds of millions of dollars a year in revenue.

Skepticism about the ability to maintain that growth rate, and the suspicion
of many (especially here) that they're burning bridges with the companies they
work with put a high valuation in doubt, but that's a matter of opinion at
this point. Evidence that Groupon is having any trouble finding partners to
offer coupons is so far anecdotal.

I never thought there'd be this much money in coupons, but so far it looks
like it's a great business model. It wouldn't shock me if those valuations
were true.

------
danenania
How does "valuations are all over the map" jive with "there is no bubble in
tech"? If a lot of tech companies are being systematically overvalued, isn't
that the definition of a tech bubble?

It's also no secret that monetary policy is as loose as ever, so it doesn't
take a lot of dot-connecting to see which forces are driving these valuations,
especially with Fed bedfellows like Goldman are getting involved. Would people
be so willing to throw their cash behind 10-100x PE companies if they had to
obtain that cash at market rates and without implicit government backstopping
of losses? I'm sure no one involved in tech investing wants to recognize this
situation for what it is, but come on now, anyone can see that something's
fishy.

~~~
kenjackson
I think a tech bubble generally means that nearly everyone is overvalued.

~~~
danenania
A sector being overvalued as a whole isn't enough? Perhaps the bubble is
really focused on particular segments within what is generally known as
'tech', but it still seems like the most appropriate label.

~~~
kenjackson
I didn't realize they said the sector was overvalued as a whole. That is
sufficient. I just caught the part that valuations were all over the map,
which to me means that some companies are overvalued and others undervalued,
but no significant trend one way or the other.

------
gamble
1950-2000 was one of those rare moments in history when industries (whole
states, countries even) could coast on regular, incremental improvements to a
single world-changing technology. SV was in the right place at the right time,
and never totally lost it's edge. But the semiconductor and software
industries are mature now, and spread much more widely than thirty years ago.
SV still retains many advantages, but you can't get blood from a stone. The
radical, disruptive stage of digital technology is over.

------
panarky
Money quote: "Too many companies are featurettes."

------
jrk
_ML: There is not enough radical innovation in Silicon Valley. Focus is too
narrow. Too many companies that are featurettes._

Companies…like Slide?

~~~
seiji
Maybe that's how he formed his opinion? He spent years catering to the whims
of 14 year old girls. It failed.

------
vannevar
They're right. Silicon Valley has become enamored with the overnight success,
which is usually attributable to fashion rather than innovation. Real
innovation often takes a long time to catch on, since by definition it goes
against conventional wisdom. VCs don't want to get rich slowly, and
entrepreneurs are following their lead in chasing hockey-stick growth curves,
which are a lot easier to come by in fashion than they are in technology.

------
hoag
That was a great event, and that discussion sparked quite a bit of debate
between my two friends and me over dinner afterwards. (Actually, you can see
the three of us sitting in the front-right-most seats in the photo!)

In my opinion, the notion of "radical innovation" depends on one's point of
view: one could argue that, although the spectacular innovation during the
space race, e.g, like landing a man on the moon, was indeed remarkable, it
was, for all practical intents and purposes, little more than a political
publicity stunt to the average individual, i.e., it did not have a profound
effect on a personal level.

In contrast, the developments of the past 20 years -- internet, cell phone,
facebook -- have profoundly changed individuals around the planet.

I don't think the question should be whether a thing is more or less
innovative than another thing, but rather what effect the thing has had on a
group of people on an individual level.

------
freshfey
You can't expect radical innovation every day. It takes time, just like it
took time to build streets, cars, airplanes and mobile phones (50-100 years).
We could however hope that the intervals between radical innovations are
shorter, now that we have a more efficient way to use technology.

IMO Google brought radical innovation and it is only what, 10-12 years old?
The next big thing is probably in works, but we can't foresee the future so
we'll know that is radical, when it's here.

------
inthewoods
Peter Thiel: "Everything is short-term focused no one is looking into the
future, 15 to 20 years like they used to in our parents' generation. A lot of
what our parents generation did: building interstate highways, Manhattan
Project, etc, could not be done today."

This from a huge libertarian?

~~~
mindcrime
_This from a huge libertarian?_

Being a libertarian doesn't conflict with wanting to be forward looking, or
with wanting to do ambitious projects. And a "small 'l' libertarian" might
even be OK with the State managing the construction of something like the
Interstate highway system. A "Big 'L' Libertarian" would oppose funding such a
project through coercive, involuntary taxation, but wouldn't necessarily
oppose the idea in itself. They would just argue that a means of funding
should be found that doesn't involve coercion.

That said, I don't know Peter Thiel and I don't know how deeply his
libertarian roots run, or how much of an ideologue he is. There are a lot of
people who call themselves libertarians that I wouldn't necessarily call
libertarians myself. <shrug />

~~~
jbooth
Libertarian has been diluted to meaningless.

These days, if you go by majority vote, it generally means "doctrinaire
conservative who decided deficits were really important on January 20th,
2009".

~~~
yummyfajitas
Here are some articles by libertarians criticizing deficits as early as 2004.

<http://www.cato.org/pubs/briefs/bp87.pdf>

<http://reason.com/archives/2005/02/13/revive-gramm-rudmann>

<http://reason.com/archives/2007/02/12/the-beltway-cut>

~~~
jbooth
I'm sure you can find a token libertarian criticism in between enabling these
guys every other spare second. Ron Paul even opposed the war in Iraq. (I'll
give that guy credit for being principled even though half of his opinions are
loony-bin crazy).

But I'm talking about the totality -- check out Fox News and the Tea Party if
you want the beating heart of the conservative movement. These are the _exact
same people_ , not figuratively, literally, who defended the Bush admin for 8
straight years. And CATO? How many pieces did they put out as cover for the
Bush admin during that same time period? They're basically part of the
republican messaging system.

~~~
danenania
"(I'll give that guy credit for being principled even though half of his
opinions are loony-bin crazy)"

Which opinions? I doubt you comprehend the first thing about any of them.
Let's see if you can even restate them correctly.

P.S. You can disagree with someone without mudslinging. I disagree with Paul
on a number of things as well, but all his ideas have a large amount of
thought and scholarship behind them (a hell of a lot more than anything the
establishment parties come up with). Dismissing them out of hand with no
backup is definitely below the standard HN tries to reach.

~~~
jbooth
Two words: Gold Standard.

I'm not falling into that "restate them correctly" trap where you interpret
some phrase differently than me so I'm an idiot. Gold standard is crazy
without even needing an explanation.

~~~
danenania
Yeah, being able to restate an argument you've called crazy is a "trap". Give
me a break.

Seriously, the goal here is to have mature discussions. If you aren't even
willing to back up your assertions, just don't post.

~~~
jbooth
Ok, "moving from fiat currency to gold-backed currency" is crazy. "Disbanding
the federal reserve" is crazy. It would involve massively reducing the money
supply and liquidity for the overall economy, and destroy the current counter-
cyclical levers we have to lower/raise interests rates when we want to either
stimulate the economy or cool down inflation. Take a look at the extreme
boom/bust cycle from the late 19th century if you want to see what happens
without those levers. There's a reason they went to fiat currency in the first
place, and it wasn't, "I'm a liberal caricature and I want to do this to
increase government control". It's because the gold standard wasn't adequate
to the job. Let alone that there's no way to get from here to there in the
modern world where the entire G20 has fiat currencies.

The gold standard is a position of "I don't care what's been proven to work in
the real world or what's possible to actually accomplish, I care about what I
find emotionally satisfying".

EDIT: Regarding civil discussions, you might consider chilling out on the ad
hom attacks yourself. You've called me uninformed multiple times while
misinterpreting my comments to mean something that I don't see any possible
way to construe from what I said. Bringing Chinese actions from the 1950s and
60s into a discussion of "modern china's" propensity for militarism above, as
if anyone would consider maoist China the same thing as the current regime,
and implying that I had no idea such events happened.

~~~
danenania
Look, the Fed printing money doesn't "stimulate" anything except the balance
sheets of its own member banks and their friends. It is functionally
equivalent to counterfeiting on a mass scale. Why do you think counterfeiting
is illegal? It gives the counterfeiter a (stolen) financial benefit, then
dilutes the value of existing money. Anyone posting on a hacker forum should
understand this basic functional relationship. It really isn't hard to grasp.
Inflation doesn't create wealth. It transfers wealth. It's not very difficult
to see which direction it's being transferred. Trying to stop this is not
'crazy'. It's common sense.

International food prices recently hit an all time high. Americans really need
to wake up from their fantasies quick. Their incredible ignorance of how their
leaders operate is costing the world a nearly unimaginable toll of suffering
and death, and it's getting worse every day.

~~~
jbooth
Lowering the interest rate is not equivalent to printing money. If you want to
redefine terms, you can prove whatever you want to prove.

~~~
jwhite
The Federal Reserve has responsibility for both interest rates and creation of
money (check out the Wikipedia page). I believe the parent was referring to
the Fed increasing M0, the base money supply. Interesting things have been
happening to M0 over the past couple of years. Also, the Fed sets reserve
requirements on the banks, which directly affects how much money they (the
banks) can create (M1 and higher).

------
hendler
Fundamental research isn't cheap or fast. Private investors aren't usually
going to to take the long road until they can afford it.

