Conference Presentation, Panel, Fireside Chat
In Tech We Trust? A Debate with Peter Thiel and Marc Andreessen
- The Core Debate: The session examines whether technological innovation is accelerating or decelerating, contrasting high R&D investment ($1.4 trillion annually) with a perceived lack of transformative consumer inventions compared to the late 19th and early 20th centuries.
- Peter Thiel's Thesis (Deceleration): Thiel argues that while the computer industry continues to advance, innovation in all physical sectors (energy, biotechnology, transportation, clean tech) has decelerated significantly since 1970.
- Labor and Capital Metrics:
- The number of people employed in U.S. IT grew 100% in the 1990s but only 38% since 2003, indicating slowing growth.
- Market capitalization of technology companies founded since 2000 is roughly 2–3 times the combined value of all tech firms created in the 1990s, despite the later decade's longer timeline.
- Thiel's "Computer Rust Belt":
- He identifies legacy hardware and software firms (Cisco, Dell, HP, Oracle, IBM, and potentially Apple) as entering a "rust belt" of commoditization and declining innovation.
- Apple is cited as potentially falling into this category, with recent product updates (e.g., iPhone 5 port relocation) viewed as trivial rather than revolutionary.
- Thiel on Economic Stagnation:
- U.S. wages have been stagnant for 40 years; mean wages rose only 22% (inflation-adjusted) from 1973 to 2013 compared to a 350% rise from 1933 to 1973.
- 80% of Americans believe the next generation will be worse off than the current one.
- Biotechnology patent approvals by the FDA are 66% lower today than 20 years ago.
- Energy prices are significantly higher (inflation-adjusted) than in 1972, with no recovery from the 1970s oil shocks.
- Thiel's Cultural Diagnosis: The slowdown is attributed to cultural risk aversion, over-regulation, and incrementalism rather than a lack of scientific capability; he views the current era as one where society fears technology's potential to stagnate.
- Mark Andreessen's Thesis (Acceleration/Reframing): Andreessen counters that innovation is accelerating but is often dismissed as trivial by contemporaries, similar to historical reactions to the car, telephone, and internet.
- Defense of "140 Characters" (Twitter):
- He argues that instant, free, global public messaging is a profound innovation, analogous to the telegraph or telephone, and serves as a foundational platform for future advances.
- He highlights social benefits, such as cross-cultural interaction and the ability for families to communicate without travel.
- Innovation in Transportation and Energy:
- Transportation: Andreessen points to three areas of change: vehicles (electric/hybrid via Tesla), optimization (Waze for traffic routing via smartphone data), and substitution (high-fidelity telepresence reducing the need for travel).
- Energy: He attributes the stall in clean energy not to technical failure but to massive government subsidies ($500 billion annually for fossil fuels) and indirect subsidies via foreign policy (trillions in wars), which prevent clean tech from reaching price competitiveness.
- Andreessen on Measurement:
- Input Metric: The number of scientists and engineers has surged globally (2.2 million degrees in 2000 to 3.7 million in 2008; researchers grew from 3.9 million in 1995 to 5.7 million in 2007).
- Output Metric: He expects per capita GDP to follow a long-term exponential curve (Moore's Law trajectory); he would only pivot to pessimism if a sustained drop in per capita GDP occurred.
- Regulatory Competition: Both speakers agree that deregulation drives innovation; Andreessen cites examples of countries (Israel, South Korea, UK) adopting unique regulatory frameworks to become innovation hubs (e.g., commercial drones, embryonic stem cell research).
- Disagreement on Patents: Andreessen views the explosion in patent filings as potentially positive (indicating high activity overwhelming examiners), whereas Thiel prefers macroeconomic indicators like wages and GDP, viewing patents as a potentially broken or distorted metric.
- Emerging Markets:
- Thiel is skeptical of innovation in emerging markets, viewing them often as copyists of Silicon Valley models ("something of somewhere is nothing of nowhere") and notes that even Japan, after catching up, stagnated.
- Andreessen suggests that "regulatory competition" between sovereign nations could allow emerging markets to leapfrog US-style regulatory constraints, creating new centers of innovation.
- Hollywood as a Sentiment Indicator:
- Thiel suggests the predominance of dystopian sci-fi (Matrix, Terminator) reflects a cultural pessimism and fear of technology.
- Andreessen argues this dismissiveness is a historical constant for new technologies, noting the telephone and car were once mocked as trivialities.
- Historical Precedent: The discussion notes a 40-year lag between the 1970s and present; while 1850–1970 saw falling work hours and rising living standards, the modern era has seen a reversal in work-life balance improvements despite technological gains.
- Forward-Looking Statement: Both agree that the computer industry alone may not save the economy if physical world constraints (energy, regulation) remain; the future depends on overcoming these "bottlenecks" to allow software innovation to translate into tangible economic growth.