[FoRK] A Conversation with Peter Thiel

Stephen Williams sdw at lig.net
Mon Mar 19 11:51:10 PDT 2012

+1, for pretty much all of it.  There are blind spots on both sides, and stagnation in the middle.  And, as I've said, there is a 
widespread chronic lack of vision and will to do anything serious about it.  To add to one of his good points, the job sectors that 
are immune to globalization distort the market for those sectors, like manufacturing, that are directly impacted, and vice versa.  
We should have strategies (again with the robotic factories...) to be at least partially competitive in most sectors.

> If there is going to be a government role in getting innovation started,
> people have to believe philosophically that it’s possible to plan. That’s not
> the world we’re living in. A letter from Einstein to the White House would
> get lost in the mail room today. Nobody would think that any single person
> would have that kind of expertise.

How true.  Too many people choke on more than 140 characters of text, let alone invest time to consider detailed ideas and plans.
The Colbert Report w/ Don Fleming et al did a bit about some commodities trader guy on Fox offering a solution to the 
administration.  He did seem a little bit of a crackpot, but it couldn't have hurt to look.

The way the whole Solyndra episode was handled was terrible.  My sense is that some MBAs did erroneous projections of the market and 
ran them off a cliff, ramping up production in an expensive way on non-competitive technology.  The investment should have been 
vetted and monitored by smarter guys at DARPA, VCs, and from other entities with experience asking tough questions.  Government is 
in a position to foster real growth and change, but has to be more savvy about doing it.  The Space-X progression seems like a 
positive example.  Only when they succeeded did they get significant contracts.  Every administration should have clear goals for 
innovation and growth with open discussion about failures and how to avoid them.  We need something like DARPA/FAA/NASA for managing 
funding innovation and large projects, in the sense that each has succeeded (FAA in perfecting administration of and training for 
safety, for instance).

Way too much of that positive and negative knowledge gets lost or very distantly and often erroneously filtered through business 
schools.  Having briefly been part of a small team reviewing large DoD projects, it is amazing what obvious things are allowed to go 
wrong in the name of tradition.  On those assignments, I learned more about management in a couple months by seeing mistakes in the 
large than in the rest of my career.  It's also clear that certain organizations cannot handle development well, for a variety of 
reasons.  FBI, for instance, has managed to botch their case management replacement system something like 6 times, at least twice 
costing hundreds of millions each time.  I declined a key position on the last big attempt, partly because I knew it was going to 
happen again.  Coincidentally, a year later I did my Scrummaster training in Reston with part of the government team in the program 
office on that project.  It was clear that some of what they were doing wrong was becoming obvious to them, way too late.  It was 
all over when they reused the same kinds of contracts and practices that had produced previous failures.  It is crazy that entities 
will continually create contracts that clearly optimize for the wrong things.

[1] http://www.amazon.com/Failure-Management-Highlights-Project-Government/dp/B0007UE14Y
$500 for a report?  Lol...  I'll sell a better, shorter version for $300.


[3] http://spectrum.ieee.org/computing/software/who-killed-the-virtual-case-file
This was in 2005, in the previous try:
> As the FBI gears up to spend hundreds of millions more on software over the next several years, questions persist as to how 
> exactly the VCF went so terribly wrong and whether a debacle of even bigger proportions looms on the horizon. Despite high-profile 
> Congressional hearings, hundreds of pages of reports churned out by oversight bodies, and countless anguished articles in the 
> trade press and mainstream media, the inner workings of the project and the major players have remained largely invisible. Now, 
> detailed interviews with people directly involved with the VCF paint a picture of an enterprise IT project that fell into the most 
> basic traps of software development, from poor planning to bad communication.
> Lost amid the recriminations was an early warning from one member of the development team that questioned the FBI's technical 
> expertise, SAIC's management practices, and the competence of both organizations.Matthew Patton 
> <http://spectrum.ieee.org/images/sep05/images/fbif3.jpg>, a security expert working for SAIC, aired his objections to his 
> supervisor in the fall of 2002. He then posted his concerns to a Web discussion board just before SAIC and the FBI agreed on a 
> deeply flawed 800-page set of system requirements that doomed the project before a line of code was written. His reward: a visit 
> from two FBI agents concerned that he had disclosed national security secrets on the Internet.

[4] http://strategicppm.wordpress.com/2010/04/05/the-fbis-virtual-case-file-project-and-project-failure/
Succinct summary of the failure that ended in 2010.
> The FBI’s Trilogy project contained three parts:
>  1. Upgrading software and hardware for FBI agents
>  2. Upgrading the FBI’s communications network
>  3. Significantly upgrading the FBI’s case management system (Virtual Case File) to enable better access to, and sharing of,
>     case-related information across the FBI
> The first two elements of the project were completed, not perfectly or all that impressively, but roughly as planned. However, the 
> Virtual Case File project experienced major cost and schedule overruns and never achieved its objectives. It is widely used as an 
> example of a failed IT project.

I was part of the DOJ "Internet dial tone" and security architecture / PKI projects, part of the four areas I helped win a contract 
for.  I believe we were successful and efficient on all of them.  The secure Internet/internet network was related to or was part of 
item 2.  I came up with the idea of writing security patterns and anti-patterns in a Wiki there rather than traditional monolithic 
documents.  And I wrote a secure application development book for the FBI & DOJ, later reused and improved by our team at Treasury.  
Too bad we couldn't get permission to publish or share it.

Nice examples:
[5] http://strategicppm.wordpress.com/project-failure/

If all of government persisted in managing projects like the FBI does, I would agree that they should just stop doing projects 
altogether.  But I've seen much better.  When the whole management structure is more savvy, have ownership of the entire mission 
including being efficient, and less affected by dumb-by-appointment flowing downhill, it can work very well.


On 3/19/12 8:49 AM, Eugen Leitl wrote:
> http://www.the-american-interest.com/article.cfm?piece=1187
>  From the March/April 2012 issue: A Conversation with Peter Thiel Francis
> Fukuyama talks with the renowned entrepreneur.
> ...
> Peter Thiel: I don’t entirely agree with that description. My claim is not
> that there has been no technological progress, just deceleration. If we look
> at technological progress during most of the 19th and 20th centuries, it
> brought significant disruption. If you built horse buggies for a living, you
> would be out of work when the Ford Motor Company came along. In effect, over
> time labor was freed up to do more productive things. And on the whole,
> people got to be better off. I think the larger trend is just that there has
> been stagnation. There are debates about how to precisely measure these
> statistics, but the ones I’ve looked at suggest that median wages since 1973
> have been mostly flat. Mean wages have gone up maybe 20–25 percent, which is
> the greater inequality, an anemic 0.6–0.7 per year. And if you confiscated
> the wealth of all the billionaires in the United States, the amount would pay
> for the deficits for only six months. There has been this increase in
> inequality, but it’s a secondary truth. The primary truth is this truth of
> stagnation.
> As for why inequality has gone up, you could point to the technology, as you
> just have. You could also point to financialization of the economy, but I
> would say globalization has played a much greater role because it has been
> the much greater trend. Even though there have been a lot of bumps in the
> road, your “End of History” strikes me as very much true today. Globalization
> has been incredibly powerful, far more so than people could have
> realistically expected in 1970. The question is, what is there about
> globalization that creates a winner-take-all world? There certainly has been
> a labor arbitrage with China that has been bad for the middle class, as well
> as for white-collar workers, in the past decade or two.
> Consider, too, that in 1960 we spoke of the First World and the Third World;
> today we speak of the developed world and the developing world, the part that
> is looking to copy the West. The developed world is where we expect nothing
> more to happen. The earlier dichotomy was fairly pro-technology and in some
> ways more agnostic on the prospects for globalization. The present dichotomy
> is extremely bullish on globalization and implicitly pessimistic about
> technology. Of course, we can point to the great fortunes that have been made
> in the tech industry, but of the great fortunes that have been made in the
> world over the past twenty or thirty years, most have not been made in
> technology. Look at the Russian oligarchs. Maybe one out of a hundred
> billionaires has a tech-related fortune. The others are a political thing
> linked somehow to globalization. So that’s why I think it’s important to
> quantify these things correctly. We tend to focus a lot on the optimistic
> tech narrative that notes a lot of progress, but I think the more important
> question is why it hasn’t been happening.
> There certainly are a lot of areas of technology where, if it were
> progressing, we would expect a lot of jobs to be created. The classic example
> would be clean technology, alternate energy technology. If you were to retool
> the economy toward more efficient forms of energy, one would realistically
> expect that to create millions of jobs. The problem with that retooling is
> that the clean technology just doesn’t work—namely, it doesn’t do more for
> less. It costs much more, so it isn’t working—at least not yet.
> Francis Fukuyama: Thinking again about inequality, the problem isn’t that
> people are lazy. It’s not that working-class people don’t have a work ethic.
> In a sense they’re victimized by the advances of technology and globalization
> and so forth. The classic response to that is to urge the state to protect
> them. Take Karl Polanyi’s view that these forces can’t be defeated or pushed
> back, but that there must be some form of guided social adjustment, because
> society on its own adjusts much less quickly than underlying technology and
> trade patterns change. But then, if you say we’re stuck because the
> government can’t do anything, there isn’t a solution. Or at least there isn’t
> the classic solution: more redistribution and active labor market policies
> like they have in Scandinavia, which arrange for worker retraining.
> In terms of clean tech, I think the classic infant-industry argument might
> apply here. It’s true that it isn’t competitive with fossil fuel technology
> right now, but we’re walking very rapidly down a cost curve, especially in
> solar tech. Governments have provided a certain amount of help in
> commercializing technologies. Certainly the Chinese have been doing this big
> time, which is why they’ve undermined our alternative energy industries.
> Where do you stand on that kind of intervention?
> Peter Thiel: We have different kinds of challenges on the government side.
> One is a little more philosophical in nature: We tend to think the future is
> indeterminate. But it used to be seen as a much more determinate thing and
> subject to rational planning. If it’s fundamentally unknowable, it doesn’t
> make sense to say anything about it. To put it in mathematical terms, we’ve
> had a shift from thinking of the world in terms of calculus to statistics.
> So, where we once tracked the motions of the heavenly bodies and could send
> Voyager to Jupiter over a multiyear trajectory, now we tend to think nature
> is fundamentally driven by the random movements of atoms or the Black-Scholes
> mathematical model of financial markets—the random walk down Wall Street. You
> can’t know where things are going; you only know they’re going to be random.
> I think some things are true about this statistical view of the future, but
> it’s extremely toxic for any kind of rational planning. It’s probably linked
> in part to the failure of state communist central planning, though I would
> argue that there is something to be said for some planning over no planning.
> We should debate whether it should be decentralized or centralized, but what
> the United States has today is an extremely big government, a quasi-socialist
> government, but without a five-year plan, with no plan whatsoever.
> If you were to telescope this now down to a single issue like clean energy,
> the unplanned statistical view of the future is that we don’t know what
> energy technology will work, so we’ll experiment with different things and
> see what takes off. The planned view says that two are most likely to be
> dominant, and so the government has a role to play in coordinating resources
> and making sure they work. So if it’s nuclear power, it has to free up space
> at Yucca Mountain, deal with zoning rules and get plants built, and it’s a
> complicated project at the regulatory level. The same is true of solar or
> wind power. If government wants high-speed rail, it must overcome local
> zoning rules. My guess is that at best we can push on just a handful of these
> major things, but that sort of determinate push requires a view of the future
> that is very specific, and that’s not now the kind of view people have.
> The Solyndra bankruptcy is a detailed example of this. It strikes me that the
> Obama Administration’s response should have been, “Well, Solyndra failed, but
> here are two or three companies we awarded loan guarantees that are working
> great.” They didn’t give that response. There’s a bad explanation and a worse
> explanation for that. The bad explanation is that none of these companies are
> working. The worse explanation—the one I believe is true—is that no one at a
> senior level in the Administration even thinks about the question of
> technology. It’s assumed to be a statistical, probabilistic thing that’s best
> figured out by portfolio allocations of capital to different researchers, and
> not a worthwhile subject to think about. This is a radically different
> position than, say, that of John F. Kennedy, who could talk about the nuts
> and bolts of the Apollo space program and all the details of what was needed
> to make it happen. So it’s a much different way of thinking about the future.
> If there is going to be a government role in getting innovation started,
> people have to believe philosophically that it’s possible to plan. That’s not
> the world we’re living in. A letter from Einstein to the White House would
> get lost in the mail room today. Nobody would think that any single person
> would have that kind of expertise.
> Francis Fukuyama: Well, clearly, Silicon Valley was in many ways the product
> of a government industrial policy, DARPA. So much of the early technology,
> the creation of the internet itself, the early semiconductor industry, were
> really spinoffs from investments in military technology that were obviously
> pushed very strongly by the government.
> Peter Thiel: My libertarian views are qualified because I do think things
> worked better in the 1950s and 60s, but it’s an interesting question as to
> what went wrong with DARPA. It’s not like it has been defunded, so why has
> DARPA been doing so much less for the economy than it did forty or fifty
> years ago? Parts of it have become politicized. You can’t just write checks
> to the thirty smartest scientists in the United States. Instead there are
> bureaucratic processes, and I think the politicization of science—where a lot
> of scientists have to write grant applications, be subject to peer review,
> and have to get all these people to buy in—all this has been toxic, because
> the skills that make a great scientist and the skills that make a great
> politician are radically different. There are very few people who are both
> great scientists and great politicians. So a conservative account of what
> happened with science in the 20th century is that we had a decentralized,
> non-governmental approach all the way through the 1930s and early 1940s. At
> that point, the government could accelerate and push things tremendously, but
> only at the price of politicizing it over a series of decades. Today we have
> a hundred times more scientists than we did in 1920, but their productivity
> per capita is less that it used to be.

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