Reid Hoffman & Peter Thiel The Future of Revolutions
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Thiel and Hoffmann argue that technological progress and innovation are essential for societal improvement, but are hindered by cultural pessimism toward technology and structural barriers in both government and large corporations that prioritize risk mitigation over ambitious vision.
- Western culture systematically depicts technology negatively in media and politics, creating a hostile environment for innovation despite accelerating technological capabilities
- Monopolies with sustainable competitive advantages are necessary to incentivize innovation and allow creators to capture value, contrasting with competitive markets where inventors capture zero benefit
- Large organizations structurally default to committee-based decision-making that protects against downside risk rather than pursuing upside opportunity, requiring founder-led or founder-minded leadership to break this pattern
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Humans have a more intense biological trigger to fear change and death than to appreciate improvements, which compounds into fear of anything new, making cultural pessimism not purely cultural but rooted in deep biological incentives
“one of the things we find as a biological species is we have a much more intense trigger to change being negative because the fear of death is more important than the kind of the improvements and so and then that compound compounds into oh that's new that's fearful”
Society shows hero worship and scapegoating dynamics: the same leaders are praised as heroic when successful and blamed for psychological illness when they fail, creating an unstable and distorted evaluation of leadership
“we we ascribe heroic leadership to people when they succeed and then we um ascribe all sorts of psychological illnesses to them when they fail and um and uh and I do think there is always this uh this crazy Dynamic with with a lot of the uh Founders in in Silicon Valley where uh you know when things go wrong it is like a primitive tribe where you're everyone's running after them and you know going to chop their heads off or something something like that”
Throughout history, inventors and creators have captured very little value from their innovations: the Wright Brothers made no money, aviation industry cumulative profits were near zero for 100 years, Industrial Revolution factory efficiency increased 7-10% annually for decades but aristocracy retained most wealth, and most innovation historically features y=0% value capture
“when we think about the history of innovation more broadly over the last 200 250 years um it is a sobering fact how many of the inventors creators of new things how little they actually uh captured so much of the time and because to succeed as an in Inventor as a Founder as an entrepreneur two things have to be true you have to create X dollar of value for the world and you have to capture y% of X um and in most cases y equals zero so the right Brothers didn't make any money nor did anybody else in the aviation industry for the next hundred years to First approximation cumulative profits about zero uh if you look at the uh first Industrial Revolution late 18th early 19th century where um the efficiency of factories was increased by 7 to 10% a year relentlessly for decades um and you know the whole all of Britain was transformed from 1780 to 1850 1850 most of the wealth in Britain was still held by the landed aristocracy the factory owners did not make much money it was all competed away”
The best way to change culture toward technology optimism is not mass movement but demonstrating success: convincing small numbers of people to start new companies and do successful things, which gradually changes discourse
“I think one of the ways that uh you know my my best answer for how to change the culture is for people just to actually succeed in doing things that are good for the world and to make it better and so uh and so that's sort of I think it's too hard to to have start a mass movement that convinces the whole societ to change I think you can convince small numbers of people to start new companies and do new things and I think that's how you that's how you gradually change change the discourse”
The microeconomics of clean tech ventures in the last decade were such that companies could not achieve even ephemeral monopoly status because they could not produce something decisively better than competitors, making value capture impossible and leading to business failure despite technological importance.
“you could certainly argue that clean Tech was an important innovation to get right but um the the microeconomics of it were such that uh that it was really hard to come with something was so decisively better you know I'm not sure you even got to an ephemeral Monopoly stage in any of them”
Steve Jobs returning to Apple in 1997 exemplifies successful founder-led big company innovation: despite thousands of employees and multiple product lines, Jobs had authority to shift completely from home computers to consumer electronics
“Steve Jobs coming back to Apple 1997 you it was a reasonably they had thousands of people they had lots of product lines and as as the founder he had the authority to say we're shifting completely from home computers to consumer electronics”
The textile industry disruption (Luddites destroying machinery) was not just economic but involved tremendous social unrest, suggesting that even successful long-term technological transitions involve significant temporary costs that cannot be dismissed
“we we got we got through the textile mills but there were tremendous social unrest during dur that was part of the reason why we have an English term Lite was because there was in fact actually a lot of turmoil going on”
Jobs used physical isolation (badges that only work in the product area) to protect the Macintosh team, and Google did similar with Android under Andy Rubin, protecting from organizational interference
“how jobs did it which is he basically said okay he pulled people into a project put them in a room where only their badges would work he would go work with them uh part of the thing that happens at Google and you know there's variation like this when Andy uh ruin was building Android only the Android folks badges would work in going into the Android and basically Larry was like look you know Andy just go this is important to do make this happen”
Medical transformation from biology-computing intersection includes curing cancer and achieving longevity gains, with unclear net effects on overall human well-being but significant positive medical potential
“the opportunity set is obviously massive transformation in medicine uh being able to cure cancer uh being able to uh do uh you know there maybe pluses and minuses on longevity that's probably Peter thinks was only pluses”
Government should redirect spending from non-discretionary entitlements to discretionary funding for basic research, but this is politically impossible because utilitarianism always dominates policy, prioritizing redistribution over future-oriented investment
“if I had a government that spent things I would much rather have it spent money on basic research wealth redistribution but but we live in a society in which utilitarian considerations always Dominate and so if you look at the uh the the budget it's the uh it's the um it's the non-discretionary part that keeps growing the discretionary part would be the part that does the kinds of things that we're talking about but utilitarianism uh stops you from doing anything of the sort”
Middle class wage pressure over the last 40 years stems much more from globalization than from technology, which has been ongoing for 200 years, making technology an inappropriate scapegoat for wage stagnation
“I think um I think um it is true that we've had um you know a lot of pressure on middle class wages in the US and Western Europe over the last 40 years and I think that coincides much more closely with this era of globalization than with techn ology which has been going on for hundreds of years and so I would um I would say that people blame too much on technology and that the the real problem is with uh competition with low-wage workers in India China places like that”
Internal company politics and blocked resources are always challenges for small innovation teams within large companies trying to pursue small market opportunities
“it's always a question of the internal politics I me you could presumably could have a small team of people work on the small New Market but then there's a question would they get blocked by everybody else in the company uh and how you know and would they really get the resources to to push on this um and so you always end up with these internal political things”
Entrepreneurs should always want to have a monopoly—doing something so different and so much better than the rest of the world that there's actually no competition—rather than competing 'like crazy' in markets where many firms compete
“from the inside if you're if you're starting a business if you're a Founder entrepreneur you always want to have a monopoly um you want to be uh you want to be doing something that's so different that's so much better uh than the rest of the world that there's actually no competition um at all and um if you know if you want to compete like crazy you should open a restaurant in San Francisco”
We measure the importance of innovations by how much money people have made in them in a financialized world, and this leads us to ignore the microeconomics of importance; Albert Einstein got nothing for general relativity even though it may be more important than software
“I think it's I think you know I think we we often tell ourselves like it would be a mistake to say that software is more important than everything else um because we live in a financialized world and so we we measure the importance of things by how much money people have made in them um and we often ignore the microeconomics if you're an Albert Einstein you come up with uh general relativity you don't get to be a billionaire you don't even get to be a millionaire”
Only about 35 of 535 members of Congress (roughly 6.5%) have backgrounds in science, engineering, or technology broadly defined, leaving most lawmakers without technical literacy to understand modern policy challenges
“535 senators and congressmen I I looked this up uh the other day and maybe a generous estimate 35 of them have a background in science engineering technology very broadly defined and the rest of them you I mean they don't understand that windmills don't work when the wind isn't blowing your solar panels don't work at night”
Western culture and politics systematically hate science and technology in all forms, as evidenced by science fiction movies consistently depicting technology that kills people, destroys things, doesn't work, or creates dystopian futures like Terminator, Matrix, Avatar, and Elysium
“I think we live in a society in which all the culture all the politics hates science and technology in all forms the easy way to see this is you just look at all the science fiction movies they always show technology that kills people destroys things doesn't work is dystopian the future is going to be a combination of Terminator Matrix Avatar elisium”
There are two types of companies—monopolies and competitors—and this distinction is the most important idea in business that people don't talk about, with monopolies typically lying about their status while competitors distort their actual competitive position
“I think this idea that uh you have two kinds of companies you have companies that are monopolies and you have companies that compete um I think this is the most important idea in business that people don't talk about and they don't talk about it because the people have monopolies lie about that and the people who are in um crazy competition also distort that fact and pretend that they have better businesses than they actually do”
Adaptive companies require adaptive people who explicitly adopt 'tours of duty' mindset rather than expecting 30-40 year lifetime employment, with conversations about career transformation and multiple sequential commitments
“the alliance the principal question is is that the only way you can have an Adaptive company is if you have adaptive people adaptive people are no longer looking for how do I check into a 30 40 year old 40-year lifetime job so they are looking for how is their career transformed so you actually have to have an explicit conversation with them about essentially doing tours of Duty about how you do something really important here that also helps your career and maybe you'll sign up for 30 or 40 Years of tours of Duty but you act operate that way”
There have to be reward structures for work like general relativity that can't be monopolized into dollars, which requires either basic research funding or tax and redistribution systems, creating tension with libertarian principles
“I completely agree with you there have to be reward structure you can't monop monopolize on dollars which is surprises me a little bit actually ideologically from your point of view...the second part of it is this kind of a question of like for example things like general relativity it's unclear how that actually ends up in a company or product result and so you have to have the incentives that aren't necessarily a company or product as a result for doing that and usually to create those incentives you actually have to have some kind of tax and redistribution system which you also tend to be somewhat negative on”
Monopolies are not necessarily bad; what matters is whether they are ephemeral (fragile, requiring constant innovation to maintain dominance) or static (sitting on laurels, collecting rents without innovation), with dynamic monopolies creating good incentives for ongoing innovation and investment
“the question is is almost a definition between what you might think of as a ephemeral or fragile Monopoly and actually a monopoly that actually doesn't have to work right because a ephemeral fragile Monopoly many Tech things that are described monopolies are actually in fact working really hard because they're worried that if they don't 5 years from now they will no longer have their only the paranoid survive yes and that actually creates a very good cycle of innovation and in reinvestment but if they can essentially sit on their Laurels not do anything collect a massive tax that creates less Innovation”
The dominant ideology treats scientists as monks who should take vows of poverty and dedicate their lives to science without compensation, which obscures the microeconomic reality that compensation structures determine innovation capacity
“we have these ideological claims that scientists should be like monks and they should take a vow of poverty and they should dedicate their lives to science and it's all know it's the microeconomics you can't capture any of the value y equals 0%”
Slowing down technology to protect domestic workers is generally a losing strategy because other countries won't slow their pace, creating competitive disadvantage for any unilateral slowdown
“the general reaction that people have to this is let's slow down technology let's limit it let's do that sort of thing that's actually generally speaking a failing game when other people aren't going to be slowing down technology because you we're not you know solipsists right we we don't exist in the world itself other people are also organizing around it”
Board of directors structurally defaults to minimizing downside risk and avoiding failure on their watch, even if this means sacrificing long-term upside and allowing companies to coast for a decade, rather than taking big bets with large upside and potential downside
“generally speaking what happens when you have a committee is the committee values protecting against the downside more than the upside so they would rather have the company Coast for another 10 years even if it's old sacrificing its ultimate figure because it doesn't look like there's a failure on their watch versus taking a big risk that might fail which has a huge negative implication versus upside”
There is an enormous gulf between Silicon Valley and Washington DC in how people think about problems and what they consider important topics; DC doesn't even consider science and technology important as a category
“there is an enormous Gulf between Silicon Valley and Washington DC the way people think about things is very different the way they think about problems is very different uh we tend to think technology questions about science and technology are important topics people in DC don't even think they're important so we it's not even like we disagree on the the the details we even disagree on the waiting you'd attached to things”
Big companies can successfully innovate and renew themselves, but this requires either founder leadership or founder-like mindset with sufficient moral authority to override committee-based decision-making that defaults to downside risk mitigation
“absolutely um and there definitely and there have been definitely many cases of this um it's uh I I think the that the role of leadership is very important on this and uh and the the um the examples where this is happened has involved cases where the founders have come back to run the company”
Software is an exception to the historical pattern—unlike clean tech, aviation, and industrial manufacturing, software companies have achieved y>0% value capture, making it one of the very few innovation domains where inventors captured meaningful value
“software is one of the very few categories where the inventors were why was greater than 0% and what's your diagnosis from that”
Why startups exist at all is partly a mystery explained by large institutions being too politically screwed up to execute, making startups a solution to institutional dysfunction rather than technological necessity
“it's always a mystery there's something of a mystery why you ever have startups at all you know it's um when we started PayPal one of the most common questions I got was uh you know it sounds like kind of a good product but uh obviously the banks are just going to do this and how will you ever compete with the banks and um because the banks are much bigger they have more resources they have more money they have lots they can hire lots of talented people and uh and I think I think the answer uh why you have start up at all is because large existing institutions are too screwed up politically and both governmental institutions and large corporations to actually to actually execute”
Every organization of 20 people or more requires a technology strategy—not an IT strategy but a strategy for how technology is changing the organizational landscape, how you're playing, and how you're recruiting talent
“any organization that's 20 people or more has to have a technology strategy and that's not an IT strategy that's a strategy for how technology is changing the the landscape of the around your organization within your organization uh how people how you're playing how you're recruiting Talent the whole thing if you don't have a technology strategy you're already in the process of dying”
While technological disruption cannot be prevented, technological progress should be directed to minimize suffering during job transitions and maximize middle-class employment opportunities through education and new job creation
“these this these intermediate zones where there's this transition from one industry to another are hugely disruptive people suffer a lot um there is you know whether or not they you know you do have an uncertainty about like well how much of the of the middle class will come back or how many middle class jobs will be we can have faith that it's like look we've gone through this pattern before it'll work out it'll be fine but I think that in that problem both to minimize the depth and length of the suffering in the transition and also to maximize I think we want a middle- class Society I do think it's an important call for how can we employ technology you know rhetorically Mor's law to help with the transition of middle class to new jobs whether it's Education and Training whether it's new kinds of jobs”
Biological plagues from biotech/biohacking pose greater existential risk than nuclear terrorism—viruses spread more efficiently than nuclear weapons could, making biotech the greater threat vector
“viruses uh incompetent action that could something could spread or um you know kind of biot terrorism is obviously uh in some sense is much more frightening uh than uh essentially nuclear terrorism”
Most entrepreneurs and venture investors describe themselves as small fish in large ponds with lots of competition, while those with actual competitive dominance describe themselves as dominating a niche—the opposite of how you would expect them to describe their position
“the folks who think that they might be a monopoly or like a monopoly describe themselves as small fish and large ponds and there's so much competition and you know nothing nothing to see here move along these are not the monopolies you're looking for um uh and then the people who actually have a lot of commentation we dominate you know and I forget the examples but it's like rap music you know Southern Bakery you know whatever combination”
Taking a company public empowers new constituencies (accounting departments, compliance functions) inside the organization and shifts the balance of power away from innovation-focused leaders toward process-oriented managers, making it harder to execute risky innovation
“I often think of the uh the people who are able to drive Innovation um in one way or another as uh being quite weak at the political games and the political processes tend so the more political processes you set up it always tends to empower the wrong people this is this is one of the CH this is one of the reasons I always give advice against taking companies public because when you take a company public in Silicon Valley you end up empowering a whole new class of people inside that uh company um you know in the accounting department all sorts of places and you know obviously you know you need these things to work but it um it really does shift the balance of power in these uh ways that are you know very hard to do anything around”
Silicon Valley and what it represents is radically countercultural and at odds with what people in the Western World actually think about the future, creating a Zeno's paradox situation where accelerating technological change meets an increasingly reactionary political system hostile to it
“Silicon Valley and what it represents is radically countercultural it's it's very much at odds with what people um in the Western World actually think about the future or or what they want and so I think we have this uh you know we have the sort of it's like a zenos paradox type situation where you have on the one hand accelerating technological uh change or at least the potential for that and then um you know um a culture and a political system that's uh uh incredibly reactionary and Incredibly hostile to it”
If artificial superintelligence arrived, the economic question about jobs becomes secondary to a political question about whether the AI is friendly—analogous to alien contact, making economic analysis irrelevant if the entity is adversarial
“I think the first question we'd ask at that point it's not economic it's political are they friendly or not it would be like extraterrestrials landing on this planet Rob if you had if you had aliens landing on this planet you wouldn't ask the economic question you'd ask the political question”
The CEO often must have a personal opinion on product merits of the innovation rather than treating it as a financial portfolio of diverse bets, otherwise they won't provide sufficient protection and direction
“the CEO often has to have an opinion on the product merits of the product otherwise they wouldn't do it's not a portfolio it's not a financial portfolio of a hundred different uh Innovations uh without any details on anyone in particular”
Peter's book emphasizes that we cannot take for granted that the future will be better, and therefore we need to work to create it today, serving as a key motivating thesis for the book
“the summary sentence really like in this third to last paragraph or somewhere near the end he said we cannot take for granted that the future will be better and that means we need to work to create it today so that's why Peter's here”
PayPal succeeded not because of superior resources compared to banks, but because banks were too politically constrained to execute on the payment innovation despite having more money, talent, and resources available to them
“when we started PayPal one of the most common questions I got was uh you know it sounds like kind of a good product but uh obviously the banks are just going to do this and how will you ever compete with the banks and um because the banks are much bigger they have more resources they have more money they have lots they can hire lots of talented people and uh and I think I think the answer uh why you have start up at all is because large existing institutions are too screwed up politically and both governmental institutions and large corporations to actually to actually execute”
Successful corporate innovation groups are product-oriented (building something, making it happen) rather than strategy-oriented (producing innovation plans or strategy documents), and must be completely disconnected from organizational political processes
“I think the common pattern is it has to be a product oriented group it isn't a group that says we are producing a strategy or we are producing an innovation plan we're building something we're making it happen and it's empowered by the CE and it is completely disconnected from any political process from the rest of the organization”
Healthy ego strength versus unhealthy narcissism in leaders is a very fine line, often distinguished by whether they ended up being right, with the same characteristics that move teams potentially becoming harmful depending on context
“it's a very fine line I agree with that actually yeah I mean look the it's a little bit the distinction between Madness and genius and usually it's because you ended up being right”
History shows technology has replaced lost jobs with new ones over 200 years, but predicting whether AI/robots would follow this pattern is premature; if strong AI and humanoid robots smarter than humans and requiring no payment emerged, that would be genuinely scary for middle class employment
“I think um so I think the the history of the uh of Technology broadly for the last 200 years has been a history in which um certain jobs have been lost but it's been replaced by other jobs and people have been wrong to um to exaggerate this the the Lites tried to destroy the factory equipment in the mid 19th century because were going out of losing their jobs to the textile factories but in fact technology had the effect of freeing people up to do to do other things um and I don't think I think it's premature to say that there's something radically different about computer technology if we had strong AI if you had robots that looked like people and that were smarter than us and that you didn't have to pay anything um I think that would be a scary Prospect for middle class jobs”
The judgment of whether to back a particular leader combines multiple variables: market opportunity, person's skill set including ability to assemble support network, product-market fit timing, available assets, and probability of success—making specific guidance impossible
“I think the Highline is uh uh it's almost like a venture decision which is in this market time in this kind of what the market opportunity is this person's set of skills including being able to assemble the right network of support around them do you back them or not it's like a venture decision and that's always an a an aspect of judgment that's a combination of what the time looks like in terms of the assets what the time looks like in terms of the product Market fit and the set of assets that can be pulled together with some probability of getting the shot on go”
Bob Iger at Disney exemplifies non-founder leadership successfully executing innovation and renewal at scale, though such examples are uncommon and more rare than founder-led successes like Amazon and Google
“I think Bob igert Disney is doing pretty well I I don't think it's I think it's uncommon and it's much more common amongst Founders but I think you know Iger and Disney is one one i've think of I have to think a short list”
In theory there is no difference between theory and practice, but in practice there is—illustrating that abstract principles about corporate innovation structure often fail when confronted with actual implementation challenges
“in theory I agree with that and in practice I think it's uh it's uh we shouldn't minimize how tough it is and we may not even disagree on in theory there is no difference between theory and practice practice there is”
Peter Thiel co-founded PayPal and Founders Fund provided early funding for Facebook through Thiel's role, while also being a co-founder of other companies.
“Peter co-founded PayPal and paler provided early funding for Facebook thanks to to Reed of course”
Thiel and Hoffman attended Stanford University together and have subsequently partnered in various ways in the technology industry.
“but these guys went to college together most people probably don't know that but maybe you do um at at Stanford um and then they've subsequently partnered in a variety of ways in the technology industry”
The Luddites (spelled 'Lites' in this transcript) attempted to destroy factory equipment in the mid-19th century because they were losing jobs to textile factories, but technology ultimately freed people up to do other things rather than destroying employment.
“the the Lites tried to destroy the factory equipment in the mid 19th century because were going out of losing their jobs to the textile factories but in fact technology had the effect of freeing people up to do to do other things”
Reed Hoffman founded LinkedIn and has provided significant help on projects including contributing to work on Facebook-related research.
“uh LinkedIn being Reed's company um but you know I wanted to just tell you one of the things that I I took away from Peter's book which I really thought was um the summary sentence really like in this third to last paragraph or somewhere near the end he said we cannot take for granted that the future will be better and that means we need to work to create it today so that's why Peter's here um Reed is somebody who I've known for a long time he was huge help to me when I wrote my book about Facebook”