Technology Stalled in 1970

Peter Thiel has been behind some prominent technologies: he cofounded PayPal and was an early investor in such companies as Facebook and LinkedIn. But he’s convinced that technological progress has been stagnant for decades. According to Thiel, developments in computers and the Internet haven’t significantly improved our quality of life. In a new book, he warns entrepreneurs that conventional business wisdom is preventing them and society as a whole from making major advances in areas, such as energy or health, where technology could make the world a better place—though he doesn’t offer detailed answers about how we might unlock such breakthroughs. Thiel spoke to MIT Technology Review’s San Francisco bureau chief, Tom Simonite, at the offices of his venture capital firm, Founders Fund.

One of the most striking claims in your book is that we haven’t had significant technological progress since around 1970. What about computing?

Progress in computers and the Internet helps with communications, and it’s enabled us to make things far more efficient. On the other hand, most other fields of engineering have been bad things to go into since the 1970s: nuclear engineering, aero- and astronautical engineering, chemical engineering, mechanical engineering, even electrical engineering. We are living in a material world, so that’s pretty big to miss out on. I don’t think we’re living in an incredibly fast technological age.

The Founders Fund’s slogan takes a swipe at Twitter: “We wanted flying cars; instead we got 140 characters.” Haven’t things like iPhones and online social networks improved our quality of life?

Some. Just not enough. That line is not meant to be a critique of Twitter as a business. I think the company will eventually become profitable; the 2,000 people who work there will be gainfully employed for decades to come. But its specific success may be symptomatic of a general failure. Even though it improves our lives in certain ways, it is not enough to take our civilization to the next level.

What kinds of technologies might do that?

There are all these areas where there could be enormous innovation. We could be finding cures to cancer or Alzheimer’s. I’m quite interested in enabling people to live much longer. There’s an information technology approach, where we optimize your nutrition and give instant feedback using mobile device technology. But I suspect that there are entire new classes of drugs or processes that could rejuvenate body parts. I also think that tenfold improvements might be possible in nuclear power. There are miniaturization technologies where you have much smaller containment structures, and technologies for disposing of and reprocessing fuel that have been underexplored.

What are you doing to create this kind of technology?

Well, we invested in SpaceX [the private rocket company that has taken over some launches for NASA] in 2008 after the first rockets had blown up. The next one did work. We invested in a few biotech companies, and we’ve been looking at medical devices. These sectors where it’s a multiyear commitment are wildly out of fashion among investors. At the same time, I do think that there will continue to be innovation in information technology in the decades ahead. About two-thirds of our work is there.

What companies would you say are taking on big problems?

Tesla is a really interesting example. Most of the components didn’t involve really great breakthroughs, but there was this ability to combine them. I think we’re generally too drawn to incremental point solutions and very scared of complex operational problems like that.

The paradigmatic example for a large company is Google. Within large companies you often run into internal bureaucracy and the need to meet the quarterly results cycle. Google has done much less of that than other large companies. It looks like they’re making good progress on the self-driving cars, which would be very revolutionary if it happened.

Instead of taking aim at major breakthroughs, Silicon Valley appears dominated by the philosophy of the “lean startup,” which says you have to start small and beat existing products as cheaply as possible.

Great companies had a fairly inspiring long-term vision at their core. It’s not the way most of the startups in Silicon Valley think of themselves, but I would say it’s the way the really valuable ones do. Apple was not exactly a lean startup when it launched the original Apple computer. If you think that you can’t take any bold steps, then you will take only incremental ones. This is why Elon [Musk, founder and CEO of Tesla and SpaceX] is so inspiring. Tesla and SpaceX both represented fairly big quantum leaps.

Can technology companies that start out bold stay that way when they become established? Many large computing companies get cautious.

You have to think of companies like Microsoft or Oracle or Hewlett-Packard as fundamentally bets against technology. They keep throwing off profits as long as nothing changes. Microsoft was a technology company in the ’80s and ’90s; in this decade you invest because you’re betting on the world not changing. Pharma companies are bets against innovation because they’re mostly just figuring out ways to extend the lifetime of patents and block small companies. All these companies that start as technological companies become antitechnological in character. Whether the world changes or not might vary from company to company, but if it turns out that these antitechnology companies are going to be good investments, that’s quite bad for our society.

You hold up the Apollo program, the freeway system, and the Manhattan Project as examples of the kind of big leaps in technology we need more of. But those were all government projects. Should the U.S. government return to funding such things?

There is an argument that there should be state funding to help things get started where there are not many profits that could be captured. It’s in the public interest. But the way the U.S. government today is dominated by lawyers rather than scientists or engineers suggests that it is very poorly suited for evaluating these kinds of projects. For example, you probably could not restart nuclear power in the U.S. without the role of government. But because our government does not believe in complex coördination and planning, it will not restart the nuclear industry. It’s quite possible it will just not get restarted.

Might one of the newer economies, such as China, retain that belief in big goals?

I think China’s medium-term future will involve simply copying things that worked in the developed world—what I call globalization. That’s the rational choice. It’s how we develop the developing world. The question we don’t ask enough is, how do we develop the developed world? It’s through the push for technology.

Some of your arguments echo those of economist Robert Gordon, who says that economic growth and technological progress are stalled because new technology won’t deliver the gains of the Industrial Revolution. Do you share that view?

I agree with both Robert Gordon on the one hand and Ray Kurzweil [futurist author turned Google executive] on the other. I’m not as pessimistic as Gordon, because I do see a lot of progress in the information technology sector, but I’m not nearly as optimistic as Kurzweil. His book The Singularity Is Near gives a sense that it’s just this force of nature that’s coming, whereas I think we make a cultural decision to develop technologies.

The way some pessimists put it is that all the low-hanging fruit has been picked. I would argue that there was never any low-hanging fruit; it was always of intermediate height and the question was, were people reaching for it or not? I’m frustrated because I think technology is progressing slowly, but I’m optimistic because I think it could be going a lot better.

This Q&A was updated on October 3 to delete an erroneous reference to Thiel’s investment in Tesla Motors and to correct the number of failed launches SpaceX had.