Peter Thiel: I’m Really Not Crazy; I Just Want to Help Some Kids

Two weeks ago, billionaire Peter Thiel was savaged in a widely read Slate story that called him a “hyper-Libertarian” with an “appalling plan to pay students to quit college.”

It wasn’t the first time that Thiel has been dumped on by media observers. The 42-year old—who made his first fortune as a PayPal cofounder and now oversees a New York-based hedge fund, a San Francisco-based venture capital firm, and sits on several startups’ boards, including Facebook—has numerous interests that make him an easy target.

The newest of these, and the overwhelming focus of Slate’s scorn, is the Thiel Fellowship, a program that plans to give $100,000 to 20 applicants under age 20 to “stop out of school” and pursue any entrepreneurial ambitions they might harbor.

Slate called the idea “nasty,” and an effort for Thiel to “clone” himself, and though it seemed that Slate grossly overstated its case, I didn’t particularly understand the need for the program, either. Thiel tried to explain it to me yesterday. Our conversation, edited for length, follows.

Slate wrote a surprisingly hostile piece about you. Did you talk with the author, Jacob Weisberg?

I didn’t. He didn’t reach out to me in any way. I Googled him and saw that he went to Yale and was a Rhodes Scholar, so it’s possible that as [someone with Weisberg’s academic credentials], he took particular issue with the suggestion that college isn’t for everyone. But I really don’t know.

Among the ominous-sounding observations in Weisberg’s piece is that you see Facebook “as a way to form voluntary supra-national communities.” Is that really what you had in mind when you wrote Mark Zuckerberg his first check for $500,000?

[As a board member and investor] I can’t really comment much about Facebook except to say that I don’t see a problem with people forming voluntary groups on Facebook, and of course, they’re not hampered by national boundaries. It’s sort of odd that there would be something wrong or controversial about that.

What of his characterization that you’re the lead backer of Seasteading, which aims to create permanent, autonomous communities on the ocean, or that you’re way involved in the Methuselah Foundation, which is researching how to extend human life by hundreds of years?

Seasteading was started by a friend of mine, Patri Friedman, who’s the grandson of [Nobel Prize-winning economist] Milton Friedman. Patri is a smart guy who used to be an engineer at Google and [one of the institute’s first ideas] is called Ephemerisle, which is intended to be more like Burning Man on the ocean. Whatever you think of Burning Man, you don’t think of it as this sinister crazy plot. And I’m probably the largest single donor to it, but the whole thing has been [operating] on a modest shoestring-type budget. It’s still just getting started.

About the Methuselah Foundation, I’ve been very interested in biomedical research, and one area that’s been very underfunded is research on the causes of aging and what to do to slow down the aging process. It’s sort of odd to me why people find it so controversial. It seems to me that in general, it’s something that people would be very supportive of – that people could live longer and healthier lives. Meanwhile, Methuselah has done an incredible amount of good work on a very modest budget, including organize conferences to get people together on the topic and inspire a lot of people involved. Transhumanism has all kinds of weird connotations [but] I think it’s worth supporting the research even if it’s unlikely that I’ll personally benefit from it. I’d still be supporting it if I were 90 years old and expected to die in six months.

Do you mind being characterized as so eccentric, with strange interests and rented homes that are “totally devoid of any family or friend photos” and so forth?

Well, I don’t spend a lot of time decorating my places, but I do have books, chess sets, and some photos. “Eccentric” always sounds slightly negative, so I’d never describe myself as eccentric. I’d sort of describe myself as independent. Whenever there’s a piece of conventional wisdom that everyone believes, my gut instinct is to ask questions about it. It doesn’t mean that it’s wrong, but I’m viscerally skeptical of what the crowd thinks.

Including the importance of a college education, seemingly. You went to Stanford University as an undergrad and a law student, yet you’re advocating for some students to “stop out of school.” How would you rank the value of your own education?

I’m very positive on Stanford. I’ve been on Stanford Law School Board of Visitors. I’ve taught [at the law school] and will teach there again in 2011. It was a great undergraduate and graduate learning experience, and I think it probably was very helpful, but you can’t run the experience twice. It’s hard to know [where I’d be] if I didn’t go to Stanford or to school at all.

I do think it’s striking that there are a lot of talented entrepreneurs who didn’t finish even their undergraduate schooling and I question how closely education links with entrepreneurship. At the end of my education, I was applying to become a corporate attorney in Manhattan. Becoming an entrepreneur was very far from my mind even though it was Silicon Valley in the ‘90s.

A second thing that’s very important and that has changed from the ‘80s, when I went to school, is that it costs so much more. I was fortunate that my parents were middle to upper middle class, so they could pay for my school, and I got out without loans, and it freed me to do a number of things, including becoming an entrepreneur, which is riskier and you can only really do if you don’t have a lot of debt.  But it’s hard to do a startup if you own a house, for example, because you typically have to have a job to service the debt. And when college education becomes as expensive as buying a home and impacts people’s freedom over the rest of their careers, it’s a problem that we need to think more about as a society.

College costs are clearly a huge burden, but what of the many other benefits of going beyond educational, including the friendships schools foster, along with the networks?

On that score, I think some colleges are better than others. The counter question is: are cultivating those networks worth a quarter million in debt? It’s something like $180,000 in loans for business school. I sort of agree with your point, but I think it’s a problem when networking becomes the main reason that people go to school, which is sometimes the case. I think you could do networking for a lot less [cost].

There’s also the question of why you’re rewarding people under age 20. Why is that number meaningful to you?

The idea behind the fellowship program isn’t just for people to start companies. We’d be open to having them start a business, but we’re also looking at helping connect them with the various businesses that we’re familiar with and know in Silicon Valley, and to give them the opportunity to see what goes on in a startup.

Then are we really talking about well-paid internships?

Sort of. You don’t typically have internships at startups, but that would certainly be one option. We just want people to start thinking hard about various things, and we’re asking for a bit more of a commitment than a 10-week or a 3-month-long summer program. My sense is that you don’t learn that much in three months, which is why we thought this should be a somewhat more sustained effort.

What about logistics, including how recipients will be paid?

We’re still figuring everything out. We might give them [one check] at the beginning of the first year and another at the start of the second. We might do it quarterly. We’re looking at accepting a first batch by the end of this year and the rest on a rolling basis. But we’ve gotten a decent amount of interest. I think people are very open to this kind of program because there’s some agreement that we need to rethink things that are tracked. You can think of this as an anti-tracked thing, because being an entrepreneur is fundamentally not tracked.

And what do you say to parents who think there’s enough time for both?

The thing is, it’s only 20 people. There’s something like 10 million people in college in the U.S. I can grant you that for most of those 10 million people, college is the right thing. But are there 20 people for whom it’s not the right thing — who should think about it more? These debates always get framed  in binary ways, but the nuance is always: it may be good for some people, maybe even the vast majority. But [college] may not be right everybody.

We just had a crazy housing bubble and people didn’t think enough about, and it’s a mess. But if you don’t pay your loans, the bank will take back your house. I think it’s even more important to stop and think about education. If you don’t think it through and you make a mistake, you really can’t get out of it.