Peter Thiel talks Apple, Bitcoin, tech investing, innovation

The technology entrepreneur and investor questions whether Apple can move the revenue needle with its new products, derides tech buzzwords and talks everything from education to mobile payments to innovation.

ORLANDO — Technology entrepreneur and investor Peter Thiel said Apple will struggle to innovate to develop any business that'll move the dial on revenue growth, questioned whether Bitcoin has staying power and panned technology buzzwords like cloud and the internet of things.

Thiel co-founded PayPal with Max Levchin and Elon Musk and was CEO of the company. Now he's a venture capitalist who was the first outside investor in Facebook. Thiel also is co-founder and chairman of Palantir, a big data company. He has invested in more than 140 companies and the Thiel Foundation aims philanthropy at breakthrough technologies such as artificial intelligence and anti-aging research.

Speaking at the Gartner Symposium ITxpo, Thiel, at the conference to plug his Zero to One book, covered everything from entrepreneurial thinking to currency and investing in new technologies.

thielgartner
Credit: Gartner

Thiel covered a lot of ground ranging from education, innovation and how vertical integration is generally underestimated. There's also a big difference between globalization and technology innovation. Here's the recap on Thiel's talk.

  • A new world currency and Bitcoin's role. Bitcoin is extremely hard to use for transactions, but lacks a payment system. "I'm somewhat skeptical," said Thiel. "It's a currency without a payment system. I'd be more bullish on it if there were more payments."

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  • Mobile payments. "There are a lot of things to be improved on with mobile payments. There are too many steps. Payments is always this thing that's credible. You always want to be close to the money. We come up with these broad solutions, but can never get adoption," said Thiel.

  • On Apple Pay and the company's innovation. Thiel said CEO Tim Cook has an almost impossible job to fill Steve Jobs' shoes. Apple will have trouble moving the dial on its overall revenue with Apple Watch or Apple Pay because the businesses are "still too small to move the dial." In other words, the iPhone will always dominate Apple's focus and the company will suffer from the laws of large numbers.

  • Capitalism vs. science and technology. Thiel said the U.S. is focused on capitalism and not technology. He said you can look at any movie and there is technology going bad whether it's Terminator, The Matrix or Gravity. "You see Gravity and you'll never want to go into space," he quipped. Internet and mobile are an exception to the technology backlash, but overall there's a bias against science and tech. "There has been innovation in bits, but not in the world of atoms," said Thiel. The upshot: The world is good at creating good companies with technology and innovation, but not advancing society. For instance, Twitter is a nice company but won't take our civilization to the next level.

  • The investment criteria. Thiel said he wants to invest in companies that improve on a business "by an order of magnitude." Think PayPal, Amazon or a sharp technology grading. "The business model piece is we're always talking about competing more effectively. If you're starting a company or career you don't want to compete. You want to create a monopoly. We want to invest in a company that has a good plan to create a monopoly," said Thiel.

  • VC investing. Thiel said you can't think of companies or people as lottery tickets. If you do you've already "psyched yourself into losing." He said companies, people and government need to focus on getting a short list done. Spreading bets all over the place and hoping for luck that one will pay off isn't a strategy.

  • Innovation teams within a company. "My bias is always substance over process," said Thiel. "We can talk about setting up groups within groups. The question is how do you work toward a goal. We often hide behind process so we don't have to think about the substance."

  • Skepticism on tech buzzwords. Thiel said he's skeptical of buzzwords — cloud, internet of things, SaaS, etc. Buzzwords usually have too many players. "What's always underestimated is a company that's one of a kind," said Thiel. These companies can have buzzwords around them, but are generally unique. "I don't want to invest in the fourth online pet food company," said Thiel. "The internet of things seems quite plausible in a decade, but the question is around very specific use cases. It has to be super differentiated." Same deal with wearables, said Thiel. Thiel said he looks for vertically integrated technologies and that integration is often underrated. Elon Musk with Tesla and SpaceX are examples of companies that take parts and put them together in innovative ways. Apple and the iPhone are another example of a company that took parts and integrated them in an original way.

  • Robots replacing human labor. Thiel said the bigger risk to jobs is globalization. The idea is somewhere between technology and science fiction.

  • Quantum computing appears "completely fraudulent." The hype cycle on quantum computing is intense. There usually aren't tech revolutions that come from universities. "Universities have to pretend they are creating new breakthroughs to get the government grants," said Thiel.

  • Education vs. the focusing future. Education has become a crutch to avoid thinking about the future. Thiel said the focus of education has been about getting a credential. "I've been guilty of this too," said Thiel, referring to his stint at Stanford and adventures in law. "If I were to give my younger self advice I'd ask 'why are you doing this?' Always go long on substance and short on status," said Thiel.

  • There's too much money to be deployed and not enough big swings. Google was cited as an example of a company that takes a hit for funding quirky projects such as robotic cars, but Thiel argued the search giant could do more. "At some point companies run out of ideas and cash builds up," said Thiel. "You have a shift from technology to anti-technology. Oracle is a bet against the cloud. IBM is a bet that we'll keep the same kludgey technology from the 70s and 80s."

  • Tech investing overseas. "I'm still biased towards the US. I always contrast technology and globalization as two different themes. Globalization is doing more of the same. China doesn't need to invent anything to improve the standard of living there. Technology is vertical progress and doing new things. We need to be doing more in the so-called developed world. If we don't innovate, we face stagnation. China can grow by copying things. Developed companies need to do new things," said Thiel.

  • Is there a future for the CIO? Thiel said the CIO role will be as important as it is today. There will always be a question of what you build internally and what you buy. "There's a bias in Silicon Valley that the CIO is the enemy," said Thiel. There will be a tension between vendors who will sell the CIO crap and the urge for enterprises to build their own tech tools.

  • Two tech trends with substance. "My bet is always specific, not buzzwords. I would bet on some next generation of cyber security technology. The security question will remain acute. I would bet on some trend of mobile integration and workflows. The security and mobile pieces won't be one size fits all," he said.

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