Showdown: Thiel vs. Schmidt, 2012

Clearly I’m on a Thiel kick.

At first I was dubious, but now I’m just curious. Though some of Thiel’s motives and politics remain vague, it should be impossible for anyone to ignore his foresight and intelligence. The fact that many people still dismiss him offhand because he’s a nominal Trump supporter just blows my mind.

This debate, which took place in 2012, offers a clear picture of how much smarter Thiel is than other Silicon Valley tools, like Eric Schmidt. In this case, we watch Thiel eat Schmidt for breakfast, while Schmidt just oozes, as Thiel says, Google propaganda.

 

Summary

The opening question was to explain your view of what technology brings to the world.

Schmidt says that “the message of technology innovation is an overwhelmingly positive one,” then talks about how technology has transformed our world, bringing poor people into the middle class, and how everyone in the world will soon have access to the internet. Ultimately, he says that technology innovation will improve the world for everyone, giving people more information and longer lives.

This smacks of technological utopianism, something that Thiel (as well as others, such as Evgeny Morozov) warned about long ago.

The MC reads a quote of Thiel’s that offers a more cynical – and, in my opinion, realistic – perspective on the issue of technological innovation. “We wanted flying cars, instead we got 140 characters.”

Thiel goes on to compliment Schmidt, saying he does a great job as Google’s Minister of Propaganda, then outlines some very insightful points that Schmidt spends the rest of the debate avoiding (including a couple that we would later see crop up during the Trump election). Namely, the facts that:

  • Median wages have been stagnant for 40 years, compared to the previous 40 years, during which they increased 6-fold
  • The technological improvement we’ve seen in the past couple decades, which has been confined to the IT industry – or “the world of bits” – hasn’t translated into economic well-being
  • Since 1973, oil barrel prices have increased 50-fold, a demonstration of “a catastrophic failure of energy innovation,” which has been offset by computer innovation
  • Governmental regulation has effectively “outlawed technology” – for instance, new drug development costs $1.3 billion, you can’t fly supersonic jets because they’re too noisy, you can’t build nuclear power plants, and so on

The question Thiel asks is how IT innovation translates into economic progress for humans.

After a short slap fest, while disagreeing about technological progress, both agree that governments are at the root of many major problems. The Arab Spring becomes another bone of contention. Schmidt cites the cause as a widespread discontent with regimes, and Thiel blames 30-50% price hikes on food, which he says brought the threat of starvation for many people.

More disagreements prompt Thiel to respond with: “I thought we were going to talk about technology, but Eric seems to think it’s all about politics, which, in a way I think concedes my basic point, which is that technology is no longer that big a driver.”

He follows up with one of his main points: “Technology should be a large enough force that it could power [political] change.”

After Schmidt tries to make a point about education being the solution to automation and globalization, two forces that will govern the world in the future and create jobs problems, Thiel pushes Schmidt more, saying that Google doesn’t do enough to create more jobs, claiming that Google is not an innovative technology company, but merely a search engine that is sitting on $50 billion in cash with no ideas on how to use it.

Compare that to Amazon, he says, which continually reinvests all of its profits into new technologies.

For the closing phase of the discussion, Thiel reiterates his insults to Google, to which Schmidt responds that Chrome is the #1 browser in the world, Google is the top platform for enterprise innovation, and there are plenty of other examples of business innovation that Thiel was choosing to ignore.

Q&A followed.

Conclusion

This conversation reminds me of a WWE fight or a Jerry Springer spat, just in a different arena. Thiel’s nonstop aggression makes it really fun to watch and, as usual, his intelligent arguments make it fascinating food for thought. In particular, he seems like he has a very solid and respectable mission – to use technological innovation to change the world.

It would have been more interesting if Schmidt had anything to say, but as it is, his technological utopian preaching and soft sales patter comes across as weak, lame, and boring. He sounds exactly like an old-school politician, who can talk and talk for hours without saying anything.

I’m admittedly irritated by Schmidt’s smarmy smugness, but that doesn’t negate the fact that he got screwed by Thiel in this so-called debate. Since he had nothing to say and no way to respond to Thiel’s arguments, rather than addressing any point head on, he just dodged with catchphrases, incorrectly reframed arguments, and logical fallacies.

Though the discussion is clearly on a different level, this debate also reminds me of the two forces that came into play during the Trump elections: hot-air-breathing political types versus aggressive, straightforward businessmen.