The article is also comparing this very small group with university student _on average_. If we look at university performance at the margin, we would really be expecting some of these people to have won a Fields Medal or a Nobel Prize-winning discovery.
Obviously Thiel is unique, but he’s only paying $100k vs the much larger sums from all these other programs.
I think it’s worth debating the merits of the discussion whether than just saying “Thiel magic, college is still better and nothing else matters.”
If it’s really just Thiel’s network then is the right move to make him the president of Harvard since that will have a greater reach?
Yes. You're essentially talking about academic organizations there, with diffuse industry involvement. That's a world away from direct access to a tech billionaire's network.
Networks don't scale like that. As in the people in the network have finite time and mental capacity to take on new relationships.
It’s like saying Y Combinator has failed to produce a single National Book Award nominee, or judging Juilliard by how many future dentists studied there.
# literary and scholastic attainments
# energy to use one's talents to the full
# truth, courage, devotion to duty, sympathy for and protection of the weak, kindliness, unselfishness and fellowship
# moral force of character and instincts to lead, and to take an interest in one's fellow beings
In comparison to that, Thiel's success rate looks a bit more ordinary.
Rhodes scholarships etc on the other hand are a fair bit more successful at generating academics and researchers and mid level managers from backgrounds that don't usually become mid level managers, because that's what they're for
Meanwhile, whose interests are served by future unicorn founders being plucked away from the liberal arts, or from the connections and experiences they would’ve had in college with people very unlike Peter Thiel?
At the end of the day there is a lot of meat behind a real unicorn company. It is possible to do more for humanity than a billion dollar company - names like Gauss and Euler sprint to mind - but such names are rare.
Are they? I notice you only picked mathematicians. What's the value to society of a Mozart, a Picasso, a Dostoevsky, a Michelangelo ... ?
And of course it’s very difficult to evaluate the impact along these types of values. Saying college is good because Mozart is valuable and not STEM seems like a reach.
First, I don't think that society is best when optimizing for adding as many dollars of value to society as possible. This is easy to measure, but there are a great many other incredibly valuable things that don't involve large visible changes in the economy.
Second, I don't think that unicorn startups are necessarily providing economic value to society. A company can become worth an absolute mountain of money while making society materially worse.
Technically there is still an implicit money transfer in those cases, it's just the debt is settled immediately. Remember, money is an IOU – used when you promise to give something that you cannot deliver on right now.
Business seeks to deliver value at a scale that would make it impractical for all the debts to be settled in the moment, thus money (promises owed to the business) does become a reasonable measure of how well it is scaling. Things that are incredibly valuable to society do benefit from being scaled up to provide that benefit to more and more people.
> A company can become worth an absolute mountain of money while making society materially worse.
No company becomes worth mountains of money without making society better in some way. Every act comes with negative externalities, of course.
A pharmaceutical company that concludes that they can increase the price of their drug by 10x and only lose 3/4 of the sales is going to be a more valuable company. It will have increased revenue and profit and that will be reflected in its stock price.
This decision makes the world materially worse. It only looks like an improvement when we measure based on revenue and profit rather than the amount of health improvement that the business provides to the world.
What I expect you are really trying to get at is that society has created rules that prevents others from providing that value, thus creating artificial scarcity. That is definitely true, but that's on society who created those rules and not truly related to the discussion taking place.
The point OP is making is that value to society and money are only loosely correlated. Sometimes it correlates well but often not so well. That’s because there’s externalities in any marketplace that aren’t captured by the marketplace itself.
So in the presented hypothetical case, the externality of “provide life saving treatment” is not captured in the costs side of the drug company’s balance sheet, so treating 75% fewer people for 10x more per unit cost makes the company look even more financially positive even though the change is a societal negative. And this externality shift in the balance sheet need not be a conscious “evil” decision. It could simply be market dynamics and competition playing out with the players not even realizing that they’re just making money from an externality and not providing any benefit.
Your argument that it’s the legal system is flawed on several counts:
1. The US (and many places) have regulatory capture so the legislation preventing future competitors is written by today’s competitors. So while it’s the law on one hand, it’s the current set of players that’s the real problem.
2. There’s no collective buying power in places where this is a problem (eg you don’t see the cost of penicillin being an issue in countries where single payer healthcare is a thing). We’re starting to see this with insulin where non profits and California are getting into the game, but it takes a while to ramp up production so even if the price does come back down, the companies involved have managed to make a lot of money in the short term at the cost of lives and financial health of many households.
Yes, that's right. Because others who could be playing cannot, in this case because society has decided they don't want more players, for whatever reason.
However, the original premise still holds true given the constraints the actors are operating in. The 10x represents the additional value offered to society to operate within those rules created by society.
So while, again, all acts have negative externalities, we cannot deny that society sees great value in having a limited set of players. In fact, society sees so much value that, in this example, it is willing to pay 10x more and accept that some people will not have access to drugs in order to maintain the benefits.
I suggest nothing. That would require injecting my feelings towards the matter, and that would be in bad faith.
But I don't think the presence of these broken systems means that we can conclude that every company that is worth billions is necessarily making the world a better place today. It is evidence in the other direction! Our society does not perfectly align wealth creation with providing value to society.
But there are always tradeoffs. Something that makes society great in some way is also likely to make society not great in some other way. As before, every act comes with negative externalities.
Saving a rich person's life and a poor person's life has the same value to society. But a rich person can pay far more money to have their life saved than a poor person can.
Of course, as before, no benefit is consequence free. We see in the example that said benefit means that some people may not have access to drugs, which negatively affects society in other ways. That doesn't mean society sees no benefit. There are always tradeoffs. Something can be a benefit and detriment at the same time.
Perhaps what you are trying to say is that you think that society should see better access to drugs as being a higher priority than the benefits it expects from the regulated market? But clearly society, which is free to repeal or change said laws as it sees fit, disagrees. Society will certainly never please all individuals. That's a tradeoff of having a society.
After all, society can repeal the regulation if it wanted to – it created the regulations! But clearly it doesn't want to, because society recognizes it as a benefit and is willing to pay, perhaps as much as 10x more according to previous comments, to see that value delivered. That may not suit your or my fancy, but, again, society cannot cater to everyone.
Naturally, even society itself is both beneficial and detrimental, just like everything else. Tradeoffs, as always.
There is no such thing as a best possible world. Not two people would ever be able to agree what that even is. Every benefit comes with a detriment. It's just a matter of what tradeoffs do you want to accept. Society has made its choice, seeing a regulated market as being more important than access to drugs for all (for now; that choice is fluid and able to change in the future should society change its views, but trying to predict the future is well beyond this discussion).
It isn't generating value that makes a company valuable, it's capturing it. You can generate value for society without earning a cent.
There was a time where FTX, Theranos, and WeWork were all unicorns and none of them had real “meat.”
Uber is/was a unicorn and the gig economy has proven awful for society. (Underpay what amount to employees while giving them no benefits or recourse and at the same time destroying taxi companies that did)
Facebook was also a unicorn…
I think billion dollar companies that “do more” (eg. be a net good) for humanity are as rare as individuals who do, especially if they are profit driven.
https://newsroom.haas.berkeley.edu/research/study-ride-shari...
Lets be real, I'm sure many of people here have jobs where they have to insist this is true, but that billion number is inflated nonsense. Most startups are not adding that much value to society. Maybe finding a way to middle-man extract that from society, yeah, but not adding it.
> and does not match the success of Thiel’s programs for generating successful startups (11/900 is a pretty amazing success rate)
That may be an amazing success rate for generating startups, but it would also mean that 98.8% of the startups weren't successful. Was dropping out actually good for the fellows aside from a few? Couldn't many argue that for most of these "smart and ambitious" students it really did fail?
I'm not really taking a position here because I don't think failure alone means something wasn't worth it. Also I haven't followed Thiel's program that much so can't speak to the specifics. But given the numbers in this thread, I certainly wouldn't recommend students drop out.
Although even it meant 11 unicorns out of 900 and the rest were zero, those are amazing odds that many would gamble 1-2 years of their life on. Especially at 20.
But the article talks about how the others were also successful, just not multi-billion dollar company successful.
The actual choice set is drop out and spend several years trying to become very wealthy and then go back to school and be delayed by those several years on the path well traveled, or just take the path well traveled right away.
It seems extremely unlikely to me that it would be possible for this to be a net negative on average at any point in time past the first few years. average[0.02(mega wealthy)+ N(success but not mega wealthy) + (1-N-0.02(regular path delayed 5 years)] should always be larger than average(regular path) and it should get more pronounced over time and the spread between regular path and regular path delayed 5 years will likely diminish over time.
On the society level, unless you are so cynical that you think all the benefit that causes the value of those companies to be in the billions is coming from some sort of market power abuse and none of it is coming from creating something that is so much better than what was there before that people are buying it in a big way, it would be a massive benefit as well because you just increased the conversion rate of ideas into product that benefits society by a massive multiple.
> 11/900 is a pretty amazing success rate
But completely unscalable. It seems perfectly reasonable to think you can take a select group of people give them resources that allow them to succeed (at a certain level) better than people who went to college. You could probably get similar results by just giving a select group of people a million dollars to start with.
Or am I misunderstanding something about the situation.
There are tons of people giving $1M to groups of people who don’t have these returns.
Also, this is a comparison of working vs college. So it’s an opportunity cost experiment. Giving $1M to skilled management teams is completely different.
College, for all its trumpeting about better outcomes, has shown no actual change in the financial success of the population. Incomes have held stagnant the entire time.
Thiel's experiment really just goes to reiterate what we already knew: That successful people are born that way.
That is aside from the fact that I don't see any way, fundamentally, to become something like a scientist or a physician outside of the university system. You can't run controlled experiments, especially if they require any kind of specialized lab equipment or human subjects, without fairly strict oversight, and you certainly can't go into a hospital and put yourself into rotation getting clinical experience with patients outside of being supervised by a teaching physician.
There are other ways to meet these sort of dynamics outside of universities in principle. Guilds serve this purpose in some professions. But for many modern professions, the university system is the guild. It's where scientists train other scientists. It's how you get an apprenticeship.
Nonetheless, not every profession is like running a business, where anyone with money is at least allowed to try.
Getting accredited to be a Physician in the US is a political thing controlled by the Physician Cartel(AMA and ACGME).
That line about Ivys and Presidents just seem to line up more with the political situation of Physicians. Heck, residencies and med school are all tied up in special points.
To it into perspective, his native country—Germany—only produced about double that number of unicorns over the same time frame, and he invested in many of those as well.
Don't elite colleges do the same? Select a small slice of society and give them opportunities beyond what society at large has?
The difference between what Thiel is doing and what colleges are doing seems to be a difference in degree and not in kind. That difference in degree is exchanging a larger reward for a smaller pool of candidates.
The same criticism of the Thiel Fellows could be leveled at college, from the perspective of someone who didn't attend college.
At the highest-level universities, nearly every applicant is already exceptional before they're even accepted, and yet:
Even if you carefully selected 100 or so people out of nearly any university, it's statistically unlikely that a Fields medal winner, Nobel prize laureate, or unicorn founder would come to fruition out of any of them, even if we allow more than a decade.