Paul L. Caron

Monday, May 23, 2016

Peter Thiel's Advice To Graduates: 'My Ambition To Be A Lawyer Was Less A Plan For The Future Than An Alibi For The Present'

Peter Thiel (Co-founder, PayPal), Commencement Address at Hamilton College (May 22, 2016):

(Click on YouTube button on bottom right to view video directly on YouTube to avoid interruption caused by blog's refresh rate.)

Thank you so much for the kind introduction. It’s a tremendous honor to be here.

Like most graduation speakers my main qualification would seem to be that I am one of the few people who are even more clueless about what is going on in your lives than your parents and your professors.

Most of you are about 21 or 22 years old, you’re about to begin working. I haven’t worked for anybody for 21 years. But if I try to give a reason for why it makes sense for me to speak here today I would say it’s because thinking about the future is what I do for a living. And this is a commencement. It’s a new beginning. As a technology investor, I invest in new beginnings. I believe in what hasn’t yet been seen or been done.

This is not what I set out to do when I began my career. When I was sitting where you are, back in 1989, I would’ve told you that I wanted to be a lawyer. I didn’t really know what lawyers do all day, but I knew they first had to go to law school, and school was familiar to me.

I had been competitively tracked from middle school to high school to college, and by going straight to law school I knew I would be competing at the same kinds of tests I’d been taking ever since I was a kid, but I could tell everyone that I was now doing it for the sake of becoming a professional adult.

I did well enough in law school to be hired by a big New York law firm, but it turned out to be a very strange place. From the outside, everybody wanted to get in; and from the inside, everybody wanted to get out.

When I left the firm, after seven months and three days, my coworkers were surprised. One of them told me that he hadn’t known it was possible to escape from Alcatraz. Now that might sound odd, because all you had to do to escape was walk through the front door and not come back. But people really did find it very hard to leave, because so much of their identity was wrapped up in having won the competitions to get there in the first place.

Just as I was leaving the law firm, I got an interview for a Supreme Court clerkship. This is sort of the top prize you can get as a lawyer. It was the absolute last stage of the competition. But I lost. At the time I was totally devastated. It seemed just like the end of the world.

About a decade later, I ran into an old friend. Someone who had helped me prepare for the Supreme Court interview, whom I hadn’t seen in years. His first words to me were not, you know, “Hi Peter” or “How are you doing?” But rather, “So, aren’t you glad you didn’t get that clerkship?” Because if I hadn’t lost that last competition, we both knew that I never would have left the track laid down since middle school, I wouldn’t have moved to California and co-founded a startup, I wouldn’t have done anything new.

Looking back at my ambition to become a lawyer, it looks less like a plan for the future and more like an alibi for the present. It was a way to explain to anyone who would ask—to my parents, to my peers, and most of all to myself—that there was no need to worry. I was perfectly on track. But it turned out in retrospect that my biggest problem was taking the track without thinking really hard about where it was going.

When I co-founded a technology startup, we took the opposite approach. We consciously set out to change the direction of the world. Very definite, very big plans. Our goal was nothing less than to replace the U.S. dollar by creating a new digital currency.

We had a young team. When we started, I was the only person over 23 years old. When we released our first product, the first users were simply the 24 people who worked at our company. Outside there were millions of people working in the global financial industry, and when we told some of them about our plans we noticed a clear pattern: the more experience someone had in banking, the more certain they were that our venture could never succeed.

They were wrong. People around the world now rely on PayPal to move more than $200 billion every year. We did fail at our greater goal. The dollar’s still dominant. We didn’t succeed in taking over the whole world, but we did create a successful company in the process. And more importantly we learned that, while doing new things is difficult, it is far from impossible.

At this moment in your life you know fewer limits, fewer taboos, and fewer fears than you will ever in the future. So do not squander your ignorance. Go out and do what your teachers and parents thought could not be done, and what they never thought of doing.

Now this is not to say that we should assume there is no value in teaching and tradition. And here we can take inspiration from a graduate of Hamilton College, the illustrious Ezra Pound, class of 1905. Pound was a poet, and he was also a prophet of sorts, and he announced his mission in three words: “Make it new.” When Pound said “make it new,” he was talking about the old. He wanted to recover what was best in tradition, and render it fresh.

Here at Hamilton, in America, and that part of the world called the West, we are all part of an unusual kind of tradition. The tradition we’ve inherited is itself about doing new things. The new science of Francis Bacon and Isaac Newton discovered truths that had never been written down in books. Our whole continent is a new world. The founders of this country set out to create what they called a new order for the ages. America is the frontier country. We are not true to our own tradition unless we seek what is new.

So how are we doing? How much is new today? It is a cliché to say that we are living through a time of rapid change, but it is an open secret that the truth is closer to stagnation. Computers are getting faster and smartphones are somewhat new. But on the other hand, jets are slower, trains are breaking down, houses are expensive, and incomes are flat.

Today the word “technology” means information technology. The so-called tech industry builds computers and software. But in the 1960s, “technology” had a more expansive meaning and meant not just computers, but also airplanes, medicines, fertilizers, materials, space travel—all sorts of things. Technology was advancing on every front and leading to a world of underwater cities, vacations on the moon, and energy too cheap to meter.

We’ve all heard America described as a developed country, setting it apart from countries that are still developing. This description pretends to be neutral. But I find it far from neutral. Because it suggests that our tradition of making new things is over. When we say we are developed, we’re saying, “That’s it.” That for us, history is over. We are saying that everything there is to do has already been done, and now the only thing left is for others in the world to catch up. And in this view, the 1960s vision of a fantastic and far better future was just a mistake.

I think we should strongly refuse this temptation to assume that our history is over. Of course if we choose to believe that we’re powerless to do anything that is not familiar, we will be right, but only in a sort of self-fulfilling way. We should not, however, blame nature. It will only be our own fault.

Familiar tracks and traditions are like clichés—they are everywhere, they may sometimes be correct, but often they are justified by nothing except constant repetition. Let me end today by questioning two clichés in particular.

The first comes from Shakespeare who wrote this well-known piece of advice: “To thine own self be true.” Now Shakespeare wrote that, but he didn’t say it. He put it in the mouth of a character named Polonius, who Hamlet accurately describes as a tedious old fool, even though Polonius was senior counselor to the King of Denmark.

And so, in reality, Shakespeare is telling us two things. First, do not be true to yourself. How do you know you even have such a thing as a self? Your self might be motivated by competition with others, like I was. You need to discipline your self, to cultivate it and care for it. Not to follow it blindly. Second, Shakespeare’s saying that you should be skeptical of advice, even from your elders. Polonius is a father speaking to his daughter, but his advice is terrible. Here Shakespeare’s a faithful example of our western tradition, which does not honor what is merely inherited.

The other cliché goes like this: “Live each day as if it were your last.” The best way to take this as advice is to do exactly the opposite. Live each day as if you will live forever. That means, first and foremost, that you should treat the people around you as if they too will be around for a very long time to come. The choices that you make today matter, because their consequences will grow greater and greater.

That is what Einstein was getting at when he supposedly said that compound interest is the most powerful force in the universe. This isn’t just about finance or money, but it’s about the idea that you’ll get the best returns in life from investing your time in building durable friendships and long-lasting relationships.

In one sense, all of you are here today because you were approved by the admissions office of Hamilton to pursue a course of study, which is now over. In another sense you are here because you found a group of friends to sustain you along the way, and those friendships will continue. If you take care of them, they will compound in the years ahead.

Everything that you have done so far has had some kind of formal ending, some kind of graduation. You should, and I hope that you will, take time today to celebrate all that you’ve achieved so far. But remember that today’s commencement is not the beginning of one more thing that will end. It is the beginning of forever. And I won’t delay you any further in getting on with it. Thank you.

(Hat Tip: Greg McNeal.)

Legal Education | Permalink



Has it ever occurred to you that I purposefully chose a self-deprecating pseudonym to make it even more flustering for those who already have great trouble addressing the data and citations I weave into my posts? Hmm... And as I recall, you've taken great pleasure in insulting me in threads even where I have not posted (which is telling in and of itself, of course). On the other hand, I assiduously try to stick with data analysis, and I've certainly never levelled personal attacks against anyone writing under their own name. I attack their arguments, sure, but not them. There is a difference.

Posted by: Unemployed Northeastern | May 25, 2016 10:33:23 AM

@ UNE:

"we just disagree about which clock is broken."

Yes, UNE and I do agree about that, as well. Signs of the apocalypse?

I would add that I look forward to when our cowardly little friend finally posts his name, so we can refer to him by a cutesy derogatory diminutive, too, but I won't be holding my breath.

Posted by: Rob T. | May 25, 2016 10:08:21 AM

Robbie, I think you and I will both agree that a broken clock is correct twice per day; we just disagree about which clock is broken. Toodles.

Posted by: Unemployed Northeastern | May 24, 2016 6:02:34 PM

@ UNE:

I suspect that you'll be horrified, but I agree with you 100 % in your excellent post, especially about the miserable over-valued Pound, who is long overdue for a devaluation.

Posted by: Rob T. | May 24, 2016 11:01:36 AM

@John Novack,

And then there is the reality that the vast majority of venture capitalists and (especially) private equity and hedge fund folk come from one monolithic, standard career path: Ivy League / Stanford / Williams / a handful of other hyper-elite institutions --> bulge bracket bank or MBB consultancy --> HBS/SBS/Wharton --> VC/PE/HF. This progression is more or less set in stone unless you get into VC by being a highly successful tech entrepreneur like Thiel. So there's a certain irony in him exhorting grads to go off-track, since his success comes from one of the most regimented and prestige-conscious career tracks in the country. And quite frankly, those Hamilton grads have about as much chance landing a bulge bracket or MBB job as I do landing at Sullivan & Cromwell as an unemployed graduate of a mid-pack law school.

Posted by: Unemployed Northeastern | May 24, 2016 10:06:02 AM

UE: thanks for the (fair) criticism. Still, a damn good commencement address.

Posted by: John Novack | May 24, 2016 7:21:34 AM

This was a well prepared commencement speech. Thank you for sharing it.

Posted by: Jojo | May 24, 2016 3:52:12 AM

A few notes:

1. Even though this speech is about Thiel's personal history, it somehow feels appropriated from William Deresiewicz's "Excellent Sheep."

2. For all of Thiel's poo-pooing of traditional career tracks and his fellowship dollars for getting kids to drop out of college, he should own up to the nearly-certain reality that his tech startup succeeded because of VC funds allowed it operating capital, and studies have found that VC partners essentially only extend money to three groups of people: veterans of established tech companies, people who have already founded other startups, or graduates of JUST THREE universities: Harvard, Stanford, and MIT. If someone only went to, say, Hamilton College (itself one of the best liberal arts schools in the country), the notion that they could even get a meeting with a VC in Cambridge or Palo Alto is risible. As in so many venues, the pretense of a level playing field is only that: a pretense.

3. Ezra Pound was a sympathizer to Mussolini and Hitler who was arrested for treason. And his "Cantos" are without question the most execrable poetry I have ever had the displeasure of coming across.

Posted by: Unemployed Northeastern | May 23, 2016 11:42:11 AM