Toll Collectors vs. Creators
Thiel: Monopolies become bad in a static world where a monopoly is just a toll collector at a bridge. Like the Parker Brothers board game where you just reshuffle the existing properties and nothing changes.
In a dynamic world, you're not creating artificial scarcity. When Apple invents a smartphone that works, that's not restricting supply — it's creating supply where none existed.
A bad monopoly is a toll collector. A good monopoly creates supply where none existed.
IBM in the '70s, Microsoft in the '90s
Thiel: People were worried about IBM in the '70s. Microsoft in the '90s. With the benefit of hindsight, these were probably the points at which the monopolies were eroding as a result of changing markets. IBM — the shift from hardware to software. Microsoft — desktop to internet.
I would be disturbed if you had a permanent monopoly. But most of the time they're a decade, two decades. They're not permanent.
People feared IBM and Microsoft. In hindsight, those were the moments their monopolies were eroding.
Why Capital Flows to Software
Thiel: The existence of these monopolies — and the fact that they're so valuable — is what attracts capital and talent. That's part of the dynamic that drives the whole system forward.
Why is so much capital going into the software industry? Because the business models actually work. I think it would be good if we had more innovation in clean tech. But the business models don't work, and as a result we're going to have very slow innovation in that area — even though it would be very good for our society.
Software attracts capital because the business models work. Clean tech doesn't — even though society needs it more.