- Billionaire investors Reid Hoffman and Peter Thiel have been friends for 30 years and worked together at PayPal.
- They are opposites politically but often agree on business and career insights, like the role of graduate schools today.
- Both fear business and law degrees can lead to stagnant group think.
Reid Hoffman, an influential Democratic donor, and Peter Thiel, President Donald Trump’s liaison to Silicon Valley, rarely agree on anything — and that’s actually been the basis of their 30-year friendship.
As Hoffman explained in the season two premiere of his podcast “Masters of Scale,” he and Thiel have long enjoyed intensely debating politics, but they find common ground in their approaches to investing in startups and educating entrepreneurs.
The “Masters of Scale” team sent Business Insider an exclusive deleted scene from the podcast episode, in which Hoffman and Thiel discuss why they’re both wary of business and law schools — especially for entrepreneurs — but with nuanced differences.
You can find the full episode below.
When Hoffman asked Thiel what he would recommend to someone considering getting a degree from either, Thiel said, “you should identify someone with a JD or an MBA who’s using it, who’s a good role model for you in one way or another.”
“So I think I got a JD because of the abstract prestige, because I didn’t know what else to do, and I didn’t concretely think through what it would be like to be a lawyer,” he told Hoffman.
Education without purpose is a waste of time and resources
Thiel has an undergraduate degree and law degree from Stanford. He started the Thiel Fellowship in 2010, which has given 104 young people $US100,000 to forego an undergraduate degree in order to pursue developing their startup, which he considers more valuable and practical for a certain type of person.
He uses this suspicion of conformity of thought as a lens for graduate degrees, as well.
Thiel used Harvard Business School as an example, saying that it’s “a cohort of people who are very extroverted but have no opinions of their own, no convictions. And you put them in a hothouse for two years where they talk to other extroverted people who have no idea what to do. At the end of the two years sort of the largest group of them often decide to try to catch the last wave.”
Thiel explained that in the late 1980s, for example, they all wanted to be like junk bond king Michael Milken, who eventually went to jail; MBAs then wanted to get into tech at the end of the dotcom bubble. Business schools, he said, shape groups of smart but wayward young people into clones following trends, basically.
He acknowledged that b-schools pass on skills and knowledge that are especially valuable to students with clear objectives and unique goals, but that “there’s something very treacherous about the incredible sort of mimetic, mob-like, herd-like aspect of these places.” And as he explained in a 2014 interview with Business Insider, “People will compete fiercely for things that don’t matter,” and he thinks fostering this mindset before entering the workspace is dangerous.
The danger of reliability
Hoffman said that when he sees that someone is pursuing or received a JD or MBA, he thinks, with few exceptions, this person wants “a very reliable, safe track.” Hoffman also received his undergraduate degree from Stanford, where he met Thiel, and got his master’s in philosophy at Oxford. He shares Thiel’s belief that higher education isn’t necessarily a bad thing, but it needs to be pursued with clear purpose. (He considers his philosophical education vital to his role as entrepreneur and investor.)
As Hoffman sees it, the decision to attend b-school shows a lack of entrepreneurial spirit, and the education itself doesn’t typically prepare its graduates for the fast-paced and unpredictable environments of startups or scaling, ambitious companies.
Hoffman carries his bias with him to investing.
“And so generally speaking, like when I talk about MBAs,” Hoffman told Thiel, “I say, an MBA is a negative mark about whether or not I will invest — not overcomeable — but is a negative mark because it has this kind of, ‘I’m staying off the beaten path; I am reliably kind of going down this kind of path very similar to law school.'”
Thiel concluded by saying he thinks the more traditional path of a law or business school graduate was a better option before the Great Recession, when high-paying jobs were more plentiful and less competitive.
“So for example, a lot of law firms, you have a partnership with associates, and as long as the firm grows most people can become partners over time, but if the growth field stops, then what was once sort of a career opportunity turns into something like an inter-generational Ponzi scheme or something like that.”
He continued: “I think one of the things that’s gone wrong with a lot of these tracked careers is the tracks, to use a physics metaphor, depended on a sort of growth field that evenly permeated our society. And as the growth field is less robust, these things work much less well so even on their own terms they don’t work.”
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