Why Peter Thiel supports Donald Trump

PayPal founder and a Silicon Valley iconoclast gave a rousing speech at the RNC convention in support of Donald Trump.

Thiel is a measured thinker, calculative and reserved. Trump is impulsive and the type introverted Thiel probably encountered in high school: brash and aggressive. It’s unlikely the two would have been friends.

It is, however, not unusual for two individuals who are polar opposites to form a political alliance in the face of a common enemy. But Thiel is a puritan libertarian whereas Trump is a protectionist who wants “good deals”; in essence opposing the invisible hand of laissez faire capitalism. Trump wants to control the outcome whereas Thiel wants to maximize liberty and free capitalism from constraints holding it back.

So why is a Peter Thiel, different in temperament and political philosophy supporting Donald Trump?

Domination

In a Wall Street Journal essay, a prelude to his book Zero to One, Thiel chastised companies for being competitive. Instead, he urges companies to create monopolies and to dominate their respective industries.  

“By “monopoly,” I mean the kind of company that is so good at what it does that no other firm can offer a close substitute. Google is a good example of a company that went from 0 to 1: It hasn’t competed in search since the early 2000s, when it definitively distanced itself from Microsoft and Yahoo!”

As the founder of PayPal and an early investor in Facebook, Thiel has a history of discovering new industries and consequently establishing companies that exist to win. Trump, while not an innovator or a visionary of Thiel’s caliber, is in it to win, whether real estate, booze or food products. Trump’s appetite for success seems insatiable.

The drive to dominate is arguably one common denominator between the two. Trump wants America to start winning again. For Thiel this unapologetic demand is a welcome disposition in a sea of professional politicians all campaigning too much and governing too little.

As a shareholder, wouldn’t you want the CEO of a company you invested in, to crush competition? As a voter, wouldn’t you want the candidate for president to do what’s best for the country even it meant trampling on existing treaties’?

Similar thought patterns exist between men and women who answer both questions in the affirmative. The hell with the rest, as long as your team is winning, right?

Contrarian existence

Peter Thiel has argued that except for computers, we’ve been experiencing an innovation deficit in the past forty years, and the rate of technological advancements has decreased compared to the first half of the 20th century.  Trump’s complaint “we don’t make things anymore”, fits nicely into Thiel’s vision of current stagnation.

It’s likely that Thiel believes that only unbridled capitalism can save innovation. In his famous 2009 Cato essay, Thiel made the argument that the expansion of democracy is threatening capitalism.

“Since 1920, the vast increase in welfare beneficiaries and the extension of the franchise to women — two constituencies that are notoriously tough for libertarians — have rendered the notion of “capitalist democracy” into an oxymoron.”

You could replace the word libertarians with the word Trump and the sentence would still make for a reasonable argument.

Thiel concludes his essay with a warning that contains a wish for a messianic figure to save capitalism from the many threats it faces.

“The fate of our world may depend on the effort of a single person who builds or propagates the machinery of freedom that makes the world safe for capitalism.”

By this Thiel seems to suggest that politics must be disrupted by a forceful figure who does not care about existing social or political boundaries. Thiel is telling his fellow libertarians to look for solutions such as commercialization of space, settling oceans and the creation of a new currency to escape the shackles of social democracy.

Seven years later it seems that Thiel is settling for Trump. But it’s hardly foolish to assume that Trump is exactly the candidate to reverse the current trend of social democracy and its many side products such as political correctness and safe spaces. For Thiel, Trump is a good start and a glimmer of hope.

Pundits have suggested that Thiel is arguing for a post-democracy America. While this may be the case it’s important to remember that America is a republic in which the people choose representatives who make policy decisions on their behalf.

It’s obvious both Trump and Thiel don’t have much love for their political opponents. Ingrained in their political philosophies is an authoritarian strain that wants to bypass democratic means in order to achieve a goal.

This is not to suggest that President Trump’s America would be a fascistic regime. It simply implies that Trump’s America would be fundamentally different from what we have seen and potentially pave the way for a future less concerned about democracy and more focused on winning – whatever that may be. For Thiel, a Trump presidency comes with a promise of a very different tomorrow and that’s enough to satisfy the man’s quest for political disruption, for now at least.

What are the reasons behind Finland’s booming startup ecosystem?

Following my recent Q&A with Timo Ahopelto he decided to ask his Facebook followers what they think are the reasons behind the blossoming Finnish startup ecosystem.  The answers were many and reflected the passion – and of course, consensus – among the relatively small group of “founding fathers”.

The cream of the crop of the Finnish startup ecosystem took a break from their busy schedules (or vacationing) to offer their two cents to Timo’s question.

timoahopelto

Miki Kuusi, the CEO and co-founder of Wolt and the man behind Slush.

“I’d say somewhere around 2008-2009, when three things happened: ArcticStartup was founded, first Slush was organized and AaltoES (Aalto Entrepreneurship Society) was kicked off. I guess pretty much everything else followed”

Peter Vesterbacka, Formerly Mighty Eagle at Angry Birds, founder of Slush and MobileMonday.

“First Slush was in 2008, Aaltoes got started in 2009 and the ecosystem has been growing stronger ever since. I think a key ingredient has been Slush, i.e doing stuff differently. Cold. Dark. Slush on the ground. Not the Silicon Valley. Better. Because different. The World is full of wannabe Silicon Valleys that are pretty clueless about ecosystems.”

Ilkka Kivimäki, Partner at Inventure and the chairman of Startup Sauna & Slush

“I would claim that the full ecosystem formed around Startup Sauna 2011-2012 when all the entrepreneurs and investors were also lured in😉 and then Slush started gaining ground.”

Ville Vesterinen, EIR at Reaktor Ventures

“…The real watershed moment for Finland came when the group of at-the-time students decided that startups are important for the country’s future. Setting the tone for the country by first forming AaltoES, StartupSauna and by single handedly making Slush the success it is. Community effort wins every time. Anything else would be missing the point. And by looking at how much current AaltoES, Sauna, StartupLife and Slush teams are getting done now, clearly we’ve barely started considering what will happen in the next 10. Similarly the strong early stage investment landscape that has been built by many on this thread is essential piece for the thriving Finnish scene of today.

Equally important are rockets like Rovio and Supercell to set the baseline and scale up our dreaming. I also echo Peter ‘s point about the importance of Finland being confidently Finland and not playing by SV’s or anyone else’s rules. Now that students have built us the foundation Finland’s ready for escape velocity just as Timo coined it with the coming “Finland’s entrepreneurial renaissance”. Never underestimate the ability of a small country of dedicated people to change the world.”

Riku Asikainen, Chairman of FiBAN – Finnish Business Angels Network

“I would like to emphasize Slush/Aalto ES as well, but add also Tekes NIY program with then new early stage investors ( both Vigo Accelerator side and Tesi backed VC’s. ). Also Fiban was founded in 2010. After that it was all about Rovio and then Supercell.”

Q&A with Timo Ahopelto from Lifeline Ventures

Timo Ahopelto is the founder of Helsinki-based Lifeline Ventures, an early stage VC that has invested in companies like Supercell, Applifier (now Unity3D) and Enevo. In March, the firm launched a new 57 million euro ($63 million) fund to invest in startups. I posed Timo a few question about he current state of the Finnish startup scene.

1. According to FVCA’s report, Finnish companies received over 1 billion euros of VC/PE investments in 2015. What does this tell you?

Finland is on track to a very good start. Israel raised $ 3.5 billion in 2015 into 1,200-1,500 tech companies, which probably is what a national ecosystem in a smallish country can create. Finland will be there in five years’ time. The growth path from here onwards is very clear.

2. Why does Finland attract early stage investments?


Fundamentally and simply: Finland is producing high quality tech startups. This is the result of what I call “Finland’s entrepreneurial renaissance”. It started in 2009, when Aalto University Entrepreneurship Society was founded. This student-led movement gathered the ecosystem together and drives projects like the Slush conference.

3. Which industries do you see emerging from Finland in the next few years?

My strongest bet is AR/VR. We have the requires components in the ecosystem for both software and hardware: consumer electronics devices based on the Nokia history, content by the games ecosystem, computer graphics dating back the Finnish teams dominating the demo scene in the 1980’s, big data, and artificial intelligence with the very specific machine vision twist.

4. As an investor, how do you find companies? Or do they find you?


We mostly invest in companies whose founders we know or who we have a strong link to already. It is difficult to say who finds who. Finland is a very connected startup ecosystem where one knows what is going around.

5. Looking at developments in Europe and the crackdown on companies like Uber and Airbnb – how do you see the future of these two companies in Finland?


Airbnb is easy. It is fully legal in Finland, and difficult to see how and why individual cities or the state would want to ban the service. Airbnb will grow and flourish.

Uber is more difficult. The first case against an Uber driver is now in the higher court, and tens of similar court cases are being considered. I don’t have a crystal ball to forecast how this will turn out.

Personally, I think that we need to have a broader tech strategy as a country. The government needs to develop a deep-rooted understanding of how global tech will fundamentally change small country’s role as an economic and political actor. Once there is this understanding, we can develop our strategy and take stance on things like Uber and Airbnb.

6. Do you think Finns have recovered from the demise of Nokia as a growth engine?


Mentally yes, but economically it will take another three to five years to develop the growth company ecosystem to the level that it compensates the loss.

7. Do you believe that Nokia can make a comeback? (considering news about the company returning to smartphones)


Yes, but not necessarily in the mature and even somewhat declining smartphone market. The playing field is entirely open in AR/VR and connected health, where Nokia has launched new products and made acquisitions.

8. What should the Finnish government do better in order to foster growth?


Take down regulations and artificial growth barriers. The dialogue with the startup ecosystem is already active and on a very good level. Everyone in Finland wants to make this work now.

Uber’s troubles in Europe aren’t going away

The car-hailing app Uber has been expanding rapidly across the globe since its launch in San Fransisco in 2011. To date Uber has raised 12.5 billion at an implied valuation of $66 billion.

Much like companies like Airbnb, born out of the sharing economy and cheered on by the urban masses, Uber has faced difficulties winning over the hearts and minds of European bureaucrats.

What many US based companies forget when expanding to Europe is the impenetrable and pervasive mindset of keeping things as they are. In essence this means the following: technology is great as long as it doesn’t threaten the public sector. As we know, the public sector and its unions are the guardians of the hotel industry (threatened by Airbnb) and taxi services (government monopoly with taxi drivers as the holy untouchables).

Adding to the chagrin of the consumer, often a tourist whose interests are not the interests of local politicians,  is the low likelihood that local politicians would intervene to help Airbnb disrupt the livelihoods of local hoteliers who also happen to be tax-paying constituents. Indeed,  there’s very little appetite for European politicians to seriously take on taxi unions and hotels on behalf of American giants like Uber and Airbnb.

Uber’s likely failure in Europe

Uber targets big cities. Cities like Berlin. Earlier this month Airbnb was banned from Berlin.

Under the ban, in effect since 1 May, people who let more than 50% of their apartment on a short-term basis without a permit from the city risk a fine of €100,000 (£78,000).

The decision coincided with Uber’s announcement to leave “Hamburg, Frankfurt and Düsseldorf last year after a German court banned the company from running services using unlicensed cab drivers” according to The Guardian.

The keyword here is licenses. In Europe you need a license for everything.

For Uber and Airbnb to make it in Europe, they need to go through local governments and courts. Although Brussels has been voicing quiet support for both companies, it’s unlikely Brussels can superimpose its will on European towns and cities. After all, local politicians are elected by locals whereas Brussels’ faceless bureaucrats do not have to worry about accountability.

A few recent examples of Uber’s misfortunes in Europe:

Uber found guilty of starting ‘illegal’ car service by French court

Uber May Soon Get Banned In Hungary

Helsinki Uber driver ordered to pay state 12000 euros

New vs. Old Europe

You might recall Donald Rumsfeld’s New Europe/Old Europe distinction between those European countries that supported America’s plans in Iraq and those that didn’t. When it comes to Uber, the differences between new and old are clear.

Uber’s headwinds in Europe come down to a pretty common distinction: Civil law countries versus  Common law countries. France,  Finland, Norway, Sweden, Spain, and others all use civil law systems and are much stricter, both in law, and in terms of culture that has developed around the legal systems. These countries are less accommodating with new technologies and innovations like Uber.

Uber simply does not fit into the existing framework and thus judges, whose roles are more investigatory than in common law countries often tend to side with the plaintiffs. Common law countries – US, Canada and the UK – are more flexible, and where there isn’t a law that exactly addresses something, they build off the precedent of similar and related cases, allowing more flexibility around an issue.

Expect to see Uber do well in North America and the UK, but its troubles in Old Europe have only just begun.