The following is a conversation between Profectus co-editor Ben Wiltedink and Archbridge President and CEO Gonzalo Schwarz with Michael Gibson, co-founder and general partner of the 1517 Fund and author of “Paper Belt On Fire: How Renegade Investors Sparked a Revolt Against the University.” The transcript has been lightly edited for clarity.
Ben Wilterdink: Thank you for listening to this edition of the Profectus Interview. Profectus Magazine is dedicated to kickstarting a conversation around the key drivers of human flourishing, progress, and the barriers that prevent individuals from reaching their full potential. I’m Ben Wilterdink, and today I’m joined by Archbridge Institute President and CEO Gonzalo Schwarz to talk with Michael Gibson. Michael is co-founder and general partner of the 1517 Fund and author of Paper Belt On Fire: How Renegade Investors Sparked a Revolt Against the University. Michael, thanks for joining us today.
Michael Gibson: Thanks for having me here. It’s great to be here.
Ben Wilterdink: Awesome. Well, I think to get started, I want to ask kind of a really broad question so you can kind of help us do some sort of level setting here. How would you describe the American higher educational system as it is today?
Michael Gibson: I think it’s degenerated quite a bit. Maybe it’s heyday was the 1950s and ‘60s. Maybe like the GI Bill era, where given the cost of education at that time, it was within people’s reach to get a degree while working some kind of job. I mean there are stories of our parents, or maybe I suppose some people’s grandparents now, but back then, you could actually work and pay off your tuition. Maybe you had to hustle, but it could be done. And then starting in the early ‘70s and then moving towards the present, I feel like the cost to college has gone up 4X in real terms, and that depends if you look at state schools versus private, but still quite substantial increase there. And yet the quality of the education has not improved that much.
I mean, in the hard sciences, there are more facts and theories that have been proven out that we could fill in people’s heads. But when it comes to actual learning and teaching techniques, I can’t say that the college experience is 4X better. So I don’t even want to get into, I could spend a lot of time talking about the political bias of higher education. I think that has distorted things quite a bit, and some courses are just pure indoctrination at this point. But I could leave that aside and just talk about, wow, if you look at the cost and time and money that it takes to get these degrees, and it’s not even clear what’s being learned, I think that’s tragic as well.
Ben Wilterdink: Yeah, yeah, definitely. Well, is kind of looking at that problem and thinking through that what prompted you to write the book?
Michael Gibson: Yeah, so I mean, my career has taken strange twists and turns. I thought I was going to be a professor of philosophy. I was working towards a doctorate at Oxford. I studied ancient Greek and Latin. So I have a background in ancient philosophy, some moral and political theory. I never thought I’d drop out of becoming an academic and then find my way into Silicon Valley. But I account this sort of adventure in the book where I come into Peter Theil’s orbit, and this happened in 2010. Peter and I, I had an interview with him, and we just got along philosophically, and he asked me if I would help him teach a class at Stanford Law School on philosophy and technology and how they interact. And I said yes. At the time, I was a freelance writer. I didn’t have a lot going on, and it just seemed like a really cool gig for about a year. And then I’d go back to LA where I was living, retire to my Garrett in the attic and start scribbling away again.
But I showed up to work the first day, and I can tell you what day it is because it was my first day of work, September 27, 2010. And I walk in and like Peter, he gave me a position at his hedge fund as an analyst, and I show up at this desk, trading desk, and it’s just like you would imagine in the movies with anything finance relate: stock ticker, CNBC, people at their big computer monitors, tracking numbers. And I sit down, I’m thinking, “What am I doing here?” And then my colleague, Jim O’Neil, came to my desk, and he says, “Well, hey, we got to go to Peter’s house. Last night on the plane ride back from New York, we came up with this idea, we’re calling it the ant- Rhodes scholarship, but we can’t really call it that, but we just want to pay people money not to go to college and let them work on things.” And I was like, oh, well I can’t stand Rhodes scholars, so already this sounds great.
So we went to Peter’s house. There was a big technology conference that day, TechCrunch Disrupt, that a lot of people went to. Peter was scheduled to be interviewed there. And so the thought was one of the things he could do in that interview was announce this program. So I go to Peter’s house, Peter comes bounding down the stairs, we get in the car. Next thing I know we’re talking about, okay, what do we name this thing? How much money is it? How much time? And we basically settled on, okay, it’s going to be called 20-under-20, $100,000, 20 people a year.
Now this program had two conditions. One, you had to be 19 and under to apply. And then number two, you had to be not enrolled in school. So, we fleshed this out later, but I’m in the car, we get to this conference center backstage. Then Peter is onstage being interviewed, and Sarah Lacey, the reporter, is asking him about this, and he announces the fellowship, and Peter’s talking about it in the present tense as though it’s this program that we’ve been running. So he’s saying stuff like we’re taking applications.
So I went home, just at a hotel because I just moved. And I remember calling my parents that night, and I was just like, “Oh my God, this is my first day of work. What’s tomorrow going to be like?” And that sent me on my way. I ran that program for, co-ran it for five years with other people and Peter, and just saw a lot of amazing things come out of it. Most notably is Vitalik Buterin. We helped launch Ethereum with him in 2013. Just a wiry Russian 19 year old we met, brilliant mind, and since then, Ethereum has become quite prominent and continues to be. Another one is Dylan Field in 2012. He was in the news recently because he founded a company called Figma, and Adobe bought Figma for $20 billion in this last fall. So we just saw amazing things come out of that program.
And then by 2015, I thought, well, we’re giving out these grants for free. Well, no strings grants, but we could be making money here in the sense that we could be making investments in these companies and in these individuals and then build on that. And so me and my co-founder, Danielle Stratman, we started our fund where we primarily back 90 percent of our investments are in people who don’t have college degrees.
So yeah, I wrote the book because on a number of levels, like, well, I mentioned I was on my way to becoming a professor. I saw some of the problems in higher ed, especially in the humanities where, God, it was such a soul-crushing existence it felt for anyone who was trying to become a professor. The subject matter, the soul of it had been sucked dry just by bad scholarship and strange distractions, and then all the way to, “What is actually college doing?” And we’re running this program and these individuals seem to be thriving more outside of it than inside of it.
So that was one motivation for writing the book. I thought it’d be good to investigate and talk about some of these things I had seen. And then maybe the second part is just really this business story too. So I think it’s extraordinary that, and who am I to write a little bit of a memoir, but the fact that I’m this like, I say defraud philosopher and with no background in finance. And then my co-founder, Danielle, she is the founder of a charter school, Innovations Academy, in San Diego. She was a school principal there, and that’s K-8. So how does a school principal and this dropout academic, they start a VC fund, and we’ve been doing quite well. We had a company go public in 2020, Luminar Technologies.And so I like to say we’ve returned more money to our investors than the Ocean’s 11 team steals from the Bellagio and MGM Grand. So to me, that is an extraordinary business story.
It’s like, wow, these two people with no background in finance are only investing in dropouts, and they’re making millions for their investors. That’s a story worth telling. But the truth is, when I was pitching it to publishers, they just didn’t want to hear it. It got rejected over and over because my agent sent it out to 20 publishers and seven wrote back saying, well, we think Peter Theil is evil and anyone—I mean, this is word for word—they said, “Peter Theil is evil, and anyone who works for him is evil.”
Ben Wilterdink: Wow.
Michael Gibson: So we can’t possibly publish this. I was like, okay, wow, this country is polarized. And then another seven wrote back saying, “Yeah, we can’t do this. I went to Yale. I love my English major, I studied literature, and my life is amazing. So this is wrong.” And then maybe seven others were like, “This isn’t for us.” But it’s been wild. It is like people don’t want to hear this. They want to believe that the old system still works, even though it’s starting to crack at the foundation, and the cracks are showing.
Gonzalo Schwarz: And delving a little bit deeper into the book and your personal life story, because as we’re saying a little bit off camera, it’s a very interesting journey that you’ve had. And I think you’re selling yourself short in one way. Because when I think about your story, it reminded me of a book I read a few months ago by David Epstein about range and how generalists triumph in the world. And, I think, in a good sense of the word and of the description. You have specific interests that you’ve mentioned that you’ve tried to study or have worked on, but it seems you fit a mold of generalist that is able to bring a lot of the various experiences to bear in your decision making with the fellowship and with the 1517 Fund. Both for you and Danielle from her background.
Is that sort of fair, how you would describe yourself or how you think about that as a-
Michael Gibson: Yeah. I love that book, Range. It’s a wonderful exploration of this idea that generalists and people who are at the intersections of these different disciplines and so on might have insights into things. So yeah, maybe this is pretentious to say, I wanted the book also to be a meditation on creativity, because it’s such a mystery. And when I was working for Peter, one of the heuristics he would use when it came to evaluating founders he worked with or people to hire was, of all the inspirations in the world, he drew on the work of his mentor and professor from Stanford, Renee Gerard. Now Gerard is a French literary theorist who first started his career writing about Bruce and Dostoevsky and then became something of an anthropologist because of his interest in the madness of crowds, witch hunts, and scapegoating. And Gerard has his theory about how these social dynamics play out.
And his book on the scapegoat, Peter really looked to, because Gerard, in his survey of the world’s mythologies and these historical examples of mob violence, when the mob is trying to restore order by picking a scapegoat, it’s not just anyone that they pick as the scapegoat. Gerard noticed that the scapegoat is, in the words of David Byrne of the Talking Heads, “strange but not a stranger.” Meaning there’s this insider-outsider polarity, where the scapegoat can’t be so foreign that this person couldn’t possibly be responsible for the social crisis at hand. But on the other hand, neither can they be so much of an insider that they’re part of the king’s court and trusted or whatever. Oftentimes, the scapegoat is this boundary figure that somehow fits in as an insider and outsider paradoxically. And the fact that Peter would use this—oh, because Gerard points out, oftentimes the scapegoat is a hero, these people have extreme characteristics—and so I thought it was interesting that Peter would use this heuristic, and we came to use it ourselves when evaluating talent.
I mean, for example, it’s a good explanation for why immigrants make for just such good entrepreneurs, because of course they’re hungry and ambitious. But I also think it’s the case that they’re both insiders and outsiders. It’s, on the one hand, they’re US citizens, but on the other hand, maybe they still have ties to somewhere else and fresh eyes because the culture isn’t entirely their own. And that leads to insights that others might not have. So when I was writing the book, I had to create a little bit of a self-portrait and see myself in that framework. And so I tell a personal story as well about how I’m an insider and outsider.
It’s like I’m an insider. I almost became a professor, but then I dropped out, and now I’m this rebellious outsider. But on a more personal level too. In my own family, I grew up thinking one person was my dad, and then when I was 20, learned that someone else was. And to me, that sets up, okay, yeah, even within my own family, I was certainly part of it, but then all of a sudden I was not part of it. It was like I was different. So that insider-outsider dynamic, I think, is fascinating. And I wanted to try to portray that in fullness without bogging the tale down too much in backstory. But yeah, so I reveal a bit about myself.
Gonzalo Schwarz: And speaking a little bit about that, I was wondering if you can tell us, because your Twitter handle has his name, who was William Blake? And why is he influential?
Michael Gibson: Yeah. Well, when I dropped out of Oxford, so I always wanted to be a writer when I was younger, when I was 18, 19. This is a little too memetic in the Giradian sense, where the writers I admired when I was 19, like TS Elliot, the poet. On the back of the book where they have that picture and the paragraph bio, I remember reading that Elliot had a PhD in philosophy from Harvard. Or Tom Wolf, another writer I admire, he had a PhD in American Studies from Yale. So I remember thinking that if I’m going to have a writing career, maybe these guys were onto something. I came to enjoy the subject matter for its own sake, but it’s interesting how those things set you off.
But I had a breaking point, and I was in the basement of a bookstore in Oxford, and I was reading this old collection of journalism Tom Wolf had put together. And I just thought, “Yeah, what am I doing? I got to just get out of here. If I’m going to write, I got to just write.” So that was one of the turning moments for me. And I thought the plan was, okay, I had some experience in journalism at small town newspapers, magazines I had interned at, and so on. And I thought, okay, I’m going to get a job in a newsroom. I’ll work the fat off my prose, and then in three or four years time, I’ll be ready for the main event, which would be some kind of non-fiction book or a novel. And so I got lucky. When I dropped out, I got lucky enough, I got a job at MIT. They have a magazine called Tech Review. So I became a journalist, and I was just covering science and tech for the first time.
I’d get assigned just crazy stories I knew nothing about. But the beauty of it was I had the professors at MIT I could talk to, and they could point my way to something. So, geez, I’ve lost track. I’ve gone down this path of my history. Yeah, so that was my background, and I was always a storyteller, and I’m still inspired by Wolf and those people who thought that you could use all the techniques of short stories and novels and memoirs and so on to really try to get to the truth of something.
Ben Wilterdink: Yeah. Sometimes even better than just articulated, abstract kind of language too. I mean, sometimes it’s a lot deeper.
Michael Gibson: Well, right. Peter Theil is a very well known figure, especially recently for a lot of his political maneuvering and so on. But, to me, I think what’s missing out in the world really is—well, heck, he’s a tremendously creative individual and very innovative investor. So I also wanted to portray what it was like to work behind the scenes on that.
Ben Wilterdink: Yeah, I think what kind of jumps out at me as you’re telling this story, and what really grabbed you, was the story element of things. Like journalism, obviously, is partly a storytelling exercise as well.
Michael Gibson: Yeah.
Ben Wilterdink: And so that seems to be very, very connected to what you were looking for, what you were after, and that seems to have translated into some of your later work—
Michael Gibson: Yeah.
Ben Wilterdink: And then also, that seems to be one of the key things that’s missing from a lot of academia. I mean, I’m a big fan of philosophy as well. I don’t think I ever really thought I would try to pursue a PhD, but I remember reading some of it and going to some of those classes, and you’re just like, “Wow, this is amazing.” These ideas hit you, and it’s like, “Bang.” And then you start reading more, and I’m just like, “Wow, this is so dry.” It’s like math with the English language; it’s very formulaic, very detailed, and I don’t know, it’s more mechanized. Maybe it’s more systematized, and it seems less creative and less focused on stories and inspirational things.
Michael Gibson: Yeah, I think that’s right. Because maybe in the class when you first start, you’re wrestling with the big questions as embodied in some work written by a master from the past or some interesting person. But then academic philosophy is just professionalized now. And the whole incentive structure of the ivory tower, I think, sets the course of how people pursue the subject, so that these professors are writing these papers that read like legal briefs for boring lawsuits. And it’s just a whole, just a different activity from whatever those other great minds were doing in the past. It’s like Nietzsche, you can’t even imagine Nietzsche in a modern academic philosophy department, or Plato for that matter. I mean, you got dialogues, right? It’s like…
Ben Wilterdink: Yeah, that would be something to see the reaction, because it seems so dissonant from the reality of what’s happening in college campuses. And I think Russ Roberts, host of EconTalk, he’s now president of Shalem College, he was kind of in the Stanford loops there too. He wrote a book, Wild Problems, that sort of—
Michael Gibson: Oh, I very much enjoyed that one too.
Ben Wilterdink: Yeah, big fan of it. And I think, it seems to me, he’s hitting on something similar, where he’s kind of talking about how we’re almost driving to reduce certain decisions or even life more generally to be more formulaic. Rather than an adventure or a journey to be enjoyed or experienced, as he might put it.
Michael Gibson: Yeah, I think that’s right. And I noticed that there aren’t many, I don’t know how to characterize this, sometimes the word “scripts” comes to mind. Scripts aren’t available for younger people to understand how they might scaffold an adventurous life doing new things. Instead, there’s like this assembly line to some vague pre-professional degree, and maybe you’ve become a consultant or investment banker or lawyer. And because those paths are obvious and visible and so on. But we don’t have the role models on a much smaller level to show us the way, because it’s like, to come back to the hard problems thing, it’s like, okay, you’re trying to figure out what to do with your life. This is a nasty, gnarly, hard problem. You can’t draw a list of pros and cons or some kind of cost benefit analysis around path A over path B.
And so what I think people do is they just look for relevant examples that near peers take. And so, I wish there was greater, it’d have to be like, it’s some kind of scaffolding where it’s people who aren’t 10 stages ahead, whether it’s like Michael Jordan or Elon Musk. Those people can inspire. But when you’re all the way down here, it’s just like you don’t know how to get there. So it’s like we need the people who are 2, 3, 4 steps ahead to show the way. Because I think decision making happens more about, “Hey, yes, there’s an imitative quality.” It’s like, oh, that’s cool. I want to become a pro athlete. We see how that’s possible. We don’t really know how to become a great novelist or a great poet or philosopher. And the only answer we have nowadays is like, oh yeah, get a PhD and become a professor. But that’s so emaciated.
Gonzalo Schwarz: And going to that sort of storytelling angle that maybe we need. So going back to—
Michael Gibson: Oh, wait, wait, I remembered what you asked. You asked William Blake. Yes.
All right, so I became a tech journalist, and Twitter was started during that time, and I thought it was this silly product that was made for haikus and poetry. So I snagged the handle William Blake, because he’s a poet I admire, again, for these sorts of paradoxes that are the insider-outsider. I highly recommend people take a look at his little book, The Marriage of Heaven and Hell, especially the section called, The Proverbs of Hell. And Blake was just like this visionary, mad at times, it’s so hard to follow what he’s writing about, but here and there and are just, there’s some beautiful poetry.
Gonzalo Schwarz: Yeah. But it is, in that sense, I think we’re talking about the poetry and the storytelling, that it is something bigger. And sometimes I think, yes, we need, as you mentioned, some of those steps for people to know how to reach certain, to take certain paths and what to do the next steps. But I think, sort of stepping back to that storytelling aspect of how we are seeing the world, is that there is also a need for a new narrative in a way that sort of shows that things are possible. And what I’m thinking, what I’m seeing besides just maybe what we’ve seen in schools and colleges, is just overall in our culture, there’s a narrative that’s more nihilistic and just passive about the root causes of some of these problems and what could be good solutions. So I know that a lot of the work that the Theil fellows and others have done tackle that head on. But I’ll follow up with a question on that later. But do you think that there is a need for a big cultural shift to have more support, a bigger narrative that will invite people to tackle these big challenges? Do you think that’s a problem at all?
Michael Gibson: I think, yeah, that’s something we got to push on. I’ve noticed, I’m in my 40s now, and just my peers and friends and acquaintances, with increasing frequency I’ve heard people say that they don’t want to have kids because they’re afraid of climate change. And this sort of opinion is just thrown out there in a hopeless fashion and accepted as reasonable. And I’m just shocked. I come from the opposite side where that’s where I’m a romantic at heart. I believe in the power of the human imagination, and I think we can solve these problems. So there is this deterministic, fatalistic mood that has set in with a lot of things where if you are worried about climate change, you can just say that now without having any knowledge of what the drivers might be and how we might be able to turn them around.
That’s what’s always surprising to me. Well, have you thought about how much carbon dioxide is in the atmosphere? Have you thought about how we could remove it? No, but you’re just accepting that it’s like doomsday. So yeah, that’s I think a problem, and I think we see it in schools and in higher education where it’s hard to, it’s not really a problem solving oriented way to learn. Instead, we have a different kind of scaffolding where it’s like, okay, you’re going to study the history and development of these ideas. You’re going to study Newton, and then once you understand gravity, maybe you learn relativity, and it gets more and more complex. But you’ve wasted all this time to get up to speed. Whereas, instead, it might be interesting, and I posit this at the end of the book, what if education was designed where we just admitted upfront how little we know about things and that there are these great unsolved problems? And boy, you’d win a Nobel Prize if you solved one of them.
So it’s like, if you walked into the physics department at Caltech or Harvard, and instead of just seeing the course listings or whatever on the wall, instead there was listed the top 10 problems that even the greatest minds in this building haven’t solved yet. It’s like, okay, yeah, we’ve taken a crack at trying to find a unified theory, but we admit we’re hopeless and it’s still a mystery. So if you give it a shot, go for it. And in that sense, I think if we can reorient ourselves towards, oh, here’s how we would make progress, here’s how, if we knock out these ideas and problems and not mysteries, I think we really can make a difference in the world and improve things for all. So yeah, I think you’ve put your finger on something. It’s like, I’d want to move away, maybe I’m a romantic at heart, but I believe in the power of human agency and imagination. And so if we can reorient people, I think we’ll make progress.
Gonzalo Schwarz: And in that sense—I haven’t researched everything there is to know about every Theil fellow or the company that you’ve supported, but—one of my favorite examples of people out there, correct me if I’m wrong, if it’s not part of the program, but Boyan Slat of the Ocean Cleanup—
Michael Gibson: Right. Yeah, exactly. He came after I left managing the program. But yeah, great example.
Gonzalo Schwarz: He is a great example of someone who’s a young person and also, because some of these bigger narratives generate a lot of, I think, anxiety or depression in kids. Obviously in teens, because they see all these problems and a lot of issues, but there’s no one sort of thinking about solutions. So, in that case of him seeing a thing, a problem, and everyone is starting to either become depressed of an issue, or worried about the turtles, or promoting the ban of plastic straws. And then someone like him who creates a company to actually tackle the problem and say, “Okay, it’s a challenge.”, And I imagine, I haven’t talked to him and know exactly every steps that he took, I imagine it was not an easy path at all—
Michael Gibson: Yeah, right.
Gonzalo Schwarz: He was creating some of these huge machines that are cleaning up the oceans. But is that something that you think that a lot of people that go through your program share? Sort of a sense of urgency about tackling a problem.
Michael Gibson: I think, yeah, I think there were a lot. There were a lot who were motivated by this deeper mission of trying to solve some kind of problem like that. Laura Deming stands out to me. She’s a young woman. We met her when she was 16, but she had been working in labs since she was 12 on trying to understand how the human body ages, what the underlying causes of aging are. And to me, she’s just a great example of someone who’s possessed by a mission. And maybe it’s on, all these things are difficult, but if it’s almost like building a cathedral too for some people, where if you add your stones, maybe posterity will add more and eventually will solve the problem. But that said, to be fair, it’s like there were Theil fellows who just worked on enterprise software or something like that. Yeah. So not everyone, but it is always inspiring, I think, to meet people like that.
At the end, the last third in my book, I realized I did want to advertise or sort of map out for people this boundary. The limits of our knowledge right now, where is the frontier? And when I set out to do that, I realized just what a blank space there was in our culture, because there was no other book that, in layman’s terms, could take you through unsolved problems in energy creation, transportation, healthcare, water, all these different topics. There’s nothing out there that’s sort of just, in an encyclopedic fashion, can take you through some of the issues. And that to me was a sign about how little as a society we talk about it. When was the last time a president said something inspiring about how to solve these problems? The study is always about how to contain them or some policy about coping with it or whatever. But God, I’d love to see a president out there encouraging people to solve specific problems.
Gonzalo Schwarz: That is, in a way, the essence of the American Dream is to push those frontiers. And at the beginning, it was more of the country, it was more of the geographical frontiers. And now, as I think a lot of these technological or just challenge frontiers of different issues that you mentioned in the book or that we see that we still haven’t solved, that could be a good motivator in terms of unifying people around. The idea of the American Dream is about solving these big challenges. Here’s what we haven’t done yet, so lets—
Michael Gibson: Oh, I paused for a second.
Gonzalo Schwarz: Oh, no worries. But I was just mentioning that the American Dream serves as that narrative that could push people to think about these challenges. In the past—the American Dream was about just pursuing the mission or goals or challenges—and in the past, that was more a geographical frontier, just moving farther west and settling different places. But now it could be thought of as the frontier of all these challenges that you speak about in the book or that if you want to mention some of, as well as an example.
Michael Gibson: I think that’s right. It’s like, in the past, maybe we’re just limited as beings, because we think in terms of geography. It’s way more exciting and thrilling to actually have a frontier to go explore. But when it becomes this metaphorical frontier that is more about the limits of our current knowledge, I don’t know, maybe it just hasn’t been able to galvanize people to the same degree. But I think the space race was characterized as an extension of the frontier. And Star Trek, space was the final frontier. I don’t know if there will ever be a final frontier, but I think that this idea that there’s some boundary between what’s known and unknown in that it is a wild place, I think that’s an accurate model for the way things are. And there’s some people, I think, who are just born, or maybe they can be developed, to try to explore that territory, but I think we don’t think about it enough now.
Ben Wilterdink: Yeah, I think a lot of what you’re describing is very action-oriented. I really like the idea of having, you walk into a place of learning and you’ve got the problems to solve. You’ve got that missional focus. You’ve got something. It’s much more oriented around, what can I do? How can I improve? How can I add?
Michael Gibson: It’s funny you say that, and it’s true. But it’s, so I had lunch with Peter Theil recently, and he said the most important sentence in your book is this quote from Faust that, “In the beginning was the deed.” Not the word, but the deed. So yeah, thematically it’s like there is very much, one of my criticisms of the ivory tower is that contemplation is important, but so is action. And we’ve just been missing it for so long that when I encountered it in the form of Silicon Valley and some people working on it, it woke me up.
Ben Wilterdink: Yeah, that’s a really, I want to kind of stay on that for a second because that’s something that I’ve been thinking about and wrestling with. We mentioned the problems about alarmism, about climate, of people not wanting to have kids, or maybe doomerism of any variety or something like that. And I think that there is this sort of creeping nihilism that’s out there, and that’s almost like a hopelessness that can become paralyzing, or at least become a convenient excuse not to do certain things, even if it’s not exactly the root cause. I mean, I can’t get inside people’s heads, of course.
Michael Gibson: Well, yeah. What I can’t tell is taking the example of someone who says they don’t want to have kids because of climate change. Is that just a rationalization for a deeper nihilism? Maybe they just don’t believe in having a next generation, like life isn’t worth it. And so they have this convenient excuse that there’s some doomsday they can use. I don’t know, I can’t decide.
Ben Wilterdink: I don’t know. My guess is there’s probably a little column A, a little column B. It’s a lot of people out there. I think it’s hard to know, but I do think that whatever that is, it’s certainly out there, and it’s growing, and I’m really, really not confident that we’ll be able to think our way out of this problem. My thinking about this is we’re basically going to have to take a leap of faith approach. We’re going to have to just get back into doing these actions. We’re going to have to replug back into our communities, re p=lug back into social connections, take plunges into new areas to make progress, even if we don’t fully articulate all of the reasons why you might want to do that in a more propositional way. And I think that college and the university as it is right now, is just not geared towards that. It’s much less geared towards action-oriented, or getting things started, or “the deed,” and it’s much more oriented towards propositionalizing, abstracting, thinking through. So I don’t know.
Michael Gibson: Yeah. I think that’s right. Okay. This is probably way too esoteric, but I picked up, I found this old book on, it’s a history of different types of schools in the middle ages, especially as related to monasteries versus cathedrals. So this, I forget the author’s name, but it’s called The Envy of Angels. And one of the things he points out, in the Middle Ages, there was a split between the intellectual schools, which were about texts and memorization and reciting things. And then another set of schools that was about embodiment and charisma, and those were these cathedral schools. And so it dawned on me that we are overwhelmed with intellectual culture, which is like book-based, text-based, speech-based, and we’ve really missed out on this charismatic culture of just the way philosophy is embodied in someone’s life. And in the religious context, it’s like you have a touch. Someone who has charisma has a touch of the divine, and therefore their embodiment radiates the lesson to the students in a way that they should imitate.
Okay. I see that at play nowadays, where it comes back to those stories and examples where it’s like, who are the charismatic people in your life where you feel drawn to learn from them and their way of life and being? I feel like our higher education system is completely blind to this because it is all about like, “Hey, can you write an essay? Can you take a test?” It’s not like, “Hey, can you live life in a certain way?” Because that’s just outside the bounds of intellectual culture. So in a weird sense, I think we need to find a way to create a charismatic education, like a charismatic pedagogy where the magnetism of a way of life as embodied in certain individuals holds people to do great things. That’s a very abstract statement.
Ben Wilterdink: Yeah. But I think that’s the kind of college that I’d want my kids to go to, something like that. That would be something, because that’s, I think, and I think about my own life. And certainly it sounds like it’s sort of reflected in some of what you’ve done in your life as well. I’m sure Gonzalo would have similar examples—
Michael Gibson: We do see it in the old apprentice to mastery model where it’s somehow you as a novice just being around and working with people who are higher skilled and better than you. You’re picking up the skills, but you’re also, it’s all that tacit knowledge that you accumulate just being part of a craft.
Ben Wilterdink: Right. And there’s some of that in mentorship now too. I think that is kind of replicated there, but especially mentorship that’s sort of maybe goal-oriented and it’s a little less formalized in that way.
Michael Gibson: Yeah, very much so.
Ben Wilterdink: Yeah.
Gonzalo Schwarz: And this is a question that we were thinking about is, so what would be your advice to a high school senior who’s thinking about what could be his or her next step in terms of when he is they’re exploring their different, yeah, so it depends on the person, but what would be—
Michael Gibson: Right. I mean, what we haven’t talked about is, I mean, I think college still pays for individuals, but the question is why? And that’s a debate where the standard consensus story says that the college wage premium exists. It pays to get a BA because college imparts skills to you, and those skills are rewarded in the labor market. But there’s a body of research that pushes against that quite a bit. The biggest thing is this sheepskin effect, where if you were gaining skills in college, then every step of the way you would expect that person to be paid more. So if they had, let’s say they drop out after one year, two years, three years, or maybe even they’re one credit shy. Every step along the way, they should have higher and higher wages because they’re accumulating skills. But that’s not what we see. In fact, it’s like, I forget the number, but I think it’s somewhere like 50-60 percent of the wage gains occur only when you get the diploma.
So it’s like, if you got hit by a car on the way to that last exam and you didn’t finish your degree, you’re not going to make as much. Because what the theory is that, well, the degree is signaling something about you as a person, not that you have skills, but that you are a certain type of person who can be relied upon to do some work. So my advice to an 18 year old with that in mind is saying, okay, I understand if you want the higher wages because you’re going to try to distinguish yourself by getting this degree, that makes sense. But the opportunity cost is changing, so it’s very, very expensive. Make sure you study something that at least can be rewarded in the labor market. Maybe you need time to explore and make friends and so on. I think there’s, college can be a good reason to do that, so long as it’s balanced by this prudence. Just because the prices have become so expensive. But on the other hand, if you have ideas, some ideas can’t wait. And if you’re working on something, don’t bother to stay. I mean, come contact us, we’ll be happy to help you out and get you started.
Yeah. And then more broadly,=there’s certain types of people where, we just have this monoculture right now where it’s just assumed that this assembly line is the only way to the American Dream, is the only way to have a successful career. And I think there’s also a large number of people who have just a different heart and mind and maybe are more suited to, let’s say the trades: carpentry, contracting, that kind of stuff. And it’s like, why are we pushing the people like that into higher education? It’s like, maybe we should do more to help those people build an on-ramp so they can start their career without getting a BA, but maybe something else or apprenticeship or whatever. So if you’re that type of 18 year old, I’d say, okay, yeah, don’t get the debt. Like, okay, we’ll find a way for you to learn this trade or something like that.
So yeah, I think it’s a much harder problem than it used to be. I think you could, because the cost of college has gone up so much, don’t go into debt. If you come out of college at 22 not knowing what you want to do and indebted, then you’re going to be in a tough spot. Because now you’re going to have to take a job that doesn’t really fall out what you’re passionate about or draw forth your greatest talents, and you’re going to have to do it because you just have to pay the bills. And that’s quite depressing.
Ben Wilterdink: Yeah. And I think a lot of people have fallen into that. And on the one hand, I’m no fan of student loan bailouts, but I do sympathize when the overarching message has been, “Go to college if you want to succeed.”
Michael Gibson: Right.
Ben Wilterdink: Basically, if you want to do anything, go to college. Go to college.
Michael Gibson: I know. Yeah. It’s funny you mentioned that. I think it’s today that the Supreme Court is hearing the case about the Biden Administration’s debt cancellation plan. And what I find so interesting about the whole debate is that no one is holding the universities accountable. It’s like, okay, we’ll forgive the debt, but nevermind why it was generated. Ask for no reforms. And so in five, 10 years, what, we’re just going to do the same thing again? Keep forgiving the debt? It’s like, I don’t understand.
Ben Wilterdink: It’ll be more expensive next time.
Michael Gibson: Yeah. If the colleges were fraudulent in one sense and saying that they would impart these skills, and then people learn nothing and now they’re in debt, well, okay, I feel bad for those people. But we need to hold the schools accountable.
Ben Wilterdink: Yeah. Yeah.
Michael Gibson: That’s very strange to me.
Ben Wilterdink: And of course that would be incredibly hard to prove too, right? I mean, did you not get the skills? Were you not a good student?
Michael Gibson: Right, yeah.
Ben Wilterdink: That’s different. And then, of course, the added layer is you can’t discharge these in bankruptcy like you normally would with other kinds of debts. So I think starting to unwind this, part of, I think the key piece of this is employers. Employers are still very, very much looking for that credential there, or at least that’s my impression. Although that seems to be changing a little bit. Do you think that we’re kind of getting ready for another shift there? How do you see the employer side of this sort of shaping up?
Michael Gibson: Right. I think it’s to come back to that signaling theory of education. The degree signals not only that you have the cognitive capability of intellectual work of some kind, but it’s also the case that it shows you’re willing to undertake a four year project at great cost, take assignments and orders, fulfill them, hand in the paper, take the test, and all of that irrespective of what you study. And that signal is valuable in the labor market. So we have to find a way for people to send that signal much cheaper or just differently.
Where we see it most is in the world of computer engineering, where because it’s a skill that can be pretty directly measured—I mean, either you can build or can’t—we’re starting to see more and more people peel off out of college. Just not even to do startups, but to work at companies. So it’s not unusual to meet someone who is 18, 19 and actually has like six, seven years coding experience. And then there’s a website called GitHub. It’s a repository where people can upload their code. They’ve worked on open source projects, and now that GitHub account is a greater resume than anything LinkedIn, because your code is validated by your peers. They’re like, yeah, this guy can build, and it may not even be your real name. You could have Darth Vader as your avatar and some pseudonym, and you can still get hired because you can do the work.
So, yeah. I think in professions where skill can be directly measured, there’s a way to get around the university degree. That degree is meant to signal something about the skills you have. Well, if you can show by this portfolio that you’ve created and you’re so good that people can’t ignore you, you can certainly start your career.
But I think in other areas it’s going to be a little more difficult. But I do see promise in using that model just in different ways. We need some kind of network-based apprenticeship system where maybe people can get started, build enough of a reputation so that they get the recommendation to the other employer, the other program, and then they can go from there. It’s just all about getting your foot in the door and then working on and building a credible reputation over time. So I think if we were able to build out a network of people who, I mean, it doesn’t even have to be high tech stuff. It’s like there should be an on-ramp to a career to, let’s say you wanted to be like mid-level manager at a big Fortune 500 company. I don’t think you need a college degree to do that. It’d be interesting if we could create a network where people could start their careers, get the references, and then move their way up.
Gonzalo Schwarz: Yeah. One question before I forget about it that I wanted you to allude to, because you wrote about it in the book, is why did you choose the name 1517 for the fund? And why do you think that’s important for this conversation?
Michael Gibson: Right. Names are very important to me, including my own in the book. 1517 is… I noticed that people always asked what the number meant if I had it on a t-shirt. And so I was looking at numbers. And then back in 2014, ’15, we started making this historical analogy that maybe the university system today is the corrupt church of the 16th century. So when Martin Luther famously nailed his 95 theses to the church door in 1517, what he was protesting against was primarily the sale of a piece of paper called an indulgence. The church would accept money in return, and people would buy this piece of paper because the church said, okay, you’re absolved of sin. You gave us money, go do it again, and then give us more money or something. So Luther was upset about that in 1517.
On Halloween, the story goes, he nailed his theses to the church door. I guess that’s not, that’s up for debate, but we’ll take it as true. And we’re not a religious fund either, but the analogy is that we think today, the secular mania that feels religious in its own way is this idea that everyone needs this piece of paper. Otherwise, they’re going to hell. Except it’s not an indulgence, it’s called a diploma. And these universities are selling it at great cost. And so as a fund, we say we don’t believe in indulgences. So we named ourselves 1517. And yeah, it’s served us well because yeah, it’s funny, it’s like we’ll be on the street or at an event and people will ask us what the number is. And it’s only rarely, but it does happen from time to time, where someone knows the year and they’ll ask us, “Are you some kind of seminary or?”
Ben Wilterdink: Yeah. That’s great. All right. Well, I want to make sure that we get you out of here relatively on time.
Michael Gibson: Okay. Well, thanks for having me on. Great discussion, great questions.
Ben Wilterdink: It’s been really good talking to you. And I’m curious to keep following you and see what you’re going to be coming up with at the fund. And just again, I want to remind everyone that the book is Paper Belt on Fire: How Renegade Investors Sparked a Revolt Against the University. Sounds like it’s a much needed one, so thanks a lot.
Michael Gibson: Yeah, thanks for having me on. Anyone can reach out at 1517fund.com or, as mentioned, my Twitter handle, @William_Blake on Twitter. Happy to say hi there too.
Ben Wilterdink: Awesome. Thank you.
Michael Gibson: You’re welcome.
. . .
Michael Gibson is co-founder of the 1517 Fund, a venture capital fund investing in teams led by dropouts, the uncredentialed, and renegade scientists. Previously he was vice president for grants at the Thiel Foundation and a principal at Thiel Capital, where he helped launch and run the Thiel Fellowship. He has written on innovation and technology for MIT’s Technology Review, the Atlantic, National Review, and City Journal. His book, “Paper Belt on Fire: How Renegade Investors Sparked a Revolt Against the University” was published in 2022.
