Peter Thiel: Well, I had seen the tech bubble, and this one seemed crazier than the tech bubble, so that’s my personal answer. It was crazier in the sense that the technology bubble, at least at its core, was about something real and about progress and about building and creating new things. Once you had a hundred different online pet food companies, maybe it was not really about tech at all anymore, and that was the problem with it. But, by contrast, if you think about something like the housing bubble where you had people speculating on the fifth house in Las Vegas or something like that, when there is something psychologically bizarre about people getting that excited about empty pieces of dirt, it was fundamentally dirt that was the most exciting because it was land and land speculation that had the biggest amount of leverage in it. So there was something really insane. The law of quantitative metrics, one can cite, so people were, the rent versus buying implied that housing prices needed to double so people’s expectations about future house price growth were…
Tom Stewart: But you saw that? You paid attention to the signals? A lot of people didn’t. What’s the psychology of that?
Peter Thiel: I think there’s just incredible collective psychology in these things, and there are all these self-reinforcing dynamics. You went to every sort of dinner conversation party in 2005 was about housing, just like it had been about tech in ’98 or ’99.
Tom Stewart: And so, at a certain point, you said this doesn’t feel right and I’m going to act on it?
Peter Thiel: Yes.
Tom Stewart: Or, there’s also the temptation to be the last person at the punch bowl before the Fed famously takes it away and that they got, just one more drug deal, one more housing deal, I can get it. You know, I can always quit…
Peter Thiel: Yeah. Generally speaking, you don’t really know when the last one’s going to be, so it’s probably prudent not to try to do that.
Recorded: October 23, 2008