Why Is US Business Sitting on $Trillions of Cash?

US non-financial businesses may be sitting on as much as $5 trillion in cash -- in the middle of a global recession. Apple has over $100 billion stashed, while Microsoft, Google, and Cisco have stashed roughly $50 billion apiece.

Peter Thiel wonders why these cash-rich companies are not using their hoards of simoleon to solve the human world's big problems. Thiel, himself, is invested in a number of disruptive technologies from life extension to private space launch to "cities on the ocean" and more.

There must be a good reason why so much cash is being held in reserve -- at a time when plenty of bargains can be found, and when there are so many opportunities to advance modern science, technology, and human enterprise.

Here at Al Fin, we suspect that companies are waiting for the results of the November US national elections. Investment has been stifled by a very uncertain political environment throughout the duration of the Obama regime. Nothing constrains risk-taking in the private sector so much as a vocally anti-private sector US president and executive branch.

This is true for the global economy, just as it is true for the US economy. If the US is led by a stasist uber-statist regime, prospects for growth are somewhat dismal not only in the US, but in global markets at large.

Image Source

The Obama regime is unhappy about the hoarding of cash by US non-financial enterprises -- just as it is unhappy about possibly greater cash hoarding by US financial enterprises such as banks. Hillary Clinton and other administration spokespersons have already complained about these huge stashes, but relatively mutely. After the election, if Obama is still US President, expect much more pressure to be put to bear.

Of course, if Obama is not US President in late January 2013, it is likely that no pressure will be required to begin to free up large amounts of cash for investment, R&D, ventures, and so on.

More: Is Obama letting his cat out of the bag too soon? Most American voters understand Obama's strong pro-government leanings. But they are slowly learning about his anti-private sector biases more quickly than might be best for Obama's re-election campaign.

Yet More: Meditations from the Book of Barack

Peter Thiel: Who's Afraid of the Higher Ed. Bubble Bursting?

Entrepreneur, venture capitalist, philanthropist, and teacher/philosopher Peter Thiel sat down to talk with CBS' Morley Safer:

video via MJ Perry

Morley Safer: You think if the [higher education] bubble bursts, it's a good thing?

Peter Thiel: I don't think bubbles bursting are ever good things. I think they are inevitable things.

For Thiel success seemed inevitable -- child prodigy, chess champion, arrogantly self confident. He breezed through Stanford undergrad and law schools. With his Midas touch he took the millions he made as a co-founder of Paypal and turned that into billions as the first investor in Facebook.

Morley Safer: And you're a billionaire before the age of 40.

Peter Thiel: I guess that might be correct, yes.

Morley Safer: No, it is correct. _CBS_via_MJPerry

Peter Thiel is backing the Methuselah Project for anti-aging, he is backing the Seasteading Institute, he backs Elon Musk's SpaceX, he teaches a Stanford course on high tech startups, and is involved in a number of unconventional and cutting edge enterprises.

So far, he has been able to avoid the ire of the skankstream journolist thugmonkeys -- for the most part. It might be best if he continues to avoid commenting on political topics. ;-)

About Peter Thiel's CS183 Tech Startup Class

Peter Thiel is a successful entrepreneur and venture capitalist who is taking the time to teach his hard-won knowledge and ideas to students and the wider public. He is currently teaching a Stanford class in tech startups, CS 183. Here is more information on the class, including links to class notes and readings.

CS 183: Startup

Conception, launch, scaling, and growing of a successful tech company. Bridging the subjects of engineering, science, business, finance, and world history, topics will include: the technology revolution of the 20th century and prior eras; the economics of business; founding a startup; the importance of team vision and passion; long-term strategic planning; building a successful founding team; financing and the VC perspective; secrecy vs. openness; recruiting, managing growth, marketing, regulation and other operational topics. Assignments are designed to explore key concepts at greater depth, using real-world and hypothetical example companies. Inner accounts from the early days of startups including PayPal, Google and Facebook will be used as case studies. The class will be taught by entrepreneurs who have started companies worth over $1B and VCs who have invested in startups including Facebook and Spotify. Students can expect to be proficient in the core skills critical to the founding and growing of a tech company upon completion of this course. Prerequisites: Introductory calculus and statistics ( Math 41 and ENGR 155C, or equivalents); basic modeling skills in student's preferred coding language (e.g. C++, Java, Matlab, Excel).

Terms: Spr | Units: 3 | Grading: Letter or Credit/No Credit

Instructors: Nolan, S. (PI) ; Thiel, P. (PI)

Schedule for CS 183 2011-2012 Spring

CS 183 | 3 units

Notes: Enrollment limited to 250. Consent of instructor required. _Stanford Explore

Class readings

Class notes in essay form from Blake Masters

Startup Digest .... Peter Thiel video on his startup philosophy

It is much easier to destroy than to build and create something that works and lasts. It is not easy to understand the world well enough to build a consistent, long-standing, successful venture track record.

Peter Thiel Aims to Misbehave

This article is cross-posted from Al Fin, the Next Level

Peter Thiel is a successful entrepreneur, visionary, and venture capitalist. But according to many tenured ivory tower professors, Peter Thiel has become "the enemy." One of Thiel's recent "investments" involves sponsoring youth under the age of 20 years old, in the starting of their own entrepreneurial enterprises. The young people must forego a college education during the time that they are engaged in their intensive entrepreneurial training and startup experience.

Interestingly, one of Thiel's young hopefuls -- 19 year old Dale J. Stephens -- has embarked on an entrepreneurial campaign in opposition to an excessive dependency on a college education. The excerpt below is taken from Stephens' article in CNN: College is a waste of time:

I have been awarded a golden ticket to the heart of Silicon Valley: the Thiel Fellowship. The catch? For two years, I cannot be enrolled as a full-time student at an academic institution. For me, that's not an issue; I believe higher education is broken.

I left college two months ago because it rewards conformity rather than independence, competition rather than collaboration, regurgitation rather than learning and theory rather than application. Our creativity, innovation and curiosity are schooled out of us.

...College is expensive. The College Board Policy Center found that the cost of public university tuition is about 3.6 times higher today than it was 30 years ago, adjusted for inflation. In the book "Academically Adrift," sociology professors Richard Arum and Josipa Roksa say that 36% of college graduates showed no improvement in critical thinking, complex reasoning or writing after four years of college. Student loan debt in the United States, unforgivable in the case of bankruptcy, outpaced credit card debt in 2010 and will top $1 trillion in 2011.

... Learning by doing -- in life, not classrooms -- is the best way to turn constant iteration into true innovation. We can be productive members of society without submitting to academic or corporate institutions.

... We who take our education outside and beyond the classroom understand how actions build a better world. We will change the world regardless of the letters after our names. _College is a waste of time

Brave words, which will need to be backed up by braver actions. Stephens will receive $100,000 and access to expert advice and assistance in reaching his entrepreneurial goals. Stephens has already been signed by Penguin Press to write his first book, "Hacking Your Education."

What is most interesting about this phenomenon is that Thiel's initial investment is spurring a downstream expansion in interest in entrepreneurial alternatives to mainstream college education. And this downstream expansion is likely to spawn further downstream expansion, and so on etc. . . .

Wise people understand that school is not the education. Life is the education. The efforts of modern society to place emphasis on the educational effect of schools at the expense of the educational effect of life, has led to a society of Peter Pans and Cinderellas, perpetual incompetent adolescents of the psychologically neotenate variety.

Peter Thiel aims to change that emphasis back, in an effort to help save at least a few youth from wasting their time and lives. Peter Thiel aims to misbehave. And he is hoping that the attitude will be catching.

Peter Thiel Talks to Stanford Young Entrepreneurs on Innovation

Watch live video from Stanford BASES on Justin.tv

[Jump ahead to the 10 minute mark on the video above, to skip the noise and superfluous comments.]

In the video, Thiel discusses entrepreneurship from two opposite standpoints: 1. Take the money and run, and 2. Building a company to last. He also talks about the difference between running a company yourself as an entrepreneur, or bringing in outside management to run your company for you.

Thiel brings an interesting historical perspective to tech startups of the past 20 years, bringing up many of the conundrums which founding entrepreneurs had to solve in order to succeed.

Interestingly, Thiel extends these problem-solving concepts which are wrestled with by tech entrepreneurs, onto the thinking of the US as a society in solving its current set of problems. In other words, how would an innovator and entrepreneur solve the modern problems of the US and other modern nations? (see this Business Insider article for a rather non-perceptive interpretation of Thiel's talk)

Thiel's discussion of the need for technological growth and innovation in order to create any type of livable future, should be an eye-opener for most stasists, but unfortunately it is likely to go right over their heads.

It is Thiel speaking as a successful insider which makes the talk interesting. Continued success in the modern world is either a result of being good, being consistently lucky (very unlikely), or being connected to corrupt seats of power (the Obama crony approach). Needless to say, Thiel as a libertarian has had to make it on his own, without cronyism.

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