Peter Thiel is one of the greatest investors of all time, but he too has struggled to invest in some areas.

The PayPal co-founder and Founders Fund partner — whose bets on Facebook, Palantir, SpaceX, and Stripe have made him a legend in venture capital — has been remarkably candid about where his instincts and capital have come up short. In a frank reflection on his investment track record, Thiel had once singled out educational software and healthcare IT as the two sectors where returns have been the weakest, and where the structural barriers to disruption have proven most stubborn.

“The area where we’ve probably had the least success from a returns basis in software — the two worst areas — are educational software-related companies and healthcare IT companies,” Thiel said.

On education, he admitted his fund largely stepped back before making much of an effort. “Education, we felt, was so hard, we did very little. We’ve done so little in education, I feel I can’t even comment on it.”

Healthcare, however, was a different story — they tried harder, and still ran into walls. “Healthcare, we tried a few more things,” he said. “What’s roughly gone wrong in the healthcare sector is: you have all sorts of things that sound like a pretty good plan for reforming the system — and it’s okay — it’s this one angle on the pricing model that you need to change. But then there are ten different ways you can do it.”

That last point is the crux of it. Healthcare reform, in Thiel’s telling, is less a problem of imagination than of execution and fragmentation. The diagnosis is usually correct; the treatment options are what multiply out of control.

Thiel’s frustration maps closely onto broader trends in both sectors. Edtech, despite a surge of investor interest during the pandemic, has struggled to deliver durable returns — the collapse of India’s BYJU’s, once the world’s most valuable edtech startup, being the starkest example. Investment in the space hit multi-year lows in 2024 as the return to in-person schooling and the rise of general-purpose AI tools like ChatGPT eroded the case for dedicated educational platforms.

Healthcare IT has faced its own version of Thiel’s pricing labyrinth. The sector is burdened by regulatory complexity, fragmented legacy systems, and payer dynamics that can extend adoption cycles by nearly a year — all of which compress returns and test investor patience. Even with the current wave of AI investment flowing into clinical and administrative workflows, the core structural problem Thiel described — too many angles, too many ways to fix just one thing — has not gone away.

What makes Thiel’s observation worth sitting with is not just the candor, but the pattern of thinking behind it. For an investor who asks founders a single sharp question to test whether they’re building something truly differentiated, sectors with no clear point of leverage are anathema. Education and healthcare, it turns out, have too many levers — and none that move the whole machine.