Billionaire Peter Thiel has some advice for Apple AAPL

The Apple Watch and Apple Pay aren't true breakthroughs, Thiel argues. Something like an Apple Television might be.

"You need to come up with something that is vastly better than the next best thing," he told CNN's Erin Burnett in an interview airing on OutFront at 7pm ET Tuesday.

Thiel co-founded PayPal and was an early investor in Facebook (FB), among other Silicon Valley startups. Today he's full of criticism for everything from Alibaba to Harvard University.

Related: Alibaba 101: the biggest IPO of all time

The 46-year-old thinks the U.S. is looking at years of stagnation if it doesn't start innovating more. That's his main message in his new book, "Zero to One: Notes on Startups or How to Build the Future."

It's more than words for the wealthy investor. He's gone as far as founding the Thiel fellowship program, where he offers to pay bright college students to drop out of school and start companies.

"A diploma is a dunce hat in disguise," he said. That's especially the case if you don't graduate from a top school, he said.

Related: Watch Peter Thiel's comments on college

Thiel himself is a graduate of Stanford University and Stanford Law School, but he claims his biggest mistake in his 20s was not questioning the norm enough. So far, 83 young people have been through Thiel's program.

Former Harvard University president Larry Summers has called the program "the single most misdirected bit of philanthropy in this decade."

Thiel fires back that if Harvard's education model is so great, why are they limiting it to 6,700 students? Why not increase the undergraduate student body to 20,000 or even 100,000?

Related: Is a college degree worth it?

As for Alibaba, the much talked about Chinese e-commerce giant that is expected to start trading this week on the New York Stock Exchange, it also gets an indifferent shrug from Thiel.

"It's fundamentally a political investment," he said, noting that Saudi Arabia and Iran probably have a freer online system than China. "I would not buy [Alibaba] although I think it will go up some."

Thiel also lashed out at Twitter (TWTR), calling the company "mismanaged" on CNBC Wednesday and saying there's "probably a lot of pot smoking going on there." Twitter CEO Dick Costolo jokingly said in a tweet that he would respond a bit later because he was "working my way through a giant bag of Doritos."

These days, Thiel is invested in companies such as Lyft, ZocDoc and Airbnb.

"If you held a gun to my head and said what's the next $100 billion company, I would say Airbnb," he said, praising the company as the next big thing out of Silicon Valley.

Related: Is Airbnb really worth $10 billion?

He's also a fan of monopolies. He published an opinion piece in the Wall Street Journal over the weekend, arguing that monopolies are a necessary part of innovation. The headline read: "Competition is for losers."

"You don't want to just do 'me too' companies that are copying what others are doing," he said. "The reward for coming up with something new is you are the only person who has it. We protect monopolies with copyright."