On Wikipedia you will quickly find that Peter Thiel is the founder of Paypal, the first investor in Facebook, and has a net worth is $2.5B+. Oddly, those three facts are the least interesting parts of his story, point of view, and personna. Recently wrote Zero to One here (affiliate link).
Super contrarian – Thiel is a different breed. If you hear a billionaire speaking vocally about the tyranny of government, and the general failure of technology to improve our lives, you are listening to Thiel. As a more recent data point, he was perhaps the only Silicon Valley leader publicly backing Trump in the US Election. He has lots of views – likes to debate – but I am most interested in his thoughts on business.
Blue Ocean thinker – For those familiar with Kim and Mauborgne’s concept of blue ocean, you know it is about creating and re-configuring new markets of “uncontested space”. Simply, don’t fight the competition on old terms, create new ones. Nice, right?
Thiel’s take, “Capitalism and competition are antonyms; you want to build a monopoly.” Sheesh. That is big talk, but also makes sense. You want something so unique, rare, and defensible that it is an economic moat. Monopoly – a bad-word in regulatory circles, but what business leader would not like having a position that strong?
Stop copying. Thiel continues that line of argument, “Tell me something that is true that no one agrees with you about? . . . When you do something new you are not directly competing with too many people . . . We get trapped in competitive cycles because we like to be a part of the herd.”
“Courage is in even shorter supply than genius.” Sheesh. Thiel likes to drop these tweet-able phrases in interviews all the time. Courage – to stand out. Courage – to do something different. Courage – to fail because you think it is true. Courage – to stop copying other people, and instead use technology to take a step-function jump from 0 to 1.
Paypal experience – was an amazing experience because they “Learned that it was hard, but possible.” Instead, most people in Silicon Valley learn the two bi-modal lessons:
- I failed so it must be impossible; let me try something easier
- I succeeded, so everything must be easy.
He notes that of the 220 Paypal employees, 7 of them founded $billion companies. Forbes called them the the Paypal Mafia for good reason. Includes founders of Tesla (Elon Musk), Yelp, Yammer, YouTube, Linkedin (Reid Hoffman) etc. . .
Progress through innovation is the goal. Thiel is a big Ann Rynd follower. . . he argues that governments are universally bad at innovation and says there is a bubble is in government bonds. Trust me, he has even more dystopian stuff to say than that.
Biggest mistake was Facebook series B. Even though he invested in the A-round, he did not invest in the B-round. After all, it increased it’s valuation by $5M (12x) in 8 months, and to him, nothing had changed. . 8-9 people. Graffiti everywhere in the office. He passed on the B round. Ooops. Don’t worry, he course-corrected on series C round, making $550M. 5x.
“We wanted flying cars and we got 140 characters.” Thiel argues that technology has been a massive disappointment. He says, “If you look at the US over the last 40 years, median wages are stagnant, the 30 years before that, they went up by a factor of 6″. Cars, aeronautics, important dimensions that progress was made. Oddly, not a lot of it has progressed [since then with] productivity.” He argues that all the progress has been with computers – nothing on the physical side and as a uber-libertarian, he largely blames the government.
Judge for yourself. It’s hard to listen to him too long – because he is so combative, but no one will argue that he does not have valid points. He is an iconoclast in the best way. Principled and rough-around-the-edges, which is exactly how I imagine he would like to be described. Great interview with Tim Ferriss here.