Why PayPal co-founder Peter Thiel thinks luck will get you nowhere

Harriet Green explores the tech billionaire’s contentious views on setting up a business.

 

Co-founder of PayPal, first outside investor in Facebook and seasoned venture capitalist, Peter Thiel is Silicon Valley royalty. His new book, Zero to One: Notes on Startups, or How to Build the Future, offers a series of insightful – and often controversial – views on how business, and the world, work. Topics range from the incompetence of consultants, to the steps we can take to reach the Singularity – where we create a technology so powerful that it transcends the limits of our understanding. Also a JRR Tolkien nut – three of his companies’ names are Tolkien-inspired – Thiel even turns to Lord of the Rings to explain how “every great business is built around a secret that’s hidden from the outside… a conspiracy to change the world.” Here, we look at a few of the book’s many lessons.

 

Speaking to City PM, the billionaire explains that true revolutionaries – the people who’ll change how we live tomorrow – rarely come  from very competitive sectors: “If you want to become the next Apple, don’t open a restaurant.” Thiel himself practises what he preaches. He has invested in businesses that deal in artificial intelligence, space travel, and in several firms that are working to combat ageing and death. “Our task today is to find singular ways to create the new things that will make the future not just different, but better,” he asserts. 

 

So if you’re cooking up a business idea, finding ways to marginally improve a product or service wouldn’t impress Thiel. “Good companies should look to become monopolies,” he tells us. Rather than embrace competition, you should try to escape it. The way he recommends doing this is to be the “last mover” in a given area – “to make the last great development in a specific market and enjoy years or even decades of monopoly profits.”

 

And Thiel’s contrarianism doesn’t end there. Startups should not, he says, aim to be “disruptive”. “Silicon Valley has become obsessed with “disruption… [which] has recently transmogrified into a self-congratulatory buzzword for anything trendy and new.” He’s adamant that any business that can be “summed up by its opposition to already existing firms can’t be completely new” – and that means it’s unlikely to become a monopoly.

 

Of equal importance when setting up a business is realising you have free will – Thiel is not a fan of putting things down to chance. Being an entrepreneur means “you can have agency not just over your own life, but over a small and important part of the world… You are not a lottery ticket,” he writes. Taking control of your future means planning it and acting – not just being someone who “expects to profit from the future but sees no reason to design it concretely.” 

 

Using Facebook as an example, Thiel highlights the importance of foresight and taking action. Recalling when Yahoo offered to buy it for $1bn in 2006, he admits: “I thought we should at least consider it”. But Mark Zuckerberg put paid to the idea in minutes. “Mark saw where he could take the company, and Yahoo! didn’t. A business with a good definite plan will always be underrated in a world where people see the future as random.”

 

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