“The next Bill Gates will not build an operating system. The next Larry Page or Sergey Brin won’t make a search engine. Copying others takes the world from 1 to n, adding more of something familiar. But when you do something new, you go from 0 to 1. Tomorrow’s champions will not win by competing ruthlessly in today’s marketplace; they will escape competition altogether, because their businesses will be unique.”
Why you should listen to Peter Thiel
Peter Thiel is an entrepreneur and investor. As CEO he co-founded Pay-Pal in 1998 and later took it public in 2002. He and his Pay-Pal colleagues became known as the “PayPal Mafia” who individually went on to found billion dollar companies including: Tesla Motors, LinkedIn, Palantir Technologies, SpaceX, YouTube, Yelp and Yammer.
As an investor Peter has funded hundreds of start-ups. He was the first first outside investor to Facebook. He has also funded SpaceX and AirBNB.
1) We need to believe in secrets
Over the past 40 years we have lost the much of the curiosity we had for the undiscovered. We need to believe there are still secrets waiting to be explored!
As a startup your ideas, when executed could have a great impact on the world.
2) Capitalism and Competition are opposites!
The economic theory of “perfect competition”, over time erodes all profits and capital wealth. Consider the restaurant industry where fierce competition is high: it is a challenge even to survive!
Our businesses need to escape competition through creating a monopolies. Thiel defines “monopoly” as innovation that allows a firm to have a “10X” advantage over its rivals. For example Google has not needed to compete since it definitively distanced itself from Yahoo and Bing in 2002. The word “Google” is now a verb in the Oxford English Dictionary.
By escaping competition organisations are able to survive and grow. In 2013 the search engine made $50 billion dollars in revenue and was able to retain a 20% profit.
Contrast this with the airline industry in the United States. During intense competition the average $149 flight only provided the airline with 14 cents profit! Airlines were creating value for their customers but they failed to retain any value for themselves.
3) You need to have a bold vision!
“Cause they say two thousand zero zero
Party over, opps out of time
So tonight I’m gonna party like it’s 1999”
“1999” by Prince
Many will remember the intoxicating highs of the dot com era of the late 1990’s. Anyone with a business plan that included an “e-” prefix or “.com” in the name could attract funding at the drop of a hat. Entrepreneurs had grand visions for the World Wide Web to transform our world! Unfortunately many did not know how to capitalise on these opportunities and many web technologies were underdeveloped at the time.
The dot com crash of 2000-2002 caused a loss of $5 trillion dollars from capital markets between March 2000 and October 2002.
Out of the ashes many investors and startups retreated from their bold plans and instead focused on small improvements, being “lean” and pivoting their way to success. Your business is not a science experiment.
You will never achieve a “10X” competitive advantage without being prepared to have a bold vision and take risks.
Maybe we need to return to the optimism of the late 1990’s.
4) Sales matters just as much as Product
Silicon Valley underrates sales more than most. In fact some believe the roles of sales people will eventually be replaced by technology.
Many technical folk see the “hard work” is found in solving technical problems and that sales should be easy. The reverse is true. Technical advancement is a logical and systematic process.
Masterful sales is hidden. You may have been sold something but you did not realise it. Consider the literary adventures of Tom Sawyer (Mark Twain) a “master sales person” who not only had his friends to whitewash the fence but persuaded them to pay for the privilege!
Another Masterful sales person is Elon Musk (Tesla Motors) who persuaded the US government to lend his business $465 million.
5) Challenge your assumptions!
You may have a 10-year plan to achieve your goals.
Ask yourself why you could not achieve these goals in 6-months?
Zero to One was a big influence for me. It is available both on Kindle and Audible