6 Contrarian Business Views from Peter Thiel

 at @OpenViewVenture I have read some interesting (and unconventional) ideas from Peter Thiel.
6 Contrarian Business Views

1. There are no formulas for business, only pseudo-science.

It’s because every moment in the history of business happens only once. The next Bill Gates will not build an operating system. The next Larry Page won’t build a search engine. The next Mark Zuckerberg will not be building a social network. If you are copying these people, you are in some sense not learning from them.

The first answer that I believe, and this sort of pulls from the uniqueness of these companies, is that (in the opening sentence of Anna Karenina) that all happy families are alike. All unhappy families are unhappy in their own special way. I think the opposite is true of business. I think all happy companies are different. They’re doing something unique.

2. All unhappy companies are alike because they failed to escape the essential sameness of competition.

If you’re too focused on competing, maybe you’re losing sight of what’s really important.


3. There are companies that are competitive and there are companies that have monopolies.

If you are a one of a kind company, a happy company that’s doing something different, you are a monopoly. It is the goal of every founder, of every entrepreneur, it should be their goal to try to build a monopoly business.

4. Capitalism and competition are antonyms.

The people who don’t have monopolies pretend to have them. The people who have monopolies pretend not to have them. The apparent difference is quite small. The real difference is really big. That’s intellectually why we don’t understand this monopoly question.

I think there’s also a psychological part of this as well though that’s very subtle but is very important to understand where we are taught that competition is valuable. There’s this safety in crowds, that if a lot of people are trying to get something, it must be a good thing to do. If there’s a long line of people waiting to get in somewhere, you just get in line. You don’t even ask why people are standing in line.

… We’re taught to compete for all of the same credentials. If you’re on an athletic team in high school or college, you’re competing on things there. The competition has the effect of definitely making you better at that which you’re competing. If you spend years prepping for an SAT test, you will get better at taking the SAT test. If you’re on a swim team in high school, you’ll get better at swimming because you’re focused on beating the people around you. It always comes with this price of possibly losing sight of broader questions, of questions of what’s really valuable or what’s really important.

5. We’ve discovered most things already. If there are things we haven’t discovered. They’re super hard to figure out.

I suggest this trichotomy of three categories of conventions, things that everybody already knows to be true, mysteries that are almost impossibly hard to figure out, and things that are in between which I call secrets, things that are hard to figure out, nobody knows yet, but if you work at it you can figure it out. It’s my claim that a secret or some idiosyncratic body of knowledge is often at the core of all of these great businesses. It’s something you’re very passionate about learning about.

6. There will be two modes of progress in the 21st century — globalization (copying what works) and technology (discovering new things).

I think that in the 21st century there will be two modes of progress. One I sort of describe is globalization, copying things that work, going from one to end, horizontal or extensive growth. I always draw that on an x-axis. The other one is technology, vertical progress, discovering new things, going from zero to one. I draw that on a y-axis.

I always put globalization on the x-axis and technology on the y-axis in order to underscore how these things are not synonyms, even though they get used almost synonymously and interchangeably all the time. China today is the paradigm of globalization. It has a very straightforward plan for the next 20 years. It just must copy things that work. The US, Western Europe, Japan can skip a few steps and can avoid copying some of our bad ideas. It’s just straightforwardly all about globalization.

I think when you look over the last 200 years, there have been periods of globalization and periods of technology. They’ve been somewhat different in character. The 19th century was a period of enormous globalization and technological progress. They sort of went in tandem. It came to an end in 1914 with the First World War. Globalization sort of started to go in reverse. There was less trade, less connections between different parts of the world. Technology kept going very, very fast.

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Today, we would talk about the developing and the developed world. The developing countries are those which are copying the developed world. This dichotomy of developing and developed is sort of a pro-globalization convergence theory of history where everybody will become more alike as globalization proceeds apace.

It is also a dichotomy that is somehow I find to be anti-technological. When we say that we’re living in the developed world in the US, western Europe, Japan, we are implicitly saying that we’re living in that part of the world where nothing new is going to happen, which is done, which is finished, which should be resigned to a long period of stagnation where the younger generation should not expect to be living lives any better than their parents.

I think this is a conception we should resist very, very strenuously. We should not accept this label that we’re living in the developed world. I think we should instead ask anew, how do we go about developing the so-called developed world?