Start-Ups

Peter Thiel: Entrepreneur. Investor. Author. Former national chess master.

Peter Thiel spoke with TechRepublic about his new book Zero to One, his career in technology, and why he believes competition is not synonymous with capitalism.

thielhero.jpg
Image: Kyle Kirchhoff

Few technology investors have as storied a history as Peter Thiel. The former PayPal co-founder went on to found Palantir, Clarium Capital, and Founders Fund, and became the first outside investor in Facebook in 2004.

In his new book, Zero to One, Thiel shares what he has learned over the past 16 years as a startup founder and venture capitalist. In the book, Thiel explores the traits shared by successful companies and what he believes makes them truly unique and innovative.

Going from zero to one is the concept of doing something entirely new and innovative for the first time. Thiel contrasts this with the concept of going from one to n, which represents globalization and scaling. He believes the world will need need both technology and globalization in the 21st century, but he is focused more on building innovative companies, hence the title Zero to One.

According to Thiel, most people see the future in terms of globalization, not new technology. He believes, though, that globalization (horizontal progress) is only possible with advancements in technology (vertical progress). Thiel admits that there is no formula for zero to one, but he is adamant that if you try to copy people such as Mark Zuckerberg or Larry Page then you are, in some sense, not learning from them.

The book is based on a Stanford class Thiel taught in 2012 called Computer Science 183: Startup. Then-student Blake Masters took detailed notes on the class and shared them online, quickly gaining popularity.

"There had been so much interest in Blake's notes that we thought it would be good to do something as a follow up," Thiel said. "We thought the best follow up was to distill them — these notes were over a three month course — into a disciplined 200 page summary of everything that I know."

Followers of Thiel's work will be familiar with many of the ideas explored in the book, and Thiel admits that he's been teaching and working through these ideas for the last decade or so. Still, the ideas are presented in a fresh way, making them easy to understand and fun to think through.

Possibly the most controversial concept that Thiel explores is his belief that capitalism and competition are opposites, while they are traditionally expressed as synonyms.

"A capitalist is someone who accumulates capital, a world of perfect competition is a world where the capital gets competed away," he said.

For example, he sees Google as a capitalistic company because it is extremely profitable but it has no real competition in search. Thiel believes when you compete, you end up focusing on the people or companies you are competing against and you lose sight of what else is valuable and important. That is what keeps you from being innovative.

What might draw the most contention from modern Silicon Valley pundits, however, is Thiel's view on failure.

"I think failure is overrated, and I don't think it even helps you that much from a learning perspective," Thiel said.

It's difficult to learn the right lessons from failure, he said, because you might have failed for five separate reasons, but only have learned from two or three of those reasons.

Of course, some views are destined change, especially over a ten-year period. A decade ago, Thiel believed that all you needed was talented people to build a company. He thought you could put a bunch of high IQ people in a room together and they would figure it out. Now, he sees that there is more to it.

"I've come to put more emphasis on the business strategy," Thiel said. "I always think you need three things: a technology innovation, a business strategy, and a talented group of people. If you have a very talented group of people without a business strategy, that often will still not work."

Thiel started his professional life on an set path, so it is surprising that he ended up in the startup world at all. In the eighth grade, a classmate wrote in Thiel's yearbook that he would end up at Stanford in five years, and that is exactly what happened. Thiel is confident that he didn't ask enough questions about why he was going to law school, or why he was going to school in general. While he might have ended up making the same choices about school, Thiel said that if he could do it again he would question his intentions more carefully.

When asked about his success, Thiel isn't comfortable blaming one specific factor. He believes grit is very important, but there is a unique constellation of facts and circumstances that allow technology companies to be successful. Instead he offers this advice for would-be entrepreneurs:

"I always like asking this interview question of people: 'Tell me something that's true that very few people agree with you on?' The business version of the question is 'What's a great business that nobody is starting?'"

According to Thiel, this is a good place for people to start who are looking to build an out-of-the box business for two reasons. You have to possess some insight that other people have not yet had, and you have to have the courage to tell people that insight.

"We are living in a world in which courage is in much shorter supply than brilliance," Thiel said.

In his own words...

When your career is over, what do you hope people say about you?

"I hope they say good things. I think they will say good things not just because of accomplishments but, in many ways, if I build good relationships with people over the years. One of the resolutions we had when we started PayPal, was we weren't sure whether the company was going to succeed or not, but we wanted the friendships to become stronger so that we would work together in future companies even if this one failed. These relationships matter a great deal."

What's the best thing you've read lately?

"There are these past books about the future that I always think are very interesting to look at. One that I think is very interesting is one called The American Challenge, which was written in the late 1960s. It was written by a French guy about how the US, this technological civilisation, was going to accelerate out of sight from the rest of the world. Some of the predictions were realized, some were not. But, it's a very interesting question to go back to what people were thinking in 1967, the year I was born, and why some of these things did not happen."

What is your main hobby outside of work?

"I probably still play too much chess on the internet. I haven't played tournament chess in a long time. It is some strange combination of art and science and sport, and it's somewhat addictive. It has some very good things and some unhealthy addictive things about it too, I think. Probably the thing I enjoy doing most is just having great dinner conversations with friends. I don't think that quite counts as a hobby, but it's an activity that I really enjoy."

Zero to One is available now.

Also see

About

Conner Forrest is News Editor for TechRepublic. He covers startups and enterprise technology and is passionate about the convergence of tech and culture.

Editor's Picks