Unconventionalism in startups and life
Learning from Peter Thiel’s book Zero to One
Peter Thiel was the co-founder of PayPal, the Founders Fund, he was the first outside investor in Facebook, and also started the Thiel Fellowship for those young people willing to make an impact by taking the unconventional path.
Having watched other videos about his ideas and beliefs, I’ve found that the best source of knowledge is definitely his book: Zero to One. If I were to summarize it in one word, it would be unconventional.
Although many consider Zero to One to be a bible for startups, I think the lessons can be applied to life in general. In that case, we could think of our lives as the startups that we run as CEOs.
In this article, you’ll find my main takeaways: why you should aim to be a monopoly, how to find the secrets of the universe and success, as well as different ways of seeing the future.
Be a Monopoly
In business, perfect competition occurs when suppliers’ demand meets consumers’ demand, everybody is trying to get a bigger slice of the cake (market share), but nobody is. Since no firm has market power, it must sell at whatever price the market determines.
Yes, consumers are said to be happy since there are enough options, and they can pick the one that brings the best cost-benefit ratio. This means though, that products are often undifferentiated, all of them are good enough, but none is fantastic.
Thiel mentions the irony that this situation represents: if there’s an opportunity, and someone enters the market they will increase supply, drive prices down, and eliminate the profits that attracted them in the first place. If capitalism is about accumulating capital, then competition should be the opposite of that.
A monopoly on the other hand, is the company that owns its market and thus controls the quantity and price to maximize its profits. They are thought to be bad for consumers because of the power they have over these two factors (supply and price).
However, let’s think about Google. Aren’t their products excellent? They’re actually giving us more choices by creating an abundant and interesting future. They’re what Peter would call a “creative monopoly”.
According to Thiel, in business, money is either an important thing or it is everything. Monopolies have the great advantage of having that pretty much figured out, which means that they can focus on making long-term plans and finance R&D that firms locked in competition can’t dream of.
Monopoly is therefore, not a pathology or the exception. It is the condition of every successful business
The previously mentioned Thiel Fellowship gives people as old as 23 years old USD 100,000 to quit school and focus on building a project: their project. The current education system instead, is obsessed with competition, teaching everyone the same subjects in the same way, encouraging students to be “well-rounded” instead of being unique and great at 1 thing: being a monopoly.
The question here is: how to escape from competition and how to become a monopoly? The answer is: do what nobody else is doing; take the unconventional path. Sure, it’s easier said than done.
One trick is being less sensitive to social cues, that means naturally having atypical interests, and being less likely to give up your own convictions for the status quo. Ask yourself: could 1000s be doing this instead of me?
Rivalry causes us to overemphasize old opportunities and copy what’s worked in the past. Competition can make us hallucinate opportunities where none exist. Winning is better than losing, but everybody loses when the war isn’t worth fighting.
What happens when you do have to fight for something meaningful? Peter suggests to strike hard and end it quickly. Ideally, win, but if you can’t, merging will be better than competing.
What important truth do very few people agree with you?
For Thiel, monopolies are one of those important truths. At the same time, they also go hand-in-hand with those truths. To be unique, you need to know something that others don’t. A secret is something important and unknown, hard to do but doable.
A good answer to that main question is a contrarian belief: the opposite of what most people think. But finding secrets is not simply about going against the world. The hard part is actually thinking for yourself.
Paul Graham (co-founder of Y-Combinator) has a whole essay on this topic. The TLDR is to question everything you think you know, everything about the past, every belief that may have been rooted subconsciously into your mind without you noticing.
I remember being in middle school and hearing a classmate say: “We were born too late to explore the world and too early to explore the stars”. I didn’t tell him, but I obviously think that’s BS, or what Thiel calls “pessimistic indeterminism”.
Everything we know today was once unknown and unsuspected. To say that there are no secrets left today can mean either of two things: that there are no hidden problems, or that as humanity, we’ve lost our faith in secrets.
Oddly, I’d go for the latter. Gladly, contrarian thinking can help us find more. In the context of startups, the question would be: what valuable company is nobody building? Every correct answer is a secret.
This brings me hope. I’ve spent some months looking for secrets and haven’t found one yet. It’s been lots of rides of coming up with an idea, Googling it, and finding out that there’s already a startup built around it. But if there are still secrets to be discovered, then there are still great companies to be started that will change the world.
Another relatable idea is that if it were really possible to discover something truly new, a bunch of other smarter people would’ve already done it, are already doing it, or will do it one day. I agree with Thiel in that this doubt and wrong assumption is stopping lots of us from going out there and starting to look for those secrets.
A great company is a conspiracy to change the world
Build the future
Books like Factfulness or Enlightenment Now like to talk about progress and how the world isn’t as wrong as we think it is. Whatever the case may be, I do think that the future won’t build itself.
In Peter’s words, what makes the future exciting is not that it hasn’t happened, but that it will be different from today. Thus, it can be 1 year or an eternity away, depending on what we do today.
There are different ways to think about the future. Definiteness refers to us having a plan and not expecting the future to build itself. Optimism is thinking that the future will be bright.
- Definite optimism: building the bright future you envision
- Definite pessimism: copying what already exists. From my point of view, it’s the monotonous, undifferentiated, and non-innovative future that could lead us to disaster
- Indefinite optimism: inherently unsustainable. How can you be optimistic about the future if you don’t have any plans? Remember that the future won’t build itself
- Indefinite pessimism: self-fulfilling. No plan, no action, no bright future
If you’re interested in biotech, beware of the extreme indefinite thinking. Some excuses are that biology is discovered, and not invented, FDA regulations, and so on. Still, in academia people experiment with things that might work. How can this be different? I don’t know. That’s a question.
A definite optimist mindset can be transplanted to startups and life too. It means to remember that your destiny, and the world’s destiny is not a lottery ticket, and that we should all be the designers of it, committing to something instead of expecting for it to work.
In fact, Zero to One tells us that every great entrepreneur is first and foremost a designer. Steve Jobs for example, designed his business. He saw you can change the world through careful planning instead of copying others’ success.
In contemporary biology words, evolution is progress without planning. Directed evolution is definite optimism.