He’s an American entrepreneur, venture capitalist, and hedge fund manager. He co-founded PayPal, with Max Levchin and Elon Musk. He’s ranked fourth on the Forbs Midas list of 2014, at 2.2 billion dollars. He’s Peter Thiel and here are his top ten rules for success.
Peter Thiel’s Top 10 Rules For Business and Success
Rule #1: You Are The Entrepreneur Of Your Life
You are the entrepreneur of your life. And you can, you can decide you know, what you’re going to do, what you’re going to prioritize, and you should never forget that you have a tremendous amount of freedom as it is to make these very basic decisions on what you’re going to do with your life. You can start anytime you want.
Rule #2: Do One Thing Uniquely Well
The most critical thing for every start up is to be doing one thing uniquely well, better than anyone else in the world. Technology’s a fundamentally global business and the really great technology companies, are doing something significantly better than anybody else in the world and you want to be in that sort of position.
I think if you’re just starting a business, one of the questions that’s always valuable to answer is what do you know that’s true that nobody else understands or more prosaically, what great business exists that nobody is building?
Rule #3: Make Sure People Align Properly
One part that I’m always very focused on is sort of, the structure of these companies and how well are people aligned? So you can and making sure that people are you know aligned properly, not just that they say they are. I think this is sort of a very, a very legal kind of a framework to think about; what are peoples’ incentives, you know, are they going to be aligned or not and I think you want to both have formal alignment, where you set the structure right, and you want to have informal alignment, where the people would naturally try to work together well in one way or another.
And I think that somehow tends to get obscured in all these other ways. You know there’s always, there’s always a, there’s always a pre-history question I like to ask founders of companies which is how did you, how did you um, meet, what’s the pre-history of the company before you got started and I find that to be a really instructive set of questions to ask; a bad answer is something like, you know, we met a week ago at a social networking function at a business networking function.
We decided to start a company because we both wanted to be entrepreneurs. You know that’s like saying, I married the first person I met at the slot machines in Las Vegas and you might hit the jackpot, but it’s probably a really bad idea. A much better answer is you know, we’ve been talking about his for a long time.
You know, maybe one of us is more on the tech side, the other ones more on the business side. We have these sort of complimentary skills and so I think this question of alignment and structure is incredibly important.
Rule #4: Aim For Monopoly
I think that all, if you’re a founder or entrepreneur, what you want to aim for is monopoly. You want to aim to build a company that is one of a kind. That’s so far differentiated from the competition that it’s not even competing. And I this conventionalism is always with capitals and competition are somehow synonyms; I believe they’re antonyms.
A capitalist is someone whose in the business of accumulating capital; a world of perfect competition is a world where all the profits are competed away. If you want to compete like crazy then you should just open a restaurant in Chicago.
And um, and I think the great companies like Google, so the paradigm example I use, has had no serious competition in Search since 2002 when it definitively distance itself from Yahoo and Microsoft and as a result it’s been generating enormous cash flows for the last 12 years.
Rule #5: Don’t Be A Fake Entrepreneur
But yeah, there probably are a lot of people who end up trying to be somewhat fake entrepreneurs where the goal is to be an entrepreneur. If you ask people what do you want to do with your life? What do you want to do when you grow up? I want to be an entrepreneur, which I always think is a somewhat too common, disturbingly somewhat too common and I think you know it’s a, it’s saying that you want to be entrepreneur sort of like saying I want to be rich or I want to be famous.
You know, nobody in their right mind starts a company for the sake of starting a company. You start a company because there’s a very important problem to solve that’s not getting solved in large you know, governmental or nonprofit or for profit institutions and that’s why you actually need to start a new company. Just starting a company for the sake of doing so is a really odd thing to do.
Rule #6: Value Substance Over Status
On an individual level I think it is always, it’s always really good if there’s something that you’re incredibly passionate about and just sort of are find to be intrinsically interesting and the people pursue that and so the, you know one of the resolutions I came up with a number of years ago was to always value substance over status; substance over prestige.
And you know if I sort of was giving my younger self advice on what to, what to do or how to think about ones’ life, I probably, I think I you know, I probably would still go to Stanford, I might still go to law school. But I’d ask sort of, I’d ask a lot more questions why I was doing these things and I think I think if I was honest about it, too much of it was driven by, by prestige and status and not quite enough about really the substance of trying to learn things.
I have sort of this, I sort of just think of it as this sort of crazy rolling quarter life crisis and sort of culminated in this big New York law firm where you know, from the outside everybody wanted to get in. From the inside everybody wanted to get out. You know, after, I lasted seven months and three days and after, when I left one of the people down the hall said, it’s so reassuring to see you leave Peter.
I had no idea it was possible to escape from Alcatraz. Which again, and again I, and all you had to do was go through the front door, but our identity, people’s identities get so wrapped up in the things they compete for that it was inconceivable for people to actually do that and then the question was you know, well how had I ended up there? Why had I not thought about that more? And I think it was that I had taken too many of these shortcuts of valuing sort of what was prestigious, what was conventional over what I really wanted to do. So I think always substance over status.
Rule #7: Don’t Lose Sight Of What’s Valuable
And this is why I think competitions always this very two edged thing; when you compete ferociously, you will get better at that which you are competing on, but you will always narrow your focus to beating the people around you and it often comes at this very hight price of losing sight of what is more important or perhaps more valuable.
Rule #8: Trends Are Overrated
The general theme I would suggest is that all trends are overrated and so if you think about current trends in technology, you know, health care, I.T. software, education software, overrated. SAS enterprise software really overrated.
Big data, cloud computing, if you hear those words you need to think fraud; you need to run away as fast as you possibly can. And the reason these buzzwords tell you that something, these buzzwords are sort of like a tell in poker that people are bluffing and that there’s nothing, that the business is not undifferentiated because the buzzwords tell you that it is one company of a category that’s undifferentiated from the others in that category and therefore, are symptomatic somehow of a lot of competition and a bad business idea.
And so you know, you don’t want to be the fourth online pet food company, you don’t want to be the tenth tin foam solar panel company, you don’t want to be the one-thousandth restaurant in San Francisco and so there’s something about if you can describe what a company is doing very straight forwardly by referencing these buzzwords, these categories that already exist. That’s actually a sign that it’s a pretty bad, that it’s a pretty bad idea.
Rule #9: Don’t Dwell On The Past
I think there’s a problem in western Europe where, where failure is, it’s too impossible to fail. Once you fail you can never, you can never start over. I think there’s an opposite version of this in California where I think sometimes people are a little bit too facile about failure because I think it actually is always incredibly damaging to people and if you work really hard at something and it doesn’t work that’s, you know, that’s going to be psychologically damaging, you know, people have less confidence.
All sorts of reasons why that tends to be, that tends quite bad. I think that when people, I don’t think there’s that much you learn from failure by the way because it’s typically overdetermined; it’s like why is technology slowing down, why did you fail? It’s typically five separate reasons: you work with the wrong people, the idea was bad, the timing was wrong, it wasn’t a monopoly, the product didn’t work, and okay, next time I’m working with different people.
You figure out one of the five things, you’re likely to fail again. So I think, I think failure is not something we can learn very much from. I think that’s sort of a myth that I would challenge. But what I think you should do when something goes badly wrong is you just keep going; you do something else and you don’t dwell on the past.
Rule #10: Find The Secret Path
Already in the time of Shakespeare the word ape meant both primate and to imitate and there is something very deep in human nature that is imitated; it’s how, it has a lot of good things, it’s how language gets learned by kids. It’s how culture gets transmitted in our society.
But it also can lead to sort of a lot of insane behavior. It can lead to the madness of crowds, to bubbles, to sort of mass delusions of one sort or another and I think it can, I think it’s advertising. We always think of, we always tell ourselves that we’re not that prone to this and I think that’s something I would encourage all of us to rethink; you know, we always think of advertising as something that just afflicts other people, that never afflicts ourselves.
I think this is very far from the case and so, and so, the monopoly competition is not just this intellectual failure, it’s also this thing where you have a tiny door where everyone’s trying to rush through and there may be around the corner a vast and a secret gate that no ones taking and you should always find the secret path and go ahead and take that.
Thank you guys. Now we made this because Chain Wan Chung on YouTube asked Evan to make it. If you have a famous entrepreneur that you really really really want Evan to make a video on leave it in the comments below.
I’d also love to know which of Peter Thiel’s top ten rules hit you the most; leave it in the comments. We’re going to join in the discussion. Thank you so much. Continue to believe and we’ll see you soon.
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