Peter Thiel's Very Negative -- And Very Useful -- Advice for Entrepreneurs So you're a young dot-com wannabe launching your own venture. Here's what the successful entrepreneur and investor has to say.
This story originally appeared on Fortune Magazine
Maybe you can tell something about the Zeitgeist of the business world by looking at what business people are reading at airports. In the white-collar recession angst of the early 1990s, for example, they were desperately flipping through the cost-cutting manifesto Reengineering The Corporation. During the China panic a decade ago, it was Thomas Friedman's The World Is Flat. When the financial crisis exploded in 2008, and blew their neat little spreadsheets to smithereens, they turned to Nassim Taleb's The Black Swan, about the power of the unpredictable, to find out why.
Today, the Nasdaq is surging, young companies such as Facebook and Twitter and Uber and AirBnB are turning established industries upside down, and a new generation of dot-com wannabes are dreaming of starting their own revolution. So Silicon Valley serial entrepreneur Peter Thiel has probably picked the perfect moment to publish Zero To One: Notes On Startups, or How to Build the Future.
Thiel has a remarkable track record. He co-launched PayPal and sold it to eBay for billions. Then, as a venture capitalist, he was among the early backers of Facebook, LinkedIn, Spotify, and Yelp. It says something about Thiel's clout that the marketing materials for the book have come with gushing reviews from Mark Zuckerberg, Elon Musk, Nassim Taleb, and even GE CEO Jeffrey Immelt.
Okay, so you're a young dot-com wannabe in San Francisco—or New York, or London, or Taipei—thinking of jumping on the bandwagon and launching your own venture. Your company will be the next Uber or Square or so on. What advice does Thiel have for you?
Lots. Some of it is buried, or revealed in passing. And upon looking back through Zero To One I realized most of the really interesting advice is negative. Don't.
So… don't try to "disrupt" an existing industry: instead, try to fill a need that nobody else knows exists. Don't get overwhelmed by uncertainty. Don't diversify. Don't hire consultants.
Don't have part-time employees ("Ken Kesey was right: you're either on the bus or off the bus.") Don't pay your CEO too much and don't pay staff lots of cash instead of stock.
Don't have a board of more than three to five people. Don't offer incremental advances. Don't bother launching a new technology unless it is "an order of magnitude" or "10X" better than what exists today.
Don't play little ball—swing for home runs. Don't listen to the mainstream. Don't be afraid of the unknown. Don't try to be a big fish in a big pond before you've been a big fish in a small pond. Don't start a company with people you don't really like. Don't neglect sales and marketing.
And, my favorite bit of advice: Do not, under any circumstances, create a complex or confused organization. "The best thing I did as a manager at PayPal," Thiel writes, "was to make every person in the company responsible for doing just one thing. Every employee's one thing was unique, and everyone knew I would evaluate him only on that one thing."
This, of course, is applicable to people in any organization or business whatsoever, in the old economy as well as the new. I am constantly astonished at how many big companies are so badly organized and how few follow sensible management techniques. Maybe if more established companies adopted a little more of the thinking of successful startups, there would be fewer successful startups.