Peter Thiel on Startups

Blake Masters has made available notes from the course on startups that Peter Thiel taught at Stanford in the spring of 2012. These have been a lot of fun to read, and here are some bits I found particularly interesting:

  • We take for granted that competition is better than monopoly. But in perfect competition, no one makes any money, and all profits have to be reinvested. Every valuable business is a monopoly business, even though they pretend otherwise.

  • Many variables are distributed according to a power law, which is profoundly unintuitive, because we expect them to be roughly equal, not orders of magnitude apart. For example, out of 100 companies, one will make 100x profits, a few will make 10x profits, and the majority will hover near zero or even lose money. As another example, there is no reason to expect that multiple sources of energy (e.g. wind and solar) will have similar cost effectiveness; instead it is more likely that one will be vastly superior to all others.

  • When it comes to energy, conservation is not a viable solution, because demand in the developing world is growing faster than the gains from conservation in the developed world. Thiel points to thorium reactors as a potential solution.

  • There is no product so good that it "sells itself" without requiring a sales effort. Sales is omnipresent in tech, but we don't see it, because it works best when disguised. Really good salesmen appear to be just regular people.

  • We no longer believe that there are any frontiers remaining. That's why we focus on small, incremental improvements. But hard, discoverable secrets still exist, and in fact every successful company starts out by realizing something big that others don't realize. "What important truth do very few people agree with you on?"

  • Attitudes about luck and the future can be analyzed using two distinctions: determinate / indeterminate, and optimistic / pessimistic. Until the 1950s, people thought of luck as something to master and control. But today we think the future is unpredictable and out of our control.

  • People and companies default to having no plan. But that just means you're "floating", instead of moving in the direction you want. Companies should have a secret plan and execute on it. People should have a personal plan, too. "You should either like what you're doing, believe it's a direct plan to something else, or believe it's an indirect plan to something else."

  • The promise of biotech 2.0 is to understand our biology well enough to radically increase our life expectation. In other words, fix aging and death. (Opinion by Aubrey de Grey: The main roadblock to radical new technology is conservative public opinion. So mainstream opinion formers are going to be crucial for making progress.)