Why I Disagree with a Multi-Billionaire
Founder of PayPal — Peter Thiel and His Points that I have contentions with
Peter Thiel is a Silicon Valley Legend. He was a co-founder and the CEO of PayPal, he founded Palantir Technologies — a data analytics company, and he has numerous other projects like Founders Fund, Breakout Labs, and the Theil Fellowship.
Over the past week, I’ve been listening to some of his podcasts and lectures at places like Stanford Business School. A lot of what Thiel has to say I agree with. He talks about taking agency over your own life, not looking back into the past, and creating plans for the future. I think all of that makes sense. But I want to hone in on the two things I disagree with him on.
#1 Competition — is it validation or insanity?
A big recurring theme across a lot of what Thiel talks about is the idea of competition and differentiation. In Thiel’s eyes, he views competition as insanity. For example, if you decide to create a pizza shop in New York City that would be insane because there are already thousands of pizza shops that are doing the same thing.
Now a big part of business is to have a UVP: a unique value proposition. What value are you adding and creating into this world that no one else is doing? People who are in these very saturated markets will convince themselves that they are doing something unique be redefining the market that they are in.
For example, instead of saying — ‘We serve Neopolitan Pizza in Downtown Manhattan”, they would say “We are the only pizza shop between Cedar and Pine St that serves fresh, quick service Neopolitan Pizza”. The market they truly exist in is too big so they have to create a very narrow market to justify the value that they create.
At some level, this makes sense but in my opinion, it can not be universally applied. Every business has to start small. Amazon started off by selling books, only later did they expand to the behemoth they are now. I think it is a discouraging mindset to think your market is too small. What if we had new information that there was a subway station near Cedar and Pine. That would build legitimacy around their value-add statement.
I think what dictates the success of a business is — what does your market look like in 2–5 years? The reason Amazon is so successful is that they benefited from the growth of the Internet as a technology. The growth of pizza shops in Manhattan is of no comparison so that’s what makes Amazon a better business. This requires the skill of knowing what the future will look like and building businesses with the highest leverage in the future.
Competition, in my opinion, is a validator whether in business or attaining achievements. In creating a business if there are incumbents that already solve your problem that is good. You have to create a business that adds value in a different way and define a market that is different from the incumbent’s. Having existing competition, in my opinion, should not be a deterrent but instead a motivator because it proves that a market exists and there are people that need your solution.
This next point is one of common sense but I think it should be mentioned as well. When you see a lot of people competing for the same thing, most often, what they are fighting for is valuable. There is a lot of competition to get into Harvard because it is a great school and can change the trajectory of someone’s career.
The time’s when this is not true is when you see people competing for something that does not align with your worldview. If you see a lot of people competing to become a radiologist but you know in 10 years' time a lot of those jobs will be eliminated by automation. This could be a controversial take but I do believe there is wisdom in crowds unless you have information that no one else has. (I could be wrong, and again this does not hold for all examples).
#2 — You Don’t Learn a Lot From Failure
This is the other point I do not see eye-to-eye on Thiel. In one of his talks, Thiel mentioned how when you fail at a start-up there were so many different variables you could have failed at — wrong team, wrong product, the wrong market, wrong timing — you don’t pinpoint what you failed at then just continue to fail.
My perspective with failure is it is all about how you look at it. Failure is something technically something we experience every day. We all have goals — small and large and often times we don’t reach those goals. I failed to wake up at 5 AM today, I failed to finish writing an article yesterday, I failed to make time to play with my younger brother, etc.
But failure is all about your mindset and whether you decide to take it as a learning opportunity. You have the choice to look at failure and really determine what went wrong and try to fix it next time. I think the real root of the problem from not learning from failure is people not taking the time to really reflect and learn. Even if you failed at achieving a goal, the knowledge, and experience and resources that you learned about were your success. Failure, in my opinion, is all about you spin it.
- I agree with Peter Theil on a lot of things — taking agency over your own life, not looking back into the past, and creating plans for the future.
- I disagree with his take on the competition — I see competition as a validator, and depending on the circumstances I don’t think it is insane to be doing things everyone else is doing
- I disagree with his take on failure — you can learn from any failure, it all depends on your perspective of that failure.