The challenge of the Future
- We can either copy things that work now and slowly improve on them, or do completely new things. The former is globalization while the latter is technology—China is focused on globalizing with a 20-year plan to be like the United States, and we should focus on technology and doing new things.
- Startups push for change—even the Founding Fathers were just a bunch of guys in a room, what you might define as a startup. We have to ask and answer certain questions about fundamental truths that may be wrong in order to make that sort of progress.
Party Like It's 1999
- The 1990s and the dot-com bubble bursting that punctuated the period gave us certain beliefs that are hard to shake. This is where many of the lean methodologies we've come to know and worship today originated. They can be boiled down to:
- Make incremental advances (no grand visions)
- Stay lean and flexible (unplanned)
- Improve on the competition (because you're uncertain otherwise
- Focus on product (because advertising and sales are unnecessary for a great product)
- However, the opposite principles may be more effective:
- Boldness > triviality
- Bad plan > no plan
- Competition leaves no profits
- Sales = success of product
All Happy Companies Are Different
- Monopolies want to claim they are competitive and competitors want to claim they are monopolies, and both of them are lying. Nonetheless, the monopolies are the happy companies who aren't driven to insanity by competition.
- Why be ten percent better when you can be ten times better and be in a class of your own? This isn't the same as creating your own market which doesn't exist—"We are the best Afro-Indian British restaurant in L.A. targeted to 18-36 year old women." It must be real, but you must also start small and grow incrementally into a larger market. Aim for monopoly, because competition leaves nothing on the table.
The Ideology of Competition
- Competition isn't nearly as healthy as we believe. From the time we start in school, we're just improving on the metrics (grades) of the students who came before us in hopes of standing out. It's a futile race. Do something different, don't get stuck in law school.
Last Mover Advantage
- Investing and creating a great company is about long-term returns, not short-term shareholder value. (In this way, startups are the most incentivized to make meaningful change.)
- Rapid short-term growth is overrated and can lead you to believe you can repeat your early success forever.
- To enjoy long-term success as a monopoly, there are four imperatives:
- Proprietary Technology—or anything that makes you incredibly unique
- Network effects—or reasons for your thing to grow
- Economies of scale—AKA, not ghostwriting
- Branding—having a monopoly over who you are as a company.
- Disruption is overrated and if that's your goal, you only exist in the context of the companies you aim to destroy, which is competition, not a monopoly.
You Are Not a Lottery Ticket
- We have to be more definite in our vision toward the future—being indefinite means we never commit, we're too scared to go all-in, and we don't value the great planning and thought which creates the most successful companies on the planet (see Apple).
- Success is not accidental, Gladwell.
- Being definite in his plan for the organization, Mark Zuckerberg was able to turn down a $1B (!?) offer from Yahoo! in 2006. Why? He knew his grand vision and knew that a $1B valuation wasn't even close.
Follow the Money
- Very few of your investments will yield a majority of the returns, so you have to ask yourself each time you're about to invest (or start a company)—does this have a chance of being the one massive success in my portfolio or not? If it doesn't it's not worth investing in.
- See Warren Buffett on your investing punch card where you think of every investment like it's the only one you'll make in your entire life.
- What do you believe that nobody else does? That's a secret, and that's the power behind great companies (and people). To find them, ask yourself two questions:
- What is nature not telling you?
- What are people not telling you?
- Secrets should bring together your organization like a bunch of conspirators because you all believe in this one thing that nobody else does. If you worked at PayPal in the early days, you believed in creating an alternative currency, even though few others obsessed over this belief. That's what attracted the right people.
- Ownership, possession, and control are the three considerations regarding people in your company because it clearly defines roles. As you grow and you're no longer in charge of all of these, someone has to be assigned those responsibilities.
- Make sure that everyone's interests are aligned. An employee who wants cash is different than one who demands stock in the company—the latter believes in the long-term prospects with a religious fervor, and that's who you want.
The Mechanics of Mafia
- Why should anyone join your company when they could go make more money and pad their resume elsewhere? It's not about the fact you're building something so cool or that you have the best people—you don't—but that you're on a mission and you believe in something. That's what should attract talented people, so make that abundantly clear in your recruiting process.
If You Build It, Will They Come?
- No, they won't come just because you built it. In fact, you should focus on building something more than your product—a sales pitch. Sales, for some odd reason, is a dirty word among founders and in society in general. It shouldn't be.
- Sales can't be called sales and it shouldn't be obvious because nobody likes to be reminded of the fact they're being sold to.
Man and Machine
- So, what? Robots are going to take over the world, maybe. It doesn't mean we should stop developing and innovating now.
- Every business has to ask themselves and make sure they have the answer to all seven of these questions:
- Can you create breakthrough technology instead of incremental improvements?
- Is now the right time to start up?
- Are you starting with a big share of a small market?
- Do you have the right team?
- Do you have a way to not just create but deliver your product?
- Will your market position be defensible 10 and 20 years into the future?
- Have you identified a unique opportunity that others don't see?
The Founder's Paradox
- Founders are weird. There's no mistaking that Jobs, Musk, and Thiel are different fellows. It may or may not be a product of the them truly being crazy and unique, but either way, it's present. Perhaps that's necessary to be a great founder—or maybe it just happens.
Disclaimer: Some parts of this short summary is word-for-word what Thiel said in the book, while most of it is my own words. If I interpreted something a certain way, don't take it as gospel. Buy Thiel's book by clicking here.