In this post: Points that encourage you to start your business founding journey, whether you consider yourself a techie or not. Beware of off-kilter and unfounded statements from Thiel, however.
Category: Out of Comfort Zone
Helllooo, friends! Please consider this book review for both September and October. I am still getting acquainted with this work + work from home + book blog schedule, so thanks for bearing with me on this delayed posting. Let's get into it!
Ramiah Recommended?
Yes. I was so close to adding an emphasis there but ultimately did not. Keep reading to see why.
Peter Thiel, co-founder of PayPal, takes readers through the steps of starting a (tech) business. I put 'tech' in parenthesis because many of the points to consider - which is replicated in my Food for Thought section - can be applied to businesses in other industries, as well. Monopolistic companies exist outside of tech. Choosing the right founders are important for companies outside of tech. Building a company on the right strategy foundations are important for companies outside of tech. Thus, even if you are not thinking of founding a startup, you will find help during those only processes from this book.
This book revolutionized my thinking in so many ways. Let's start with disruption. The word 'disruption' has been used in a business sense to signal drastically changing a market or industry. Another way to think of it, as I learned in my Introduction to Management Consulting course at USC, making other products in the market obsolete. It's a title that many businesses want to be in - The Disrupter. Google has been accredited as the disruptor to search engines. Apple is the disruptor to smartphones. In other words, disrupting companies often become household names and their founders billionaires. Who wouldn't want that? Well, Theil turns the idea of disruption on its head.
Companies trying to disrupt are doing themselves a disservice because they view the company (and the company's growth) in their competitor's eyes. Google compared itself to Yahoo. Apple compared itself to... any other phone, really. It worked for these companies, but this approach can also stifle growth and innovation by always using the market incumbents as a benchmark. In better words:
Indeed, if your company can be summed up by its opposition to already existing firms, it can't be completely new and it's probably not going to become a monopoly (pg 46)
Speaking of monopoly, my understanding of these types of companies was also upheaved. If you think of the ever-popular board game of the same name, a monopoly includes dominion. One tries to own and seep the benefits of as much of the board as possible. For a company, it tries to take the biggest market share it can. Maybe you're like me and think it's bad - think of all the mom and pop coffee shops that suffered (and continue to suffer) once a Starbucks entered the neighborhood.
I, as a Seattle native, love Starbucks as much as the next person, but monopolies do have repercussions on other businesses in the market. Thiel's explanation for creating the building blocks of a monopoly - starting by dominating a small market first rather than trying to dominate a large market (big fish in small pond vs small fish in big pond) - gives a feasible roadmap that does not first overwhelm the market nor consumer. If this feels obvious to you (it does to me after writing it in this blog post), you'd be surprised how many companies take the small fish in big pond approach, squarely focusing on the potential return on investment without considering their extremely small market share upon entering the market.
Thiel also compares companies to cults. Although this might SOUND alarming, it actually makes a lot of sense. See here:
The best startups might be considered slightly less extreme cults. The biggest difference is that cults tend to be fanatically wrong about something important. People at a successful startup are fanatically right about something those outside it have missed (pg 112)
As someone who plans to own my own business soon, this book placed me in the proper mindset to imagine a distinct, long-lasting, and fortified company from start to finish instead of running with the first idea that seems sound and making many adjustments along the way. Thiel's definition of terms, use of charts and graphs, and references to the successes and blunders of tech giants we all recognize helped conceptualize his points that much more.
All this being said, I did have some quarrels. There is a fair amount of self-promotion in this book. As you all know (from my complaint in Lean In for Graduates to Rich Dad, Poor Dad), oversaturated self-promo does not sit well with me. There is a fine line between drawing upon your own experiences and promoting yourself and your own endeavors. If I wanted to read Theil's autobiography, I would have. There were too many references to the success of PayPal, Palantir Technologies, and Founders Fund for my taste.
Also, Thiel is very opinionated. Very. Whether making blanket statements about law school students ("If they don't go to law school, bright college graduates head to Wall Street precisely because they have no real plan for their careers," pg 59), harping on astrology ("The opposite of physics might be astrology, but astrology doesn't matter," pg 91), or oversimplifying explanations ("Just as corporations tend to copy each other, nonprofits all tend to push the same priorities," pg 152 - so Red Cross and Goodwill and Human Rights Watch all push the same priorities now?), you may want to expect to have conflicting mindsets with Thiel. On age 81, he also compares (and I would say, equates) a terrorist with a hipster. I'll let you discover the issues with that for yourself.
If you can internally argue with or ignore the negative comments of this book, you open yourself to some pretty innovative ways to think of businesses (in or outside the tech industry) and equip yourself with questions to start you on that founding journey, as well. Just... beware of his negative thoughts, reader.
Ramiah Reflects
My New Favorite Life Quotes:
Competition can make people hallucinate opportunities where none exist - Peter Thiel
Winning is better than losing, but everybody loses when the war isn't one worth fighting - Peter Thiel
If you think something hard is impossible, you'll never even start trying to achieve it - Peter Thiel
The actual truth is that there are many more secrets left to find, but they will yield only to relentless searchers - Peter Thiel
Questions to Ask Yourself (and answer!):
What valuable company is nobody building?
Will this business still be around a decade from now?
What secrets is nature not telling you? What secrets are people not telling you?
What are people not allowed to talk about? What is forbidden or taboo?
Why should the 20th employee join your company? Why would someone join your company as its 20th engineer when she could go work at Google for more money and more prestige?
How can computers help humans solve hard problems?
What will the world look like 10 and 20 years from now, and how will my business fit in?
Food for Thought:
Be a creative monopoly. "If you lose sight of competitive reality and focus on trivial differentiating factors - maybe you think your naan is superior because of your great-grandmother's recipe -- your business is unlikely to survive" (pg 24)
Be a better monopoly. "The history of progress is a history of better monopoly businesses replacing incumbents" (pg 28)
Ramiah's Re-read When
Re-read when:
You are starting a (tech) business
You are thinking about starting a (tech) business
You need to think contrarian
You need to find or build industry secrets
You are crafting a company culture
You want insight into cleantech companies
You want to build a monopoly
See below for my book notes:
Check out my other posts and book notes here.
Until next time!
Montana Houston
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