Peter Thiel visited Columbia last week to talk about his new book Zero to One and other matters of startupdom. The book is a more refined version of Blake Master’s set of notes from Thiel’s Stanford class last spring. The notes are a pretty interesting read, which I suppose means the book is as well. The contrarian libertarian is always interesting and some of the highlights from the talk are below.
Thiel contends the goal of any company is to become a monopoly. In fact, a successful company is defined by their ability to monopolize a market. He claims Google is monopoly, as no one has really challenged their search product since the mid-2000s (~68% market share in the US). But monopolies like Google do their best not to seem like monopolies, which is why Google calls itself a technology company instead of a search company. They can claim false competition from other tech companies to avoid scrutiny in the search industry they monopolize.
It’s logical not to call attention to your monopoly should you have one, but I would say Google does have competitors that aren’t search engine companies that warrant the tech classification. Consider Amazon: as they continue to become a dominant first-source for retail purchases, that is, when I want to buy something I go Amazon and search there first, they take away a significant chunk of search traffic (and a lucrative one at that) from Google servers. Amazon is by no means a search company, but I would still call them a long-term threat to Google’s search business.
Thiel used the word contrarian many, many times. He believes there is no wisdom in crowds, only madness. This is mildly amusing given his fund’s investment in Yelp, but most of his investment thesis seems to be around challenging commonly accepted truths.
Shane Snow, co-founder of Contently, did a great job with the interview portion, pushing Thiel on some of his claims about the antonymous nature capitalism and competition. Snow pointed to Coke and Pepsi, two companies you’d be hard pressed not to call capitalist, but in a fiercely competitive market. Thiel suspects that people actually have a preference for Coke or Pepsi, so the market isn’t actually as competitive as it looks, but I’m not sure I buy that, and not just because I love both.
Thiel is often lovingly referred to as the ‘Don of the Paypal Mafia‘, the lamest nickname for the coolest thing. Snow poked around how Thiel constructed of the mafia, which includes Elon Musk and Reid Hoffman. Thiel knew many of them from before PayPal, and was interested in building a team that actually wanted to work together instead of just having a common business goal. Thiel briefly worked at a law firm and hated the idea that his colleagues were essentially competitors; it was a hostile environment by construction. Desire to make money makes those types of structures work, but he wanted to rid that sentiment from work environments he created.
Thiel also complained a bit about regulation. He’s happy that the world of bits is still largely unregulated, but thinks that over regulation of the world of atoms is what’s holding back innovation in fields like energy and medicine. This may be true in medicine, but having spent some time in energy research, I don’t think that’s really the case in energy. That’s just a really hard problem that takes a lot of sustained effort. But over regulation still leaves Thiel dreaming of a new floating city, some kind of tech Antioch, where liberty is the only law, and innovation the only pursuit.
Snow also asked the question that was on everyones mind: did Mark Zuckerberg really show up at his office in pajamas, and did Thiel really just hand him a check for $500k? Thiel skillfully evaded the question but noted that it was all quite routine, which only seemed to add to the jejune legend.