It is inherently difficult to distinguish between an entrepreneur’s skill and luck, even in retrospect. Peter Thiel, however, is the cofounder of two different billion-dollar technology businesses and the first outside investor in Facebook. If he’s only lucky, I’d like to borrow his rabbit’s foot.
In the spring of 2012, Thiel co-taught the Stanford computer science course CS183: Startup. A law student named Blake Masters began blogging about it and publishing his lecture notes online each week. They became an Internet sensation, and they form the basis for Zero to One. As telegraphed by the subtitle—Notes on Startups, or How to Build the Future—it makes an argument on two levels: The narrower argument is how to build a successful startup technology company; the broader one is how America should build a more successful economy. Based on my experience, Thiel’s advice on how to create a startup is practical, often unconventional, and uniformly excellent. Here are a few examples, chosen almost at random:
Every startup should start with a very small market. . . . Recruiting should never be outsourced. . . . Everyone at your company should be different in the same way. . . . Like acting, sales works best when hidden. . . . A startup messed up at its foundation cannot be fixed.
While there is an exception to every rule, my own software company developed versions of these exact beliefs, often through painful experience. Thiel’s strands of insight come together in the penultimate chapter, which explains why the Solyndra model for green energy is fundamentally flawed. It is a 21st-century version of what a Harvard Business School case-study ought to be.
Thiel begins with a question that he poses to job applicants: What important truth do very few people agree with you on? This is a great interview question, and I’m going to steal it from him. But the question also points to a deeper truth: It is extremely difficult to come up with an idea that is simultaneously contrarian, true, and valuable.
Such an idea is the genesis of most great technology companies. The unique intellectual task of the entrepreneur is to distinguish between the core contrarian idea, which must be preserved at all costs, and everything else, which is subject to endless questioning and change.
This is not usually as simple as it sounds, because there is almost always a difficult road from idea to realization. The exact boundaries of the core idea itself are usually clarified through sustained contact with the marketplace and repeated trial-and-error learning about various approaches to technology, sales, people management, and other elements of a real-world company.
The day-to-day role of the entrepreneur is to overcome the endless practical obstacles to realizing the vision. I have often described the subjective feeling of this experience with a paraphrased version of what I once heard another entrepreneur say: “You just keep putting one dumb foot in front of the other, while the whole world throws bricks at your head.” Joseph Schumpeter summed up this combination of intellectual and practical tasks almost perfectly in Capitalism, Socialism, and Democracy (1942):
To undertake such new things is difficult and constitutes a distinct economic function, first, because they lie outside of the routine tasks which everybody understands and, secondly, because the environment resists in many ways that vary, according to social conditions, from simple refusal to finance or buy a new thing, to physical attack on the man who tries to produce it. To act with confidence beyond the range of familiar beacons and to overcome that resistance requires aptitudes that are present in only a small fraction of the population and that define the entrepreneurial type as well as the entrepreneurial function. This function does not essentially consist in either inventing anything or otherwise creating the conditions which the enterprise exploits. It consists in getting things done.
As Schumpeter writes, this isn’t a wise career choice for most normal people, and the implication of Zero to One is that most readers who come to it looking for advice about creating a startup are really being given the advice to do something else for a living.