How Peter Thiel Thinks About Entrepreneurship | Secrets to Dominating Business!

If you're looking for ways to get in the right environment, don't conform, and do what's meaningful, then this video is for you.

We always want to fit in, and this, this, this pressure to fit in is, is really powerful. You want to be in the place where you can talk to as many people as possible about your ideas. I think you should be doing something you're passionate about.

What's up, Believe Nation? It's Evan. My one word is believe, and I believe in you. I believe you have an amazing gift inside you that I want to see explode out into the world. So let's get your motivation to a 10 and get you believing in you. Grab a snack and chew on today's lessons from a man who had to change elementary schools 7 times and was hit by teachers when he made mistakes, to being the co-founder of PayPal, a venture capitalist, and making billions. He's Peter Thiel, and here's my take on his Top 10 Rules of Success Volume 2. Enjoy! So let's kick things off right. Rule number 1 is solve problems.

I actually think you should think twice before starting certain types of businesses. So I think there are probably too many bad businesses getting started and not enough good ones. So that's, you know, I don't think there's anything about entrepreneurship per se that is good. You know, I was talking to one of my friends a few years ago. I was asking him, what do you want to be doing in 5 or 10 years? Oh, it's really clear. I want to be an entrepreneur. That's like saying I want to be rich, I want to be famous. And I don't think— Those are good things, being rich and famous. They're not good as direct goals. Like, if you have that as your sole goal, you're unlikely to, I think, really succeed. And so I think you become an entrepreneur because you're working on an important problem no else is working on. I think you should start a business if you have something, if you're working on a problem that otherwise would not get solved.

Moving on to rule number 2, always be open to learning.

Assembling a crew of people who are very smart, very fast learners was kind of the key to success in a startup, as opposed to trying to get someone who had, you know, if they had 10 years experience doing something, that's great, but the more fundamental characteristic is Would they learn fast on the new problems and the new challenges? Yeah, no, it always feels wrong to be anti-experience, but the place where it can backfire is if the experience makes you think that you know everything. Yes. And so it's, again, it's important to know things, and it's important to be open to learning more. And in theory, experience is a plus. In practice, it's often a bit of a minus because people are less open to learning new things. Or they're more set on doing a particular job in the context of a startup, which is always very tricky where you have small numbers of people and people need to be very flexible about the roles and the roles change as the company gets built.

Next up, rule number 3, don't conform.

I have seen people, and it happens to everybody no matter what it is, I've seen people rip you apart on both sides for both. How does that— what— how does that drive you? Does that drive you at all? Does that— on political correctness of having to conform and being what everybody says you're supposed to be, does that drive you at all? Well, it's— you try to ignore it to some extent. You know, you try not to— but you don't try to— you don't try to put yourself into any of these very uncomfortable straitjackets. And, you know, you don't want— and I think that's what's so pernicious about all the identity politics, that, you know, we all have to be in this category, we're all the same. I think people are all different. We're all, you know, we're all, you know, I'm somewhat idiosyncratic, but I think all of us are. All of us are idiosyncratic in different ways. And I think this is a— This is something that most people experience, that they're being put into boxes way more than they're comfortable. You know, there's this interview question I always like asking people: tell me something that's true that very few people agree with you on. And it's a very hard question to answer. And it's not because people don't have answers. They actually have lots of answers to it. It's because they're uncomfortable answering it in the context of an interview, because, you know, the answer has to be something the person asking you won't agree. And we're always nervous about doing that. We always want to fit in. And this, uh, this, this, this pressure to fit in is, uh, is, is really powerful.

Let's go to rule number 4: Don't compete.

Most business books tell you, uh, how you should compete more effectively, and mine, uh, goes somewhat against that grain and tells you that you should not compete. As a founder or entrepreneur, your aim should always be to create a creative monopoly in some new area that's been unexplored and underdeveloped. And I think that's always the key to great companies. And so my pattern recognition is that when I hear about a company that makes a lot of sense but is really fresh and strange, that's often a really promising kind of idea. Whereas when it's the 4th online pet food company or the 10th thin-film solar panel company or the 1,000th restaurant in San Francisco, that's often not as good an investment.

It's time for rule number 5: Get in the right environment.

If you're going into politics, you should go to D.C. If you're going into finance, New York. Movies, probably still L.A. And tech is Silicon Valley. Silicon Valley has an aspect that's very open, very fluid, and it helps tremendously on these cutting-edge ideas. You want to be in the place where you can talk to as many people as possible about your ideas. Because that's the way you will know that they're cutting edge and you will improve them even more.

Let's go to rule number 6: think ahead.

I think there definitely are things that one can iterate on, but the core thing is to have a great product, and then you can always improve and iterate on that in all sorts of ways. And I think, you know, I think even in the tech industry, what's striking is how weak on a quantitative basis. So many of the successful companies were— it was just they had a great product and then years later they were able to optimize it in all sorts of, all sorts of ways. Whereas if you're just trying to optimize and you don't have a great product, I think that, that rarely works. I think it's always worth asking, you know, where you're going to go with this business. And so I think we're always focused on very short time horizons because You have to, you know, figure out a way to get through the next month, the next quarter. Um, you know, how do you get some customers? How do you, how do you track? But it's, it's always worth thinking ahead, you know, 5 to 10 years, you know, why will this be a really valuable business in 5 to 10 years? And, um, you know, how's the competitive landscape gonna develop? How's technology gonna develop? How's the world gonna develop? Um, these are hard questions to answer, but I think, um, I think, I think, I think the, uh, the great entrepreneurs that I know always have some perspective on it. And it might be wrong, but it's just this is what's going to happen. And then it's sort of well-reasoned. And so you have a, you have a plan. And, you know, it's when I was playing chess, you know, in junior high school, one of the early lessons I learned was a bad plan is still always better than no plan at all. Right. And so, you know, have a plan. You can always change it. But don't, don't just pretend that, that you have no clue have no clue about what's gonna happen and that everything about the future is random. If you sort of say that everything's random and out of your control, that's the way you set yourself up for failure.

It's time for rule number 7, understand what customers want.

This is sort of like the Steve Jobs question. Do you think you should focus on making something that you believe people want or something that you want? I definitely think it should, I would focus, it should be on something that people want. But I think the nuance on this is you shouldn't— there's always a question whether you're making the judgment or you're taking some survey of people to make the judgment. And so I'm very much in the Steve Jobs camp of you want to have like this ESP link to the population at large and understand what they want better than they understand themselves. And I take the view that people don't generally know what they want. And so if you ask them surveys, if you do market studies, you will not actually get the right answer. And so there is something about sort of this inspired, you know, figuring out a very inspired intuition about what the world as a whole wants.

Jump into rule number 8: Do something completely new.

It's one of the things that's very difficult about teaching entrepreneurship in general is that there's maybe 20 or 30% where you follow certain rules and there's certain processes for doing things, but 70 to 80% of it is about doing something that's never been done. If it's been done before, you know, you're not really an entrepreneur. So the next, you know, the next Bill Gates probably will not start a desktop operating system. And— Almost certainly not. And even if you studied Bill Gates meticulously, you wouldn't, you know, go there. And, you know, the next Steve Jobs probably will not be building a smartphone. Technology is by definition non-repetitive. and every moment in technological history only happens once. There's a point where things are developed for the first time. Yep. And then there's a point where they become normal and standard and not even surprising. So the PayPal— the big PayPal insight that we sort of came up with in the summer of '99 was the idea of linking money and email as a basic product insight. There was a lot built around that, but that was sort of the key intuition. And it seems really simple. Basic in retrospect, although we'd spent 6, 7 months in the business without thinking of that beforehand. And it turned out that was a really key idea. Once someone's thought about it, very easy to explain. Before the fact, nobody had thought of it.

Let's go to rule number 9: Do what's meaningful.

I think you should be doing something you're passionate about. So the question is always, you know, when I give my younger self advice, you know, would I still go to Stanford? Would I still go to Stanford Law School? Possibly, but I think a lot more about why I was doing it. Was it— is it just, you know, and I was on this super track for myself. I ended up at a big law firm in New York. In my 8th grade junior high school yearbook, one of my friends wrote in, I know you're going to get into Stanford in 4 years. I went to Stanford 4 years later, went to Stanford Law School, ended up at a big law firm in New York where on the outside everybody wanted to get in, on the inside everybody wanted to get out. When I left after 7 months and 3 days, one of the people down the hall from me said it was, you know, really reassuring to see that it was possible to escape from Alcatraz, which, you know, and all you had to do was really just go out the front door. But so much of our identity gets wrapped up in the competitions we win. And when you compete, and I think a lot of the credentialing, resume building is this sort of competition. When you compete, you do get better at what you're competing at. And if you take lots of SAT test prep classes, you'll get a better score on the SAT. And when you compete, you get better at beating people on the narrow things you need to beat them on. But you often— it often comes at this very high price of losing sight of what's truly valuable and important and meaningful. Which is? Well, I think— Passion? Well, there's sort of all sorts of other— there are all sorts of things. That could be that. But, but I think, I think it often the, the, I think it often ends up being something that's a little bit off the beaten path because, so I think, you know, there's, there's obviously financial version where you get to be, have a monopoly-like business. There's a, the meaningful version I think is always counterfactual where if you weren't doing this, would, you know, it's, it's great to be working on problems where if you weren't working on them, Nobody else would do them. You know, if you're working at the 4th online pet food company, the 10th thin-film solar panel company, the 1,000th restaurant in Philadelphia, there's a sense that if you weren't doing it, someone else would. You know, if you're working at something where it's the only thing of its kind in the world, that's very meaningful. If we weren't— and it could be for-profit, nonprofit, all sorts of contexts. If we weren't doing this, this problem would absolutely not be tackled. I think that's the kind of— that's what's meaningful.

And rule number 10: work with extraordinary people.

So let's say you're trying to select people for your Thiel Fellowships, or maybe to work for one of your companies, or to start a new company with. And just you, Peter Thiel, as a judge of talent, what trait do you look for in that person that is being undervalued by others? A lot of what you're looking for are like these almost Zen-like opposites. So you want people who are both really stubborn and really open-minded. That's a little bit contradictory. You want people who are idiosyncratic and really different, but then who can work well together in teams. This is again, maybe not 180 degrees opposite, but 175 degrees opposite. This is why you like Hegel. I don't like Hegel that much, but— so I think it's— so if you sort of focus too much on one or the other end of it, you'd get it completely— you would tend to get it completely wrong. So I— but I like to get things where you get these combinations of unusual traits. So if you have people with some really interesting, very different idea, that suggests, okay, we're sort of in the idiosyncratic category. Then the important question becomes, Okay, would they actually be able to function socially and execute? And then maybe the teamwork question you'd ask would be, what's the prehistory of this company? How did you meet? How long have you been working together? And if there's a long prehistory, that would be good on the other side. So I think it's always getting these combinations right.

Thank you guys so much for watching. I'm going to have to say that rule number 3 is my personal favorite. Don't conform. I think that's something as entrepreneurs, we tend not to want to conform. It's a really interesting question that he asked. At the end of his job interviews about something that you think is true but that other people don't think is true, they may not agree with you on. I like that as an interview question. And I think just in general, we do not need to have to feel like we need to fit in and do things a certain way and just accept cultural norms and do things because our parents or friends want us to. We do the things we wanna do! That's why we're entrepreneurs and that's why we started our businesses and so I'm a huge fan of this rule, it's my favorite. I'd love to know from you guys though, what was your favorite rule? Are you with me? Is don't conform your personal favorite? Or is there one that you like better? Let me know down in the comments below. Now I made this video because Diego Hernandez asked me to. If there's a famous entrepreneur that you want me to profile next, check out the link in the description. You can go and cast your vote on the request line. And I also wanna give a quick shout out to Tuan Nguyen from dudebuddha.com. Tuan picked up 55 copies of my new book, The Top 10 Rules of Success, and then he made this awesome video where he asked the kids in his family to read the book and pick out what their favorite rule was. Tuan, man, you are a leader. I appreciate all your support and wish you much success in 2018. So thank you guys again for watching. I believe in you. I hope you continue to believe in yourself and whatever your one word is. Much love.

I'll see you soon. So let me give you the one word secret to happiness. One word. This is all you need to be happy. The most important word ever. If you had to think of one word that's most important to you or that sums you up or that would be kind of like a little beacon.

Hey, Believe Nation, if you want to know what the most important one word is for Tony Robbins, Gary Vaynerchuk, Oprah Winfrey, Will.i.am and Howard Schultz, I have a very special secret video for you. Check the description for details.