Peter Thiel Interview: You Have A Billionaire Mindset!

He's an American entrepreneur, venture capitalist, and hedge fund manager.

He co-founded PayPal with Max Levchin and Elon Musk.

He's ranked 4th on the Forbes Midas List of 2014 at $2.2 billion.

He's Peter Thiel, and here are his top 10 rules for success.

You are the entrepreneur of your life, and you can, you can, you can decide, you know, what you're gonna do, what you're gonna prioritize, and you should never forget that you have a tremendous amount of freedom freedom as it is to make these very basic decisions on what you're going to do with your life. And you can start anytime you want.

The most critical thing for every startup is to be doing one thing uniquely well, better than anybody else in the world. Technology is a fundamentally global business, and the really great technology companies are doing something significantly better than anybody else in the world, and you want to be in that sort of a position. I think if you're just starting a business, one of the questions that's always valuable to answer is, what do you know that's true that nobody else understands? Or more prosaically, what great business exists that nobody is building?

One part that I'm always very focused on is sort of the structure of these companies and how well are people aligned. And so you can, and making sure that people are aligned properly, not just that they say they are. I think this is sort of a very legal kind of a framework to think about what are people's incentives, are they going to be aligned or not. And I think you want to both have formal alignment where you set the structure right, and you want to have informal alignment where the people would naturally try to work together well in one way or another. And I think that somehow tends to get obscured in all these other ways. You know, there's always a prehistory question I like to ask founders of companies, which is how did you meet, what's the prehistory of the company before you got started? I find that to be a really instructive set of questions to ask. A bad answer is something like, you know, we met a week ago at a social networking function— at a business networking function. We decided to start a company because we both wanted to be entrepreneurs. You know, that's like saying I married the first person I met at the slot machines in Las Vegas, and you might hit the jackpot, but it's probably a really bad idea. And a much better answer is, you know, we've been talking about this for a long time. Maybe one of us is more on the tech side, the other one's more on the business side. We have these sort of complementary skills. And so I think this question of alignment and structure is incredibly important.

I think that all— if you're a founder or entrepreneur, what you want to aim for is monopoly. You want to aim to build a company that is one of a kind and that it's so far differentiated from the competition that it's not even competing. And I think this is the conventional wisdom is always that capitalism and competition are somehow synonyms. I believe they're antonyms. A capitalist is someone who's in the business of accumulating capital. A world of perfect competition is a world where all the profits are competed away. If you want to compete like crazy, then you should just open a restaurant in Chicago. And I think the great companies like Google, sort of the paradigm example I use, has had no serious competition in search since 2002, when it definitively distanced itself from Yahoo and Microsoft. And as a result, it's been generating enormous cash flows for the last 12 years.

But yeah, there probably are a lot of people who end up trying to be somewhat fake entrepreneurs, where the goal is to be an entrepreneur.

If you ask people, what do you want to do with your life, what do you want to do when you grow up, I want to be an entrepreneur, which I always think is a somewhat too common, disturbingly somewhat too common, and I think, you know, it's saying that you want to be an entrepreneur is sort of like saying I want to be rich or I want to be famous. Nobody in their right mind starts a company for the sake of starting a company. You start a company because there's a very important problem to solve that's not getting solved in large governmental or nonprofit or for-profit institutions, and that's why you actually need to start a new company. Just starting a company for the sake of doing so is a really odd thing to do.

On an individual level, I think it is always— it's always really good if there's something that you're incredibly passionate about and just sort of find to be intrinsically interesting. And that people pursue that. And so one of the resolutions I came up with a number of years ago was to always value substance over status, substance over prestige. And if I sort of was giving my younger self advice on what to do or how to think about, one's life, I probably, I think I probably would still go to Stanford. I might still go to law school, but I'd ask sort of, I'd ask a lot more questions why I was doing these things, and I think if I was honest about it, too much of it was driven by prestige and status and not quite enough about, really the substance of trying to learn things. And, you know, I had sort of this— I sort of think of it as this sort of crazy rolling quarter-life crisis that sort of culminated in this, you know, big New York law firm where, you know, from the outside everybody wanted to get in, from the inside everybody wanted to get out. You know, after— I lasted 7 months and 3 days, and after— and when I left, one of the people Down the hall said, you know, it's so reassuring to see you leave, Peter. I had no idea it was possible to escape from Alcatraz, which again, and, you know, and again, I, and all you had to do was go through the front door, but our identity, people's identities get so wrapped up in the things they compete for that it was inconceivable for people to actually do that. And then the question was, you know, well, how had I ended up there? Why had I not thought about that more? And I think it was that I had taken too many of these shortcuts of valuing sort of what was prestigious, what was conventional, over what I really wanted to do. So I think always substance over status.

And this is why I think competition is always this very two-edged thing. When you compete ferociously, you will get better at that which you're competing on. But you will always narrow your focus to beating the people around you. And it often comes at this very high price of losing sight of what is more important or perhaps more valuable.

The general theme I would suggest is that all trends are overrated. And so if you think about current trends in technology, you know, healthcare, it software, education software, Overrated. SaaS enterprise software, really overrated. Big data, cloud computing, if you hear those words, you need to think fraud. You need to run away as fast as you possibly can. And the reason these buzzwords tell you that something is— these buzzwords are sort of like a tell in poker that people are bluffing and that there's nothing— that there's that the business is not undifferentiated because the buzzwords tell you that it is one company of a category that's undifferentiated from the others in that category and therefore are symptomatic somehow of a lot of competition and a bad business idea. And so, you know, you don't want to be the 4th online pet food company, you don't want to be the 10th thin film solar panel company, you don't want to be the 1,000th restaurant in San Francisco, And so there is something about if you can describe what a company is doing very straightforwardly by referencing these buzzwords, these categories that already exist, that's actually a sign that it's a pretty bad idea.

I think there's a problem in Western Europe where failure is— it's too impossible to fail. Once you fail, you can never you can never start over. I think there's an opposite version of this in California where I think sometimes people are a little bit too facile about failure because I think it actually is always incredibly damaging to people. And if you work really hard at something and it doesn't work, that's going to be psychologically damaging. People have less confidence in you. All sorts of reasons why that tends to be quite bad. I think that when people— I don't think there's that much you learn from failure, by the way, because it's typically overdetermined. It's like, why is technology slowing down? Why did you fail? It's typically 5 separate reasons. You worked with the wrong people. The idea was bad. The timing was wrong. It wasn't a monopoly. The product didn't work. And okay, next time I'm working with different people. You figure out one out of the five things, you're likely to fail again. So I think failure is not something one can learn very much from. I think that's sort of a myth that I would challenge. But what I think you should do when something goes badly wrong is you just keep going. You do something else and you don't dwell on the past.

Already in the time of Shakespeare, the word "ape" meant both primate and to imitate. And there is something very deep in human nature that is imitative.

It's how—

it has a lot of good things. It's how language gets learned by kids. It's how culture gets transmitted in our society. But it also can lead to sort of a lot of insane behavior. It can lead to the madness of crowds, to bubbles, to sort of mass delusions of one sort or another. And I think it can— and I think it's, you know, advertising. We always think of— we always tell ourselves that we're not that prone to this. And I think that's something I'd encourage all of us to rethink. You know, we always think of advertising as something that just afflicts other people, that never afflicts ourselves. I think this is very far from the case. And so, and so the monopoly competition is not just this intellectual failure, it's also this thing where you have a tiny door where everyone's trying to rush through, and there may be around the corner a vast and a secret gate that no one's taking, and you should always find the secret path and go ahead and take that.

Thank you guys so much for watching.

Now, we made this video because Chin Wong Chung on YouTube asked Evan to make it. If you have a famous entrepreneur that you really, really, really want Evan to make a video on, leave it in the comments below.

I'd also love to know which of Peter Thiel's top 10 rules hit you the most. Leave it in the comments. We're going to join in the discussion. Thank you so much for watching. Continue to believe, and we'll see you soon.