Peter Thiel's Top 10 Rules for Success

Peter Thiel is a billionaire entrepreneur, venture capitalist, and the co-founder of PayPal and Palantir Technologies.

PayPal co-founder and venture capitalist Peter Thiel, the co-founder of another company called Palantir. One of the great legendary investors in Silicon Valley.

He grew up as an immigrant fascinated with philosophy and technology.

Born in Germany, Peter Thiel moved to the United States with his family when he was a child.

He went on to build one of the most influential careers in Silicon Valley, helping create companies that reshaped finance, data, and startups.

I think Peter is one of the most brilliant people I've ever met. In fact, I think he's been one of the most important forces, at least in my life, for questioning assumptions about the path that society was on.

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One of the frames I always have is that there are many ways in which the United States, the, you know, the developed countries have been relatively stagnant for the last 50 years. You know, progress has slowed. We've had, you know, we had progress in computers, internet, software, and many other domains. Things have kind of stalled out and it sort of manifests in low economic growth in the sense that the younger generation is going to have a tough time doing as well as their parents. And there is sort of this, this way that there has been this broad stagnation for 40, 50 years and we need to find ways to do new things. I don't think, you know, startup tech startup companies are the only ways to do them. But that is, that is a vehicle for doing it. And, and yeah, if you don't, if you don't allow these companies to have a certain latitude and flexibility to try to do new things, we shut it down right away, you know, the stagnation will be worse than ever.

Rule number 2: Translate innovation into business.

I always think you want to instantiate it more in companies than things, or, you know, if you ask sort of like, where is innovation happening. You know, it is in our society and doesn't have to be this way, but it's mostly in a certain subset of relatively small companies. We have these relatively small teams of people that are really pushing the envelope. And that's sort of, you know, that's sort of what I find, you know, inspiring about venture capital. And then obviously you don't just want innovation, you also want it to translate into good businesses. But that's where it happens.

Rule number 3, admit when you're wrong.

My friend David Sacks and I published this book, The Diversity Myth, back in 1995, shortly after we're out of college and sort of synthesizing a lot of these kinds of arguments. it's all focused on happenings at Stanford, and you have to somehow, you have to make some kind of argument that what you're talking about matters to other people, to the whole country. And the somewhat contrived argument we made was that, you know, ideas have consequences, that what happens at these elite colleges will eventually spread into the broader society. It was a somewhat contrived argument, and probably by the time we met in 2008, it already felt, wow, it was just embarrassing. An embarrassment in a way where I sort of turned molehill into a mountain or something like that. And certainly even 4 or 5 years after I wrote the book, 1999, 2000, during the PayPal years, it was just not an item. It was not something anybody ever asked me about. I was never asked to explain things in the book. I was never asked to, you know, explain my past as sort of a right-wing campus libertarian type person. The vibe of the, I don't know, 1999 dot-com internet was profoundly apolitical, optimistic, and so incredibly disconnected from these crazed culture wars. And then when you forward to the Silicon Valley of the last few years, you know, even though in some sense it's done so incredibly well financial or economic matter, the vibe is sort of angry, pessimistic, you know, endless culture wars, hyper-political. Something like "The Diversity Myth" resonates in a very different way. And yeah, it now feels prophetic. You know, I suppose I'm kind of proud that I wrote it, that I can say I was right about everything. Well, in some ways, you know, it would, maybe I'd rather live in a world where, I'd been less right about things. And then of course, I think there probably are things that I miscalibrated and also got wrong.

Rule number 4, utilize AI.

I always had this riff where I don't like the buzzwords and, you know, machine learning, big data, cloud computing. You know, I'm going to build a mobile app, bring the cloud to, you know, if you have sort of a concatenation of buzzwords, you know, my first instinct is just to run away as fast as possible. It's some really bad groupthink. And for many years, my bias is probably that AI was one of the worst of all these buzzwords. It meant, you know, the next generation of computers, the last generation of computers, you know, anything in between. So it's meant all these very different things. If we roll the clock back to the 2010s, you know, probably the AI, to the extent you concretize it, I would say the AI debate was maybe framed by, by two— the two books, the two canonical books that framed it. There was the Bostrom book, Superintelligence, 2014, where AI was going to be this superhuman, super duper intelligent thing. And then the anti-Bostrom book was the Kai-Fu Lee, 2018, AI Superpowers. You can think of the CCP rebuttal to Bostrom, where basically AI was going to be surveillance tech, face recognition, and China was going to win because they had no qualms about applying this technology. And then if we now think about what actually happened, let's say with the LLMs and ChatGPT, it was really neither of those two. And it was this in-between thing, which was actually what people would have defined AI as for the previous 60 or 70 years, which is passing the Turing test, which is, you know, the somewhat fuzzy line It's a computer that can pretend to be a human, or that can fool you into thinking it's a human. And, you know, even with the fuzziness of that line, you could say that pre-ChatGPT it wasn't passed, and then ChatGPT passed it. And that seems very, very significant.

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I'll see you there. Rule number 5, find your interests and passion.

I think the elite colleges, you know, in the '80s it was definitely still a good thing to get into an elite college like Stanford. And then there's, you know, there's some point where just from a point of view of, you know, I don't know, child teenage development, it's if your entire, you know, life gets tracked into doing all these, you know, filling out college applications activities, and you never develop any interests or any passions because it's just this, you know, completely contrived resume that you're building, there's some point where that's, you know, that has to be more of a liability. And, you know, my sense is that even for the kids that get into the elite colleges at this point, it's like you've passed some Mandarin examination in China, but you're just so exhausted you're never going to do anything more for the rest of your life. You're burned out at 18.

Rule number 6: Think ahead.

I think that, 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. Um, 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 going to develop? How's technology going to develop? How's the world going to develop? These are hard questions to answer, but I think, I think, I think 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 So, you know, have a plan. You can always change it, but don't just pretend that you have no clue about what's going to happen and that everything about the future is random. If you sort of say that everything is random and out of your control, that's the way you set yourself up for failure.

Number 7, make sure people align properly.

One part that I'm always very focused on is sort of the structure of these companies and how well are people aligned. 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 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? And 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, you know, 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.

Rule number 8, don't dwell on the past.

I think there's a problem in Western Europe where failure is, it's too impossible to fail. Once you fail, 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, you know, that's going to be psychologically damaging, you know, people have less confidence in you, all sorts of reasons why that tends to be quite bad. I think that— I think 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 1 out of the 5 things, you're likely to fail, fail again. So I think 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.

Number 9: Value substance over status.

On an individual level, I think it is 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 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, by prestige and status and not quite enough about really the substance of trying to learn things. And I had sort of this— I sort of think of it as this sort of crazy rolling quarter-life crisis and sort of culminated in this big New York law firm where from the outside everybody wanted to get in, from the inside everybody wanted to get out. I lasted 7 months and 3 days, and after And when I left, one of the people down the hall said, "It's so reassuring to see you leave, Peter. I had no idea it was possible to escape from Alcatraz." Which again, 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 rule number 10, the last one before a very special bonus clip, 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. Goals. Like if you, if you have that as your sole goal, you're unlikely to, I think, really, really succeed. And so I think you become an entrepreneur because you're working on an important problem nobody else is working on. I think you should start a business if you have something, if you're, if you're working on a problem that otherwise would not get solved. 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. 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.

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Continue to believe, and I'll see you there. Robert Kiyosaki is the author of Rich Dad Poor Dad, a book translated into 51 languages and has sold over 40 million copies worldwide. He went from launching a surfwear company called Rippers that collapsed and later declaring corporate bankruptcy in