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Peter Thiel’s 3 Weird Secrets to Winning the Future

When PayPal met the world in 1999 it had stiff competition from Elon Musk’s X.com
by Caitlin Schiller | Aug 9 2015

The worst part wasn’t the rivalry, but that x.com had practically copied PayPal’s product. PayPal was still determined to prevail. For some of the early PayPal employees, assuring they’d come out on top meant hundred-hour work weeks; for others it meant building a bomb, presumably for use on their adversary’s Palo Alto HQ.

peter-thiels-3-weird-secrets-to-winning-the-future

The latter method never really got off the ground, but such an explosive solution wasn’t the PayPal group’s first brush with explosives. Of the six founders, four had dabbled in the decidedly fringe hobby of bomb-building. The founding team’s uniqueness extended well past eccentric leisure activities, too. For starters, they were young, five of them only 23 at PayPal’s launch. Four of them had been born outside of the US, and three had escaped from communist countries. Thiel also recalls that in their very first conversation, one of his co-founders, Luke, mentioned signing up to be frozen at death in hope of future medical resurrection.

Not your standard cocktail chatter, eh?

Youth, outsider status, and a fascination with sci-fi immortality techniques aren’t in themselves enough to ensure success such as what PayPal saw. What they do offer is fertile ground for eccentricity – a trait crucial to creating something from nothing. Peter Thiel’s book Zero to One contends that there are three secrets to building a startup that can change the future, and they’re both grounded in a reverence for the weird.

Secret 1: Understand progress.

Peter Thiel explains that the future is defined by two kinds of progress: horizontal and vertical.

Horizontal progress expands on existing ideas and works through globalization, spreading known innovations to a larger audience.

Vertical progress, however, entails creating something entirely new, or, “going from 0 to 1.” For example, if you build phones and distribute them to underdeveloped countries, that’s horizontal progress at work. However, building a smartphone from a regular telephone to create an entirely new breed is the kind of vertical progress that makes radical alterations to the future.

For new startups to be successful, vertical progress is key. And where do you get ideas that spur vertical progress? From the insights of a unique mind, one that, like those of Steve Jobs and the PayPal founders, sees the present a little differently.

Secret 2: Hire oddballs.

Unconventional thinkers are the most valuable players of any startup, so Thiel starts looking for them at the very first interview. He always asks, “What important truth do very few people agree with you on?” Of course, most answers he gets are pretty predictable. “There is no God,” is a popular one, as is “America is exceptional.”

But a few dozen unremarkable responses are worth it because this question is ace at sussing out unconventional minds. It shows whether the candidate is able to adopt a different perspective of the present, which, according to Thiel, is “as close as we can come to looking into the future.”

The people who surprise you with their answer to this question – the bomb builders and the cryogenics enthusiasts of the world – are the types you want on your team. Asking a question that invites them to say something unpopular is a good litmus test. This question incites heterodoxy, which is exactly what Thiel wants. Only a person who can think outside of convention can change it.

Secret 3: Get an (open) secret.

All truly great startups were built on a secret. Airbnb, for example, looked at the homeowners of the world and saw an untapped abundance of accommodation. Meanwhile, they surveyed the hotel market and found an unaddressed demand for places to stay.

In much the same way, the private car services Lyft and Uber saw people clamoring to go places and surmised that there were probably auto owners who wanted to drive them there.

Airbnb, Lyft, and Uber found their “open secret,” in the intersection between groups who had and groups who needed, connected the two, and ended up wildly successful companies. The good news is that there are plenty more such “open secrets” to be had.

But where do you find one? Even for an open secret, you’ll have to do a little digging.

In Zero to One, Thiel offers the proof of Fermat’s last theorem as an example, the discoverer behind which died in 1637 without providing the proof.  Between 1986 and 1995, one intrepid mathematician made it his business to prove that theorem on his own. It took him nine years, but eventually, he cracked the problem. His secret was the theorem’s proof, and he succeeded where others hadn’t simply because he chose to look.

What next?

Zero to One won’t give you tips about what kind of company you ought to build, or what product you should make – after all, such a revelation would be in direct opposition to everything the book espouses. The key is understanding that you’ve got to think what others never dare.

Start here: ask yourself the “contrarian question” Thiel poses to all of his interviewees. What popular truth do you find unconvincing? This question, when taken on a larger scale, translates into “What valuable company is nobody building?” Start here and see where your unconventional thinking can take you.

Want to learn more about why the future belongs to oddballs with secrets? Come read Zero to One’s key messages in 18-minute summary form.

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