Peter Thiel’s Principles: Capture the Hidden Knowledge and Avoid Competition
Photography of Peter Thiel: © Gage Skidmore
Peter Thiel is one of the most successful and controversial figures in the world of business and technology. He is known for co-created Paypal and being the first external investor in Facebook. However, what makes this technology enthusiast unique is being contrarian, but first and foremost the free thinker.
His approach to life consists of the so-called secrets hidden from trends and public opinion. He is strongly connected with the Western Culture, the Bible, and the supremacy of the individual that is somehow inscribed in the culture of the founders of the USA and the spirit of freedom.
Thiel encourages us to avoid competitions and conventions. He thinks the most valuable things are located between conventions and mysteries, they are called secrets and we should strive to find them.
He warns us against the wisdom of the crowds and notes that the way to get to know secrets is by avoiding others' footprints and being a polymath in a world where a shallow approach to important matters prevails.
I think these words efficiently sum up Peter Thiel's philosophy, which can also be wrapped in the sentence he asks during recruitment: "Tell me something that's true that almost nobody agrees with you on?"
Even if you disagree with Thiel's views, I think it is worth getting acquainted with his thoughts, which engage us to operate on a higher level than conventional. His free-thinking ideas also stimulate us to live life more consciously, asking more valuable questions and encouraging us to innovate within it rather than copying others.
According to him, it is easy to fall into the trap of competition, especially in today’s world. Being overly competitive is far from giving us answers and clues. What it leads though is stress or even a life crisis. Which Thiel himself experienced at the age of twenty-five.
I found his philosophy highly insightful and encouraging us to be free-thinking individuals in a highly competitive world. Here are some of his principles that resonate with me and I feel connected to, especially coming from the Western Culture that always emphasized the independence of the individual.
Be careful of the competition
“My advice for you — the advice I wish I could have given my younger self — is this: Before getting swept up in the competitions that define so much of life, ask yourself whether you even want the prize on offer.”
Peter Thiel got caught up in what we commonly call the rat race. His life until the age of twenty-five was filled up with conventions and counter-productive competitions.
He got into Standford for studying philosophy and then earned J.D. from Stanford Law School. His path directly led to Manhattan, where he eventually landed at a prestigious Manhattan law firm. He described this place as "from the outside everyone wanted to get into, but on the inside, everybody wanted to leave."
When he quit his job in a law firm after seven months, one lawyer said incredulously, "I had no idea it was possible to escape from Alcatraz." Then Peter moved to San Francisco to focus on technology and building the future.
Thiel said that if he would start his journey again from scratch, he would go to law school, but he would try to ask himself more and more insightful questions whether what he does is something he is good at or at least passionate about or is it just a fight for social status?
Peter in "The Rubin Report" podcast gave some insights about his view of competition and why it should be avoided almost like hell.
“My autobiographical part that I tell about myself is that I was super tracked. It’s like eighth grade, junior high school, my friend says you know they’re gonna give him to Standford in four years. For years later I get him to stand for to get into Standford Law School. I end up in a top-tier law firm in Manhattan. And I get some sort of quarter-life crisis in my mid-twenties. I was asking myself what did I do that I end up like this? And the question is I just followed the track. I wasn’t thinking about I was doing things.”
The generic advice that contrarian gives to young people is that tracks are not working. They have maybe been more helpful in terms of earlier generations, but they stopped working for Gen X, so especially now it’s more important than ever to find what you’re good at and what you’re interested in, and you’re motivated in.
“Cross the board advice I always have is not to be overly competitive. The tracks force you to compete. You win. You cycle. You repeat.”
Thiel's insight about the competition is that you should have a reference point that is more vertical than horizontal. You should find some transcendence in a dynamic world, a higher purpose that accompanies your work.
Looking horizontally almost always means copying. It doesn't end well because you didn't figure anything, you just landed being a hyper-follower in the craze environment.
Peter with his implications goes even further, referring to the Ten Commandments, which adds almost a religious cut to his view.
He thinks that the first and the last commandments are the most important in terms of finding purpose and not being overly competitive. The first one is you should only look up to God. There’s only one God you should worship with all your heart, and with all your soul, and with all your mind. And the second one is you shouldn’t covet anything that belongs to your neighbor.
We can conclude that there’s a connection between Bible and Thiel’s philosophy that share a common ground in finding secrets through the transcendental lens and not following anybody, but the higher purpose and God. The Bible is the source of Peter’s secrets.
One of the interesting views I also found was during Thiel’s AMA session on Reddit. He was asked if it’s possible to succeed for people outside Silicon Valley.
The contrarian answered that there are things you may miss, such as network effects by living elsewhere, but he also added: “Sometimes these network effects lead to negatives, as people end up behaving more lemming-like in the SOMA hotbed.”, referring to the hip San Francisco neighborhood.
SOMA is Thiel’s acronym for groupthink, which doesn't serve ambitious individuals.
There’s also a reason why he doesn’t appreciate business schools, he sums up this kind of school as a hothouse environment, where you have a bunch of people, who are copycats without a transcendent reference point. Maybe that’s why he doesn’t hire people who wear suits and have MBA diplomas.
The proof that Thiel knew some secrets is that he survived in such a competitive place like Silicon Valley, where competition is almost synonymous.
I think the best summary for this subsection is one of his sentences, in which he stated:
"You don't have real diversity when you have a group of people that look different but think alike."
The best place to look for secrets is where nobody pays attention.
2. Create New Beginnings
“Thinking about the future is what I do for a living. And this is a commencement. It's a new beginning. As a technology investor, I invest in new beginnings. I believe in what hasn't yet been seen or done"
As we previously stated, Thiel found out in retrospect that his biggest mistake was to take the track without thinking deeply about where it was going.
As he co-founded one of the biggest technology companies - PayPal, he took the opposite approach. His thinking process was about the future vision of the world. He constantly set out to change the direction of the world.
The first PayPal teams were composed of young and innovative people who were deeply convinced that the existing order, although it appears to be something permanent, does not have to be that way. They had big plans and were highly optimistic about the future.
Thiel and PayPal's goal was nothing less but to replace the US dollar by creating a new digital currency.
“There were milions of people working in the global financial industry and when we told some of them about our plans, we noticed a clear pattern. The more experienced someone had in banking, the more certain they were about our venture could never succeed. They were wrong. People around the world now rely on PayPal to move more than 200 billion dollars every year. “
Even if Thiel and his team failed in terms of their greater goal that was to replace the US dollar, they learned that while doing new things is difficult is far from impossible.
Another contrarian’s advice is to not squander your ignorance. It means that you should test the conventions and traditions to the maximum. In some sense is worth being a blank page that fills up based on your own experiences and thoughts, and not one that has been filled by others.
By Thiel’s language, it means to go out and do what your teachers and parent thought could not be done. It’s not about being a rebel for its own sake but rather to find if something is valuable and that’s why it’s tradition or something is valuable because it’s tradition.
PayPal’s co-founder found that often conventions are established to fill the gap that no one had the courage to explore.
However, Thiel is far from claiming there’s is no value in teaching and tradition. Is quite opposite, he stated that these two things should be an inspiration for us to explore deeper the conventions.
The tradition is not an old order that we should abandon and consider only as a relic filled with conventions, but a kind of reference point that encourages us to go deeper.
He assumes that we should recover what was best in tradition and render it fresh. As an example, he quotes the motto of one of the most influential poets of the 20th century, Ezra Pound.
Pound was a poet and he was also a prophet of sorts and he announced his mission in three words: “Make it new”
On the one hand, a technology enthusiast teaches us to test traditions, on the other, he is closely associated with Western Culture that we inherited.
This tradition is itself about doing new things. The spirit of the West always was about the capabilities and sense of individuals’ freedom. Francis Bacon or Isaac Newton found a new ground for science, just as the founders of the USA set out a new order for ages by establishing the first Constitution in the world.
In the end, Thiel added:
“America is the frontier country, we’re not true to our own tradition unless we seek what is new. “
To sum up, Thiel encourages us to check if behind the tradition is something more than just simple justification by nothing except constant repetition.
3. Test the Wisdom of Crowds - The Contrarian Question.
"What important truth do very few people agree with you on?”
This question is almost inscribed in the identity of the contrarian. Most people, in Thiel's opinion, take it for granted that everything has been discovered and act as if there are no more secrets left to find.
The contrarian side of Thiel forces us to test the conventions by questioning - as he defines - two cliches.
The first comes from Shakespeare who wrote in one of his iconic books, well-known piece of advice:
“To thine own self be true“
This sentence can be translated into modern English as “be true to yourself”. The great poet didn’t say it directly, but he put those words in the character named Polonius, who was portrayed by Hamlet as a tedious old fool, even though he was senior counselor to the King of Denmark.
Hamlet’s advice is not as simple as it occurs to be. To fully grasp the hidden knowledge that Shakespeare places between the lines, you should in the first place take the opposite approach and start deepening what means to be true or even yourself.
Thiel described that the greatest poet wanted us to tame two things. Firstly, to know yourself you need to have the discipline to not follow blindly others and cultivate independence. Secondly, you should be skeptical of advice, even they come from elders and more experienced people.
So the advice Shakespeare should be interpreted is the opposite than he gave. In Thiels’ words:
“And so, in reality, Shakespeare is telling us two things. First, do not be true to yourself. How do you know you even have such a thing as a self? Your self might be motivated by competition with others, like I was. You need to discipline your self, to cultivate it and care for it. Not to follow it blindly. Second, Shakespeare's saying that you should be skeptical of advice, even from your elders. Polonius is a father speaking to his daughter, but his advice is terrible. Here Shakespeare's a faithful example of our western tradition, which does not honor what is merely inherited.”
The second cliche Thiel wanted to share is a famous saying:
“Let each day as if it were your last”.
And he stated that the best advice is to do exactly the opposite, meaning you should live each day as if you will forever.
The contrarian shows that you should establish the inner skepticism that is valuable, especially when it comes to your career life. This type of mentality is the opposite of people who got caught up in the conventional thinking process.
They got trapped in the vicious cycle full of limitations, which is nothing more than conventions. But Thiel shows us that there’s so much to discover.
You will get great returns in life from investing your time in making difficult decisions that matter. In other words, in the long term, it pays off to be an independent thinker. He brings one of the famous quotes, whose saying is attributed to Einstein:
“Compound interest is the most powerful force in the universe“
The key to Thiel's speech is to avoid trusting the wisdom of crowds.
One of the better examples that show we should be skeptical of the wisdom of the crowd is the diets conventions we’re too trapped. Peter also referred to it in his best-selling book “Zero to One”.
The food pyramid we established that diet should be based on low-fat and high-carb foods affected in nothing positive but increasing the obesity amongst the population. People to this day believe they should be eating high-carb food to get “energy”. That’s what Peter what to tell in this topic:
“The food pyramid that told us to eat low fat and enormous amounts of grains was probably more a product of lobbying by Big Food than real science; its chef impact has been to aggravate our obesity epidemic.“
Thiel also go even further in his thought-process accusing Harvard of not being major in nutrition. And this is an extremely important topic because it concerns all of us.
Peter Thiel believes that we totally forgot about innovation in everything, but technology. He potrayes world as a consistent picture of codes and atoms, somehow we forgot about the second.
There are still some enormous strides to make, for example, he still haven’t cured cancer. After we had a food Revolution in the sixties, we didn’t bring any significant changes in the food industry, and even the food prices have increased.
He stated that people don't necessarily try hard in these fields because they don't believe that there's any Innovation that is going to happen. And this is Innovation cannot be done by central authority rather it should be provided by a small group of highly intelligent and driven people that we makes his speeches for.
In Thiel’s words we’re educated to follow conventions. He also gave couple of examples in business field in his well-known book:
“Before Airbnb, travelers had little choice but to pay high prices for a hotel room, and property owners couldn’t easily and reliably rent out their unoccupied space. Airbnb saw untapped supply and unaddressed demand where others saw nothing at all”
Thiel points also the best startups and companies are based on secrets that are hidden far from competition. These types of secrets happen when we bring unconventional thinking to the table, testing the current order. As we previously mentioned, the best place to look for secrets is where nobody is looking. He also referred to Uber and Lyft.
“The same is true of private car services Lyft and Uber. Few people imagined that it was possible to build a billion-dollar business by simply connecting people who want to go places with people willing to drive them there. We already had state-licensed taxicabs and private limousines; Only by believing in and looking for secrets could you see beyond the convention to an opportunity hidden in plain sight.“
His points in terms of the wisdom of the crowds and overall conventions are submitted to one conclusion: There’s plenty more to learn and so many things haven’t done discovered. Thiel in some sense portrayed the individuals as creatures that struggle to rise above all because of the narrow-minded general public that tries to hold them down. But he gives them hope:
“It won’t be easy, but it’s not obviously impossible”
4. Strive to be a Polymath
Thiel is interested in the world as a whole picture. He is a person who is focused on both world of atoms and bits, and what I mean by that, he is a guy who constantly searching for different kinds of secrets and patterns that overwrapped some aspects.
The co-founder of Palantir has a habit of coming up with general directions and absolute concepts, not specific tips. He is much closer to being an all-embracing generalist than a narrow specialist, he also thinks this is what highly successful people share in common.
As he had a lot of shared time with world-class entrepreneurs, he found an interesting pattern that any of them is essentially a specialist but they have a general sense of the understanding variety of topics. Thiel describes them as a people close to polymaths.
In a talk with Dave Rubin, he gave an example of Mark Zuckerberg as a person with polymath cut, he said:
“[Mark] has a surprising amount of understanding about a lot of things. We could speak about the details of the Facebook product. You could take about the way people think about social media, the psychology, the way culture is shifting, the management of the company, his ideas, and how this fits in the bigger picture of the technology“
Peter personally is the opponent of the so-called academic view. He notices that is often about being only a narrow expert in one, specific area, which he doesn't appreciate. This approach according to Thiel does not apply to achieving some sort of success or building the future because there are many fluid factors that you should be aware of. According to him, it’s hard to capture them with narrow, highly specialized knowledge.
And this narrow view is what distracts you from firstly viewing secrets and secondly, having a deeper understanding of them.
Peter in the conversation with Eric Weinstein, noticed that:
“Polymaths are the people who could connect the dots […], and these people are very, very dangerous.”
By dangerous he doesn’t mean that they can hurt the society, but they are capable of tearing down the fake order and showing truths that are hiding from the general public.
And this is what powerful people are trying to avoid under the guise of political correctness and then label this kind of people as dangerous. So being a polymath also brings negative consequences, especially if you’re driven by ideas that you want to spread that isn’t aligned with the general line. Being a polymath is quite risky. Thiel uses Laughin as an example, he said:
“Robert Laughgin was a great physicist and the professor at Standford. I mean there are all these areas you shouldn’t go into, like question climate science. But he went into an area far more dangerous than all of these. He was convinced that all the people in university were doing fake science, were wasting government money on fake research. And he started investigating other departments. He started with the biology department at Standford University. And you can imagine this ended catastrophically for professor Laughlin. His graduate students couldn’t get PHDs. He no longer gets funding. Nobel Prize in Physics, no protection whatsoever“
Thiel encourages us to explore a variety of topics and develop a thorough understanding of them. It helps us notice patterns, secrets and prepare us for unexpected events. But there’s also the other side of the coin, it carries some responsibility and courage because these kinds of people are labeled in society as dangerous or called by another negative epithet. It happens especially in highly politically corrected societies. The difference of ideas is not much appreciated, as the variety in wearing clothes.
5. Be courage
“Brilliant thinking is rare, but courage is even shorter supply than genius”
Thiel thinks that in entrepreneurship the boldness is more important than being genius. Being genius is more applicable to sciences than in entrepreneurship, where showing some backbone is required.
The difference between science and business is that the first one is based on experimentations and repetition. On the other hand, entrepreneurship, or technology in general, only focuses on perfect timing.
Every great moment of the history of technology or business happens only once, so there’s no place for repetition. That’s why you need to have the ability to show boldness.
“The next Mark Zuckerberg will not be starting a social networking company. The next Larry Page will not start a search engine. The next Bill Gates will not be starting an operating system.”
Brilliant thinking itself is not enough, it has to be supported with the courage to pursue and build your ideas, even if you don’t have it all figured out. Peter believes you should risk failure with boldness instead of moving too slowly or doing nothing.
The ideas you have should be of some kind in categories “to die for”, just like Nicolaus Copernicus believed in what we called Heliocentrism, and the founders of the USA believe that individuals are the foundation of freedom country, not the one, exalted person.
Thiel had a great influence on a lot of famous entrepreneurs. One of them who was openly speaking about it was Mark Zuckerberg. Thiel’s impact on the Facebook founder, especially in the early days of the company was undoubtedly high.
Zuckerberg in a few lectures told how Thiel’s view on entrepreneurship and running a company took him over and how he manage Facebook.
Peter believes you should risk failure with boldness instead of moving too slowly and doing nothing. This view has taken over Zuckerberg and how he runs Facebook completely. I also think this was also one of the main components of Facebook’s success.
This courage also manifests in not following other footprints and avoiding competition. Thiel notices that if you tried to copy others' success, it means you've learned nothing from them.
Thiel encourages people to be courageous to the point where you ask such uncomfortable questions and answers in such a way that the interviewer doesn't want to hear them. This approach also manifests his objection to the problem of political correctness not being properly understood.
Summary:
Being an optimist, especially about the creative shaping of the future and the ability to think independently is some kind of clamps that bind Thiel's philosophy into one coherent system. These two features are the overarching principles that show him as a person who strongly believes in the origin and sources of Western culture.
As I share Thiel's view and try to come up with some general concept that will apply to every area of our life, I found an interesting pattern: the more you innovate on your terms and avoid copying others, the better your quality of life is.
And here are the rules to remember:
Don’t fall into the trap of competition. Be careful of groupthink, and find your kind of vertical reference point.
“Make it new” - recover what was best in tradition and render it fresh.
Be skeptical of the wisdom of crowds and don’t follow conventions. The best place to looking secrets is where nobody is paying attention to.
Strive to be a polymath and look for patterns that overwrapped general aspects.
“Brilliant thinking is rare, but courage is even shorter supply than genius” - every important moment of history happens only once.
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