Peter Thiel’s Contrarian Strategy: or Why It’s Good to Be Different



I heard Peter Thiel speak at Columbia University recently about his new book Zero to One: Notes on Startups, or How to Build the Future. Thiel discussed factors that make businesses successful and focused on the importance of innovation. He cited Apple, Microsoft, Google, and Facebook as innovators because they revolutionized PCs, software, search engines, and social networking. He suggested that the next big company must offer a product or service that is one thousand times better than any product or service available to us now. A business cannot be successful if it is a “me too” company. The next big improvement should be equivalent to the progression from the telegram to email or from live theater entertainment to television.

Thiel said that all successful companies are monopolies, and he used Apple, Microsoft, Google, and Facebook as examples. All other companies, with similar products, compete with monopolies in an effort to take profits away from them. I found Thiel’s take on branding interesting.  His example was Coke and Pepsi. According to Thiel, Coke is not competing against Pepsi because Coke has a monopoly on all Coke drinkers, and Pepsi has a monopoly on all Pepsi drinkers.

For startup companies, Thiel said that it’s better to be the big fish in a small pond rather than the small fish in an ocean. The big fish has a monopoly in the pond and can use that as a “home base,” but the small fish will always have to fight for territory. So, when companies ask for a big market, they are really asking for a potential big market tomorrow.

Thiel’s point is funny to me because Warren Buffet said the same thing: buy low and sell high. When everyone else is buying you should be selling, and when everyone is selling you should be buying. The most successful people are those who think differently. They are the contrarians.

This issue connects to my concern with diversity and perspective because, if we all think the same, we will never think differently. When I taught a MBA class, I found that the confident students dominated the conversation, and the class adopted their points of view. I believe that social networks are a large contributing factor because they provide an opportunity for immediate judgment. It’s no wonder why most people don’t want to take risks: they are afraid of what other people will say. But, acting on our fear causes us to act alike, look alike, and to think alike. Consequently, the only possible outcome is that everyone will have the same ideas and will try to start the same company.

Thiel’s talk made me realize the importance of diversity, because no one will be different without it. No one will be innovative. No one will be successful. The most important lesson I took away from Thiel’s talk is that when people zig, you might want to zag.

Reprinted by permission.

Image credit: CC by Michael Pardo

About the author: Roger Wu

Roger Wu is co-founder of Cooperatize, an advertising platform for sponsored content. Previously, he founded Klickable.tv, an interactive video platform and was part of the founding team at Bloomberg Law.

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