• Apply To Contribute To AlleyWatch
    • Write for AlleyWatch
  • Tell Us About Your Startup
  • Email Signup
  • Advertise on AlleyWatch
AlleyWatch
  • Business
  • Startups
  • Funding
  • Women in Tech
  • NYC Tech
No Result
View All Result
  • Business
  • Startups
  • Funding
  • Women in Tech
  • NYC Tech
No Result
View All Result
AlleyWatch
No Result
View All Result
Home Resources Advice

Contrarian Thinking for Startups: Lessons from Peter Thiel

Mike Chan by Mike Chan
Contrarian Thinking for Startups: Lessons from Peter Thiel
Share on FacebookShare on Twitter

7508872140_e908861a82_z

I recently finished reading Peter Thiel’s book, Zero to One: Notes on Startups, or How to Build the Future, and it’s a must-read for anyone working on a startup or any product in general.

Peter Thiel was the founder of PayPal, co-founder of Palantir, an early investor in Facebook, and runs Founders Fund, an early-stage venture capital firm. Needless to say, the dude knows his stuff when it comes to startups.

His viewpoint is quite contrarian to mainstream thinking, which is a big factor in why he is so successful. Some interesting questions and points that Thiel makes in his book include:

  1. What important truth do very few people agree with you on?
  2. What valuable business is nobody building?
  3. Competition should be avoided.

Let’s dig into each of these a bit more.

What important truth do very few people agree with you on?

The most contrarian question of all is likely the hardest to answer. The point isn’t to purposely think the opposite of what the crowd thinks. Rather, it’s to understand how you can think for yourself and be different than everyone else.

I think Pandora is a great example of this. Back in the early to mid 2000s, iPods and MP3 players were ubiquitous and Apple was reinventing music with iTunes. Who would have thought then that people wanted to just listen to music streamed to your computer that some algorithm had selected?

What valuable business is nobody building?

This is the business version of the first question. If you can answer question #1 and build a valuable business out of it, you’re going to be successful.

The key word Thiel highlights here is “valuable.” In order to build a valuable business, you need to both provide and capture value.

Let’s go back to the Pandora example. While the company certainly created value for its users, whether it could capture any value was in doubt for a long time. High music royalty fees nearly toppled the company, but Pandora was able to strike deals to pay musicians fairly and sell enough advertising to capture value. It’s now a thriving public business, pulling in over $239 million in revenue in the 3rd quarter of 2014.

Competition should be avoided.

This tenet is directly related to a business’ ability to capture value.

Thiel compares the airline and search industries to make his point. Airlines, like United and American, provide a lot of value (they move many people from place to place) but captures very little (they make a paltry margin, if any). Google, on the other hand, creates much less value but captures much more (it’s worth 3x more than all the airlines combined). And the reason for that is that they’ve basically achieved a monopoly in search.

For startups, competition sometimes is considered to be a good thing, as it sort of validates your concept and shows that the customer demand for your product is high enough for other companies to want to build it.

Apparently, Thiel is thinking contrarily, once again.

If you found this recap interesting, you’ll certainly want to pick up the book and read it in its entirety. For anyone interested in products, startups, or just a different way of looking at things, it’s a quick and worthwhile read.

This article was originally posted on MikewChan.

Image credit: DonkeyHotey

Previous Post

6 Habits of Highly Successful Founders From An Angel Investor

Next Post

Why Your Brand Should Be in the Moment

Next Post
Why Your Brand Should Be in the Moment

Why Your Brand Should Be in the Moment

ABOUT ALLEYWATCH

ABOUT US
ADVERTISE
EDITORIAL GUIDELINES
LEGAL
PRIVACY
TERMS OF USE

CONTACT

CONTACT US
ADVERTISE
TIPS
WRITE FOR US

CHANNELS

NYC VC
NYC TECH EVENTS
NYC TECH NEWS
NYC STARTUPS
NYC COWORKING
TECH DIRECTORY

© 2023 AlleyWatch | All Rights Reserved | Proudly Made for NYC

No Result
View All Result
  • Home
  • Startups
  • Funding
  • AlleyTalk

© 2023 AlleyWatch | All Rights Reserved | Proudly Made for NYC

You are seconds away from signing up for the hottest list in New York Tech!

Join the millions and keep up with the stories shaping entrepreneurship. Sign up today.

Close this popup