How Peter Thiel Knows If A Startup Is Crazy Smart, Or Just Crazy | Disrupt SF 2014
TLDRPeter Thiel, a prominent figure in the tech industry and co-founder of Founders Fund, shares his insights on distinguishing between innovative ideas that may initially seem crazy and those that are simply unrealistic. Thiel emphasizes the importance of evaluating the substance of a startup's technology, the history and resilience of its founders, and their ability to persevere through challenges. He also discusses the unique perspective of tech entrepreneurs regarding wealth and philanthropy, suggesting that the rapid accumulation of wealth in the tech world often leads to a sense of responsibility to give back. Thiel advocates for contrarian thinking in philanthropy, encouraging support for unpopular yet deserving causes. He concludes by urging tech founders to be courageous in their philanthropic efforts, mirroring the bravery they exhibited when founding their companies.
Takeaways
- 🚀 **Innovation and Risk**: Peter Thiel emphasizes the importance of evaluating the substance of an idea rather than relying on preconceived notions of what can or cannot work.
- 🤝 **Team Dynamics**: He stresses the significance of the founders' history and their ability to work together, which is crucial for the startup's success.
- 💡 **Long-term Vision**: Thiel suggests that when considering an idea, it's important to understand the entrepreneur's philosophy and long-term vision and their likelihood of achieving it.
- 🧐 **Avoiding Bias**: He advises against making quick yes or no decisions and recommends maintaining an open mind to understand the core of the idea.
- 🤖 **Technology Focus**: Thiel discusses the importance of technology, people, and business strategy, stating that all three must work together for a startup to succeed.
- 🌊 **Philanthropy in Tech**: He believes that philanthropy should be rethought and that tech entrepreneurs should be courageous in their giving, similar to how they are in starting a company.
- 💼 **Value Creation and Capture**: Thiel points out that in the tech industry, inventors are often able to capture some value from their inventions, which is unusual historically.
- 💰 **Wealth and Responsibility**: He suggests that tech entrepreneurs feel a sense of responsibility to give back to society, possibly due to the rapid nature of wealth accumulation in the tech world.
- 🌟 **Unpopular Causes**: Thiel encourages supporting unpopular causes, as they are often underfunded and could benefit greatly from additional support.
- 🌱 **Rethinking Philanthropy**: He believes that the tech industry offers a unique opportunity for philanthropy, as it has created a class of wealthy individuals who are the actual inventors.
- ⚖️ **Ethical Wealth**: Thiel reflects on the ethical aspect of wealth accumulation in tech, noting that inventors often feel that their wealth belongs to the world and should be shared.
Q & A
How does Peter Thiel determine if a startup idea is 'crazy smart' or just 'crazy'?
-Peter Thiel evaluates the substance of the idea, asking questions about the technology's viability, the prehistory of the founders, and their resilience in the face of challenges. He emphasizes avoiding biases and focusing on understanding the core of the idea rather than making a quick yes or no decision.
What are the three key components Thiel considers when evaluating a startup?
-Thiel considers the team, technology, and business strategy as the three key components that must all work together for a startup to be successful.
What is Thiel's perspective on the philosophy of the 'new rich' emerging from the technology scene?
-Thiel believes there is a different value system among those who become wealthy from technology, as compared to traditional industries. He sees technology as a generally positive force and suggests that those who rapidly accumulate wealth through tech may feel a sense of responsibility to give back to society.
How does Thiel feel about the concept of philanthropy in the context of the tech industry?
-Thiel thinks philanthropy should be rethought and encourages contrarian thinking, such as supporting unpopular causes that may not receive as much funding. He believes in being courageous in philanthropy, similar to the courage it takes to start a company.
What does Thiel suggest about the mindset of individuals who rapidly become wealthy in technology?
-Thiel suggests that those who quickly become wealthy in tech might feel that their wealth is somewhat owed to the world due to the random nature of success in the industry. This could lead to a perspective that it is better to give away a portion of their wealth.
What is Thiel's view on the inventors in the tech industry and their financial success?
-Thiel notes that historically, most inventors do not capture the value they create. However, in Silicon Valley, there is a unique class of inventors who are able to capture some of the value, which he sees as a positive development.
What is the importance of capturing value in the context of innovation, according to Thiel?
-Thiel states that to make money, one must create something of value for the world and then capture a fraction of that value. Often, people fail at the second part, but in Silicon Valley, many have succeeded, which is unusual.
How does Thiel approach the evaluation of a startup's technology?
-Thiel focuses on whether the technology works and asks detailed questions about its prehistory. He emphasizes the importance of understanding the technology's foundation and the founders' commitment to it.
What does Thiel mean by 'courageous philanthropy'?
-By 'courageous philanthropy,' Thiel is encouraging individuals to make bold and unconventional choices in their charitable giving, similar to the risks they took when starting their companies.
What is Thiel's opinion on the distribution of wealth among tech innovators?
-Thiel believes that the distribution of wealth in the tech industry is unique, with many inventors capturing value they create. He suggests that this is not the norm historically, where most inventors do not get rich from their inventions.
How does Thiel perceive the role of the 'giving pledge' among tech millionaires and billionaires?
-Thiel views the 'giving pledge' as a way for tech entrepreneurs to give back to society, reflecting a sense of responsibility and a desire to contribute positively to the world.
What is Thiel's advice for entrepreneurs when pitching their startup idea?
-Thiel advises entrepreneurs to be prepared to discuss their team, technology, and business strategy in detail. He also encourages them to be open-minded and to engage in a thorough discussion that goes beyond a simple yes or no decision.
Outlines
🚀 Choosing the Right Startups: Substance Over Flash
In this first paragraph, Josh Constine from TechCrunch Disrupt SF interviews Peter Thiel, discussing the challenge of identifying potentially successful companies that may initially seem outlandish. Thiel emphasizes the importance of evaluating the substance of a startup's technology and the founders' history and resilience. He also touches on the avoidance of biases and the need to maintain an open mind, focusing on the team's ability to execute a solid business strategy alongside the technology. Thiel further explores the philosophy behind the 'new rich' in the tech industry, contrasting it with traditional wealth accumulation, and suggests that tech entrepreneurs often feel a responsibility to give back to society, as their success can feel somewhat accidental or undeserved due to the rapid nature of tech wealth creation.
💰 Philanthropy and the Tech Industry's Unique Value
The second paragraph continues the conversation with Peter Thiel, focusing on the unique perspective of tech entrepreneurs regarding wealth and philanthropy. Thiel suggests that tech innovators often feel a strong desire to contribute positively to society, advocating for courageous philanthropy similar to the boldness required when starting a company. He also discusses the unusual nature of the tech industry, where inventors are able to capture some of the value they create, which contrasts with historical patterns where inventors often did not benefit financially from their innovations. Thiel concludes by encouraging tech founders, who have made fortunes by creating globally desired products, to strive to make a meaningful difference in the world.
Mindmap
Keywords
💡Crazy Smart
💡Founders Fund
💡Substance over Process
💡Philanthropy
💡Contrarian Question
💡Technology Scene
💡Giving Pledge
💡Innovation
💡Value Capture
💡Courageous Philanthropy
💡Unpopular Causes
Highlights
Peter Thiel discusses the importance of choosing companies that may seem crazy at first, as they represent untapped ideas.
Evaluating the substance of a startup involves assessing the technology, the founders' prehistory, and their resilience.
Thiel emphasizes avoiding biases and not rushing to a yes or no decision, instead seeking a deep understanding of the startup's substance.
The key components to consider in a startup are the team, technology, and business strategy.
Thiel's philosophy involves asking contrarian questions to identify overlooked opportunities and causes.
He believes in the positive impact of technology and the potential for philanthropy to address underfunded causes.
Thiel suggests that the rapid wealth accumulation in tech can lead to a perspective of wealth as belonging to the world rather than just the individual.
He differentiates between the tech industry and traditional industries in terms of the inventors capturing value from their innovations.
Thiel notes that historically, most inventors do not reap financial rewards from their inventions.
He points out the unusual nature of Silicon Valley, where inventors are able to capture some value from their creations.
Thiel encourages founders who have made fortunes to make a positive difference in the world through their philanthropy.
He advocates for courageous philanthropy, mirroring the bravery taken when starting a company.
Thiel reflects on the responsibility of tech entrepreneurs who have rapidly become wealthy to give back to society.
He discusses the concept of the 'giving pledge' and the philosophy behind making significant donations.
Thiel believes that tech entrepreneurs generally feel they deserve their wealth but also want to contribute to societal improvement.
The interview concludes with Thiel's encouragement for entrepreneurs to be brave and make impactful donations.