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 founder of Founders Fund and Mithril Capital, shares his insights on identifying potentially successful startups that may initially seem outlandish. Thiel emphasizes the importance of evaluating the substance of an idea, considering the technology's viability, the founders' background, and their perseverance. He also discusses the unique value system of the new wealthy in the tech scene, suggesting that they have a different approach to philanthropy and wealth distribution. Thiel encourages entrepreneurs and philanthropists alike to be courageous, innovative, and to seek out causes that are less popular but deserving of support. He reflects on the rapid wealth accumulation in the tech industry and the responsibility that comes with it, advocating for a thoughtful approach to giving back to society.
Takeaways
- 🚀 **Innovation and Risk**: Peter Thiel emphasizes the importance of choosing companies with ideas that may seem crazy to the average person, as these are the ones less likely to have been pursued.
- 🤔 **Evaluating Substance**: To determine if a startup is 'crazy smart' or just 'crazy', Thiel suggests evaluating the substance of the idea, including the technology's viability and the founders' prehistory and resilience.
- 🧐 **Avoiding Bias**: Thiel advises against coming into an evaluation with preconceived biases about what can or can't work, to maintain an open mind and focus on the substance.
- 🤝 **Team Dynamics**: He highlights the significance of the team behind the technology, their experience working together, and their commitment level.
- 💡 **Long-Term Vision**: Thiel discusses the necessity of understanding an entrepreneur's philosophy and long-term vision, and the likelihood of their success.
- 💼 **Business Strategy**: Along with technology and team, a solid business strategy is crucial for a startup's success.
- 🌊 **Philanthropy and Tech Wealth**: Thiel talks about the different value systems among tech entrepreneurs compared to those from traditional industries and the role of philanthropy.
- 💭 **Contrarian Thinking**: He encourages contrarian thinking, asking why certain causes are unpopular and considering their value for support.
- 💰 **Wealth and Responsibility**: Thiel reflects on the rapid wealth accumulation in tech and the feeling that such wealth may not entirely belong to the individual but should be given back to society.
- 🎓 **Inventors and Value Capture**: He points out the unusual nature of the tech industry where inventors often capture value from their inventions, differing from historical norms.
- ❤️ **Courageous Philanthropy**: Thiel concludes by advocating for courageous and impactful philanthropy, similar to the boldness required when starting a company.
Q & A
How does Peter Thiel decide if a startup idea is genuinely innovative or just unrealistic?
-Peter Thiel evaluates the substance of a startup idea by assessing if the technology works, considering the prehistory and commitment of the founders, and avoiding biases that might cloud judgment. He emphasizes understanding the core of the idea and not rushing to a yes or no decision.
What are the three critical components Peter Thiel believes need to align for a startup to succeed?
-The three critical components are the team, technology, and business strategy. All three must work in harmony for a startup to be successful.
What is Peter Thiel's approach to understanding the long-term vision and philosophy of an entrepreneur?
-Thiel suggests asking about the entrepreneur's long-term vision and philosophy, and gauging their likelihood of success by considering their commitment and the potential of their idea.
How does Peter Thiel perceive the value system of people becoming wealthy from the technology scene?
-Thiel believes there is a difference in the value system of those who become wealthy through technology compared to traditional industries. He sees technology as generally positive and believes that those who make money in tech have a different perspective, often wanting to solve problems themselves rather than waiting for others.
What does Peter Thiel think about the concept of philanthropy in the tech industry?
-Thiel believes philanthropy should be rethought and encourages contrarian thinking. He prefers supporting unpopular causes that are underfunded and questions why causes become unpopular.
How does Peter Thiel view the rapid wealth accumulation in the technology world?
-Thiel acknowledges that the speed at which people can become wealthy in technology can feel random and undeserved. He suggests that those who have rapidly accumulated wealth might feel a responsibility to give back to society.
What is Peter Thiel's perspective on the inventors capturing value in Silicon Valley?
-Thiel notes that historically, most inventors have not captured the value they created. However, in Silicon Valley, there is a unique situation where inventors are able to capture some of the value, which he sees as a positive development.
Why does Peter Thiel encourage philanthropists to be courageous in their giving?
-Thiel believes that philanthropy should mirror the courage shown when starting a company. He encourages taking risks and being brave in philanthropic efforts to make a significant impact.
What does Peter Thiel suggest is the key to making a real difference with philanthropy?
-Thiel suggests that philanthropists should aim to make a difference in a way that is not just for status or in a respectable manner. The goal should be to have a real, meaningful impact on the world.
How does Peter Thiel differentiate between 'crazy smart' and 'just crazy' when evaluating startup ideas?
-Thiel differentiates by evaluating the substance of the idea, the technology's viability, the founders' history and resilience, and by maintaining an open mind to avoid preconceived biases.
What role does the founder's background play in Peter Thiel's evaluation of a startup?
-The founder's background is important as it provides insight into their ability to work together, their history in the field, and their resilience in the face of challenges.
What is Peter Thiel's view on the importance of creating value and capturing value in the context of innovation?
-Thiel emphasizes that to be successful, one must create something of value for the world and also capture a fraction of that value. He notes that often, inventors fail to do the latter, but in Silicon Valley, there is a unique opportunity for inventors to capture value.
Outlines
🤔 Evaluating Innovative Ideas: Substance Over Shortcuts
In this paragraph, Josh Constant from TechCrunch Disrupt SF interviews Peter Thiel, discussing the process of identifying and evaluating potentially successful companies that may initially seem 'crazy' to the average person. Thiel emphasizes the importance of focusing on the substance of an idea, asking questions about the technology's viability, the founders' prehistory, and their resilience. He advises against making quick judgments and encourages a deep understanding of the idea's potential. Thiel also touches on his philosophy regarding the new rich in the technology scene, suggesting a different value system compared to traditional industries. He believes in the positive impact of technology and the importance of rethinking philanthropy, advocating for supporting unpopular causes that may be underfunded but are deserving.
💼 Tech Wealth and Philanthropy: A New Perspective
The second paragraph continues the conversation with Peter Thiel as he shares his views on the rapid wealth accumulation in the tech industry and the philosophy behind giving back. Thiel suggests that the speed at which tech entrepreneurs can amass wealth can lead to a feeling that the money doesn't fully belong to them, but rather to the world. He contrasts this with individuals from more traditional, hierarchical industries who may feel a stronger sense of ownership over their wealth after years of work. Thiel also discusses the unusual nature of the tech industry, where inventors often capture value from their innovations, which historically has not been the case. He concludes by encouraging tech founders who have made fortunes to make a difference in the world through courageous philanthropy, not just in a respectable manner but by taking bold steps in their charitable efforts.
Mindmap
Keywords
💡Crazy Smart
💡Founders Fund
💡Substance over Process
💡Long-term Vision
💡Philanthropy
💡Contrarian Question
💡Giving Pledge
💡Innovation
💡Value Creation
💡Courageous Philanthropy
💡Tech Industry
Highlights
Peter Thiel emphasizes evaluating the substance of a startup idea to determine if it's 'crazy smart' or just 'crazy'.
Thiel discusses the importance of asking about the technology, founders' prehistory, and their perseverance.
He advises avoiding biases and not rushing to a yes or no decision, instead taking time to understand the core idea.
Focus should be on the team, technology, and business strategy, ensuring all three work harmoniously.
Thiel's philosophy includes a contrarian approach to philanthropy, seeking to support unpopular causes.
He questions why a cause is unpopular and seeks to fund those that are less likely to receive support.
Thiel reflects on the rapid wealth accumulation in the tech industry and the feeling of a responsibility to give back.
He differentiates between wealth made in technology versus traditional industries, suggesting a different value system.
Thiel believes that inventors in the tech industry are unusually able to capture value from their inventions.
He encourages tech founders who have made fortunes to make a difference in the world.
Thiel suggests that tech entrepreneurs should be courageous in their philanthropy, mirroring their startup ventures.
He highlights the unusual nature of Silicon Valley where inventors capture value, contrasting with historical norms.
Thiel discusses the concept of the 'giving pledge' and the philosophy behind significant donations by the wealthy.
He considers the ethical perspective of those who feel they don't fully deserve their rapidly acquired wealth.
Thiel shares his view on the importance of creating value for the world and capturing a fraction of that value.
He concludes by advocating for a brave and impactful approach to philanthropy, aligning with the spirit of tech entrepreneurship.