Ambition in Silicon Valley:
Silicon Valley has a reputation for ambition, with young entrepreneurs seeking to change the world or create significant wealth. Over time, ambition in the Valley has evolved. The 1990s saw ambitious projects centered on technology’s transformative potential.

The Hangover from the 90s:
Many ambitious tech projects in the 90s failed due to high costs and unsustainable burn rates. PayPal, for instance, experienced a high burn rate of $10 million per month from March to September 2000. Thiel highlights that PayPal was not an extreme case, as other companies burned through even more money.

Post-Mortem of the 90s Tech Boom:
Thiel reflects on the lessons learned from the 90s tech boom. He concludes that the primary takeaway was the importance of building a great team and people.

Shift from Incremental Products:
The focus shifted from iterative A-B search for business models to small, incremental products with tiny features. This allowed for traction on small amounts of capital and gradual build-out. The emphasis was on product development rather than business development.

Reasons for the Shift:
The world outside Silicon Valley disliked Silicon Valley and its people, making business development challenging. The need for products that could roll out independently without external dependencies. This shift created companies with product-focused individuals who preferred working alone without dealing with the hostile world.

Rethinking Business Practices:
The question arises whether the exclusive focus on small, incremental changes and avoidance of future discussions is beneficial. Are these practices a reaction to failed ventures, or are they genuinely good? The emphasis on originality and creativity is deceptively hard, and people often mistake unconventional clothing for artistic talent.

Critical Mass of Talent:
The challenge in starting businesses today is building a critical mass of talented individuals. Asking pointed questions like “What great company is nobody starting?” or “Why would the 20th talented person join your company?” helps in identifying unique and valuable ventures.

Unique Businesses:
Successful businesses often address incredibly important problems that some people consider the most critical in the world. These unique businesses become leaders in their respective markets. In contrast, businesses that follow the crowd face intense competition and struggle to stand out.

Competition:
The common notion that competition is always good is questionable. Competition can lead to stagnation, as companies imitate each other’s ideas and products. True innovation and progress come from unique ideas that address real problems.

Competition vs. Capitalism:
Thiel presents an unconventional view, arguing that capitalism and competition are antonyms, not synonymous. He defines capitalism as the accumulation of capital and a competitive market as one with many entrants and competed-away profits.

Pricing Power and Profit Margins:
Thiel emphasizes the importance of pricing power and profit margins as indicators of a capitalist business. He cites Apple’s iPhone as an example of a product with significant pricing power and high profit margins, in contrast to the highly competitive restaurant and airline industries.

Intuition of Competition:
Thiel challenges the prevailing intuition that competition is always a positive force. He argues that competition can be detrimental, especially for entrepreneurs who may end up fighting over trivial matters.

Competition’s Societal Benefits:
While competition may benefit society as a whole, it may not be advantageous for individual businesses. Thiel uses the example of restaurants competing to offer good food at low prices, which benefits consumers but not restaurant owners.

Competition and Entrepreneurship:
Thiel disagrees with the notion that competition makes entrepreneurs stronger. He draws from his experience at PayPal, where he witnessed the destructive effects of competition from eBay’s attempts to create competing products.

The Most Competitive Dynamics:
Thiel questions the productivity and usefulness of the most competitive dynamics in society. He implies that many competitive struggles may be unproductive and unnecessary.

Advantages and Monopoly:
PayPal’s success was due to its significant differentiation from competitors, providing a dramatically better service. Creating a monopoly is beneficial when offering unique products or services, eliminating commodity competition.

Globalization and Competition:
Globalization’s touted benefits of increased competition may not be reassuring to individuals facing global competition from low-cost labor. The notion that competition makes individuals stronger may not hold true, leading to unnecessary struggles.

Education and Competition:
Education often promotes intense competition, creating a mindset where difficulty is equated with value. This mindset can lead to relentless competition and addiction to challenges, hindering exploration of untapped opportunities.

Addiction to Competition:
Competitive environments can foster an addiction to competition, leading individuals to believe that difficulty equates to value. This addiction can result in wasted efforts, focusing on challenges rather than pursuing untapped opportunities.

Thiel’s Personal Experience:
Thiel experienced a quarter-life crisis while working at a demanding law firm, questioning the endless competition and lack of clear progress. He realized the importance of avoiding competitive dynamics and identifying open doors that others overlook.

Rethinking Competition:
Competitive dynamics are not healthy when they become the sole focus of a situation. Finding unique and non-competitive endeavors can lead to success.

Unique Collaboration:
Peter Thiel’s partnership with Max Levchin at PayPal worked well due to their complementary skills. Overlapping goals and aspirations can foster successful partnerships.

Questioning Societal Norms:
Prestigious awards may lead to an addiction to competition rather than pursuing valuable endeavors. The pursuit of hard things may not equate to pursuing valuable things.

Hard vs. Valuable:
Hard things, like being the best restaurant in a city, may not be valuable due to intense competition and low profit margins. The fierceness of battles often correlates with low stakes, leading to intense competition for limited rewards.

Monopolies and Innovation:
Monopolies may be beneficial if they promote the development of unique technologies and innovation. Recognition and value capture for innovators can drive progress and economic growth.

Ambition and Societal Hangover:
The internet generation faces a hangover from the dot-com bubble, leading to skepticism and anxiety about ambitious ventures. Society should encourage innovation and value creation rather than focusing on competition and bubble fears.

First Mover Advantage and Land Grab Mentality:
Peter Thiel believes that the most valuable tech companies are not the first or second movers but the last movers, such as Microsoft, Google, and Facebook. He emphasizes that most of the value in tech companies is realized over many decades and that focusing on building a lasting franchise is more important than being the first to market.

Samwar Brothers and Cloning Businesses:
Thiel highlights the importance of starting businesses that cannot be easily cloned by competitors like the Samwar brothers, a German entrepreneur duo known for cloning successful business models. He suggests that businesses that are difficult to clone are more valuable and have a higher chance of long-term success.

PayPal Acquisition by eBay:
Thiel reflects on the decision to sell PayPal to eBay in 2002, acknowledging that it was a difficult choice. He explains that PayPal was heavily dependent on eBay, which posed a significant risk to their business. Thiel believes it was the right decision at the time due to the synergies between the two companies and the potential dangers of remaining independent.

Success of PayPal Alumni Companies:
Thiel points out that many former PayPal employees have gone on to found successful companies, including LinkedIn, Yelp, YouTube, Palantir Technologies, Tesla, and SpaceX. He attributes this success to the valuable lessons learned at PayPal and the entrepreneurial spirit of the PayPal Mafia.

The PayPal Mafia and Its Lessons:
Thiel acknowledges the enduring fascination with the PayPal Mafia, a group of successful entrepreneurs with PayPal roots. He emphasizes that the main takeaway from the PayPal experience is that building a great company is challenging, and most people in successful businesses often don’t know why they succeeded. Thiel suggests that it’s more important to focus on creating a valuable and enduring business than on understanding the exact reasons for success.

Lessons from PayPal:
Peter Thiel emphasizes that PayPal’s success was not due to having an exceptionally talented team compared to tech giants like Google. Thiel believes that many successful companies from PayPal learned the wrong lessons from their experiences, such as taking less risk and aiming for less ambitious goals. He highlights the importance of contrarian thinking and strong friendships among co-founders in the early stages of starting a company.

The Importance of Co-founders:
Thiel emphasizes the value of co-founders who have a long history and deep understanding of each other. He advises against starting a company with someone you just met, comparing it to getting married to the first person you meet at a slot machine in Vegas. Thiel believes that a team of five or six people with organic connections can be more effective than a larger team of strangers.

Palantir and the Role of Transparency:
Thiel explains that Palantir is a data analysis tool that leverages insights from PayPal’s fraud technology. He discusses Palantir’s use in government defense and large businesses to detect fraud and analyze data. Thiel believes that transparency is essential for addressing problems like terrorism and preventing civil liberties from being abrogated.

Sociopaths and Transparency:
Thiel argues that sociopaths and psychopaths tend to rise to leadership positions in non-transparent societies. He believes that as society becomes more transparent, it will become harder for sociopaths to manipulate and control others. Thiel views this shift as a positive development that will lead to a more just and ethical society.

Founders Fund’s Shift in Focus:
Thiel acknowledges that Founders Fund has shifted its investment focus from Web 2.0 companies to more ambitious and potentially transformative technologies. He defends Twitter as a successful business with a strong franchise but questions its long-term societal impact. Thiel emphasizes the challenge of distinguishing between specific successes and general failures in evaluating companies and investments.

Introduction:
Peter Thiel discusses the need for more businesses that can bring about significant societal change. He believes that while Twitter is doing good in certain aspects, it is not enough to drive progress. To truly improve living standards in the US, we need more businesses that challenge norms and push boundaries.

Investing in Innovative Businesses:
Thiel highlights some of the companies that Founders Fund has invested in, such as Spotify, ZocDoc, Practice Fusion, and Vodizen. He emphasizes the importance of looking beyond consumer internet businesses and exploring sectors like computers and biology, or computers and healthcare.

Contrarian Investing:
Thiel touches upon the concept of contrarian investing, which involves going against popular opinion in the hope of finding hidden opportunities. He believes that being contrarian just for the sake of it is not effective. Instead, investors should strive to be both contrarian and fundamentally right in their investment decisions.

Changing Opinions:
Thiel observes that people’s opinions have become less defined in recent times, making it difficult to be truly contrarian. He contrasts this with the dot-com bubble era, where people had strong opinions and were more likely to take contrarian positions.

Conclusion:
Thiel concludes by emphasizing the need for more people to have strong opinions and be willing to go against the grain to drive innovation and progress. He believes that by encouraging contrarian thinking and supporting businesses that challenge norms, we can create a better future.

The Education Bubble:
Thiel believes the education bubble is the only one left in society as people no longer believe in much else. Contrarianism in today’s world means thinking for oneself and having well-defined beliefs.

Education: An Investment, Consumption, or Insurance?
Thiel initially viewed education as a combination of investment (for future benefits) and consumption (enjoying the college experience). However, he now sees it primarily as an insurance product to avoid falling through societal cracks. He criticizes this insurance view as a cop-out, as it doesn’t address the underlying issues causing these societal cracks.

Education as a Tournament:
Thiel argues that education is actually a tournament where one must beat others to succeed. Top-tier school diplomas provide insurance, while diplomas from lesser schools are seen as “dunce hats in disguise.” He considers this a fraudulent insurance policy, as it doesn’t truly provide the promised protection.

Challenges for Education Startups:
Thiel emphasizes the difficulty for education startups to demonstrate their products’ superiority and to achieve effective distribution. He finds many startups lack differentiation and fail to grasp the true nature of education as an insurance policy masquerading as a tournament.

Key Considerations for Education Startups:
Thiel believes education startups should focus on providing better insurance or helping individuals win the educational tournament. He suggests that test prep courses, which help students compete in the tournament, may be effective. However, he questions the morality of startups that perpetuate the tournament system, which he views as flawed.

Ambition vs. Achievement:
Peter Thiel challenges the notion that education is primarily about learning. He argues that the reality is more about winning a competitive tournament. Sarah Lacy observed that the Teal Foundation winners, young entrepreneurs with ambitious ideas, were not taken seriously in many places.

Importance of Ambition:
Thiel questions whether the feasibility of an idea or the likelihood of its success is more important than the ambition behind it. He emphasizes the psychological impact of failure, even for unambitious ideas, and the potential for it to create a negative path dependency.

Failure and Resilience:
Thiel believes that fostering resilience and teaching people how to deal with failure is more important than preventing failure altogether. He argues that failure can be a valuable learning experience and should not be stigmatized.

The Role of Education:
Thiel suggests that education should focus on developing skills and qualities that enable individuals to navigate failure and succeed in the competitive world. He emphasizes the importance of teaching students how to think critically, solve problems, and adapt to changing circumstances.

The Value of Diverse Perspectives:
Thiel values diverse perspectives and believes that people from different backgrounds and experiences bring unique insights and solutions to challenges. He encourages embracing unconventional ideas and unconventional people, even if their ideas seem unrealistic at first.

Peter Thiel Fellowship Program:
The program provides talented individuals with two years to explore various opportunities, including starting businesses, working on non-profit projects, or collaborating with others. The program’s success threshold is set relatively low, aiming for participants to gain more experience and knowledge compared to continuing traditional college education. Mentorship and encouragement are provided, but there are no strict benchmarks or predefined expectations.

Thiel’s Perspective on Education Reform:
Thiel believes that too much money is invested in education reform with limited effectiveness. He questions the value of many new universities established in the last century. Thiel suggests that reducing funding and encouraging people to leave traditional university settings might yield better outcomes.

Focus on Talented Young Individuals:
The program targets young, talented individuals who are at a critical decision-making stage in their lives. Thiel believes that this age group often makes choices that impact their entire lives without fully comprehending the consequences. He emphasizes the importance of taking time to reflect on one’s future and avoid blindly following traditional educational paths.

Education as a Substitute for Thinking:
Thiel criticizes the education system for becoming a substitute for genuine thinking about the future. He observes that people often default to higher education without clear goals or plans. Thiel believes that this credential-focused approach prevents individuals from seriously considering their life’s purpose.

Encouraging Ambitious Projects and Productivity:
The program aims to provide participants with the opportunity to spend two years exploring and developing ambitious projects. While the success of these projects is uncertain, Thiel expects participants to engage in more productive and ambitious endeavors than they would have otherwise.

Phil Libin’s Perspective on Longevity and Value:
Phil Libin, founder of Evernote, expressed a desire for his company to last for a hundred years. This raises the question of whether technology or consumer web companies can achieve such longevity in an environment where younger companies often disrupt older ones. Thiel acknowledges that a hundred years is a long time, leaving the question of whether long-term survival should be a primary goal for companies seeking investment.

20-Year Threshold:
Thiel believes in focusing on projects with long-term impact, suggesting a 20-year threshold for true value creation.

Discounted Cash Flow Analysis:
Thiel cites a discounted cash flow analysis, indicating that 80% of a project’s value lies beyond the 10-year mark.

Individual vs. Idea:
Thiel emphasizes the significance of the individual behind an idea, as changing the person is more challenging than altering the idea.

Facebook as an Example:

When asked about the individual-idea balance in Facebook’s success, Thiel diplomatically responds, “Both.”

Focus on Young Entrepreneurs:
Thiel’s investment focus has primarily been on young individuals and their startups.

Businesses for the Over-50 Demographic:
Thiel acknowledges the growing demographic of people over 50 and sees potential in businesses targeting this group.

Healthcare IT for Seniors:
He suggests healthcare IT as a promising area for startups catering to the over-50 demographic.

Age-Based Product Targeting:
Thiel admits that he doesn’t typically consider the age of potential users when evaluating startups.

Ambition and Failure:
Peter Thiel believes that pursuing ambitious goals, even if they fail, is valuable. Trying ambitious projects can lead to significant learning, achievements, and team building. Failing at unambitious endeavors can be demotivating.

Education:
Thiel acknowledges the challenge of revolutionizing education due to its perceived importance and lack of clear business models. He suggests exploring ways to substitute credentialing processes to reduce costs.

Questions from Students:
Thiel does not have a specific most common question asked by his students. He believes that emotional maturity is important, but he does not provide specific advice.

Entrepreneurship:
Thiel asserts that there is no right or wrong age to become an entrepreneur. He emphasizes that entrepreneurship should not be the primary goal but rather a means to solve important problems. Starting a small business can be an effective way to address significant issues.

Motivations for Entrepreneurship:
Thiel emphasizes finding something important to do rather than aiming to become an entrepreneur for the sake of it. Emotional maturity and understanding people’s motivations are crucial for evaluating potential entrepreneurs.

Assessing Business Investment Opportunities:
Thiel considers a low CEO salary (less than $150,000) as a positive sign, indicating a focus on equity and the right company culture. He believes that this single question can eliminate about 98% of companies during investment evaluations.

Current Technology Bubble:
Thiel dismisses the idea of a bubble in technology, stating that valuations may vary, but there is no categorical bubble like the previous dot-com era.

Challenges in Disrupting Financial Technology:
Thiel attributes the lack of disruption in financial technology to people’s reliance on brands and the difficulty in distinguishing marketing from reality.

Startups and Career Choices:
Thiel advises people to focus on doing something they believe in and that makes sense, rather than joining or starting a startup solely for the sake of it. He highlights the potential rewards of starting one’s own company due to the power law effect, where the range of outcomes is significantly greater compared to joining a company later on.

Startup Success and Power Law Function:
Peter Thiel emphasizes that not all startups are equal. They differ radically, and their outcomes follow a power law function, where a small number of extremely successful startups drive most of the value.

Path Dependency and Life as a Random Walk:
Thiel cautions against viewing life or business as a series of A-B tests or random walks. Instead, he highlights the importance of path dependency, where choices made early on have a significant impact on future outcomes.

Learning from Joining Another Company:
Thiel stresses that the value of joining another company for learning depends on the specific company and the lessons learned. Joining the wrong company can lead to learning incorrect lessons.

Mediocre Superpowers:
Sarah Lacy proposes the concept of a mediocre superpower, which is a hypothetical ability that would provide a minor convenience or advantage.

Examples of Mediocre Superpowers:
Lacy suggests examples of mediocre superpowers, such as the ability to never feel cold getting out of the shower or the ability to clean a room while sleeping.

Teleportation for Punctuality:
Lacy humorously suggests the ability to teleport to the office when running late for a meeting, acknowledging Thiel’s occasional tardiness.

Announcement of Next Guest:
Lacy announces the next guest for the event series, Dustin Moskowitz, co-founder of Facebook and founder of Asana. The event will take place on May 3rd, and ticket sales will open soon.

Call to Action:
Lacy encourages attendees to stay, enjoy the refreshments, network with others, and potentially find their next co-founder.