My longtime business partner, fellow Canadian, and maverick CEO of our independent financial research firm Keith McCullough bought a bunch of copies of entrepreneur Peter Thiel’s book Zero to One and handed them out to our management team a couple of weeks ago.
Now, before I weigh in with the one important, fundamental flaw in his book, let me just say that I really enjoyed reading it—Thiel wrote a fun and insightful page-turner, filled with tales of immense entrepreneurial success, Silicon Valley insider baseball jargon and motivational life quotes.
Thiel begins his book with a question. It’s a thoughtful, rather interesting question that he normally starts every interview with job candidates or CEOs seeking financial investment:
“Tell me something that’s true, that almost nobody agrees with you on.”
In the interest of full disclosure, while I’ve never personally interviewed with him, I did apply for a job at Thiel’s hedge fund Clarium Capital many years ago, and if I were to sit down with him today, and he asked me the same question, my answer would be:
“Your book, Zero to One, is discouraging to aspiring entrepreneurs.”
Now why would I go and say that? For starters, because I believe it to be true. And based on glaring reviews from entrepreneurial notables including Mark Zuckerberg and Elon Musk, almost nobody agrees with me!
Look, I recognize and appreciate Peter Thiel’s success. Only a fool would question his business acumen, visionary insight and non-conventional thought leadership. That said, I don’t think his book is helpful to aspiring entrepreneurs. In fact, his advice can actually be discouraging and counter-productive. It encourages would-be entrepreneurs to singularly focus upon the one great, elusive, multi-billion dollar idea. Or as he calls them: “secrets.”
This is bad advice for a number of reasons. First, aspiring entrepreneurs will spend sleepless nights staring at the ceiling, racking their brain searching far and wide for the “perfect idea,” rather than just getting going on their idea. Here’s a question: Instead of trying to identify the next “grand slam” idea, what’s the problem with a “double” or “triple”?
Second, while there are only so many Facebooks, Twitters and PayPals in the world, there are plenty of other product and company ideas that fall somewhere between “working for someone else” and taking the leap of faith and initiative to do your own thing and starting a viable business. Thiel’s book discourages smaller scale entrepreneurship. What’s wrong with starting a restaurant? (See Danny Meyer).
Over the course of the last decade, I’ve been involved in a number of start-ups or turnarounds. My “day job” is Director of Research here at Hedgeye, which Huffington post recently called the ESPN of Finance. I’m an investor and board member of Sauce Hockey, which creates trendy apparel for the hockey market and recently became a part owner of the NHL’s Arizona Coyotes. I also sit on the board of FarmLead, which is North America’s only fully transparent agriculture marketplace and am an investor in FireFly Space, a revolutionary new space rocket company which is a derivative of SpaceX.
None of these companies currently boast billion-dollar valuations (although some do possess that potential down the road). Moreover, none of these companies, which have all been successful in their own right, would have ever started if the founders got hamstrung overanalyzing the uniqueness of their ideas.
As the famous quote goes:
“Twenty years from now, you will be more disappointed by the things that you didn’t do then by the ones you did do, so throw off the bowlines, sail away from the safe harbor, catch the trade winds in you sails. Explore. Dream. Discover.”
My humble advice to an aspiring entrepreneur is simple and can be summed up in three words:
Just get going.
Recognize that there is no such thing as the “perfect idea.” There never will be. And there is no perfectly uncompetitive market. There is only lost time and opportunity. Maybe you’ll hit a grand slam like Thiel or Zuckerberg. Maybe you’ll hit a double. Who cares? At a bare minimum, you’ll be in the game, on base. So again, just get going.
Having said all that (and even if I disagree with Thiel’s initial premise), he does offer some useful advice. From my own experience, here are three I would emphasize:
1) Distribution matters – This is perhaps the most critical lesson I’ve learned over the past six years. Simply put, it doesn’t matter how differentiated or proprietary your product or service is, your customers will not find it on without a cohesive sales and marketing effort. Definitely invest in a sales team.
2) Have a plan – Even though he is clearly a “big idea” type of guy, Thiel also emphasizes the importance of having a plan and measuring success against it. The plan can always change, but there has to be a benchmark for success or failure. A simple business plan (no matter how brief) with key metrics is critical to any business.
3) Cultural – Thiel calls the Silicon Valley computer science culture nerdy. Whether that is true or not, his point about knowing your partners very well and having similar backgrounds (at least when the companies are small) is critically important. When the going gets tough, and rest assured it will, it’s better to know the stuff your partners and colleagues are made of in advance.
Bottom line: Thiel’s book is well worth reading. Download a copy when you have a minute. But take it with a grain of salt and remember, there is power in action. Take your $100,000 idea, $1,000,000 idea or $1,000,000,000 idea and just get going for Pete’s sake!