Peter Thiel and Silicon Valley’s Obsession with Superficial Thinking

October 06, 2014

Aaron Timms

It’s all too easy to caricature Peter Thiel. But in his new book, Zero to One: Notes on Startups, or How to Build the Future, the fabled Silicon Valley investor offers so many startlingly original and fresh ways to parody his own personality that he almost entirely removes the need for anyone else to do it. We see Thiel, from the very first page, describing his preferred job interview strategy: “Whenever I interview someone for a job, I like to ask this question: ‘What important truth do very few people agree with you on?’” Later chapters give us Thiel the macroeconomist, Thiel the political scientist (China, we are confidently informed, is a “definite pessimistic” power, the U.S. a “definite optimistic” one), Thiel the philosopher (Marx and Hegel beat Nozick and Rawls, apparently), Thiel the ethnographer, Thiel the amateur historian of infrastructure development, Thiel the pop culture critic. All of this is pressed through prose at once peppy and WASPish, and sprinkled with passages of Shakespeare and knowingly geeky references to J.R.R. Tolkien. Is there anything Peter Thiel can’t do?

To be fair, there’s much to admire in Thiel’s intellectual ambitiousness; if anything, we need more people like him, willing to ruminate pompously on the world around us and the shape of humanity’s future. But what are we to make of the substance of his ideas? The basis of Zero to One was a class on start-ups that Thiel taught at Stanford University in 2012. His task in the book is to get people thinking about how business might help shape the future, and what it takes to build truly lasting, generation-defining technologies and companies. These are admirable aims and deserve to be taken seriously, and there’s little doubt that Thiel speaks from a vantage of no small experience: He co-founded PayPal in the late 1990s and later went on to burnish his credentials as a Silicon Valley somebody by becoming the first outside investor in Facebook. His VC firm, Founders Fund, has backed a string of successful start-ups, including Airbnb, Spotify, ZocDoc and Oculus. The résumé is not to be sniffed at.

In Zero to One, Thiel argues that the best business ideas are ones that rely on a secret about physical or human nature that the rest of the world is unaware of. He also maintains a fast distinction between monopoly capitalism and competition. Start-ups should aim to build creative monopolies and avoid competition altogether: The best ones, in other words, escape competition because they invent a market that is completely new. “What valuable company is nobody building?” Thiel asks rhetorically. If the task for would-be entrepreneurs is to find new ways to “create value,” that seems like a good place to start.

Elsewhere there are strong and even deliberately entertaining takedowns of the conventional educational system and what Thiel perceives as the “indefiniteness” of finance, in which a creed of investment diversification, he claims, reveals nothing except that no one in the financial industry has any clue what to do with money in the real world. But eventually the book succumbs to its own contradictions, becoming little more than a paean to flexible thinking offered up in the form of crudely reductive generalizations (technology good, globalization bad). Zero to One’s quasi-scientific intellectual ancestry probably owes less to Einstein and Shakespeare, whom Thiel loves, and more to Flaubert’s Bouvard and Pécuchet.

The inconsistencies begin with the foundational irony of the medium Thiel has chosen to explain his world philosophy — a treatise on innovation written in the world’s least innovative format, the hardcover book — and extend to many of Zero to One’s most certain claims. Thiel argues, for example, that when it comes to designing a truly revolutionary start-up, it’s more important to be a last mover than a first mover: “The last will be the first,” he intones, Voldemort-like. But how many of the companies he lionizes, such as Tesla Motors and Facebook, could legitimately claim to fit that description? Thiel pours scorn on start-ups that aim to play in a competitive market, but one of the central questions he claims all ventures eventually need to answer (“Will your market position be defensible in ten or 20 years?”) is premised on the very inevitability of competition. We hear a withering and compelling critique of the post-dot-com-bubble mantra of incremental advances, but in the arena of the Energy 2.0 revolution that, Thiel claims, is still on the horizon, companies should “think small.”

Even the critique of traditional secondary and tertiary education looks flimsy or disingenuous in the face of all those cascading, show-offy Shakespearean quotes: What better represents Establishment learning than a Hamlet soliloquy? (At the same time, it’s hard not to have some admiration for a business book that reserves a place for iambic pentameter.) And it’s interesting, to say the least, that pretty much every biography of every staff member on the Founders Fund web site concludes with a routine nod to higher education qualifications, the conventional imprimatur of intellectual excellence.

There’s also a vague strain of biological determinism at work through much of the book, especially when it comes to describing the special alchemy of a good start-up founding team. With the zeal of a 19th century phrenologist, Thiel draws up a statistical distribution to schematize the typical character traits of a successful start-up founder. This puts Zero to One in a strange position of challenging would-be entrepreneurs to think creatively about the world around them but suggesting, in the same breath, that unless they fit an ideal personality type, they are doomed to failure. People are surprising, Thiel wants us to believe, and they can surprise by making a success of a strange business idea — but only if they exhibit the characteristics of the charismatic but nerdy idiot savant self-contradictory insider-outsider who fits his ideal type of a good start-up founder. People are successful, in other words, if they look like people who’ve already been successful.

There’s no openness to genuine surprise in the world Thiel describes. At one point he recalls the early PayPal rule of rejecting anyone who turned up for a job interview in a suit. (There’s no way someone in a tie could be anything but a jerk.) That, surely, is the opposite of creative thinking; indeed, it’s the very definition of closed-mindedness.

These disappointments, perhaps, are inevitable when expectations are set vertiginously high, as they are in the case of Zero to One. Thiel is widely fêted as a seer and a visionary for his associations with PayPal and Facebook. But the concluding nugget of wisdom he imparts in Zero to One is to “think for yourself” — possibly the oldest banal bit of advice in corporate history. Thiel wants to style himself a contrarian, but all too often his targets are the easiest ones, especially when it comes to start-ups: Groupon, Zynga, The groupthink is at its most unbridled in the way he eviscerates failed companies financed during the cleantech bubble of the mid- to late 2000s. Anyone can call a fool a fool in retrospect, but when it comes to figuring out what the successful clean technologies of the future might look like, Thiel is bafflingly vague. “You could aim to replace diesel as a power source for remote islands,” he suggests. Could I? Okay, then, Peter, I will.

Facebook CEO Mark Zuckerberg claims on the jacket blurb that the book “offers completely new and refreshing ideas.” To some degree it does, but Thiel’s answer to the question he starts with (What important truth do very few people agree with you on?) best reveals the holes in his ambition to originality: “My own answer to the contrarian question is that most people think the future of the world will be defined by globalization, but the truth is that technology matters more.” A technology investor who believes in the power of technology — what a novel concept.

Perhaps, in the end, Thiel is less interesting as a thinker about investment than as an unwitting reflection of the early-stage investment world’s thirst for superficially attractive thinking. That kind of thinking can work as long as its focus is trained on the core activity of investing, and the investments it leads to are successful (a condition that many VC firms, of course, fail to meet). But this is a work of prose and deserves to be judged as prose. If there’s a bubble building in innovation-speak in Silicon Valley today, Thiel is right out front, leading it to its peak.

Follow Aaron Timms on Twitter at @aarontimms.

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