Tech Entrepreneurship by Peter Thiel

Intensive vs. Extensive Tech Entrepreneur

He spent a bunch of time comparing these two types of innovation.  Intensive is building something new and truly innovative.  An example would be the Macintosh or Paypal – both blazed a trail to create something that had never been created before.  It’s carries a higher risk of failure but also greater rewards.  Extensive is building on ideas which are already in place.  It can be  a safer way to build a company, but not as lucrative.  An example would be putting accounting software online.  Or doing another social network.

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  Tech Entrepreneurship by Peter Thiel

• China
  He compared China and the U.S. saying that China’s next 20 years of growth are clearly extensive.  They can simply copy the model which is the U.S. and grow rapidly (build this many airports, this many steel mills, etc).  The U.S. can’t afford to do that and has the much harder job of pursuing intensive growth.  We can’t just make more doctors, lawyers, bankers, and houses.  To grow we need to build stuff the world has never seen (technology).

• There is a lack of focus on intensive innovation
  It was clear from his talk that intensive is where he’d like to see more focus in the U.S.  Especially Silicon Valley is full of too many people copying old ideas, and not breaking new ground.  He said this field of tech startups (their current generation) feels saturated and there are too many people making clones, or investing in poor ideas.

• The car industry 1920 – 1960
  The 1920′s saw a boom in automotive  with 300 U.S. car companies.  By 1960 there were only three.  This boom and consolidation is a natural cycle with new industries.  He said the internet and web companies aren’t quite to 1960 yet, but we certainly aren’t in 1920 any more.  He feels while there will certainly be successful web companies started in the next 10 years, but more and more of the profits will go toward the established players (Google, Facebook, Amazon, etc).

• Emerging Categories
  So if the web is maturing, where should entrepreneurs focus?  He said there is a boom yet to come in a number of emerging industries – artificial intelligence, bio-tech, energy, space stuff, etc.  But this isn’t the right way to think about it – don’t think in categories.  Think about something you are passionate about or something that would be cool & useful – then build that.  The passion is what’s important, not the category.

• Mobile is not the next big thing
  Internet was a big thing because established media companies (New York Times, Disney) could not make the jump.  It was just too different for them to adapt.  This left the field wide open for startups.  But he thinks mobile internet is similar enough to other internet that todays companies will make the jump.  The #1 social network on mobile will be Facebook, the #1 ad network on mobile will be Google, mobile payments on Paypal, and on down the line.

• CEO Salary = best predictor of success
  If CEO makes < $120k  he likes their chances.  If CEO makes > $160k he doesn’t like their chances.  When management is working for equity, incentives are aligned.

• Redundancy = Conflict
  People and relationships (investors, employees, etc) were the hardest problem for him and where he made the most mistakes.  One thing he learned, many sources of problems come from two people (experts) working on the same thing.  So find people with complementing skills and don’t duplicate people’s skills.  Redundancy will lead to conflict.

• Go where there isn’t competition
  Everyone is doing web startups now.  Go work on quantum computing – you will have almost zero competition.  Key to success: you’re passionate about it, few others are working on it, and it matters if you solve it.

• Social Entrepreneurship Doesn’t Work
  Somebody asked about social entrepreneurship.  He gave a candid answer: he doesn’t believe in it.  He said non-profits can be excellent, and for-profits can be excellent.  The intersection is small.  If there are starving kids in Africa, there is no profitable business there – you just need to get them food.  (Interesting I wrote something similar a while back.)

It was thought provoking overall.  I’ve got 3 business ideas I’d like to bounce off him given the opportunity, but he got bum rushed after the talk.  Peter – if you’re reading this message me, would love to do a quick call.

What do you think?  Agree or disagree on the state of tech entrepreneurship?