An Introduction
The famous book written by PayPal co-founder and billionaire entrepreneur Peter Thiel in 2014, Zero to One, encompasses various anecdotes and opinions from his interesting experiences as a startup founder. This is a commentary limited to chapters 6 to 7, since the book has numerous topics throughout the book despite being a relatively easy read. As a disclaimer, this is not a review of Zero to One itself, but my personal take on some of the topics that Thiel introduces.
Zero to One, Chapter: 6 In Depth
"Success is never accidental" - Jack Dorsey tweeted. In the beginning of chapter 6, Peter Thiel defends his tweet and then agrees with him: "Most of the replies were unambiguously negative. Referencing the tweet in The Atlantic, reporter Alexis Madrigal wrote that his instinct was to reply: “ ‘Success is never accidental,’ said all multimillionaire white men. It’s true that already successful people have an easier time doing new things, whether due to their networks, wealth, or experience. But perhaps we’ve become too quick to dismiss anyone who claims to have succeeded according to plan."
Is Thiel perhaps referencing this? https://twitter.com/jack/status/295280990836891648 Since it is coming from someone who prides himself on “contrarian ideas”, it is strange to find that the whole idea that Thiel purports is rare (“Success is never accidental”) is not only an elementary viewpoint, but the “negative” replies are blown out of proportion: even a quick scan shows just as many people who agree with him as disagree. I’m not even a statistician but all I can see is pure indifference from Twitter’s denizens, despite Thiel’s claim of their “unambiguously negative” response. Where is that?
Now I don’t know what the stat ratio looked like back then, when Dorsey first wrote this mind-blowing bombshell of a tweet, but the stats don’t lie: 726 retweets, 13 quote tweets, 447 likes. People didn’t care enough to like or dislike this tweet because it is not relevant to any current events (besides a half-brag of his success), and because it does not add anything new or special to Twitter. “The Atlantic'' doesn't really have much say in public opinion besides the opinion of the columnist. So all that is left is an overly attached and needlessly defensive attitude towards Dorsey’s half-brag from some “negative” response that doesn’t exist. Now to the claim Dorsey makes: is it true?
In Thiel’s viewpoint, there is no way to tell whether it is truly by chance that the biggest companies, like Facebook, rise above the rest because one would have to experiment in different "copies of the world”. He resolves the question with his opinion that “each company has unique circumstances that cannot be reproduced". However, this point sounds a bit funny because earlier in Zero to One, Thiel states that these companies had something that the competition didn’t in the first place; if the biggest monopolies became so because their company was actually producing products “better than anyone else” then how would it change in different “ copies of the world”. Sounds to me like Thiel is saying that it wasn’t superior products, or any 7 questions (refer to chapter 13), or anything other than luck that makes monopolies big. By his own admission, those “unique circumstances”— or luck in clearer words— played a bigger role than any “technological progress” or “creative monopolies” or “10x better products” could possibly play. Thus we arrive at a self-contradiction on Thiel’s part.
Another foible: “If you believe your life is mainly a matter of chance, why read this book? Learning about startups is worthless if you’re just reading stories about people who won the lottery. “
Incorrect, and I’m unimpressed. Luck is something that definitely plays a massive role in success, it is just that those who put themselves in luck’s path (i.e. follow the lucky signs, formulated from experience, observation and trial-and-error) have the biggest chances in getting lucky. Jack Dorsey could have failed with his business endeavors had he not had the combination of his experience and observation of the industry, and the luck to attract investors, people, and the right teammates to get the work done. Additionally, Twitter could have lost the edge to a faster competitor if it had not been seen by the right people in time: investors who become shareholders, media who provide attention, consumers who provide clicks, and so on. The fact is that luck and hard work play hand in hand; there is a lottery to be won, and there are those who are good at winning it. One can’t claim it all on luck, nor can they claim it all on hard work: either way they are being too generous to chance or themselves. If one never went to a NBA basketball game they will have never had the chance to make a $40,000 half-court money-winning shot, but if they do, their chances go up infinitely. This answers the claim that “success is never accidental”, and also answers the question, “why read this book,” as well. A successful entrepreneur works based on experience, observation, and trial-and-error, so when luck comes they are in the right place.
In the course of the next few sections of the chapter, Thiel details the differences between definite and indefinite optimism and pessimism through comparison diagrams and anecdotes. The diagram compares the defining moods of U.S., China, and Europe at specific periods in time: “Definite optimism - U.S. 1950s-1960s, Indefinite optimism - U.S. 1982 to present, Definite pessimism - China present, Indefinite pessimism - Europe present." I mainly agree with the perspective that the diagram and the section form together on Europe and China; I completely disagree with his ideas on the U.S. and the time periods he composes his theories on.
In order to provide sound reasoning for his "mood" diagram, Thiel describes the problems or triumphs of each country or region, starting with Europe. In a point-blank manner, he launches into his critical assertion that Europe is in "slow motion crisis": they’ve been in an undirected bureaucratic shift since 1982, the euro is in decline, there’s "no leadership", and the mainstream indefinite pessimistic view sees a bleak future with no plans to change it. His conclusion of the current state of Europe is that with all of these factors in play and change seemingly impossible many temporarily abandon ship for a good time: “vacation mania”.
Next, he lays out China's crisis: to them, economic growth cannot come fast enough. He outlines their mood of definite pessimism, in other words, they know the future is going to be rough and they plan for it: "Every other country is afraid that China is going to take over the world; China is the only country afraid that it won’t." In Thiel’s opinion, China’s starting point is actually so low that it makes their growth seem high to other countries. Rather than optimism in their potential, pessimistic but definite actions define the current state of China: copying the technologies of countries like the United States, top officials moving money out of the country, and preparing for the worst economic situation.
Finally, Thiel’s two moods of the U.S. in different times represent a stark dichotomy— in Thiel’s perspective, in our complacency of our past successes we have become unproductive and hazy in our outlook. He begins by praising the definite optimistic attitude of the 1950s-60s and contrasts it to the uninvolved attitude of today’s America.
“ In the 1950s, people welcomed big plans and asked whether they would work. Today a grand plan coming from a schoolteacher would be dismissed as crankery, and a long-range vision coming from anyone more powerful would be derided as hubris.”
Next, throughout the subsection "Indefinite Optimism", Thiel marks the stiffness of our generation's minds and the lack of ambition for new visions, followed by a retrospective on the former generation that he believes led to the current mindset:
“The strange history of the Baby Boom produced a generation of indefinite optimists so used to effortless progress that they feel entitled to it. Whether you were born in 1945 or 1950 or 1955, things got better every year for the first 18 years of your life, and it had nothing to do with you. “
Among disparities in the time-marked dichotomy of America, Thiel points out what he thinks is the missing link of our presiding generation of indefinite optimism: actual, ambitious progress instead of entitlement to predecessors and uninspired enthusiasm.
Within the section, “Indefinite Optimism”, Thiel fires some shots at the prominent Canadian popular culture writer Malcolm Gladwell’s position on wealth disparity. In a highly opinionated analysis driven by his worldview, combining the definite 1950s of America to the indefinite present, he prefaces his criticism on Malcolm Gladwell by detailing the views of his time and age.
“Then, when technological progress stalled in the 1970s, increasing income inequality came to the rescue of the most elite Boomers. Every year of adulthood continued to get automatically better and better for the rich and successful. The rest of their generation was left behind, but the wealthy Boomers who shape public opinion today see little reason to question their naïve optimism. Since tracked careers worked for them, they can’t imagine that they won’t work for their kids, too.”
Continuing the rant, Thiel then references Malcolm Gladwell's viewpoint on Bill Gates from his book Outliers. Without actually quoting the book, Thiel claims that Gladwell trivializes Gates' success as being produced by a fortunate environment. From this conclusion, Thiel lumps his perspective with the conventional viewpoint of boomers who " miss the even bigger social context for their own preferred explanations: a whole generation learned from childhood to overrate the power of chance and underrate the importance of planning.” From what I can see, there are a lot of false notions that need to be corrected here.
As a disclaimer, I appreciate many of the interesting digressions that Thiel uses to create a layer of creative comparison in the business world. However, in "Indefinite Optimism"'s uncharacteristic tangent, Thiel makes numerous contradictions that need to be addressed before I move onto the next section. First, he argues against the conventional viewpoint that he generalizes over the "lucky" Baby Boomer generation. He that progress was handed to them and that they are the "indefinite optimists" that block change in our nation. Then, he puts Malcolm Gladwell, a famous writer, in the same category of slow-moving old people due to his opinion that billionaires are not actually self-made. I'd like to first point out that Thiel was born in Gen X, 4 years after Malcolm X. He is 53 years old, while Boomers are between 57-75 years old. How much is the 4 year difference between them and him worth that gives him a moral superiority to write from such a skewed perspective? When I read through the “Indefinite Optimism” section, I fail to see the point of Thiel's argument— it's a rant that takes unnecessary to a whole new level. Readers are not left with anything beneficial from this finger-pointing, and the arrogance and dogmatism in this section leaves much to be desired.
In short, Thiel says some things about Gladwell, the Baby Boomer Generation and modern society that are unfounded in truth. I’ll go through each issue of his rant on our “indefinite” viewpoint today, Malcolm Gladwell, and the generation of boomers.
To clear up some accusations made against Malcolm Gladwell's perspective in "Indefinite Optimism", I'll just put what Gladwell actually said in context: In his book Outliers published in 2008, Malcolm Gladwell debunks what he believes is the American belief of self-made success, and in particular he mentions what gave Bill Gates a head start:
"[Gates] had a one-in-a-billion chance to get good at programming in advance of every single member of his generation," Gladwell says. "And he's the first to admit this."
As one can see, from Bill Gates' own admission he was able to get ahead because of his environment in a way that he saw different from many others. Gladwell's viewpoint is complicit with Bill Gates' himself, rather than being an out-of-the-blue criticism. Not only that, but Gladwell is specifically talking about how the odds played a part in Gates' success— he's not saying that Bill Gates did not work harder than many others. In comparison, readers would likely think that Gladwell was trying to go for 6 rounds in the boxing ring with Gates with the amount of context that Thiel provides. Moreover how can Malcolm Gladwell’s statement, a provable fact, invite comparison of "opinions" to the entire generation of Baby Boomers? From this context, one can determine that the opinions are coming entirely from Thiel instead of Gladwell. To answer Thiel's accusation that Gladwell has an old generational view: Gladwell is not every Baby Boomer, first and foremost, he's a famous best-selling author, not your average Joe Shmuck. Additionally, there are many innovators from that generation just like ours that didn’t view progress on the sidelines.
Let's digress with some evidence for this claim. According to the online site of the popular newspaper Washington Post:
"the 55-to-64 demographic now boasts the highest rate of entrepreneurship in America, while - surprise! - the lowest rate of entrepreneurship actually belongs to the 20-to-34 demographic. That’s not all. The fastest rate of social media adoption now also belongs to the Baby Boomers and seniors, according to 2010 data from eMarketer. While there are still more Millennials than Baby Boomers who are active on social media, Facebook has become the type of place where your grandparents might hang out, with 47 percent of all Boomers now maintaining a social media presence".
While it seems like there is a lot to unpack here, all of the evidence that WP provides serves to turn the notions that those like Thiel write on their head. In order to remain focused on the bigger picture of Zero to One, I'll put the rest of the big issues in Thiel's argument in a separate forum post.
For the most part, Thiel gives sound advice on businesses; it is when he goes into politics that the logic goes awry: he clearly gives better business advice than political analysis.
Now, since I addressed the biggest issues of the chapter, comprising Thiel's opinions of the Baby Boomer generation, I will move on to his position on the present generation:
"Today a grand plan coming from a schoolteacher would be dismissed as crankery, and a long-range vision coming from anyone more powerful would be derided as hubris.”
The issue that he is identifying is how we have not made many improvements in our society due to "indefinite optimism", or in other words, a optimistic outlook stifled by incrementalism and a lack of ambition to innovate technology. Firstly, Thiel’s viewpoint of America's ambitious progress in the '50s and '60s views our country through the lens of technology that is fully packaged and developed, rather than the lens of technology potential that has been uncovered and primed for discovery in the 21st century. In fact, there is more technology potential now than there ever was in the 50s: quantum computing, AI, robotics, 3d-printing, Higgs boson discovery, reusable (rocket) launch systems like Falcon 9, online marketplaces, more accessible than ever data, driverless cars, electric cars, Virtual reality, touchscreens, and hundreds of subsets of these things, and more. We have only passed one decade into the 21st century, and the great innovators from the 60s to the 00’s, and the technology creators of the 00's to the 10's have not just introduced possibilities but acted upon them.. Thiel's opinion that “indefinite optimism” is the zeitgeist of our age doesn't hold up when one reviews all of the technological developments that define our current age.
In the next section, Thiel continues his lamentation of the indefinite viewpoints of the world by talking on indefinite finance: "Only in a definite future is money a means to an end, and not the end itself", because as he criticizes of a indefinite outlook, "nobody knows what to do with money".
Thiel views the indefinite world through the perspective of an entrepreneur selling his company to show the lack of planning in our current world. His example shows the route of the business sale capital that ends up aimlessly floating through the system: from the company founders who put the money in banks, to bankers who diversify it over a portfolio of institutional investors, to institutional investors who diversify the capital over a portfolio of stocks, to companies who issue dividends or buy back stocks in order to generate free cash flows and increase their share price. What more, the people “prefer unlimited optionality”, or having money itself rather than a use for it.
One major agreement we have is that there should be a plan from the start: rather than company founders not having a clue of their future plans beyond sale of business and letting money devalue in a bank, they should possibly plan for other avenues of business to make their money grow; rather than banks investing in a wide portfolio, they should invest in the best institutional investors that will produce the best returns; and so on with institutional investors and companies.
Next, Thiel goes on to thoroughly read through indefinite politics, philosophy and life: indefinite politics has caused "indefinite creep" where our government has reduced function, and itself only provides insurance through entitlement payments, and according to Thiel "It’s no surprise that entitlement spending has eclipsed discretionary spending every year since 1975."
Personally, I agree that the fact that the government “doesn’t know” the future, yet continues to spend money can be troubling for our future. However, entitlement spending is more necessary in this day and age than in 1975, plain and simple.
If you haven’t seen the breakdown of entitlement spending, here it is by descending order of cost: Social Security, Medicare, Medicaid, and then unemployment and welfare programs. The fact is, Social Security was introduced in THAT generation, a whole generation got older while working and putting money into their pensions, and now they need their earned pensions: it is no surprise that the government actually has to PAY the pensions. Medicare and Medicaid respectively have 62 million and 77 million enrollees as of 2020, and a fraction of them use the medical services, and again, they are entitlements to help those who are elderly and poor to pay their medical bills. The only thing that’s wrong with that is that the wealth disparity in the United States forces a growing number of those populations to rely on entitlements in the first place. Not to mention unemployment and welfare programs. Thiel’s die-hard conservative political philosophy is blatantly leaking into the pages here, and like I said before, he definitely needs to stick with his realm of expertise: business advice rather than political analysis. Especially when it is a book about business tactics rather than political ones.
In “Indefinite Philosophy”, Thiel enters the field of philosophy with his theory on definite/indefinite optimism and pessimism. The prominent modern philosophers John Rawls' "A Theory of Justice" and Robert Nozick's "Anarchy, State, and Utopia" are used to represent the indefinite optimism that spawned in the 70s and lasted to the present age, Herbert Spencer, German Idealist Hegel and marxist Karl Marx represent definite optimism, while ancient thinkers represent definite/indefinite pessimism. Again, as politics enters the fray, it seems to degrade the mission of the book more and more. In the rabbit hole of his theory, Thiel gets it wrong because he is only looking at a minute portion of the works rather than their ideas at large.
The very titles of the books by Rawls and Nozick convey the purpose and intent of the authors’ written works; for John Rawls, it is a philosophical book on the theory of justice as morality and fairness, and within is a more liberal view of a country's foreign policy; for Robert Nozick’s “Anarchy, State and Utopia”, individual rights are key, as is a minimal state that restricts its action to the protection of life, liberty, property and contract.
These theories cannot be boiled down to indefinite philosophy that only “focuses on process”, because while Marx and Spencer may have views of the future that expected “material advances to fundamentally change human life for the better”, Rawls and Nozick have a point in that change is only good if it truly benefits us and the countries around us. The ideas of the two modern thinkers may have been extreme in the limitations as to what the state should be able to do in order to maintain a stasis of citizen’s rights, but to glance over at the extreme opposite (like China) and its government’s focus on progress over people is to see that the grass really is greener on this side. Most of the time, Thiel gets it right when it comes to the corporate side: progress is a good thing, and that means technological development. But for politics, there are nuances that cannot be reduced to one simplified view of progress, and only by acknowledging all of these small issues we make our politics better.
Thiel’s next foray is the topic of indefinite life, from the definite optimistic attitude of 16th century conquistadors searching for the “fountain of youth”, and the beliefs in progress of thwarting death of the Renaissance era, to the probabilistic statisticians of the 19th century who created a foundation for our indefinite thinking today, and “discovered how to reduce [mortality] to a mathematical probability”. This anecdotal timeline of global viewpoints is coupled with the quote, "Today our society is permeated by the twin ideas that death is both inevitable and random".
This observation is the reader's guide as he enters into a subsection of “Indefinite Life” where he talks about the deceleration of biological development and biotechnology.
In biology, Thiel uses the example of 19th century scientist Alexander Fleming’s accidental discovery of penicillin in a Petri dish, as a foundation for how he believes medicine only relies on chance nowadays, “Modern drug discovery aims to amplify Fleming’s serendipitous circumstances a millionfold: pharmaceutical companies search through combinations of molecular compounds at random, hoping to find a hit”. What can companies do if not for randomly throwing money on what works?
Apparently not much. One major example of a random element in medicine is randomized clinical trials. According to Stat News (https://www.statnews.com/2017/08/02/randomized-controlled-trials-medical-research/), an American health-oriented news site, "In a randomized controlled trial (RCT), participants are randomly assigned to receive either the treatment under investigation or, as a control, a placebo or the current standard treatment. The randomization process helps ensure that the various groups in the study are virtually identical in age, gender, socioeconomic status, and other variables. This minimizes the potential for bias and the influence of confounding factors."
Sounds good, but in practice randomized controlled trials work inefficiently and produce a decreasing amount of results for the development of drugs over time.
"Despite their strengths, RCTs have substantial limitations. They can be very expensive to run. They can take many years to complete, and even then may not last long enough to assess the long-term effect of an intervention such as vaccine immunity, or to detect rare or long-term adverse effects."
Additionally, the RCTs may not be valid beyond the "study population" or practical for population-wide outbreaks or urgent health outbreaks like infectious diseases.
On the flip-side, better technology can play a major role in improving the process from being just random to actually being informative and viable in a greater number of situations:
"The emerging use of “big data,” including information from electronic health records and expanded patient registries, presents new opportunities to conduct large-scale studies with many of the benefits of RCTs but without the expense."
Definite innovations in our medical industry like the use of big data in RCTs are what Thiel is talking about. The integrative use of information technology in advancements and upgrades like these will drive knowledge of our biology and our production of useful medicines beyond the indefinite realm.
In biotech, Thiel compares the technology industry’s rapid acceleration to biotech’s lacking development. From his viewpoint, IT is moving faster than biotech in multiple ways, for example, Eroom's law shows that the cost of developing a new drug doubles every 9 years. Of course, it is named as the reverse of Moore’s law: that the number of transistors in a dense integrated circuit doubles about every two years, increasing computers’ speed and capabilities. Though the government does regulate medical developments like drugs and testing procedures which slows growth compared to IT, Thiel believes that their approach of indefinite optimism more than heavy regulation is holding the industry back. Thiel’s viewpoint on the degradation of progress in the medical industry rings true: the innovations that people rely on to cure diseases and create solutions to age-old problems have been yet unseen and unfulfilled because of an unambitious method of individual thinking and the uninspired attitude and greed of pharmaceutical companies.
A solid perspective of the issues on indefinite optimism in businesses caps the end of the venture into different realms of optimism and pessimism in Chapter 6. In “Is Indefinite Optimism Even Possible”, Thiel lectures the regressive trends of today’s business world. To describe the section in a sentence: definite optimism works because it builds a future it expects, definite pessimism works because it copies others without expecting innovation, and indefinite pessimism is self-fulfilling because it meets low expectations with low effort, while only indefinite optimism is illogical. Thiel details how progress without planning is called evolution, like Darwin’s theory implies. Phrases such as "Digital Darwinism '', a buzzword for comparing evolution to technology, suggest that one should build a "lean startup" that can "adapt" and "evolve" without planning. But Thiel counters their lack of innovation with the fact that their expectations will not be met with great success: “You could build the best version of an app that lets people order toilet paper from their iPhone. Iteration without a bold plan won’t take you from 0 to 1. A company is the strangest place of all for an indefinite optimist: why should you expect your own business to succeed without a plan to make it happen?” Rather, one should rely on “intelligent design” , or rather, in-depth planning, to bring an ideal business to fruition.
In the next two sections that conclude the chapter, Thiel notes that a "cultural revolution" is needed to replace the indefinite optimism with definite plans for improvement. Thiel lists philosophy professors and writers like Malcolm Gladwell as those who need to change their line of thinking, as well as politicians. In our current landscape, he believes that "a startup is the largest endeavor over which you can have definite mastery." Throughout the chapter, Thiel has tried again and again to apply a generalization of one case of theory (indefinite optimism) over many topics with limited success: indefinite optimism is a problem in some industries and areas rather than the United States as a whole. Most crucially, I believe that the misapplication of his “indefinite” theory from the business world onto individuals like Gladwell was the single biggest mistake of this chapter (as detailed earlier), second to the fact that flagrant political aims definitely reduced the effectiveness of his criticisms on indefinite optimism.
To rehash an earlier point of the chapter, he summarizes that “chance” should be rejected, meanwhile focusing on making progress. Was that really the case for Thiel? From his rise to billionaire status during the ‘90s by taking advantage of the “dot-com boom”, an event fueled by chance, to his traction gained by paying people to use PayPal and refer it to friends, which could have not worked if not for the random dice of viral network effects, to the fact that capital lasted long enough to gain a profit— everything PayPal became is partly because of chance. "You are not a lottery ticket" may be true, but that doesn’t mean that chance has no part to play. Don’t dismiss the element of chance because you want full credit for all good things that happen to you— the game goes on, and you will need a good hand in order to win.
Zero to One, Chapter: 7
Chapter 7 is much shorter than the prior chapter, but it still contains a number of good points: the main areas of focus are venture capital and the effects of the power law in the natural and business world. Thiel starts his chapter with the statement: "MONEY MAKES MONEY. ‘For whoever has will be given more, and they will have an abundance. Whoever does not have, even what they have will be taken from them’ - Matthew 25:29". Before discussing any further points that Thiel brings up in this chapter, it is apparent that I need to correct this false notion taken out of context. No, please don’t even entertain the thought that Thiel extracted this quote in context.
Here’s the context of this quote in the amplified bible: “For to everyone who has [and values his blessings and gifts from God, and has used them wisely], more will be given, and [he will be richly supplied so that] he will have an abundance; but from the one who does not have [because he has ignored or disregarded his blessings and gifts from God], even what he does have will be taken away.”
In this quote, Jesus is telling his disciples a parable about three servants, one who were given money based on their own ability, one given 5 talents (biblical-era money), one 2 talents and one just 1 talent. The one with 5 made a profit, the one with 2 made a profit, and the one with 1 just dug a hole with the money because he was afraid to lose it. The master rewarded the two who made a profit and threw out the servant who did nothing. The 1 talent servant was not thrown out because he had the least money. The master already knew that the profit would be dependent on the amount initially given, he only singled out the servant who acted lazily rather than doing his best with what he had. There is no context where this parable means that “money makes money”, or conversely those without money cannot make money. The parable is actually meant to inform readers that those who use what money they do have wisely will be rewarded.
Following his quick allusion to the Bible, Thiel segues his introduction into a discussion on Einstein’s apocryphal quote that compound interest was the “eighth wonder of the world”, in order to conjecture that his popular misattribution of the quote is an example of the power law. In other words, he is saying that many sayings are forgotten, but only a few people are constantly attributed to quotes whether true or false: the power law. For the origins of the power law theory, Thiel points to economist Vilfredo Paleto who discovered the 80-20 rule where 20% of people owned 80% of the land in Italy. Thiel attributes this, along with external examples ( earthquake magnitudes and massive cities dwarfing towns) to the power law: “the power law—so named because exponential equations describe severely unequal distributions—is the law of the universe. It defines our surroundings so completely that we usually don’t even see it.”
As the power law pertains to nature, so it also pertains to companies: "A few companies attain exponentially greater value than all others". For example, venture capital firms sometimes hope to diversify their portfolio over a number of companies in the hopes that one of the companies has great returns: Thiel argues that that "spray and pray approach" for venture funds doesn't work. “Venture returns don't follow a normal distribution - the law of powers applies to venture funds: a small amount of companies outperform all others.”
Lastly, Thiel extends this analogy to not just investors but everybody, because to him, “ everybody is an investor” in their time and resources spent. This means that the power law also applies to us as individuals. Despite this concept, there is a notable social system of discouraging a focused "investor" mindset in today's world. The root of this issue, Thiel says, points to the faulty education system that teaches that “it doesn’t matter what you do, as long as you do it well,” which pulls a veil of thought over applying the "power law" investor mentality to our daily lives.
"That [doctrine of education] is completely false. It does matter what you do. You should focus relentlessly on something you’re good at doing, but before that you must think hard about whether it will be valuable in the future."
Like Thiel correctly asserts, instead of thinking of what you do in terms of spreading risk, one should dive head-first into a specialization from the get-go after making sure it is a valuable way to spend your time.
One might say that the best strategy in life is holding a diversified portfolio, to avoid taking risks; but one has to view life, like business or venture capital, through the power law in order to succeed. In this sense, Thiel is right on the money when he says, "In a power law world, you cannot afford not to think too hard about where your actions will fall on the curve".