Peter Thiel is one of the most influential people in the world.

His genius-level entrepreneurship brought us PayPal and Palantir Technologies… and his savvy investing expertise launched a generation of big tech names, including Facebook, SpaceX, and Airbnb.

Personally, I’m lucky enough to have had Peter Thiel invest in my first startup.

Since then, I’ve invested in six companies alongside his Founders Fund, including Vise, Pipefy, Vicarious, Clara Health, Wish, and June. I’m also an investor in Palantir.

Throughout my own career, Peter Thiel has always been one of the people I look up to the most. His lessons have guided my own investment decisions, and ultimately, my successes.

And today, I want to share the top four things I believe everyone should learn from him.

Let’s get into it…

Lesson #4:

“The next Bill Gates will not build an operating system. The next Larry Page or Sergey Brin won’t make a search engine. And the next Mark Zuckerberg won’t create a social network. If you are copying these guys, you aren’t learning from them.” – Peter Thiel

The one unifying factor around major platforms like Amazon, Facebook, and Google is that each one looks nothing like the others.

That’s because these platforms – and any startups in general – are not about the products themselves, but about what problems they solve.

When Facebook first launched, it solved a radically different problem: connecting and keeping in touch with people around the world. This is far different to Google’s solution for organizing the world’s information.

Thiel understands that in order to make the next $10 billion or $100 billion startup, you need to solve the next generation of problems instead of iterating on previous problems.

Lesson #3

“The best entrepreneurs know this: Every great business is built around a secret that’s hidden from the outside.” – Peter Thiel

Many industries have several startups trying to solve the same problem… but not every startup will be a winner.

Let’s use Facebook’s success story as an example.

Facebook was not the first social media network. It was founded in 2004, well after popular sites like Friendster and Myspace had entered the space.

But these competing platforms couldn’t keep up with Facebook’s growth. While Facebook skyrockets in popularity, the others dropped off only a few years later.

What was Facebook’s secret?

Facebook took advantage of the swiftly growing social media industry, while also circumventing the mistakes of social media platforms that came before it.

Ultimately, the startups that win are those that uniquely understand the ecosystem around which a customer experiences a problem – whether they are an individual or a corporate customer.

Successful founders use these unique insights to create a business that solves consumer problems unlike any competitor.

And the way to learn these secrets is by spending years and years in a specific market. That’s why venture capitalist Marc Andreessen calls this phenomenon “earned secrets.”

Lesson #2

“Most of a tech company’s value will come at least 10 to 15 years in the future.” – Peter Thiel

The most valuable companies are those with ingrained network effects… not necessarily the ones banking profit right away.
Network effects: The phenomenon where an increased number of users increases the value of a service or product.

For example, it took Facebook five years to turn a profit. It took Amazon 14 years.

But despite the time it took to generate revenue, no one can deny the power these companies hold over the markets today.

The way to receive a 100X, 1000X, or even a 10,000X return on your investment is by investing into something that will have massive value a decade from now… not something that’s throwing off cash flow today.

Startup investing is all about investing in the next generation of companies that will have massive advantages around their competition.

Which brings me to my last lesson…

Lesson #1

“Competition is for losers.” – Peter Thiel

There is a misconception out there that competition benefits everyone.

But that’s not the case.

While competition benefits consumers, it actually hurts companies.
Competitive advantage: An advantage that gives a company an edge over its competition.

Moat: A distinct advantage a company has that allows it to maintain a long-term competitive advantage over its competitors and protect long-term profits and market share. First popularized by Warren Buffet.

This is because competition erodes profits as companies start to lower their prices or improve their services in order to differentiate and beat each other.

Peter Thiel taught me that you must invest in companies with significant competitive advantages and moats so that they don’t have much competition.

The most valuable companies have significant expertise in a specific area, have unique connections, and have access to resources others do not have.

I firmly believe that if more investors and entrepreneurs alike followed Peter Thiel’s lessons, we’d create an endless amount of great companies and a whole new generation of big tech primed to take over the markets.

And considering his advice, I’m willing to hang my hat on big tech’s dominance for decades to come.

Have a great day, and I’ll be back soon with another update.

Very best,

David Weisburd