Startup tips from Paypal founder Peter Thiel
One of the tech world's most influential voices says progress should not be measured by one new phone after another.
Peter Thiel co-founded PayPal back in 1998. The team around him went on to create ground-breaking startups like YouTube, Yelp, LinkedIn and Tesla.
Seven of those companies are valued at more than $1 billion each.
Thiel is now a venture capitalist and he's written the new book "Zero to One: Notes on Startups or How to Build the Future," in which he advises readers on how to achieve startup greatness.
"Apple needs to do all sorts of new things," Thiel said. "Tim [Cook] has, I think, the hardest job in the United States, to fill Steve Jobs' shoes. And he's doing a really good job. Apple's continued to build new products. It's perhaps not as big a breakthrough as the iPhone or the original home computer, but Apple needs to keep doing things. It's hard. They're making $150 billion a year from their phones. So you have to come up with big, new products to really move the dial."
Thiel emphasizes that to truly succeed, a startup needs to be based on a completely new idea. In his book, he writes, "Every moment in business only happens once. Companies have to make something new, regardless of the profits."
"The next Bill Gates won't start an operating system," Thiel told CBS News. "The next Larry Ellison won't start a search engine. The next Mark Zuckerberg won't start a social network. They've been done. So if you're copying these people, in some sense you're not learning from them."
The Paypal founder said the best startups fill a consumer void at the right moment.
"You ask yourself some tough questions, and you try to figure out what is the right constellation of things that can be done at this time," Thiel said. "When we started PayPal, there was email and there was money, and we figured out a way to combine the two. In 1998, 99, that was the right thing to combine. It hadn't been done, and it was the right moment to do that."
Thiel also said that idea should be unconventional, even controversial.
"The interview question I always like asking people is, 'Tell me something that's true that very few people agree with you on,'" he said. "Like, the education system is broken. Or God exists, or God doesn't exist. But these are all sort of conventional answers. Good answers are ones that are very uncomfortable and take you out of your comfort zone."
He said that building a startup should mean going against the grain in a measured fashion.
"You're willing to go against the grain, but it also has to be something that's true," Thiel said. "So opening a British restaurant in downtown Palo Alto is unconventional but probably not a good idea."
Thiel also recommends that people base their idea in uncharted territory, instead of trying to be the best version of an already existing idea.
"It's always in places where people are not looking," Thiel said. "If you're looking where everyone else is looking, you're going to have tons of competition and it's going to be very hard to differentiate. You don't want to be the fourth online pet food company. You want to be the first of a kind."
Often, the breakthrough is not where you'd expect it.
"Well there definitely are all sorts of different ways you can do it. You can execute on great ideas," he said. "I'd say Walmart figured out a way to scale things, to manage the inventory much better than anyone else had done. So often the breakthrough is in a somewhat hidden way. For Walmart, it was inventory management in ways that people had not done before."
Thiel also said a company's CEO should be a risk-taker, maybe a bit on the unstable side.
"It's important for the founder to be led by a distinctive individual, which can be powerful yet dangerous," he said. "You often have these really extreme personalities starting these companies. You have to maybe be a little bit out of your mind to actually start a business. The people are charismatic. You have to motivate people, you have to inspire them, then you have to make sure you don't blow the business up."
One of Thiel's secrets is that he always hires full-time employees, with no consultants, no part-time employment and no working from home. He also suggested the CEO pay himself less than he or she pays other people.
"It's all in," he said. "When you're starting one of these things, it's a team. Everyone has to be fully on board, and the CEO needs to set a good example. If the CEO pays himself too much, that's already a bad example for everyone else."
On a large scale, Thiel said he would like to see more innovations outside of the tech realm.
"We are seeing enormous innovation in technology in the world of bits and computers, internet, mobile internet, things like that," Thiel said. "I think we need to be innovating a lot more in other areas too. I think we need to be innovating in energy, in transportation, to figure out ways to build cheaper and more affordable housing. So, in the world of atoms as well as bits. I think that's what I find the big question - are we going to continue to progress as a society or are we in a period of relative stagnation?"