Peter Thiel Always Asks Founders These 7 Questions
Hey y'all 👋
Peter Thiel is worth $4.2 billion due to cofounding PayPal, Palantir, Founders Fund and being the first outside check into Facebook.
He wrote what's widely thought of as the manual for startups — Zero to One.
In the book, he talks about the 7 questions founders should ask themselves about their startups.
They're below, along with some of my thoughts on each one 👇
Read time: 3 minutes
⚡️ Peter Thiel's 7 Questions for Founders
The Distribution Question
How will you deliver your product to customers?
"If you build it, they will come" is a lie that second-time founders understand.
Here's a quick distribution playbook:
Identify your target persona
Ask them where the
Use whatever means necessary to get their attention there
Don't spend your money developing a product if you don't have a way to get it in front of the people who may be interested in it. And don't make the mistake of expecting that the growth lever you initially find will work forever — the law of shitty clickthroughs is always true on a long enough timeline.
The Engineering Question
Is a technological breakthrough possible?
To defeat large, well capitalized competitors you need to be 10x better — not just a little bit better.
Thiel frames this question around engineering, but it extends to product as well. Do new tools (a good example right now is what OpenAI has built) make it possible to build something truly 10x better? If not, you may not be able to acquire users fast enough.
The Timing Question
Is this the right time to start this business?
I often see founders read or hear about a trend once or twice, internalize it as definitively true that the trend will continue to grow, and then make strategic (or, worse, financial) decisions around it.
Deciding what to work on is a critical decision. Founders should take the time to double check their beliefs about how fast, and how much, the market they're pursuing will grow by talking to potential users and gathering as many datapoints as possible.
The Monopoly Question
Will you be able to capture a large share of a small market?
Thiel controversially believes that the goal of a startup should be to build a monopoly. He advocates for avoiding competitive markets until after you dominate a small one (at least).
Basically, he says it's best to start as a big fish in a small pond, and then look for more ponds. The alternative is being a "minnow is a vast ocean."
Startups need to move fast and have limited resources. Having to spend those battling a competitor can slow you down. Unfortunately, markets without competition are few and far between and must be captured quickly once discovered.
The Durability Question
Will you be able to defend your market position for 10-20 years or longer?
Startups start out needing to be disruptors but eventually, if they're successful, they'll become market leaders themselves.
Thiel says to assess your competitive risks. In the long run, what would allow you to be disrupted? How challenging would it be for you to combat a disruptor using that strategy?
If the strategy is obvious, and the way to combat it is not, then someone else will figure that out too.
The Secret Question
Have you found a unique opportunity that others have missed?
If everyone agrees that a market will be big then it's going to attract attention, and competition.
Thiel says that great founders base their companies on insights that others don't see or fully understand yet.
The People Question
Can your team achieve the opportunity you're working towards?
Startups are moonshots and founders need the right team around them to reach the moon.
Whether it's evaluating early hires, cofounders, or even yourself it's important to be honest about whether this is the right group to tackle this specific problem.
For example, it would have been tough for Facebook to get off the ground if no one on the team understood network effects.
💡 Related Resources
Competition is for Losers → a recording of a class Thiel taught at Stanford
Monopoly is how to do well in business → Thiel sharing why he believes startups should aim to be monopolies
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