The Question That Kills Bad Startups
Peter Thiel meets founders all the time. Before he writes a check, he asks one question.
Why will the 20th talented person join your company? Google pays more. Google works them less. Google looks better on a resume. Why would anyone pick you?
Thiel's filter: why would employee number 20 pick you over Google?
Money Is the Wrong Answer
Thiel: The monetary answer is generally not a good one. Chances are at employee 20, you won't have a business that's so robust and doing so well financially that it's a no-brainer.
Sure, the equity might be worth more. But it gets diluted. The 20th person doesn't get that much equity as a percentage.
The monetary answer is generally not a good one. The equity gets diluted.
The Answer That Works
You must be in a business so unique that it is the only place in the world to work on that problem.
Not one of 20 companies doing the same thing. The only one. The problem must feel like the most important problem in the world.
It has to on some dimension be a really important problem that at least some people think is the most important problem in the world.
The only place in the world to work on this problem. That is the pitch.
Unique Beats Easy
Thiel: If you do something where you have 20 other people doing it — even though it might seem easy to start — it's extremely hard to build out.
Those are the kinds of businesses that are unique. When they work, they end up being leaders in their respective markets.
If 20 others do what you do, it might seem easy to start. It's extremely hard to build out.