The Founding Period Is When Innovation Happens
Thiel: The founding period is the period when you have innovation. Once that's over, it becomes a normal business that runs in a bureaucratic, mechanistic way. It's a very important question — how long can you enable the founding to last?
The founding period is when you have innovation. Once it's over, it becomes bureaucratic.
Apple: Computers Are Like Pepsi
Thiel: The classic example where people cut the founding off too early is Apple. The judgment the board made in 1985 was that computers were like Pepsi. Just a marketing thing. There's going to be no more innovation in the computer industry. You could get rid of the founder and replace him with someone who'd run the business in a predictable, mechanistic way.
That turned out to be a bit of a mistake. It's unusual for the founder to come back once these mistakes are made. Sort of miraculously, Jobs came back. Then we saw another 14 years of innovation.
The board decided computers were like Pepsi. No more innovation needed. That was a mistake.
Founders Must Stay in Control
Thiel: The businesses led by founders are the ones able to innovate. The ones not led by founders are generally not able to innovate.
If you are in favor of innovation, you have to figure out ways for founders to stay in control as long as possible — and to avoid selling the business or substituting someone other than the founder as CEO.
Founder-led companies innovate. The rest generally don't. Keep founders in control.