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Peter Thiel: A Good Idea Is Not Optional. It Is the Whole Game.

By Peter Thiel · Strategy · 1 min read

Most Silicon Valley companies are somewhere between really badly managed and badly managed. It often doesn't matter — because they have the kernel of a good idea. But if you don't have that, it's really hard to make up for, even if you get a lot of other details right.

Key Points

The formula: talented team, good product/technology, good business strategy — all three lined up
Most Silicon Valley companies are badly managed — it doesn't matter if the core idea is great
Twitter had so much pot smoking it didn't matter — the fundamental idea carried the day

If you don't have the kernel of a good idea, it's actually really hard to make up for that — even if you get a lot of other details right.

The Formula

Thiel: I don't think there's a right time to start a company. The critical thing is to have at least the kernel of a really good idea. If you say what's the formula — it's maybe some combination of: number one, a talented team that works well together. Number two, a good product or technology. Number three, a good business strategy.

Somehow you want all three of those to line up. If you have those, you can have a great company even if you screw up a lot of stuff.

Talented team. Good product. Good strategy. If those line up, you can screw up a lot of other stuff.

Badly Managed to Really Badly Managed

Thiel: There are all sorts of processes people focus on. The reality is that most companies in Silicon Valley are somewhere between really badly managed to badly managed. If you looked at them from a Harvard Business School perspective, there are all these things being screwed up in enormous ways.

It often doesn't matter — because you have this kernel of a good idea.

Most Silicon Valley companies are badly managed. It often doesn't matter if the idea is great.

The Twitter Pot-Smoking Story

Thiel: I was on CNBC doing a book promotion. They spent hours trying to get gotcha moments. They got me to say there was a lot of pot smoking going on at Twitter. When I left stage, the president of CNBC said I did a great job and wanted me back. I realized I'd said a little too much.

But the larger context was — it doesn't matter. Twitter had such a great fundamental idea that whether it was very badly managed or somewhat badly managed, whether you're in favor of smoking pot or against it — it just didn't matter. The great idea carried the day.

Twitter had such a great idea that how badly it was managed just didn't matter.

The Pessimistic Version

Thiel: The more pessimistic version is — if you don't have something like that, it's actually really hard to make up for that. Even if you get a lot of other details right.

If you don't have the kernel of a good idea, it's really hard to make up for it.