Introduction
The world is undergoing radical transformation. With Brexit, the British voted to leave the European Union, an unthinkable move just a few years ago. Meanwhile, within the UK, the Scots, Northern Irish and possibly Welch are looking into leaving the UK itself. The 2016 Presidential election in the United States was unprecedented in modern times, where voters expressed dissatisfaction with the status quo by supporting two total outsiders: Donald Trump and Bernie Sanders. In the Middle East, Isil strives to build a supranational caliphate by means of horrific, terrorist policies. On the economic front, the prospects for large emerging economies – particularly Brazil, India and Russia – have dimmed; only China continues to move forward strongly.
In One to Two, one of the premier venture capitalists and a successful founder of billion dollar businesses describes what it takes to grow a business from the start-up stage to billion dollar enterprise, going from “zero to one.” Thiel’s track record is impeccable. He cofounded Paypal and Palantir then went on to be an investor assorted successful high-tech companies. He was the first outside investor to invest in Facebook: his $500,000 investment in 2004 gave in 10.2% equity interest in the firm and ultimately earned him billions of dollars. Mr. Thiel’s views are particularly interesting because he is an avowed libertarian. He believes that success in companies requires that their managers, directors, and employees take contrarian views on how to carry out their business.
Thiel’s views on what is needed to create great new companies is different from what business schools teach. He rejects current fads such as lean, flexibility, and incremental growth. He rails against competition and promotes monopoly. His positions make him sound like a crank, but his superlative track record suggests he must be taken seriously.
This assignment is designed to familiarize MBA students with Thiel’s upside-down world. It requires students to examine both Thiel’s perspective and the conventional wisdom critically. In a disruptive age, managers must think seriously about handling the disruption by thinking disruptively.
When examining new ventures to see whether they merit support from his venture capital company, Thiel raises and answers seven questions about the initiative:
a. The engineering question: Can you create breakthrough technology instead of incremental improvements?
b. The timing question: Is now the right time to start your particular business?
c. The monopoly question: Are you starting with a big share of a small market?
d. The people question: Do you have the right team?
e. The distribution question: Do you have a way to not just develop but deliver your product?
f. The durability question: Will your market position be defensible 10 to 20 years in the future?
g. The secret question: Have you identified a unique opportunity that others don’t see?