Saturday, March 26, 2016

Peter Thiel: Startups shouldn't be looking to disrupt

Silicon Valley has become obsessed with "disruption." ...

However, disruption has recently transmogrified into a self-congratulatory buzzword for anything posing as trendy and new. This seemingly trivial fad matters because it distorts an entrepreneur's self-understanding in an inherently competitive way. The concept was coined to describe threats to incumbent companies, so startups' obsession with disruption means they see themselves through older firms' eyes. If you think of yourself as an insurgent battling dark forces, it's easy to become unduly fixated on the obstacles in your path. But if you truly want to make something new, the act of creation is far more important than the old industries that might not like what you create. Indeed, if your company can be summed up by its opposition to already existing firms, it can't be completely new and it's probably not going to become a monopoly.

Disruption also attracts attention; disruptors are people who look for trouble and find it. ... Think of Napster... Shawn Fanning and Sean Parker, Napster's then-teenage founders, credibly threatened to disrupt the powerful music recording industry in 1999. The next year, they made the cover of Time magazine. A year and a half after that, they ended up in bankruptcy court.

PayPal could be seen as disruptive, but we didn't try to directly challenge any large competitor. It's true that we took some business away from Visa when we popularized internet payments... But since we expanded the market for payments overall, we gave Visa far more business than we took.
--Peter Thiel, Zero to One, on the real downside of a trendy buzzword