Peter Thiel is asked the formula for starting great businesses at every talk he gives. His answer is every time the same: “There is no formula. You have to figure it out for yourself.”
In his interview, Tyler offers a summary of Thiel’s thought. (Search for the paragraph that mentions Tocqueville.) I haven’t read enough Girard to follow the part about original sin, but Tyler describes Thiel as someone who is trying to get us to break free of socially-derived opinions and to see the world without distortions.
I was still in Europe when I read this, and it prompted me to think about the social environment there. It’s not at all hard to find people beating up on Europe as a bad place to start a tech company; you’ll find no lack of grievances about its regulatory attitude, its taxes, its anti-trust initiatives, its punitive bankruptcy codes, and so on. Still, I think that it’s underrated in one significant way. I submit that from a Thielian perspective we might expect great entrepreneurs to be better developed in Europe, especially in Germany, because it’s easier to be independent there.
My favorite review of Zero to One argues that despite appearances the book is not about how to found startups, but that instead it’s a book of ethics. Thiel thinks that we live in a society of deep conformism and constrained imagination. For him, the key to doing something great (of which starting a company is just one example) is to uncover insights hidden from popular opinion, or in other words to think for yourself.
Tyler has written that there’s an enormous sense of freedom in Sweden: “Autonomy reigns… Sweden is the land of the true individualist, sometimes verging on atomism.” I think it’s easier to be individualistic in Germany too. When I lived there I felt a freedom that’s unavailable in America, a social one not related to regulations or government expenditures. First you’re more free from pursuing status markers; second there are fewer pressures to conform. I’ll make this case focusing mostly on education.
Moving from Canada to go to an American suburban high school and then an American college was distressing in one particular way: It was hard to meet the need to keep up. In college especially you feel these irresistible pressures to seek and display prestige, most of which were earned by going through ever more grueling tournaments. When you enter college you’re with this big pool of students more or less like you, all trying to distinguish themselves in four years or so. That creates an environment that breeds the most intense mimetic pressures. The more that people wanted something (anything), the more it became desirable. This would work its way through until those with only marginal interests get sucked in too.
I think that’s how you’re led to situations where something like 45% of the graduating Harvard and Princeton classes in 2007 entered finance. (That figure is 31% for the Harvard class of 2014.) Toss in consulting, tech, and medicine and you’ll probably claim over a majority of the career aspirations of graduates from elite colleges. Now step back; isn’t that odd? For all of the talk about training people to think critically, somehow you find everybody trying to enter one of very few career paths.
Thiel has asked: “Is this a reason that we ended up sometimes underperforming because we are insecure about things, we want to get validated by winning various competitions?” Now I’m skeptical of the claim that all of us secretly dream of ditching finance to become marine biologists. But I think that these paths are so common because they offer not only prestige, but also assurance that others want this highly-desirable thing too.
Everybody in the world feels these pressures to some extent. I think though that in Germany this is less pronounced; there are fewer markers of social prestige, and it’s more normal to go on different career paths.
Start with schools. There’s no designation of an elite stratum of universities; no “Ivy League,” no “Oxbridge,” no “Grandes écoles,” no “zhongdian daxue.” While certainly some schools are better regarded, choosing a university better resembles a lifestyle choice. If you want to be in a big city, maybe you’ll go to the University of Munich or Humboldt in Berlin. If you want to be in a sunny area and be surrounded by hippies, maybe you’ll go to Freiburg or Heidelberg. Each of these have specialties of course, but they’re all about ranked the same, and they cost the same too (free except for a small administrative fee).
It’s not just postsecondary. Germany is often praised for its system of apprenticeships. From fifth grade on, students are separated into grammar schools (Gymnasiums and Realschulen) and vocational schools (Hauptschulen). Grammar school students are prepared for college work, while Hauptschule students are taught more work-related skills. After school they move on to apprenticeships in fields like construction and IT. It may be most desirable to enter a grammar school, but early on kids are aware that different paths are possible.
When I say that growing up in Germany helps bestow independent thinking skills, I’m not saying that it’s because they’re all taught Straussian art of close reading. Instead I’m arguing that society has suppressed the value of certain status indicators, and that encourages people to think for themselves. To put it another way, there are fewer tournaments for kids to go through, and the value of winning them is not so high. Germans I’ve met are incredibly humble. Nobody feels the need to perpetrate an international hoax about how desirable they are. In addition, people aren’t all drawn to the same fields like finance and consulting. They take up professions like baking or manufacturing, and work with the earnestness that comes from knowing that their work is dignified; it’s easier for them to do the equivalent of moving to Dayton to study widget machines.
Let me end with one last speculation. Germans are taught about the crimes of the Nazi state since elementary school. The Holocaust is mentioned in no fewer than three subjects: biology, history, and German language. People are taught that crowds can be wrong, and that it’s a duty to stand apart if you disagree. Maybe these frequent exhortations to avoid groupthink increases independent thinking on the margins.
Time to summarize. Thiel thinks that great businesses are built by people who discover secrets hidden by conventional opinions. I submit that you can become that sort of person more easily if you grow up in Europe, particularly in Germany. Put aside the question of taxes and regulations, and consider the social environment. America holds dear a lot of status symbols. Germans have fewer elite reference points and makes it common for people to pursue non-prestigious work; those in the services aren’t all trying to earn their masters’. Therefore we should expect more independent thinking to come from Germans.
Thiel himself thinks that Germany is too pessimistic and too comfortable. The best argument against everything I’ve said is to point out that, in fact, Germany has not produced any Facebooks or Airbnbs. Actually, the best-known German tech entrepreneurs may be the Samwer brothers, who are notorious for copying successful ideas from Silicon Valley to try to scale them in other markets. So much for originality.
So maybe taxes and regulations matter more after all; I also don’t want to pass over cultural norms that stigmatize failure. But if the limiting factors to great entrepreneurship is independent thinking combined with courage (as Thiel has said, courage is in shorter supply than capital or genius), then maybe it’s better to be away from America. After all, policies are easier to fix than the social environment, and original minds may grow up over there and start companies over here.
P.S. This column appeared in the Times just yesterday on why so few tech companies have emerged from Europe. At the end there’s this quote: “In Europe, stability is prized,” Professor Moser said. “Inequality is much less tolerated. There’s a culture of sharing. People aren’t so cutthroat.” I think that everything except the part about “stability” would be positives for Thiel.
