Maybe
If memory serves, David Marquardt and his Technology Venture Investors were the only outside investor in Microsoft and only got that opportunity because he went to Stanford with Ballmer, not because MSFT needed the money.
What I'm saying is that the whole VC and Sand Hill Road/Silicon Valley infrastructure which Mr. Thiel represents is not necessarily required.
So again,
Maybe.
From The American:
Peter Thiel’s Zero to One is a provocative and stimulating book, however, the Silicon Valley institutional structure may not drive the future as much as it has the recent past.
In Zero to One, Peter Thiel claims that what is best for the economy and for individual entrepreneurs is for entrepreneurs to create unique businesses based on contrarian ideas.
Thiel cofounded PayPal and was the first outside investor in Facebook. The book is based on lectures that he gave at Stanford and on the notes from those lectures taken by Blake Masters.
Thiel views monopolistically competitive markets (when many firms try to eke out small profits by offering slightly differentiated products), such as urban restaurants, as uninteresting and incapable of generating major innovation. Instead, he lauds firms that attempt to radically alter markets and in the process establish, at least temporarily, pure monopolies in their new fields.
However, many innovative businesses are able to grow by reinvesting profits rather than raising venture capital. Five years ago, Paul Kedrosky of the Kauffman Foundation pointed out that “even among the fastest-growing and most successful companies in the U.S., less than one in five companies had venture investors.” In his book The Origin and Evolution of New Businesses, Amar Bhide gives the name “promising businesses” to companies that require less external investment to start up. These firms differ considerably from the venture-capital-funded firms that Thiel extols. They rely less on formal business plans than improvisation. The chart below lists a few of the differences between the typical promising business and the typical venture-capital-funded firm.
Thiel sees the Internet business environment favoring venture-capital funded firms, because of the importance of network effects and power laws. Companies like Google and Amazon achieve such overwhelming dominance that it becomes pointless to try to compete with them.HT: Abnormal Returns
I see the Internet business environment as favorable to promising businesses. The Internet has greatly reduced the capital required to create a sales outlet, handle accounting and other administrative functions, and build a supply chain, making it easier to launch promising businesses.
Thiel offers a perspective which strikes me as skewed by his experiences as a business founder and venture capitalist in Silicon Valley over the past 20 years. The characteristics of that business environment are not necessarily those that will prevail going forward.
Thiel believes that our society needs the sorts of enterprises launched by contrarian founders and backed by venture capitalists — that without them we will not get spectacular innovation. He thinks that to achieve high impact, founders and investors must be optimistic and hold a definite outlook, meaning that they proceed confidently with a plan, rather than taking an improvisational or “hedge-your-bets” approach....MORE
