Right now, someone is tinkering with a billion dollar secret — they just don’t know it yet.
“What people aren’t telling you,” Peter Thiel taught his class at Stanford, “can very often give you great insight as to where you should be directing your attention.”
Secrets people can’t or don’t want to divulge are a common thread behind Thiel’s most lucrative investments such as Facebook and LinkedIn, as well as several other breakout companies of the past decade. The kinds of truths Thiel discusses — the kinds that create billion dollar businesses in just a few years — are not held exclusively by those with deep corporate pockets. In fact, the person most likely to build the next great tech business will likely be a scrappy entrepreneur with a big dream, a sharp mind, and a valuable secret.
Where are the Secrets?
According to Thiel, there are two types of secrets: those about nature and those about people. Thiel dismisses the former as less interesting because they are less practical. “No one really cares about superstring theory. It wouldn’t really change our daily lives if it turned out to be true.”
But secrets about people have immediately practical applications. I believe secrets about human behavior, which provide insights into the way people act even though they can’t tell you why, are levers for creating user habits and competitive advantage. These kinds of secrets are also relatively cheap to uncover but can be the basis of massive enterprises.
Once, only large companies had the resources to discover monetizable secrets. Throughout the twentieth century, companies like GE, Dupont, Chrysler, and IBM specialized in discovering the optimal form of physical goods and their insights lay largely hidden in the discipline of industrial design. For these companies, uncovering secrets required massive R&D investment to find the best way to create a better, cheaper, or faster product.
But today, as software continues to eat the world, service industries are being upended by upstarts. A new crop of companies like AirBnB, DropBox, and Square exploits secrets gleaned not from industrial design, but from interaction and systems design. These companies remedy old problems by designing interfaces to create new user behaviors.
via TechCrunch – Nir Eyal
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