My $200 million startup mistake: Peter Thiel asked and I said no

TL;DR

Venture capitalist Garry Tan shares how turning down a job offer from Peter Thiel cost him $200 million in equity.

Transcript

• Working for Microsoft cost me $200 million. My name's Garry Tan, I'm a Venture Capitalist. I started off as an engineer, a designer, a product manager. If you're new to this channel, I'm here to teach you all the things that I learned the hard way, starting with the most painful lesson, which cost me $200 million. I'd just graduated in 2003, and ... Read More

Key Insights

• 🦟 Peter Thiel advised Garry Tan to quit his job at Microsoft and join Palantir, resulting in a missed opportunity costing him $200 million in equity.
• 😃 Big tech companies like Google, Apple, and Microsoft offer stability, learning opportunities, and exposure to millions of users.
• 💪 However, innovation and new experiences may be limited within large organizations, requiring strong negotiation and political skills.
• 🥺 Working at smaller companies or starting one's own venture allows for direct access to customers and the ability to solve their problems, leading to potentially significant value creation.
• 💯 Creating software for others can result in hundreds of millions of dollars worth of value if done correctly.
• 👶 It is essential to be aware of how time is spent and to evaluate the desire for maintaining the status quo versus creating something new.
• 😃 Although big tech companies have their advantages, it is important not to become complacent and leave before becoming too comfortable.

Questions & Answers

Q: How did Peter Thiel's advice cost Garry Tan $200 million?

Peter Thiel urged Garry Tan to quit his job at Microsoft and join a startup, which turned out to be Palantir, now worth $20 billion or more. Garry's decision to stay at Microsoft cost him a significant amount of equity in Palantir.

Q: What are the advantages of working for big tech companies?

Big tech companies offer stability, opportunities to learn from the best, and the chance to contribute to products used by millions. They also provide a chance to meet smart individuals and potential future co-founders.

Q: What are the downsides of working for big tech companies?

It can be challenging to innovate and create something new within a large organization. Negotiation, political skills, and relying on others for favors become vital. These skills may be separate from technical or product expertise.

Q: What are the benefits of working at smaller companies or starting one's own venture?

Working at smaller companies or starting a venture provides direct access to users and customers, allowing for a deeper understanding of their problems and the ability to solve them directly. This cycle of empathy and solution creation can lead to significant value creation.

Key Insights:

• Peter Thiel advised Garry Tan to quit his job at Microsoft and join Palantir, resulting in a missed opportunity costing him $200 million in equity.
• Big tech companies like Google, Apple, and Microsoft offer stability, learning opportunities, and exposure to millions of users.
• However, innovation and new experiences may be limited within large organizations, requiring strong negotiation and political skills.
• Working at smaller companies or starting one's own venture allows for direct access to customers and the ability to solve their problems, leading to potentially significant value creation.
• Creating software for others can result in hundreds of millions of dollars worth of value if done correctly.
• It is essential to be aware of how time is spent and to evaluate the desire for maintaining the status quo versus creating something new.
• Although big tech companies have their advantages, it is important not to become complacent and leave before becoming too comfortable.
• Learning from past mistakes and making new ones is key to personal and professional growth.

Summary

In this video, Garry Tan, a Venture Capitalist, shares the painful lesson he learned about missing out on a huge opportunity that cost him $200 million. He recounts a conversation with Peter Thiel, who advised him to quit his job at Microsoft and join a startup. Despite joining the startup later and gaining valuable experience, Tan emphasizes the importance of considering equity and the potential for creating significant value when deciding where to work. He also discusses the benefits and downsides of working for larger companies versus smaller ones or starting a company.

Questions & Answers

Q: How did Garry Tan miss out on a $200 million opportunity?

Garry Tan missed out on a $200 million opportunity when he turned down Peter Thiel's offer to join a startup because he was not willing to leave his job at Microsoft. The startup turned out to be Palantir, which is now worth over $20 billion. If Tan had accepted the offer and received equity in the company, he would have made significant gains.

Q: Why did Garry Tan initially decline Peter Thiel's offer?

Garry Tan declined Peter Thiel's offer to join the startup because he was not familiar with the startup world and did not fully understand the potential for creating value and earning equity. He believed that staying at Microsoft and potentially getting promoted would be a safer and more secure option at the time.

Q: What are the benefits of working for larger tech companies?

Working for larger tech companies like Facebook, Apple, Amazon, Microsoft, and Google offers several benefits. Firstly, employees have the opportunity to ship products that reach millions of people, which can be a rewarding experience. Secondly, these companies provide stability and offer the chance to learn and develop expertise in creating products for a large user base. Lastly, working in these companies allows individuals to network with talented individuals who may become potential co-founders or collaborators in the future.

Q: What is the downside of working for larger tech companies?

One downside of working for larger tech companies is that it can be challenging to create something new within a big organization. Initiating new projects may involve navigating through bureaucracy, negotiating with others, and engaging in politics. While these skills are valuable, they are separate from technical and product-building skills. Young professionals should consider how they want to spend their time and whether they prefer maintaining the status quo or creating something new.

Q: Why does Garry Tan emphasize the importance of equity?

Garry Tan emphasizes the importance of equity because it provides the opportunity to benefit from the value created by the software industry. While large tech companies offer well-paying jobs, the value created by individuals in roles such as engineering, product management, design, and marketing often far surpasses their salaries. Ownership of equity, either as a founder or through working at an early-stage startup, allows individuals to access the significant value they help create.

Q: What is the advantage of working for smaller companies or starting a company?

Working for smaller companies or starting a company offers the advantage of direct access to users, customers, and their problems. This direct connection enables individuals to develop empathy and understanding for the needs and challenges of the target audience. By solving these problems directly, individuals can create a powerful cycle of value creation. Learning how to establish and maintain this cycle early in a career can be highly beneficial.

Q: What is Garry Tan's advice regarding working for big tech companies?

Garry Tan advises individuals to consider leaving big tech companies before becoming complacent or "soft." While he acknowledges the benefits they offer, he recommends avoiding the mistakes he made and instead making new mistakes. This implies seeking out new challenges and opportunities for growth that align with one's dreams and aspirations.

Q: How does Garry Tan quantify the value of software creation?

Garry Tan suggests that the outcome of creating software for others can result in hundreds of millions of dollars' worth of value. When done correctly, software can have a significant impact and generate substantial returns. By recognizing the potential value and considering equity ownership, individuals can position themselves to benefit from their contributions.

Q: What is Garry Tan's message to viewers?

Garry Tan encourages viewers to pursue their dreams rather than working on someone else's dreams. He emphasizes the importance of recognizing the potential for creating value and the role equity plays in accessing that value. Tan suggests that individuals consider where they want to invest their time and effort, especially in their early career stages, and advises against repeating his own mistakes.

Q: How does Garry Tan summarize his advice?

Garry Tan summarizes his advice by reiterating the importance of considering equity and the potential for creating significant value when choosing where to work. While acknowledging the benefits of working for big tech companies, he recommends leaving before becoming complacent. He encourages viewers to make their own mistakes and learn from them, rather than repeating the mistakes of others.

Takeaways

Garry Tan's experience highlights the value of considering equity and the potential for creating significant value when choosing where to work. While larger tech companies offer stability, the ability to reach millions of users, and opportunities to learn from talented individuals, they may limit the potential for creating something new. Working for smaller companies or starting a company offers direct access to users, allowing for empathy and the ability to solve problems directly. By recognizing the value they contribute and seeking ownership in the form of equity, individuals can position themselves to benefit from the value they help create. Tan advises against complacency and encourages individuals to pursue their dreams, making all-new mistakes rather than repeating the mistakes of others.

Summary & Key Takeaways

• Garry Tan was advised by Peter Thiel to quit his job at Microsoft and join a startup, but he declined, losing out on potentially $200 million in equity.

• Working for big tech companies like Google, Apple, and Microsoft offers stability, learning opportunities, and the ability to ship products to millions of people.

• However, working at smaller companies or starting one's own venture provides direct access to customers, the ability to solve their problems, and the potential for significant value creation.