The Secret-Finding Framework
Build your company around a truth that others have not yet discovered
Thiel divides knowledge into three categories: conventions (things everyone knows), secrets (things that are hard to discover but discoverable through effort and original thinking), and mysteries (things that may be unknowable). Great businesses are built on secrets -- truths about the world that are important but that most people do not see or agree with. The framework provides a systematic approach to identifying secrets and converting them into company-building opportunities.
- Every great business is built around a secret that is hidden from the outside
- There are two kinds of secrets: secrets of nature (discovered through studying the physical world) and secrets about people (things people hide or do not know about themselves)
- Secrets about people are often underexplored because studying human behavior is considered less rigorous than studying nature
- The golden mean between telling nobody and telling everybody is founding a company -- sharing your secret only with conspirators who help you build on it
- Ask the contrarian question in your domainSystematically ask: 'What important truth in my industry do very few people agree with me on?' and 'What great company is nobody building?' These questions force you to identify assumptions everyone else takes for granted. Most people never ask these questions because education trains incrementalism.
- Look for secrets in overlooked placesSecrets hide where nobody is looking. Examine fields that are unfashionable or where conventional wisdom is suspiciously unanimous. Focus on secrets about people (underserved needs, hidden behaviors, misaligned incentives) as these are less explored than secrets about nature. Airbnb found the secret that strangers would trust each other enough to share homes.
- Distinguish between conventions, secrets, and mysteriesTest your insight against these categories. A convention is widely known and already exploited. A mystery is unknowable and therefore not actionable. A secret is discoverable by dedicated inquiry but not yet common knowledge. If your insight is a convention, it is too late. If it is a mystery, it is too early. Secrets are the sweet spot.
- Share the secret selectively and form a conspiracyDo not broadcast your secret to the world and do not keep it entirely to yourself. Share it only with carefully chosen co-founders and early team members who become co-conspirators. A company is essentially a conspiracy to change the world based on a shared secret. When you share your secret, the recipient becomes a fellow conspirator.
Instead of building another telemedicine platform (a convention), look for secrets about people: perhaps patients systematically lie to doctors about certain conditions, or insurance company incentives create specific gaps in care. Investigate where the industry's conventional wisdom is most confidently unanimous, as that is where secrets are most likely hidden.
The conventional wisdom was that taxi regulation was necessary and ride-sharing was impractical. The secret was that smartphone GPS and payment technology had made it possible to connect riders with drivers without a taxi medallion system, and millions of people had unmet transportation demand.
Thiel's famous contrarian interview question -- 'What important truth do very few people agree with you on?' -- is the foundation of this framework. He observed that every great business was built on a secret: Google's secret was that PageRank could organize the web; Facebook's secret was that real identity online would create a more valuable network than anonymity. Four social trends work against finding secrets: incrementalism in education, risk aversion in culture, complacency among elites, and the flattening effect of globalization.