In 2010, Palantir co-founder Joe Lonsdale wrote a blog post titled “Lessons from Peter Thiel.” The second lesson in the post is:

“Don’t divide your attention: focusing on one thing yields increasing returns for each unit of effort.”

He elaborates on this idea that focus has a convex output curve:

“It’s kind of like the power law rule in venture capital where one investment tends to dominate the returns of everything else. That’s true inside companies as well. It’s extraordinarily unusual for there to be two equally promising opportunities… If you think you have 2-5 reasons for doing something, what that means is you actually haven’t figured it out. You want to find one really strong reason.”

He cites a founder listing 5 possible business models as an example of a failing strategy. What you want to do instead is find the single-best monetization model and put all your chips on that until you get new information.

“Eight revenue streams probably means you don’t have one awesome revenue stream. If you have seven growth strategies, it means you haven’t figured out the one strategy that’s going to compound like crazy.”

This same “one thing” rule applies to making decisions too. A lot of people will make decisions based on “blended reasons” (e.g. “here’s 5 reasons we should do this”). But what you should look for instead is the one reason that dominates everything else.

Full video: My First Million “From PayPal Intern to Starting 4x Billion-Dollar Companies | Joe Lonsdale Interview” (Apr 2024)

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