Peter Thiel is one of the most successful investors of all time, and he has a deceptively simple question that he asks all entrepreneurs.
The PayPal co-founder, Facebook’s first outside investor, and Palantir co-founder has built a reputation for identifying breakthrough companies before anyone else sees their potential. In a candid interview with Pando Daily in the early 2010s, Thiel revealed the litmus test he uses to separate genuinely transformative startups from the countless also-rans: a single, pointed question about talent acquisition that cuts straight to the heart of what makes companies truly special.
The Question That Separates Winners from Losers
When Thiel encounters entrepreneurs in the process of starting a company, he poses this challenge: “Why will the 20th talented person join your company when they can get paid way more at Google? They’ll have to work way less hard at Google. It will look better on the resume to go to Google. Why in the world will they ever join your company?”
It’s a brutally practical question that forces founders to confront an uncomfortable reality. By the time a startup is hiring its 20th employee, the honeymoon period is over. The company is no longer just the founders and their closest friends—it needs to attract serious talent who have plenty of other options.
Why Money Isn’t the Answer
Thiel is quick to dismiss the most obvious response. “The monetary answer is generally not a good one,” he explains. “That works in a few rare cases, but chances are that you won’t have a business at employee 20 that’s so robust and doing so well financially that it’s a no-brainer to people to join it. The equity might be worth more, but it gets diluted. The 20th person doesn’t get that much equity as a percentage.”
This insight reflects a harsh truth about startup economics. While early employees might strike it rich with significant equity stakes, by the time you’re hiring your 20th person, the ownership pie has been sliced many times over. The financial incentive alone rarely justifies the risk and extra effort required at a young company.
The Answer That Actually Works
So what does impress Thiel? “The answers that I think work are that somehow you are in a really unique business,” he says. “This is the only place in the world where you can work on this incredibly important problem.”
Thiel elaborates on what makes a problem truly compelling: “It has to, on some dimension, be a really important problem that at least some people think is the most important problem in the world. Those are the kinds of businesses that are unique—when they work, they end up being leaders in their respective markets. That’s sort of the general formula that works.”
The flip side is equally important: “If you do something where you have 20 other people doing it, even though it might seem easy to start, it’s extremely hard to build out.”
The Monopoly Mindset in Action
This philosophy directly reflects Thiel’s broader investment thesis, famously articulated in his book “Zero to One”: competition is for losers, and the most valuable companies are monopolies that solve unique problems. Whether it’s SpaceX revolutionizing space travel, Palantir transforming data analysis, or even Facebook creating the first true social network at scale, the companies in Thiel’s portfolio share this common thread—they offer talented people the chance to work on problems that simply can’t be solved anywhere else.
In today’s competitive talent market, where tech giants offer unprecedented compensation packages and remote work flexibility, Thiel’s question has become more relevant than ever. The startups that thrive aren’t just those with the deepest pockets, but those that can articulate a mission so compelling that top talent will sacrifice comfort and security for the chance to be part of something genuinely transformative.