Being Contrarian is Not Enough

I’ve always zigged when others zagged.

I have semi-unconventional Christian beliefs, trained using a once-contrarian method for developing pitchers, and think that the best way to advance my career is to write on this blog.

So of course, an entire book based on the contrarian question, “What important truth do very few people agree with you on?” was bound to stand out to me.

Yes, this is another blog about Zero to One.

As I’ve reviewed my notes, reread the book, and written about its ideas, I’ve been struck by a higher-level idea.

Peter Thiel’s contrarian question asks for an important truth that few people agree with, not simply an off-the-wall idea.

The higher-level idea is that you can’t just be contrarian. To be successful, your contrarian ideas also have to be right.

Howard Marks of Oaktree Capital hits on this in a 2011 memo to clients when he says, “Non-consensus views can make money for you, but to do so they must be right.”

Contrarian views must be right to be effective. There are a lot of unconventional ideas that simply aren’t true.

There are three levels of beliefs, which are plotted in a matrix down below:

  1. Wrong (On the matrix, marked by red x’s)
  2. Conventional truths (Yellow inverted triangle)
  3. Contrarian and right (Green checkmark)

Each level of beliefs requires different action on our part. In the parts that follow, I’ll try to explain what those actions are.

First, you want to avoid anything that is wrong. If you’re wrong, you’re wrong. Don’t be wrong.

Contrarian falsities are uncomfortable. Conspiracy theories and cults fall into this category.

Conventional falsities are a little different. Financial bubbles (or any other kind of “bubble”) exist here. Everyone agrees on something, the bubble bursts, and the conventional knowledge is exposed as a lie.

Second, it is important to know conventional truths.

As former 76ers’ General Manager Sam Hinkie wrote in his resignation letter, “While contrarian views are absolutely necessary to truly deliver, conventional wisdom is still wise. It is generally accepted as the conventional view because it is considered the best we have.”

An example of a conventional truth is that home runs are better than singles. It’s true, but everyone knows it. There’s no real advantage gained by knowing this. But, there is a huge disadvantage to not knowing home runs are better than singles.

Third, but most difficult, is the contrarian truth.

A contrarian truth is often unearthed by figuring out what conventional wisdom is wrong about. Once you’ve uncovered a secret, the next step is to move faster than anyone else. If you do that well enough, you’ll gain what Peter Thiel calls a “Last Mover Advantage.”

To continue the sports theme, I’ll quote Sam Hinkie again:

“A league with 30 intense competitors requires a culture of finding new, better ways to solve repeating problems…Wins are a zero-growth industry (how many of you regularly choose to invest in those?), and the only way up is to steal share from your competitors. You will have to do something different. You will have to be contrarian.

Baseball’s sabermetric revolution outlined in Moneyball was an example of a contrarian truth. Unfortunately, a contrarian truth quickly becomes convention as competitors emulate your tactics. That’s why it’s hard to enjoy monopoly profits (sustained winning) in professional sports.

When applying this to your career, finding a green checkmark is the first step towards building a personal monopoly.

It’s not easy, but I suspect it’s worth it.

Thanks for reading.

Thank you to Jared Reklaitis for your help reviewing this post.