LinkedIn co-founder Reid Hoffman has one of the best podcasts around, Masters of Scale. He recently interviewed Peter Thiel (transcript) about their shared experiences at PayPal and how an organization can “break free from competition entirely.”

It is definitely worth listening to the whole episode as these long-time friends, who disagree with each other on almost everything political, find agreement on the importance of compound growth as a way to discourage competition. This is not using government to prevent competition; it is using your natural talents and hard work (and in the case of PayPal millions of dollars in investor capital) to achieve “escape velocity.” Others call it blue ocean strategy—go where nobody else is. The core idea is to differentiate yourself in such a way that you have a mini-monopoly with dedicated customers who value your unique contribution.

Reaching escape velocity is a bit like chemotherapy in reverse. In chemo, you want the drugs to kill the cancer faster than it kills you. In a growing company, with “exponentially growing users and exponentially growing costs,” as Thiel describes PayPal, you need the users to grow faster than the costs. He saw the future, and it was amazing, but neither he nor Hoffman nor any of the others at PayPal were confident they would get there. Thiel explains

one of the other calculations I did at Pay-Pal in March of 2001, we’d been business for 27 months of that time, was you do a discounted cash flow analysis. And it turns out you know all sorts of crazy different valuations you get to for the company. But the basic thing was the key variable was the terminal value. 80 percent of the value came from cash flows a decade or more in the future in 2011 and beyond. That’s like, how in the world do you think about that? [emphasis added]

Hoffman adds

You’d think just as PayPal was hitting its stride, we’d also rest easy. I wish. At no point did we say to ourselves: “Relax, Peter. We’ve hit escape velocity. Sign that $10 million check already.” In fact, we worried without end.

Our concern was grounded in a humbling truth: Escape velocity is not a fixed speed. It’s always and forever relative to your competitors. Your fastest competitor determines how hard you hit the gas.

Peter suspects the majority of Silicon Valley startups could gun it a little harder.

Why companies are not gunning it harder is tied to a number of other troubling questions about the economy’s lack of vitality. There are fewer startups, fewer men working, and generally less economic growth. Tax reform, regulatory reform, and other policy changes could help, as they have begun to do in North Carolina.

Government policies are only part of the equation, however, because government is inherently risk-averse. This is, for good reason, as Hoffman states, “Most of the things you imagine about the future are wrong.” Government cannot afford to be wrong. Like eBay in the story of PayPal, a fumble could anger major donors and millions of voters. It is up to us as neighbors, donors, workers, and possibly founders of civil society or business entities to take big risks with small bets. Every time one of us meets an unmet need in our community, we build the culture that yields more experimentation and less competition from government.

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You didn’t ask, but some of my other favorite podcasts deserve a plug: The Great Books hosted by John J. Miller, Econtalk hosted by Russ Roberts, How I Built This with Guy Raz, and the sermons from Louie Giglio at Passion City Church in Atlanta and J.D. Greear at The Summit Church here in the Triangle. They all focus on the culture and ideas that can scale away from politics.