Being a contrarian means not being afraid to tell people when they're doing it wrong. In the eyes of contrarian investor Peter Thiel, just about everyone in Silicon Valley is doing it wrong. 

Speaking at the Post.Seed Conference on Tuesday, the PayPal co-founder and Founders Fund principal offered what amounted to a critique of the generally accepted model for funding startups, wherein seed and venture investors make lots of small investments in early-stage companies in the hopes that a few will yield big payoffs. 

"When you think of it as a lottery ticket, when you say, 'This might work, this might not work, I don't know,' you've already psyched yourself into losing," Thiel says. "You've talked yourself into not doing as much work. Where we've done best over the years is where we had a lot of conviction, where we were willing to put a lot of money into things."

Scenarios where startups take small investments from a large number of seed investors are dangerous, he says, because those investors, mistakenly believing there's safety in numbers, don't perform the due diligence they would if they had more exposure. "Each of those people is counting on the other people to do their work, but no one's really done the work," he says. "My default is to stay away."

The other thing that repels Thiel is startups that describe themselves as part of a trend popular enough to have its own buzzword. "Every single trend that you can mention is overrated," he says. "If you hear the words 'cloud computing,' 'big data,' 'machine learning,' you just think fraud and run away as fast as you can. You should be scared of buzzwords."