Zero to One
Rating: 9/10Author: Peter Thiel Read The Original
An in-depth look in to Peter Thiel's unique philosophy in how to create a successful company in the 21st century. Thiel was the founder of Paypal, one of the earliest investors in Facebook and now the CEO of Palantir, a company that recently went public. This short book is the accumulation of all Peter's experiences, failures, and lessons learned in being part of some of the most revolutionary companies ever built. Which is why the book is worth way more than the price you'll pay for it, especially if you desire to build a company one day or are looking to become an investor. After finishing the book I was filled with counter-intuitive insights that ignited tons of possibilities in my thinking.
Zero to One Summary
The main idea is that most companies go from 1 to 1.1 to 1.2 and so forth, it's the revolutionaries companies that go from zero to one, from no solution to game-changing solution, from nothing expect to something expected. To make a hugely disruptive and lasting impact you need to create a paradigm shift and the best way to do that is to find your own zero.
There is no Formula
- There is no formula for entrepreneurship. This is the paradox of teaching entrepreneurship. Every innovation is new and unique and no one can teach it to you.
- "Indeed, the single most powerful pattern I have noticed is that successful people find value in unexpected places, and they do this by thinking about business from [[First Principal Thinking]] instead of formulas."
The Best Interview Question
- Whenever I interview someone for a job, I like to ask this question: “What important truth do very few people agree with you on?”
- People usually answer with there is no God, America is exceptional, our education system is broken. Thiel says these are bad answers
- "A good answer takes the following form: “Most people believe in x, but the truth is the opposite of x.”
What does this have to do with the future?
- "In the most minimal sense, the future is simply the set of all moments yet to come. But what makes the future distinctive and important isn’t that it hasn’t happened yet, but rather that it will be a time when the world looks different from today. … Most answers to the contrarian questions are different ways of seeing the present; good answers are as close as we can come to looking into the future."
The Contrarian Question
- “What important truth do very few people agree with you on?” is hard to answer at first. It’s better to start with, “what does everybody agree on?”
- The first step to thinking clearly is to question what we think we know about the past.
- The dot com bubble led to these 4 trains of thought:
- 1. Make incremental advances
- 2. Stay lean and flexible
- 3. Improve on the competition
- 4. Focus on product, not sales
- These lessons have become dogma in the startup world; those who would ignore them are presumed to invite the justified doom visited upon technology in the great crash of 2000. And yet the opposite principles are probably more correct.
- 1. It is better to risk boldness than triviality.
- 2. A bad plan is better than no plan.
- 3. Competitive markets destroy profits.
- 4. Sales matters just as much as product.”
- To build the future we need to challenge the dogmas that shape our view of the past. That doesn’t mean the opposite of what is believed is necessarily true, it means that you need to rethink what is and is not true and determine how that shapes how we see the world today. As Thiel says, “The most contrarian thing of all is not to oppose the crowd but to think for yourself.
Competition is For Losers
- “If you can recognize competition as a destructive force instead of a sign of value, you’re already more sane than most”
- Airlines serve millions of customers and create hundreds of billions of dollars in revenue but they only make 37 cents per passenger trip. On the other hand, Google has 100 times higher profit margins with almost the same amount of revenue.
- You need to become a monopolist and escape this rat race.
- You may assume monopolies are bad but this is true only in a world where nothing changes. Creative monopolists give customers more choices by adding entirely new categories of products.
Business vs Startup
- Why do startups have such high valuations?
- When Twitter went public in 2013, it was valued at $24B — 12 times higher than Times market cap. Twitter was losing money while Times earned $133M the same year.
- Another example of this is Nikola, an EV startup that has not sold a single vehicle but is valued at $34 billion.
- The answer is growth, startups have such strong potential for fast growth due to power of technology and network effects. Getting users is usually the first priority and profiting off them comes after.
- However, One big error of some entrepreneurs is that they focus only on growth while forgetting about sustainability (Zynga, Groupon). Ask yourself: will your business be around 10 years from now?
- Recruiting should never be outsourced. To get talented people, ask yourself: “Why should the 20th employee should join your company?
- Focus on mission & team when persuading people to join your company. "You will be democratizing finance".
Being Last As An Advantage
- The first mover advantage is tactic not a goal.
- What really matters is generating cash flows in the future.
- Being the first mover doesn’t do you any good if someone else comes along and unseats you. It’s much better to be the last mover – that is, to make the last great development in a specific market and enjoy years or even decades of monopoly profits.
- We cannot take for granted that the future will be better, and that means we need to work to create it today.
- Our task today is to find singular ways to create the new things that will make the future not just different, but better— to go from 0 to 1. The essential first step is to think for yourself. Only by seeing our world anew, as fresh and strange as it was to the ancients who saw it first, can we both re-create it and preserve it for the future.