I’ve decided to share my notes and thoughts on Peter Thiel’s Zero to One. Additionally, I’ve also embedded suggested reads in my notes that are relevant to the topic or chapter. For those who haven’t read the book (read it!), here’s a preview of it and some of the more powerful takeaways for me while reading it. For those who have read it, I hope this is a helpful reminder for you and a good reference as you continue to help build our future.
Note: Comments in parentheses are my own.
Zero to One
Peter Thiel with Blake Masters
(1) The Challenge of the Future
The act of creation is singular, as is the moment of creation, and the result is something fresh and strange.
By creating new technologies, we rewrite the plan of the world.
Debate: Is there a formula for entrepreneurship?
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 principles instead of formulas.
What important truth do very few people agree with you on?
Conventional beliefs only ever come to appear arbitrary and wrong in retrospect; whenever one collapses, we call the old belief a bubble.
What triggered dot com bust / bubble pop?
(2) Party Like It’s 1999
4 Lessons from Dot Com Crash:
1 – Make Incremental Advances
2 – Stay Lean and Flexible: lean = unplanned. You should not know what your business will do; planning is arrogant and inflexible. Instead you should try things out, “iterate” and treat entrepreneurship as agnostic experimentation.
3 – Improve on the Competition: don’t try to create a new market prematurely. The only way to know you have a real business is to start with an already existing customer, so you should build your company by improving on recognizable products already offered by successful competition
4 – Focus on Product, not Sales: technology is primarily about product development, not distribution
( Did companies like Product Hunt have a market-ready product first or did they build with the market and succeed with distribution as a result of social media?)
(3) All Happy Companies are Different
Monopolists, by contrast, disguise their monopoly by framing their market as the union of several large markets:
Search Engine X Mobile Phones X Wearable
Computers X Self-driving Cars
Monopoly is the condition of every successful business
(5) Last Mover Advantage
A great business is defined by its ability to generate cash flows in the future.
(Bubbles form when individuals inflate a company’s ability to generate CF in the future!)
Characteristics of a Monopoly:
1 – Proprietary technology: rule-of-thumb prop. tech must be at least 10X better than its closest substitute
2 – Network effects: network effect businesses must start with especially small markets
3 – Economies of scale
4 – Branding
People then products then traffic then revenue – Marissa Myer’s rebrand of Yahoo!
(It’s a balance of first-mover advantage and last-mover advantage)
(6) You are Not a Lottery Ticket
“Success is never accidental.” – Jack Dorsey on twitter
(Most people believe getting a job in finance is impossible without previous finance experience or technical skill set. The same is true for when people think about getting a job in tech. It’s possible to create the experience for yourself by accessing the same resources, engaging in the same conversations and building the same relationships with those already in those roles in the industry. So really, nothing is impossible because nothing can’t be learned.)
(Diversification of experiences and skill sets. In my opinion, specialization is overrated. I haven’t felt the need to specialize to be successful, only to be good at what I’m currently doing. And if you’re doing what you’re passionate about, you can’t fail.)
You’ve spent a decade curating a bewilderingly diverse resume to prepare for a completely unknowable future. Come what may, he’s ready – for nothing in particular.
Today, “good design” is an aesthetic imperative
It’s true that every great entrepreneur is first and foremost a designer
Visual + Experiential Perfection
(Design your business)
(7) Follow the Money
Two Rules for VC:
1. Only invest in companies that have the potential to return the value of the entire fund
2. Because rule number one is so restrictive, there can’t be any other rules
People who understand the power law will hesitate more than others when it comes to founding a new venture: they know how tremendously successful they could become by joining the very best company while it’s growing fast.
What secret is nature not telling you?
What secrets are people not telling you?
The actual truth is that there are many more secrets left to find, but they will yield only to relentless searchers.
A great company is a conspiracy to change the world.
Thiel’s Law: a startup messed up at it’s foundation cannot be fixed
To anticipate likely sources of misalignment in any company, it’s useful to distinguish between three concepts:
1. Ownership: who legally owns a company’s equity?
2. Possession: who actually runs the company on a day-to-day basis?
3. Control: who formally governs the company’s affairs?
Anyone who doesn’t own stock options or draw a regular salary from your company is fundamentally misaligned
Any kind of cash is more about the present than the future.
(10) The Mechanics of Mafia
‘Company culture’ doesn’t exist apart from the company itself: no company has a culture; every company is a culture
Never outsource recruiting
Why should the 20th employee join your company?
2 Great Points of Evaluation of a Candidate:
1. Good candidates can answer why your mission is compelling or why you’re doing something important that no one else is going to get done
2. Why is your company a good match for the individual personally
Everyone at your company should be different in the same way
The early team should share a common, unique obsession/idea that relates to the company’s mission
(Value propositions must be defined early on. Essentially, you’re forming a cult. Airbnb is one of the best examples of a great culture that’s continued despite its growth in size)
On the inside, every individual should be sharply distinguished by her work
Defining roles reduce conflicts
– Most fights inside a company happen when colleagues compete for the same responsibilities; startups face an especially high risk of this since job roles are fluid at the early stages
– Eliminating competition makes it easier for everyone to build the kinds of long-term relationships that transcend mere professionalism
Every company is also its own ecosystem
(11) If You Build It, Will They Come?
The engineer’s grail is a product great enough that “it sells itself.” But anyone who would actually say this about a real product must be lying…
If you’ve invented something new but you haven’t invented an effective way to sell it, you have a bad business – no matter how good the product.
Advertising works for startups when CAC and CLTV make every other distribution channel uneconomical (i.e. The advertisements justify the method of acquisition because of users and revenue achieved…all about ROI)
A product is viral if its core functionality encourages users to invite their friends to become users too. (Network effects in The Networked Age)
Just get on distribution channel to work, then have a great business
Important to have PR strategy; selling company to media is necessary part to selling to everyone else
(12) Man and Machine
People compete for jobs and for resources; computers compete for neither
But big data is usually dumb data. Computers can find patterns that elude humans, but they don’t know how to compare patterns from different sources or how to interpret complex behaviors. Actionable insights can only come from a human analyst
(Will this statement always be true? Maybe the human role will change but will not become obsolete with new technologies that require human guidance but predictive analytics will become so powerful that patters across sources can and will be effectively interpreted by computers)
(13) Seeing Green
Seven questions every business must answer:
1. The Engineering Questions: Can you create breakthrough technology instead of incremental improvements?
* Proprietary technology significantly differentiates?
2. The Timing Question: Is now the right time to start your particular business?
3. The Monopoly Question: Are you starting with a big share of a small market?
* Identify and Own a niche market
4. The People Question: Do you have the right team?
5. The Distribution Question: Do you have a way to not just create but deliver your products?
6. The Durability Question: Will your market position be defensible 10 and 20 years into the future?
* The Last Mover
7. The Secret Question: Have you identified a unique opportunity that others don’t see?
Myths of Social Entrepreneurship:
“…corporations have great power, but they’re shackled to the profit motive; nonprofits pursue the public interest, but they’re weak players in the wider economy. Social entrepreneurs aim to combine the best of both worlds and ‘do well by doing good.’ Usually they end up doing neither.”
Great companies have secrets: specific reasons for success that other people don’t see.
(14) The Founder’s Paradox
A unique founder can make authoritative decisions, inspire strong personal loyalty, and plan ahead for decades.
Paradoxically, impersonal bureaucracies staffed by trained professionals can last longer than any lifetime, but they usually act with short time horizons.
*We need founders…a great founder can bring out the best work from everybody at his or her company
(Conclusion) Stagnation or Singularity?
“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.”