Zero to One – by Peter Thiel & Blake Masters
Date read: 1/12/18. Recommendation: 8/10.
I had high expectations for this one, considering it has become a sacred text for many startups and entrepreneurs. But Zero to One did not disappoint. The core of the book emphasizes that there is no single secret to innovation and entrepreneurship. But Thiel explains that if we want to to create a better future, we can't wait around, we have to go out and actually build it. He touches on concepts like vertical progress, opposite principles, monopolies, luck, venture capital, and the importance of getting the founders right when launching a new startup. The first half of the book is particularly brilliant. If you're an entrepreneur or working in technology, there's a reason this book is so highly rated.
See my notes below or Amazon for details and reviews.
My Notes:
The paradox of teaching entrepreneurship is that such a formula necessarily cannot exist; because every innovation is new and unique, no authority can prescribe in concrete terms how to be innovative.
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?"
Brilliant thinking is rare, but courage is in even shorter supply than genius.
Horizontal or extensive progress:
-Going from 1 to n
-Taking a typewriter and building 100
-Globalization (China)
Vertical or intensive progress:
-Going from 0 to 1
-Taking a typewriter and building a word processor
-Technology (Silicon Valley)
Spreading old ways to create wealth around the world will result in devastation, not riches. In a world of scarce resources, globalization without new technology is unsustainable.
Focus on building from small groups of people bound together by a sense of mission: It's hard to develop new things in big organizations, and it's even harder to do it by yourself. Small size affords space to think.
Conventional beliefs only ever come to appear arbitrary and wrong in retrospect; whenever one collapses, we call the old belief a bubble.
Opposite principles that are more correct than common startup lessons:
- It is better to risk boldness than triviality (instead of making incremental advances)
- A bad plan is better than no plan (stay lean and flexible)
- Competitive markets destroy profits (improve on the competition)
- Sales matters just as much as product (focus on product not sales)
To build the next generation of companies, we must abandon the dogmas created after the crash (dot-com).
The most contrarian thing of all is not to oppose the crowd but to think for yourself.
Under perfect competition, in the long run no company makes an economic profit.
If you want to create and capture lasting value, don't build an undifferentiated commodity business.
Competition is an ideology–the ideology–that pervades our society and distorts our thinking.
Higher education is the place where people who had big plans in high school get stuck in fierce rivalries with equally smart peers over conventional careers like management consulting and investment banking.
If you can recognize competition as a destructive force instead of a sign of value, you're already more sane than most.
The value of a business today is the sum of all the money it will make in the future.
Every startup should start with a very small market. Always err on the side of starting too small. The reason is simple: it's easier to dominate a small market than a large one.
The perfect target market for a startup is a small group of particular people concentrated together and served by few or no competitors. Any big market is a bad choice, and a big market already served by competing companies is even worse.
"Victory awaits him who has everything in order–luck, people call it." -Roald Amundsen
The strange history of the Baby Boom produced a generation of indefinite optimists so used to effortless progress that they feel entitled to it. Whether you were born in 1945 or 1950 or 1955, things got better every year for the first 18 years of your life, and it had nothing to do with you...A whole generation learned from childhood to overrate the power of change and underrate the importance of planning.
Instead of working for years to build a new product, indefinite optimists rearrange already-invented ones–bankers, lawyers, management consultants.
In an indefinite world, people actually prefer unlimited optionality; money is more valuable than anything you could possibly do with it. Only in a definite future is money a means to an end, not the end itself.
But indefinite optimism seems inherently unsustainable: how can the future get better if no one plans for it?
But leanness is a methodology, not a goal. Making small changes to things that already exist might lead you to a local maximum, but it won't help you find the global maximum.
Darwinism may be a fine theory in other contexts, but in startups, intelligent design works best.
Long-term planning is often undervalued by our indefinite short-term world.
A business with a good definite plan will always be underrated in a world where people see the future as random.
Vilfredo Pareto – In 1906 discovered the "Pareto principle," or the 80-20 rule, when he noticed that 20% of the people owned 80% of the land in Italy–a phenomenon that he found just as natural as the fact that 20% of the peapods in his garden produced 80% of the peas.
The biggest secret in venture capital is that the best investment in a successful fund equals or outperforms the entire rest of the fund combined.
VCs must find the handful of companies that will successfully go from 0 to 1 and then back them with every resource.
Venture-backed companies create 11% of all private sector jobs. They generate annual revenues equivalent to an astounding 21% of GDP. Indeed, the dozen largest tech companies were all venture-backed.
An entrepreneur makes a major investment just by spending her time working on a startup. Therefore every entrepreneur must think about whether her company is going to succeed and become valuable.
The power law means that differences between companies will dwarf the differences in roles inside companies. You could have 100% of the equity if you fully fund your own venture, but if it fails you'll have 100% of nothing. Owning just 0.01% of Google, by contrast, is incredibly valuable (more than $35 million as of this writing).
A conventional truth can be important–it's essential to learn elementary mathematics, for example–but it won't give you an edge. It's not a secret.
If everything worth doing has already been done, you may as well feign an allergy to achievement and become a barista.
Bad decisions made early on–if you choose the wrong partners or hire the wrong people, for example–are very hard to correct after they are made.
Anyone who doesn't own stock options or draw a regular salary from your company is fundamentally misaligned...That's why hiring consultants doesn't work.
You need people who are not just skilled on paper but who will work together cohesively after they're hired.
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.
PayPal: Needed smaller niche market segment with a higher velocity of money–found this segment in eBay "PowerSellers." There were 20,000 of them. Because eBay's solution to the payment problem was terrible, merchants were extremely enthusiastic early adopters.
If you can get just one distribution channel to work, you have a great business. If you try for several but don't nail one, you're finished.
The most valuable businesses of coming decades will be built by entrepreneurs who seek to empower people rather than try to make them obsolete.
The most valuable companies in the future won't ask what problems can be solved with computers alone. Instead, they'll ask: how can computers help humans solve hard problems?
Companies must strive for 10x better because merely incremental improvements often end up meaning no improvement at all for the end user.
Apple's value crucially depended on the singular vision of a particular person. This hints at the strange way in which the companies that create new technology often resemble feudal monarchies rather than organizations that are supposedly more "modern." A unique founder can make authoritative decisions, inspire strong personal loyalty, and plan ahead for decades.
We cannot take for granted that the future will be better, and that means we need to work to create it today.