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What do I love about: Zero to One?
Everything!!!!
This book is simple and easy to digest. Thiel challenges conventional wisdom by focusing on creating something entirely new rather than incrementally improving existing products or services. His concept of going from “zero to one” — creating novel and transformative innovations — is both inspiring and thought-provoking. I appreciate Thiel’s contrarian views, such as:
- Competition is overrated; monopolies are better for innovation.
- The importance of asking and answering fundamental, contrarian questions.
- Startups should focus on domination of a niche market before expanding.
What do I not love about: Zero to One?
Zilch
Who should read: Zero to One?
Anyone curious about what makes a good startup.
Who should not read: Zero to One?
Anyone who does not care for personal development
Notes about Zero to One?
Chapter 1:The challenge of the future
- 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 means copying things that work- going from 1 to n. The single word for horizontal progress is globalization.
- Vertical or intensive progress means doing new things- going from 0 to 1. The single word for vertical, 0 to 1 progress is technology
- Successful people find value on unexpected places, and they do this by thinking about business from first principles instead of formulas
- It is hard to develop new things in big organization and it is even harder to do it yourself. Bureaucratic hierarchies move slowly, and entrenched interest shy away from risks.
- Positively defined, a startup is the largest group of people you can convince of a plan to build a different future. A new company’s most important strength is new thinking.
Chapter 2: Party like it is 1999
- Irrationality was rational given that appending “.com” to your name could double your value overnight
Chapter 3: All happy companies are different
- If you want to create lasting value, don’t build an undifferentiated commodity business
- In business, money is either an important thing or it is everything
- Monopolies drive progress because the promise of years or even decades of monopoly profits provides a powerful incentive to innovate. Then monopolies can keep innovating because profits enable them to make the long-term plans and to finance the ambitious research projects that firms locked in competition can’t dream of.
Chapter 4: The ideology of competition
- Sometimes you have to fight. Where that is true, you should fight and win. There is no middle ground: either don’t throw any punches or strike hard and end it quickly
Chapter 5: Last mover advantage
- Even a monopoly is only a great business if it can endure in the future
- What does a company with large cashflow far into the future look like? Every monopoly is unique, but they usually share some combinations of the following characteristics: proprietary technology, network effects, economies of scale, and branding
- Proprietary technology; A good rule of thumb, proprietary technology must be at least 10 times better than its closest substitute in some important dimension to lead to a real monopolistic advantage.
- The clearest way to make a 10X improvement is to invent something completely new.
- You can also a 10X improvement through superior integrated design.
- Economies of scale; A monopoly business gets stronger as it gets bigger: the fixed cost of creating a product (engineering, management, office space)
- Branding; Beginning with brand rather than substance is dangerous
- No technology company can be built on branding alone
- Building a monopoly; every startup should start with a very small market. It is 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.
- This is why it’s always a red flag when entrepreneurs talk about getting 1% of a $100billion market
- The most successful companies make the core progression-to first dominate a specific niche and then scale to adjacent markets- a part of their founding narrative
- If your company can be summed up by its opposition to already existing firms, it can’t be completely new and its probably not going to become a monopoly
- As you craft a plan to expand to adjacent markets, don’t disrupt: avoid competition as much as possible
- So being the first mover does not do you good, if someone else comes along and unseat you. It is much better to be the last mover.
Chapter 6: You are not a lottery ticket
- Success results from a patchwork of lucky breaks and arbitrary advantages
- In high school, ambitious students compete even harder to appear omnicompetent. By the time a student gets to college, he spent a decade curating a bewildering diverse resume to prepare for a completely unknowable future
- To an indefinite optimist, the future will be better, but he doesn’t know how exactly, so he won’t make any specific plans. He expects to profit from the future but sees no reason to design it concretely
- The number of new drugs approved per billion dollars spent on R&D has halved every nine years since 1950.
- Leanness is a methodology not a goal. Making small changes to things that already exist might lead you to a local maximum, but it wont help you find the global maximum.
- The most important lesson to learn from Jobs has nothing to do with aesthetics. The greatest thing job designed was his business.
- Jobs saw that you can change the world through careful planning, not by listening to the focus group feedback or copying others success
- We have to find our way back to a definite future, and the western world needs nothing short of a cultural revolution to do it.
Chapter 7: Follow the money
- Money makes money. For whoever will be given more and they will have an abundance. Whoever does not have, even what they have will be taken from them (Matthew 25:29)
- Never underestimate exponential growth
- We don’t live in a normal world; we live under a power law
- If you focus on diversification instead of a single minded pursuit of the very few companies that can become overwhelmingly valuable, you will miss those rare companies in the first place
- Only invest in companies that have the potential to return the value of the entire fund
- VCs must find the handful of companies that will successfully go from 0 to 1 and then back them with every resource
- Every single company in a good venture portfolio must have the potential to succeed at vast scale.
- Once you think you are playing the lottery, you have already psychologically prepared yourself to lose.
- It does not matter what you do. You should focus relentlessly on something you are doing, but before that you must think hard about whether it will be valuable in the future.
- If you do start your own company, you must remember the power law to operate it well.
Chapter 8: Secrets
- You can achieve difficult things, but you cant achieve the impossible
- In other to be happy, every individual needs to have goals whose attainment requires effort and needs to succeed in attaining at least some of his goals
- 4 social trends have conspired to root out belief in secrets. First, incrementalism. From an early age, we are taught that the right way to do things is to proceed one very small step at a time, day by day, grade by grade. Second is risk aversion. People are scared of secrets because they are scared of being wrong. The prospect of being lonely but right- dedicating your life to something that no one else believes in – is already hard. The prospect of being lonely and wrong can be unbearable. Third is complacency. Social elites have the most freedom and ability to explore new thinking, but they seems to believe in secrets the least. Fourth is flatness. As globalization advances, people perceive the world as homogenous, highly competitive marketplace: the world is flat. Given this assumption, anyone who might have had the ambition to look for a secret will first ask himself: if it were possible to discover something new, wouldn’t someone from the faceless global talent pool or smarter and more creative people have found it already? The actual truth is that there are many more secrets left to find, but they will yield only to relentless searchers,
- There are two kinds of secrets: secrets of nature and secrets about people
- What secrets is nature not telling you? What secrets are people not telling you?
- You would notice that monopolist downplay their monopoly status to avoid scrutiny, while competitive firms strategically exaggerate their uniqueness
- Unless you have perfectly conventional beliefs, it is rarely a good idea to tell everybody everything that you know
Chapter 9: Foundations
- When I consider investing in startups, I study the founding teams
- Technical abilities and complementary skill sets matter
- It is very hard to go from 0 to 1 without a team
- Anyone who doesn’t own stock options or draw a regular salary from your company is fundamentally misaligned
- A company does better the less it pays the CEO- that’s one of the single clearest patterns I have noticed from investing in hundreds of startups. In no case should a CEO of an early-stage venture backed startup receive more than $150k per year in salary
- A cash poor executive, by contrast will focus on increasing the value of the company as a whole
Chapter 10: The mechanics of mafia
- If you can’t count durable relationships among the fruits of your time at work, you haven’t invested your time well- even in purely financial terms
- But there are two general kinds of good answers: answers about your mission and answer about the team
- You should be able to explain why your company is a unique match for him personally. And if you can’t do that, he is probably not the right match
Chapter 11: If you build it, would they come?
- Advertising does not exist t make you buy a product right away; it exists to embed subtle impressions that will drive sales later
- If you have invented something new but you have not invented an effective way to sell it, you have a bad business-no matter how good the product.
- Superior sales and distribution by itself can create a monopoly, even with no product differentiation
- Complex sales works best when you don’t have “salesmen” at all.
- At paypal, we didn’t want to acquire more users at random; we wanted to get the most valuable users first.
Chapter 12: Man and Machine
- The most valuable business of the coming decades will be built by entrepreneurs who seek to empower people rather than try to make them obsolete
- Humans and computers are not just more or less powerful than each other-they are categorically different
- Gains from working with computers are much higher than gains from trade with other people
Chapter 13: Seeing Green
- Companies must strive for 10X better because merely incremental improvements often end up meaning no improvement at all for the end user
- Whatever is good enough to receive applause from all audiences can only be conventional, like the general idea of green energy
Chapter 14: The founders paradox
- We should be more tolerant of founders who seem strange or extreme; we need unusual individuals to lead companies beyond mere incrementalism
- Founders are important not because they are the only ones whose work has value, but rather because a great founder can bring out the best work from everybody at his company