Book Notes: Zero to One

Zero to One: Notes on Start Ups, or How to Build the Future by Peter Thiel and Blake Masters
My rating: 4 of 5 stars

There are two types of progress –
Vertical progress – doing new things (technology = 0..1)
Horizontal progress – coping things that work (globalisation = 0..n)

Dogma form the dot-com burst:

  1. Make incremental advances
  2. Stay lean and flexible
  3. Improve on the competition
  4. Focus on product, not sales

The opposite are likely more correct:

  1. It is better to risk boldness than triviality
  2. A bad plan is better than no plan
  3. Competitive market destroy profits
  4. Sales matters just as much as product

What valuable company is nobody building?

A company can create a lot of value, but not be valuable in itself – how do you capture some of that value?

Perfect competition and monopolies – companies are closer to one than it may seem. Companies want to be monopolies and spin this in whichever way is useful for them – e.g. Google saying that they are a small fraction of the advertising market but in reality are nearly a monopoly of the online search advertising market. For start ups it might be finding the small niche to say that no one else is covering. Monopolies can afford to think about things which are not money, non-monopolies can’t afford to.

Competition is an ideology, but the more we compete the less we gain. Microsoft and Google were competing while Apple came along and supposed both of them.

Characteristics of a monopoly

  1. Proprietary technology
  2. Network effects
  3. Economies of scale
  4. Branding

Building a monopoly

  1. Start small and monopolise
  2. Scale up
  3. Don’t disrupt

How will the future be?

OptimisticThe future is certain and good (US 50s/60s)The future is random but good (US post 1982)
Pessimistic The future is certain and bad (China)The future is random but bad (Europe)

Indefinite – promotes “a little bit of everything” and ends up with mediocrity
Definite – promotes certainty resulting in striving to be the best at one thing

  • Conventions – easy
  • Secrets – hard
  • Mysteries – impossible

Secrets are the things we need to find. Some secrets in the past have been sign posted e.g. the globe with missing countries or the periodic table with missing elements but right now the secrets are less obvious. There are two types of secrets

  • Nature – to find them someone must study aspects of the undiscovered world
  • People – things which people don’t know or that they are trying to hide

Foundational company concepts

  • Ownership – who legally owns a company’s equity?
  • Possession – who actually runs the company on a day-to-day basis?
  • Control – who formally governs the company’s affairs?

Sales is key and tends to be under appreciated, specially by “nerds”. How to sell?

Viral marketing$1Consumers
Marketing$100Small Business
Sales$10,000 Small Business
Complex sales$10 mBig Business or government

Key questions every business must answer

  1. Engineering – can you create breakthrough technology instead of incremental improvements?
  2. Timing – is now the right time to start your particular business?
  3. Monopoly – are you starting with a big share of a small market?
  4. People – do you have the right team?
  5. Distribution – do you have a way to not just create but deliver your product?
  6. Durability – will your market position be defensible 10 and 20 years into the future?
  7. Secret – have you identified a unique opportunity that others don’t see?

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