Clippings from Peter Thiele’s – ‘Zero to One’

It would of been very easy to highlight most of, if not all of this book. Many great insights into leadership, innovative ways of thinking and business as a whole.

With the title being Zero to One: Notes on Startups, or How to Build the Future it may be insinuated that this read is steered mostly towards start ups. And whilst the book dives into the rise and rise of the formidable PayPal, It is certainly not just that. It offers much more.

Here are the sections highlighted as I went through. When I remembered to.

2. Stay lean and flexible All companies must be “lean,” which is code for “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.

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 competitors.

The lesson for entrepreneurs is clear: if you want to create and capture lasting value, don’t build an undifferentiated commodity business.

So why do people believe that competition is healthy? The answer is that competition is not just an economic concept or a simple inconvenience that individuals and companies must deal with in the marketplace. More than anything else, competition is an ideology—the ideology—that pervades our society and distorts our thinking. We preach competition, internalize its necessity, and enact its commandments; and as a result, we trap ourselves within it—even though the more we compete, the less we gain.

We teach every young person the same subjects in mostly the same ways, irrespective of individual talents and preferences. Students who don’t learn best by sitting still at a desk are made to feel somehow inferior, while children who excel on conventional measures like tests and assignments end up defining their identities in terms of this weirdly contrived academic parallel reality.

This advice can be hard to follow because pride and honor can get in the way. Hence Hamlet: Exposing what is mortal and unsure To all that fortune, death, and danger dare, Even for an eggshell. Rightly to be great Is not to stir without great argument, But greatly to find quarrel in a straw When honor’s at the stake.

If you can recognize competition as a destructive force instead of a sign of value, you’re already more sane than most. The next chapter is about how to use a clear head to build a monopoly business.

For a company to be valuable it must grow and endure, but many entrepreneurs focus only on short-term growth.

Paradoxically, then, network effects businesses must start with especially small markets. Facebook started with just Harvard students—Mark Zuckerberg’s first product was designed to get all his classmates signed up, not to attract all people of Earth. This is why successful network businesses rarely get started by MBA types: the initial markets are so small that they often don’t even appear to be business opportunities at all.

Start Small and Monopolize Every startup is small at the start. Every monopoly dominates a large share of its market. Therefore, 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. If you think your initial market might be too big, it almost certainly is.

The perfect target market for a startup is a small group of particular people concentrated together and served by few or no competitors.

Every class of people in China takes the future deadly seriously.

As Karl Marx and Friedrich Engels saw clearly, the 19th-century business class created more massive and more colossal productive forces than all preceding generations together. Subjection of Nature’s forces to man, machinery, application of chemistry to industry and agriculture, steam-navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalisation of rivers, whole populations conjured out of the ground—what earlier century had even a presentiment that such productive forces slumbered in the lap of social labor?

Actually, most everybody in the modern world has already heard an answer to this question: progress without planning is what we call “evolution.” Darwin himself wrote that life tends to “progress” without anybody intending it. Every living thing is just a random iteration on some other organism, and the best iterations win.

MONEY MAKES MONEY. “For whoever has 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).

Most people act as if there were no secrets left to find. An extreme representative of this view is Ted Kaczynski, infamously known as the Unabomber. Kaczynski was a child prodigy who enrolled at Harvard at 16. He went on to get a PhD in math and become a professor at UC Berkeley. But you’ve only ever heard of him because of the 17-year terror campaign he waged with pipe bombs against professors, technologists, and businesspeople.

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. If you overachieve and end up learning something that’s not on the test, you won’t receive credit for it.

Consider the monopoly secret again: competition and capitalism are opposites.

“Thiel’s law”: a startup messed up at its foundation cannot be fixed.

In the boardroom, less is more. The smaller the board, the easier it is for the directors to communicate, to reach consensus, and to exercise effective oversight.

In no case should a CEO of an early-stage, venture-backed start up receive more than $150,000 per year in salary.

The graffiti artist who painted Facebook’s office walls in 2005 got stock that turned out to be worth $200 million, while a talented engineer who joined in 2010 might have made only $2 million.

We sold PayPal to eBay for $1.5 billion in 2002. Since then, Elon Musk has founded SpaceX and co-founded Tesla Motors; Reid Hoffman co-founded LinkedIn; Steve Chen, Chad Hurley, and Jawed Karim together founded YouTube; Jeremy Stoppelman and Russel Simmons founded Yelp; David Sacks co-founded Yammer; and I co-founded Palantir. Today all seven of those companies are worth more than $1 billion each. PayPal’s office amenities never got much press, but the team has done extraordinarily well, both together and individually: the culture was strong enough to transcend the original company.

The start up uniform encapsulates a simple but essential principle: everyone at your company should be different in the same way—a tribe of like-minded people fiercely devoted to the company’s mission.

The best thing I did as a manager at PayPal was to make every person in the company responsible for doing just one thing. Every employee’s one thing was unique, and everyone knew I would evaluate him only on that one thing.

Like acting, sales works best when hidden. This explains why almost everyone whose job involves distribution—whether they’re in sales, marketing, or advertising—has a job title that has nothing to do with those things.

A complex sales approach would have made Box a forgotten startup failure; instead, personal sales made it a multibillion-dollar business.

ZocDoc is a Founders Fund portfolio company that helps people find and book medical appointments online. The company charges doctors a few hundred dollars per month to be included in its network.

Whoever is first to dominate the most important segment of a market with viral potential will be the last mover in the whole market.

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.

Watson, Deep Blue, and ever-better machine learning algorithms are cool. But 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?

Luddites claim that we shouldn’t build the computers that might replace people someday; crazed futurists argue that we should. These two positions are mutually exclusive but they are not exhaustive: there is room in between for sane people to build a vastly better world in the decades ahead.

1. The Engineering Question Can you create breakthrough technology instead of incremental improvements?

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?

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 product?

6. The Durability Question Will your market position be defensible 10 and 20 years into the future?

7. The Secret Question Have you identified a unique opportunity that others don’t see?

There’s nothing wrong with a CEO who can sell, but if he actually looks like a salesman, he’s probably bad at sales and worse at tech.

The Tesla Model S sedan, elegantly designed from end to end, is more than the sum of its parts: Consumer Reports rated it higher than any other car ever reviewed, and both Motor Trend and Automobile magazines named it their 2013 Car of the Year.

Elon describes his staff this way: “If you’re at Tesla, you’re choosing to be at the equivalent of Special Forces. There’s the regular army, and that’s fine, but if you are working at Tesla, you’re choosing to step up your game.”

OF THE SIX PEOPLE who started PayPal, four had built bombs in high school. Five were just 23 years old—or younger. Four of us had been born outside the United States. Three had escaped here from communist countries: Yu Pan from China, Luke Nosek from Poland, and Max Levchin from Soviet Ukraine. Building bombs was not what kids normally did in those countries at that time.

The most famous people in the world are founders, too: instead of a company, every celebrity founds and cultivates a personal brand.

The famous and infamous have always served as vessels for public sentiment: they’re praised amid prosperity and blamed for misfortune.

More recently, Bill Gates has shown how highly visible success can attract highly focused attacks. Gates embodied the founder archetype: he was simultaneously an awkward and nerdy college-dropout outsider and the world’s wealthiest insider.

Just as the legal attack on Microsoft was ending Bill Gates’s dominance, Steve Jobs’s return to Apple demonstrated the irreplaceable value of a company’s founder. In some ways, Steve Jobs and Bill Gates were opposites. Jobs was an artist, preferred closed systems, and spent his time thinking about great products above all else; Gates was a businessman, kept his products open, and wanted to run the world. But both were insider/outsiders, and both pushed the companies they started to achievements that nobody else would have been able to match.

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.

Above all, don’t overestimate your own power as an individual.

The single greatest danger for a founder is to become so certain of his own myth that he loses his mind. But an equally insidious danger for every business is to lose all sense of myth and mistake disenchantment for wisdom.

The most dramatic version of this outcome is called the Singularity, an attempt to name the imagined result of new technologies so powerful as to transcend the current limits of our understanding. Ray Kurzweil, the best-known Singularitarian, starts from Moore’s law and traces exponential growth trends in dozens of fields, confidently projecting a future of superhuman artificial intelligence.

But no matter how many trends can be traced, the future won’t happen on its own. What the Singularity would look like matters less than the stark choice we face today between the two most likely scenarios: nothing or something. It’s up to us. 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.

Peter Thiel, Zero to One. Crown Publishing Group. Kindle Edition.

There are plenty of great reviews and write ups on this book. Highly recommended from my point. As said in the preface, there are many valuable learning’s and thought processes to be adopted and taken away.


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