Reading Notes— Zero to One: Notes on Startups or How to Build the Future by Peter Thiel

PayPal cofounder and early Facebook investor Peter Thiel explores the essence of entrepreneurship and salesmanship in this outstanding book on economics.

Creating a game-changing company means going from zero to one — from nothing to something, instead of going from something to a slightly better something.
In Silicon Valley, nerds are skeptical of advertising, marketing, and sales because they seem superficial and irrational. But advertising matters because it works.

Top learning tips:

Tips on people management: Make every person in the company do just one thing.

Every employee’s one thing was unique, and everyone knew i would evaluate him only on that one thing. I had started doing this just to simplify the task of managing people. But then I noticed a deeper result: defining roles reduced conflict.

Tips on startups: Companies crash because they neglect one or more of the seven questions that every business must answer.

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?

Tips on scaleups: Once you create and dominate a niche market, then you should gradually expand into related and slightly broader markets.

eBay also started by dominating small niche markets. When it launched its auction marketplace in 1995, it didn’t need the whole world to adopt it at once; the product worked well for intense interest groups.

Tips on competition: Our educational system both drives and reflects our obsession with competition.

Competition can make people hallucinate opportunities where none exist. The crazy ’90s version of this was the fierce battle for the online pet store market. When pets.com folded after the dot-com crash, $300 million of investment capital disappeared with it.
If you can’t beat a rival, it may be better to merge.

Conclusion

Peter Thiel’s notes on business economics offer valuable insight into company culture, wisdom for the startup world.

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.
The essential first step is to think for yourself.