Main Takeaways from Peter Thiel’s Zero to One
Going from zero to one is all about how to discover radically new ideas, ideas where nothing like it has been made before. For some of the best entrepreneurs in the world, such ideas comes naturally. In order to gauge whether a person possesses the needed creativity, Thiel uses his favorite interview question: What important truth do very few people agree with you on?
Good answers to the above question looks into the future, while bad answers will state something obvious or something most people agree on. To describe the nature of the ideas Thiel is seeking, he is distinguishing between horizontal and vertical progress. Horizontal progress is copying things that work, or in other words going from one to n. Vertical progress is when you create something truly new, you go from zero to one.
Creating a Monopoly Should be the Goal of Every Entrepreneur in Order to Maximize Profits
One of the advantages with going from zero to one is that you by definition get the first mover advantage and in most cases will enter a market with low competition. However slightly exaggerated, when Wall Street Journal in 2014 posted an article with the title “Competition is for Losers”, they described Thiel’s beliefs fairly precisely. According to Peter, you should never enter a market with perfect competition, but rather seek to create a monopoly. This will make sure that you can generate massive profit margins for years to come.
The best problems is the ones that no one is trying to solve
In order to create a monopoly you have to develop a company with a certain set of characteristics. Most monopolies have at least one of the following:
- Proprietary technology, which is at least 10 times better than current technology
- A world-renowned brand
- Massive economies of scale
- Huge network effects
In order to get the wanted network effects, the product should be something that becomes more useful the more people who use it. Every monopoly must start with a small market, preferably with no competitors, and then later expand. A smaller market is more likely to have similar customers with the same needs and problems. Thus, it will be a lot easier to figure out what’s needed to get them aboard, rather than trying to get a million different people to join at once.
Start Looking for Secrets To Discover Ideas for a Monopoly
Thiel believes that all startups should be based on secrets. Secrets are something that is hard, but doable to solve, and most often not too obvious. There are many elements that can lead you away from discovering secrets; incrementalism, risk aversion, complacency, and flatness take you away from finding secrets.
There are two types of secrets:
- Secrets about people
- Secrets of nature
People secrets are secrets about people that are not commonly known. In order to discover such secrets, people should ask themselves what secrets people are not telling. This can be things people do not know about themselves or they do not want others to know. Further, there are a lot of things that people are not allowed to talk about. People do not tell that they are running a monopoly, and therefore that must be something that they want to hide, a secret. Similarly, there are also many things that are forbidden, taboo or underappreciated. All of these things can be considered secrets, and serve as great starting points for startups.
Thiel also claims that the best place to look for secrets is where no one else is looking. Many people are highly affected by their background, and does not possess the capabilities to open up their mind to new ideas and change their view on the world. It is certainly possible to discover secrets by thinking about fields that are important, but haven’t been standardized yet. One example of such a field is nutrition, which is fairly uncommon to study, but everybody need it.
Nature secrets are secrets involving something that is not yet discovered about the world. Such secrets can be discovered by studying the physical world, and entrepreneurs should ask themselves what secrets nature are not telling them.
Every Startup Need a Great Team to Be Able to Execute on Their Idea
According to Peter Thiel, you should try to attract employees to your team by focusing on your mission and team. Promise what no one else can do, a great mission and team will make you stand out, and help you attract the people who are needed in order to execute on the chosen idea. Make every employee responsible for only one thing, and make sure that there is minimal overlap between different people’s tasks. This will make people feel important, and make sure that there are no misunderstandings or discussions about responsibilities.
Another thing that can be done in order to keep the employees happy is to pay the CEO the least. Never pay more than $150k to the CEO per year. And don’t hire an average external CEO, it is better to be lead by a distinctive individual than an interchangeable manager.
Discover a Secret That Can Be Turned into a Monopoly and Hire an Amazing Team To Go From Zero to One
Peter Thiel’s Zero to One was written to encourage founders to explore revolutionary ideas, ideas that can be turned into monopolies. Such ideas often stem from secrets, which are problems that are non-obvious. Exceptional team members can be swayed by focusing strongly on mission and team, and is completely crucial in order to be able to execute on a great idea.
