Zero to One by Peter Thiel. Book review.
What important truth do very few people agree with you on?
Intro
It is the apprehension basically on different level when veteran of entrepreneurship writes about the book. The book with key lessons taken from real life and own experience. Therefore it is better to be twice attentive and take notes on every insight shared in this piece of golden material. Peter Thiel, the cofounder of Paypal, Palantir and the early investor of famous startups (Facebook, SpaceX, LinkedIn) imprints the whole idea and the secret ingridient for every startup to become successful: to follow “Zero to One” principle.
Main contents
The two-hundred-pager of collected notes is broken into 14 chapters, each of which delivers a single important message, though it is not feasible to summarize every of them in this writing. I highly recommend for the potential reader to purchase and go through each chapter carefully.
“What important truth do very few people agree with you on?”
The book has an interesting opening question author usually asks on interviews. For the average person it is difficult to come up with something in mind, since we rarely think of typical questions ourselves. Even if we have some ideas, it is rare we would stand on the point to debate with people around. However, this kind of attitude is crucial. Often, businesses follow the path that is well-trodden and copy the products that work well outside. This defines the horizontal progress. On the opposite side, the vertical progress, the progress from 0 to 1 is another mode, doing something nobody else has ever done.
Monopoly is the condition of every successful business.
Reaching the state of monopoly is the highest goal for every company. However, it is very challenging if you are just starting, especially, startups that are entering competitive markets. If there already exist the supply of products that satisfy market and there is nothing much to offer, there is mere chance to become monopoly (author gives characteristics of monopoly). Therefore, horizontal progress is not a solution. The only way for startup towards monopoly is to make 0 to 1, and make the product 10x better than closest competitors, developing so-called proprietary technology. Otherwise, there are many factors/reasons customers may reject your product and prefer the other one.
We don’t live in a normal world; we live under a power law.
Compound interest is an example from finance. However, there is a wider concept of the power law that people and the system better care of. For example, author mentions, from middle and throughout high school, educational system encourages extracurricular activities and well-roundedness. There is also a famous saying “Don’t put all your eggs in one basket”. However, when the student grows and picks up major or career, focusing on the only craft becomes unintuitive. The wise people, and smart investors, decide to chase only one thing and invest hard on as few products as possible it following the sense of power law. They are extremely successful in perspective at their thing.
“What valuable company is nobody building?”
Every great company was once unknown. Nobody suspected them to grow. Secrets are the underlying weapon behind. Author determines two types of secrets: the secrets about nature, and about people. Though secrets about nature is explainable, there is a different characteristics on secret about people. Sometimes people simply don’t know the secrets about themselves, and sometimes they hide it, so that others don’t know. So, when starting out a company or building another product, navigate yourself with questions such as: “What secrets is nature not telling you? What secrets are people not telling you?”. The best place to find a secret is to look where nobody is looking.
Beginnings are special.
The opportunity to set the foundations right are given only once. Well, there are numerous decisions to be made when starting out, however still the founders better make concrete and accurate decisions at the initial stage. The most meaningful one is whom to take on board and which roles. Author argues that it is critical cofounding team know each other well and have some prehistory before they determine to build something together. Startups have many fluctuations in the early period, and in order to survive, everyone in the founding team has to undergo challenges with full trust towards each other. Everyone in the founding team has to be full-time, with absolute devotion, so like it is either “on the bus or off the bus”. The people who work in the beginning have to be clearly distinguished in terms of their roles, and feel they are given the opportunity to do the irreplaceable job.
Since this is only a review, there are many things uncovered and many examples missed, to which I strongly recommend to just read the book, since it will give you more detailed and clear understanding. However, to summarize it here, I will just copy-paste (because it is already perfectly simple) author’s seven principal questions to which founders have to prepare own, clear defined answers before starting a company:
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?
My top 5 highlights from this book:
“Brilliant thinking is rare, but courage is in even shorter supply than genius.”
“The clearest way to make a 10x improvement is to invent something completely new.”
“War is costly business.”
“Great business is defined by its ability to generate cash flows in the future.”
“Don’t disrupt.”
Bonus:
Chess grandmaster José Raúl Capablanca: “To succeed, you must study the endgame before anything else.”
Thing(s) that I love this book for:
The book is simple to digest, without overwhelming terminology and economic/business concepts. At the same time, the great entrepreneurial wisdom is plain to observe. Author provides real-world examples, going smoothly from macro to micro, and micro to macro scales to explain. Being of engineering background, and having personally never taking any of business credits, I felt very excited and comfortable throughout the whole book.
My final thought
For the people who like star-based reviews, I would give 5 out of 5. As for qualitative mark, I would say I would reread my highlights from this book again and again, since overall the book had positive effect to challenge myself to try new things and I hope I apply some of wisdom delivered in the book to my today and tomorrow’s research/startup life.
Recommend.
