Book Summary 12 — Zero to One
My Key Insights
What important truth do very few people agree with you on?
Me: Everything can be learned and is willpower determined.
Competition is distracting from the future.
Early staff should be as personally similar as possible:
- need to work fast and efficiently
Need every hire to be equally obsessed.
Let there be a mystery around the founder — exaggerate traits — PR.
The Challenge of the Future
What important truth do very few people agree with you on?
Me: Everything can be learned and is willpower determined.
What startups do:
Question received ideas and rethink business from scratch.
Party like it’s 1999
18 months of insanity mania — funding tech
Sept 1998 — March 2000
Paypal raised just before bubble popped
Learnings
1) Make incremental changes
2) Stay lean and flexible
3) Improve on competition
4) Focus on product, not sales
All happy companies are different
If you want to create and capture lasting calue don’t create a commodity business.
Monopolists disguise monopoly.
Competitive players make themselves sound like monopolist in their market.
All happy companies solve a unique problem.
All failed companies tried to escape competition.
The ideology of competition
Competition is ingrained in us.
Rivalry causes us to overemphasise old opportunities and slavishly copy what worked in the past.
Competition is distracting from the future.
Peter Thiel’s Paypal merger with Elon Musk’s X.com.
Last mover advantage
Ability for future cashflow is essential — especially if potential monopoly
Will this business be around in 10 years?
Monopoly
- Proprietary Technology
Google’s search
needs to be 10x better
- Network Effects — FB
- Economies of Scale
- Branding
Build Monopoly
- Start small and monopolise
start as small as possible
- Scaling Up
Expand gradually, sequence markets correctly
- Don’t disrupt
- fixed on incumbents’ challenges
- attracts attention — Napster
The last will be first
You must study the endgame before anything else
Follow the Money
For whoever has will be given more, for whoever hasn’t will be taken.
Pareto Effect — 80:20
VC funds betting on startups — only very fee survive and make money back
- only invest in companies which have the potential to return more than fund combined
only 1% of companies receive VC money
only 0.2% of GDP is in VC
VC companies make 11% of jobs which is 21% of GDP
Hesitate to found company.
You can be super successful in a massive growth company rather than own a mediocre one.
Secrets
Goals
- some effort
- serious effort
- cannot be done even with all effort
Fundamentalists / Extremists don’t allow for hard truths
- just easy truths and mysteries of god
Conspired against secrets:
1) Incrementalism — one step at a time
2) Risk aversion — scared of being wrong
3) Complacency — comfort in now
4) Flatness — world perceived as one flat highly competitive market
Disbelief in secrets is faith in efficient market. No hidden injustices?
If you think something hard is impossible, you’ll never start. Belief in secrets is an effective truth.
- Secrets of nature
- Secrets of people
What is nature/people not telling you?
Foundations
The beginning is something magical.
It has a huge impact on everything else.
Matrimony — founders
Ownership, possession, control
Ownership — founders, employees and investors
Possession (day to day) — Managers and employees
Control (governing) — Board
Board ideally 3–5 people (no more!)
A company does better the less it pays its CEO — CEO incentivised to exercise ownership over possession and increase the whole company’s value.
Low salary sets an effective ceiling on cash compensation.
Fair equity compensation is very hard — keep secret.
Cash vs Equity — shows employee commitment
also aligns people broadly to the mission
Mechanics of Mafia
Ideal culture: a team on a mission
Paypal Mafia
- Peter Thiel — Palantir
- Elon Musk — SpaceX Tesla
- Reid Hoffman — LinkedIn
- Steve Chen, Chad Hurley, Jawed Karim — YouTube
- Jeremy Stoppelman Russel Simmons — Yelp
- David Sacks — Yammer
not because of beautiful offices but because the team was on a mission
If you can’t count durable relationship during your time at work — you invested your time poorly.
- Talented, but had to be excited to work specifically with the company
- People you like, not transactional
Why should anyone work for you?
Only 2 good answers
- your mission
- your teams
should be a tribe all like minded people (ie distinguishable that they want and do wear company tshirt)
Early staff should be as personally similar as possible:
- need to work fast and efficiently
Need every hire to be equally obsessed.
Paypal
- cryptomanicon required reading
- loved StarWars
- obsessed with currency outside of government
- all same kind of nerds
Do one thing
As a manager defined one thing they need to do — only assessed on that
Clearly defined roles reduce internal friction
If you build it will they come?
It takes hard work to make sales look easy.
Sales works best when hidden.
(Titles don’t show, noone wants to be reminded when we’re being sold — Account Exec, Client Partner, Politician, Invest Banker)
Complex Sales- CEO or VP of Sales — how to make sell?
Sales — how to make scalable process?
Marketing- don’t compete with the big companies, do your own thing
Optimise 1 distribution channel!
If you try lots and don’t nail any — you failed.
PR is important
- attracts employees and investors
Man and Machine
Machines — can make sense of big data but can’t make most basic judgment calls
Computers complement not rivals.
Strong AI will be a problem of the 22nd century.
Seeing green
Cleantech bubble 2007 — neglected :
- Engineering — can you breakthrough instead of incremental change? 10x?
- Timing — right?
- Monopoly — big share of small market?
- People — right team?
- Distribution — can you deliver?
- Durability — does the market have a future?
- Secret — unique opportunity?
same with 1990s dotcom bubble
you can’t begin with macro scale insights unless you begin with micro scale insights
Founders Paradox
People start to exaggerate traits and then they become like that
We only remember extremes
A great founder can bring out the best in people.
Great risk of founders is they become certain of a myth around them and lose their mind — just as dangerous is to lose all sense of myth.
Stagnation or singularity?
Globalisation, convergence and sameness leads to stagnation.
Technology innovation leads to singularity (infinite improvement) and is bound to head for AI.
Our mission is to find those singular things to make the future not just different, but better.
