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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.

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Evernote Snapshot 20170805 154017.png

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

  1. Proprietary Technology

Google’s search

needs to be 10x better

  1. Network Effects — FB
  2. Economies of Scale
  3. Branding

Build Monopoly

  1. Start small and monopolise

start as small as possible

  1. Scaling Up

Expand gradually, sequence markets correctly

  1. 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

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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 :

  1. Engineering — can you breakthrough instead of incremental change? 10x?
  2. Timing — right?
  3. Monopoly — big share of small market?
  4. People — right team?
  5. Distribution — can you deliver?
  6. Durability — does the market have a future?
  7. 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

Evernote Snapshot 20170810 081531.png

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.

Zero to One Peter Thiel.jpg

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