Zero to One
book: Zero to One
author: Peter Thiel
the whole title of Thiel and Masters’ work is Zero to One: Notes on Startups, or How to Build the Future — and that’s exactly what he dives into.
“Focus on business that creates something new.”
although it offered up some sound advice, i’m giving Zero to One a score of 7 out of 10 because, at times, it’s a bit exaggerated, and i’m not sure it will resonate with everyone who reads it. you may find the book’s advice to be unrealistically abstract at times. with that being said, i urge readers to work through the authors’ arguments slowly and be open to inspiration.
who are the experts
let’s address the two authors first. are they qualified to write about a hot topic like startups? yes.
you may recognize Peter Thiel because he is the founder of PayPal, and worked as its CEO until 2002. he’s a director of Facebook and also launched software company Palantir Technologies that specializes in the national security and global finance industries.
he’s an early investor in other very successful companies, like Airbnb, LinkedIn, SpaceX and Yelp. he also launched Thiel Fellowship, which challenges young people to put their education and learning before simply schooling, offering people to confront and challenge the traditional education system.
Blake Masters studied at Stanford Law before co-founding the legal research startup Judicata. Masters and Thiel draw on their respective backgrounds to inspire and urge readers to question the status quo, while giving us budding business people some excellent advice.
position yourself for success
Thiel and Masters outline three pillars to success:
- globalization demands technology.
- capitalism is the opposite of competition.
- you have the ability of shaping your own future whether you believe it yet or not.
to get yourself on the path for success, you must develop a great, innovative idea. that idea should revolve around technology: solve a problem. do more with less. make peoples’ lives easier.
“In a world of scarce resources, globalization without new technology is unsustainable.”
build a monopoly
Thiel urges readers to build a monopoly. but why are monopolies so critical to having a successful business that will thrive and continue to make a profit long after its start-up shine wears off? this is where Thiel’s contrarianism kicks in (many people cite these contrarian opinions as reasons they didn’t love the book, but i found them refreshing).
Thiel claims that capitalism and competition are actually mortal enemies because capitals revolves around generating more profits, while competition focuses on eliminating profits with lower margins and costs. when a business is doing well as a monopoly and is making a large profit, it is able to take risks by investing in its future.
to build a monopoly, Thiel recommends we stop thinking that our future is ruled by luck and chance, and genuinely start to believe that our success in our careers are in our hands. focus on diversifying your education and skills.
do you know a little about a lot? that’s common. Thiel and Masters urge us to fight against this convention and hone only certain skills that will shape your future. point your life in the direction you want to end up. that sounds easy enough, but how might you and i actually put this idea into play in our own lives?
Thiel explains one must create a product or idea for a niche market. this idea must be new. it must be solution-driven, or challenge the status quo, while generating real value.
as soon as i read this, it reminded me how easy using PayPal is. i took a moment to examine how this one tool has changed the way people send and receive money around the world.
protect your monopoly
Thiel tells us we must protect the monopoly we build. this makes sense. to safeguard your monopoly, you need to scale it up quickly — but without a “global domination” mindset.
so what is the key to maintaining your monopoly? avoid competition at all costs. Thiel breaks down how to protect your monopoly in three ways: network effects, economies of scale and branding.
- network effects simply means that the more people who use your product, the higher the value for each user. this concept ties closely to the bandwagon effect and positive feedback loops. this automatically makes me think of Facebook and Twitter because, as more people join and use the social media giants, the more valuable and thriving they become (network effect)—and the more difficult it is for competition to pop up and take over.
interested in learning more? in episode 947 of Jason Calacanis’ podcast, Mike Ghaffary talks at length about the network effect.
- leveraging economies of scale means managing the relationship between your costs and output. the more production you’re doing, the lower your production costs should be, and the more likely you are to be turning a bigger profit as your business ages.
- branding is all about audience awareness, distribution costs, and advertising. for example, Apple probably doesn’t need to sink as much money as they do in advertising because they have such a strong, recognizable brand and loyal customer base (and they let their products market themselves).
i think there are some valuable takeaways in this book. entrepreneurs need to recognize that vision is an extremely important part of motivation, and that success means thinking big.