Zero to One - By Peter Thiel
Introduction
The book starts with a critical insights "Every moment in business happens only once". No big company can be created without invention, without creating new things. There is no point in keep copying the existing models and American companies will fail in big time if they are not investing in the difficult task of creating new things. The best practices will only lead to dead ends. These insights are not only for creating new big companies but also anyone can learn the fundamentals of creating new things.
This is not an extensive full book review. I would be just capturing the thoughts that resonate with me.
Chapter 1: The challenge of the future
In the chapter, author predicts that future is going to be different and it has to be created today. It can be created by people who has perception of the future that very people have it. Author asks us to reflect on "What important truth do very people agree with you?". The answer to this question can reveal how prepared you are and the potential of you being creating new things as without creating genuine new things, drastic changes won’t happen.The world always benefits with two kinds of progress all the time. Horizontal and vertical progress. The first comes from globalization which essentially advocated by the big companies by the most important vertical progress happens through technological advances which are driven by the new ventures (aka startups). The big companies cannot afford or create new things and it's not their function as well.
The definition of startup is also pretty intriguing.
Startup is the largest group of people you can convince of a plan to build a different future. A new company's most important strength is new thinking: even more important than nimbleness, small size affords space to think.
This book pegs us to ask the questions and answer them to success in the business of doing things.
Chapter 2: Party Like its 1999
The decade 1990 is a memorable one. It started off with a slow economic recovery and the globalization started to push the American companies to find a new way to manage the supply chain and the sales. The internet restriction for the commercial use was lifted off around 1994 with the Mosaic browser launch. Soon the world found out that technical advancement through internet to solve the globalization problems. This insight poured so much money to internet market which is termed as dot.com mania for the 18 months since late 1998 to early 2000. However, due to East Asian financial crisis, rubble inflation and immaturity the startup world could not build lasting things and the skepticism of tech world blew up the hope. The market crashed on March 10,2000. The important lesson from this dot.com crash are
Make Incremental Advances
Stay lean and flexible
Improve on the competition
Focus on product, not sales.
However, these restraint principles followed in the last 20 years have put us behind new innovation.
What we should be doing more to bring about new change is
It is better to risk boldness than triviality
A bad plan is better than no plan
Competitive markets destroy profits
Sales matters just as much as product
The mistaken reactions to past mistakes are not the answer to build the future. We should continue to inquire to search for the truth!
Chapter 3: All Happy Companies are different
What valuable company is nobody building?
Monopolies lies : Monopolists lie to protect themselves. They know that bragging about their great monopoly invites being audited, scrutinized, and attacked. Since they very much want their monopoly profits to continue unmolested, they tend to do whatever they can to conceal their monopoly - usually by exaggerating the power of their (nonexistent) competition.
Correctly applies to Google where it states as a technology company whereas its at its core a Search Engine company where this is no competition. Similarly Amazon claims to be in consumer discretionary but it pours money from cloud computing.
Competition destroys the profits. There is no way to win 1000x in a competitive market. The best business are in fact monopolies. Whatever/Where ever you are, you need to find the niche and be the most dominant player in that sector. Only when you are in such position, you can take up most wholistic approach for the business and the people. Otherwise, the need for money and the survival will make you struggle for everything.
"All happy families are alike; each unhappy family is unhappy in its own way" - Tolstoy. However in business, the opposite is true.
Monopoly is the condition of every successful business. All happy companies are different; each one earns a monopoly by solving a unique problem. All failed companies are the same; they failed to escape the competition.
Chapter 4: The ideology of Competition
War is costly business. We compete with similar peers. Competition can make people hallucinate opportunities where none exist. Rivalry is just weird and distracting. If you can't beat a rival, it may be better to merge. It's disastrous in business to take personal pride into an account and fight for things that don't matter. If you can recognize competition as a destructive force instead of a sign of value, you are already more sane than most.
Chapter 5: Last Mover Advantage
The overwhelming importance of future profits is usually ignored. For a company to be valuable ti must grow and endure, but many entrepreneurs focus only on short-term growth, but durability isn't. The focus on weekly/monthly user measurements but leave out the hard-to measure problems that threaten the durability of the business.
If you focus on near-term growth above all else, you miss the most important question you should be asking; Will this business still be around a decade from now? Numbers alone wont tell you the answer; instead you must think critically about the qualitative characteristics of your business.
Characteristics of Monopoly
Proprietary Technology
Network Effects
Economies of Sale
Branding
Building a Monopoly
Start small and Monopolize
Scale up
Don't Disrupt : If you truly want to make something new, the act of creation is far more important than the old industries that might not like what you create. If your company can be summed up by its opposition to already existing firms, it can't be completely new and it's probably not going to become a monopoly.
The last will be the first : What matters is generating cash flow in the future. Being the first mover doesn't do any good fi someone else comes along and unseats you. It's much better to be a last mover - that is. to make the last great development in a specific market and enjoy years or even decades of monopoly profits. Dominate a small niche and scale up from there, toward your ambitious long-term vision. To succeed, "you must study the end game before everything else"
Chapter 6: You are not a lottery Ticket
Success does not come from luck. Success is never accidental. If you expect an indefinite future ruled by randomness, you will give up on trying to master it.
The author categories four types of societies and to be really successful we should try to be in "Definite optimism" category.
Indefinite Pessimism : Always expect bleak future - Present Europe
Definite Pessimism - Future can be known, but since it will be bleak, we must prepare for it - Present China.
Indefinite Optimism - Dreaming about abundant, unlimited resources and think future will always be better than today without really planning their today. Present US
Definite Optimism - Future will be better if we plan and work hard to make it - US in 50's and 60's.
A startup is the largest endeavor over which you can have definite mastery. You can have agency not just over your own life, but over a small and important part of the world. It begins by rejecting the unjust tyranny of Chance. You are not a lottery ticket.
Chapter 7: Follow the Money - Power of Law
We don't live in a normal world but live under power of law. Some moments are critical than sum of the rest. Going by the Pareto principle or 80-20 rule, 80% of the impact comes with 20% of the effort.
Don't over diversify. When you choose a career, you act on your believe that the kind of work you do will be valuable decades from now. Don't be an average but a heavy in few things. The most important things are singular. Time and decision making themselves follow the power of law. and some moments matter far more than others. Never underestimate the exponential growth. While you can't figure it out the secret of which moment is important, you can't afford not to think hard about where your actions fall in the curve.
Chapter 8: Secrets
There are two kinds of secrets; secrets of nature and secrets of people. Natural secrets exist all around us. To info then, one must study some undiscovered aspects of the physical world. Secrets about people are different; They are things that people don't know about themselves or things they hid because they don't want others to know. So when think about what kind of company to build, you should ask - What secrets is nature not telling you? What secrets are people not telling you. For example - Studies in nutrition (food pyramid) is decade old. Nobody is paying attention to it and it may become a future innovation sector.
When you find the secret, you tell enough people (that's called company) and no more. The successful business is built around a secret that's hidden from the outside. A great company is a conspiracy to change the world. When you share your secrets, the recipient becomes a fellow conspirator.
Chapter 9: Foundations
Thiel's law : Startup messed up at its foundation cannot be fixed.
The one who is not busy being born is busy dying - Bob Dylan.
The most valuable kind of company maintains its openness for invention that is most characteristics of the beginnings. When you stop creating new things, your foundation also fumbles.
Chapter 10: The mechanics of mafia
Keep the group tightly knit rather than just transactional. Author indicates the successful attributes of attracting and retaining the talents who work together on a single mission. Don't just be a consultants without a mission and passion for working for one. Its not as extreme as cult but bit civilized one which can be called Mafia.
Chapter 11: If you built it, will they come?
Sales and marketing is equally important as much you focus on building the product. You not only sell the product to customers but also to prospect employees and the investors. Any prospective employee or investor worth hiring will do his own diligence; what he finds or does not find when he googles you will be critical to the success of your company.
Everybody sells and everyone is influenced by one way or other sale tactic. Everybody has a product to sell - no matter whether you are an employe, a founder or an investor.
Chapter 12: Man and the machine
The most valuable company in the future won't ask what problems can be solved with computers alone. Instead they will ask: how can computers help humans solve hard problems. There is no point worrying about a strong AI will replace the humans and will in fact substitute the humans in the near future. It's a 22nd century problem and not the current one. Until then, as we find new ways to use computers, they don't just get better at the kinds of things people already do; they will help us to do what was previously unimaginable.
Chapter 13: Seeing Green
The macro need for energy solutions is real. Clean tech bubble - the renewable energy markets mimicked the dot-com crash. The author elaborates how Tesla started for small market to provide electric luxury sports car and successfully delivered on that single agenda. He advises that valuable business must start by finding a niche and dominating a small market. Don't over blow to change the diesel power in single day. Don't assume to create power source for remote islands. The challenge for the entrepreneurs who will create Energy 2.0 is to think small
Chapter 14: Founder's Paradox
A unique founder can make authoritative decisions, inspire strong personal loyalty and plan ahead for decades. Paradoxically, impersonal bureaucracies staffed by trained professionals can last longer than any lifetime, but they usually act with short term horizons.
We need founders and we should be more tolerant of founders who seem strange or extreme. we need unusual individuals to lead companies beyond incrementalism.
Founders are important not because they are the only ones whose work has value, but rather because a great founder can bring out the best work from everybody at his company. The single greatest danger for a founder is to become so certain of his own myth that he loses his mind. But an equally insidious danger for every business is to lose all sense of the myth and mistake disenchantment for wisdom.
Conclusion: Stagnation or Singularity
The author examines for types of possibilities for our future
Recurrent collapse : Future will look lot like present
Plateau : We will continue to progress and hit a plateau and live forever with that standard
Extinction : A collapse so devastating that won't survive it
Take off : Accelerating take off toward a much better future.
Our task is to find singular ways to create the new things that will make the future not just different, but better - to go from 0 to 1. The essential first step is to think for yourself. Only by seeing our world anew, as fresh and strange as it was to the ancients who saw it first, can we both re-create it and preserve it for the future.
