Bottom line, if you’re in business, invest in business, thinking about starting a company or are currently starting a company, you should read this book!
The premise of the book is that you have to control your destiny, do not depend on luck and do not think it will happen automatically. Creating a new business category happens only once, hence 0 to 1 (technology). Whereas incremental progress is 1 to n (globalization). Thiel outlines how to make that happen, drawing from his experience as one of the founders of PayPal and Palintir. He offers very good advice, but no magic bullet, because there are no magic bullets.
Brief chapter overviews:
In the 1999 crash, businesses learned the wrong lessons and they are still practicing them. They should have learned to be bold, plan, not enter competitive markets and put energy into distribution.
You must create a monopoly company. Monopolies are what drive the future as they allow founders to do long term planning vs. short term planning. Competition kills the ability to do long term planning so avoid it at all costs.
To build a monopoly company you need some combination of proprietary technology, network effects, economies of scale and branding.
You must take control of your future by planning for it, chance will not get you there.
Remember the power law, only a small percentage of companies can ever succeed at a substantial scale. When it comes to your own life think hard about what will be valuable in the future, then pursue that will everything you have.
To build a valuable company you have to do something nobody has done before. To do that you have to tap into secrets that aren’t already universally understood.
When starting a new company you have to start right and have committed founders that add value.
Company culture should be of like minded people with individual talents. Internal conflict will tear a startup apart.
It is essential to have distribution and count it as part of your initial design. A company that has a product without good distribution is doomed to failure.
The computer should be a complement to human activity, it should supplement decision making.
If you want a successful business you must answer the following questions:
Do you have a breakthrough technology? Why is now the right time? Are you starting with a big share of a small market? Do you have the right team? Do you have a way to deliver your product? Will your position be defensible for 10 – 20 years? Have you identified a unique opportunity that others don’t see?
Thiel’s overriding question is whether we will be able to escape from optimistic indefinite and get back to optimistic definite. To do this we must think for ourselves and build businesses that go from 0 to 1. I get the feeling Thiel isn’t so optimistic about this.
I thoroughly enjoyed Thiel’s book and feel that he shared some of his secrets with us. I also think it is important to move the dial back to doing some planning after moving so far toward indeterminism. Creating a unique technology is no doubt a difficult task, but it is what is needed to keep our society moving forward. As a country we need to create the proper incentives so that smart people work on hard problems instead of spending that intellectual capital in the markets. It should be just as attractive for someone with the capabilities to be a scientist or engineer as it is to be a Wall St. trader/analyst. How do we get there?
A special thanks the Zero to One team for the advanced reader’s copy!