Zero to One – Peter Thiel & Blake Masters

zero-to-one

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!

Book Notes

The Forgotten Man

“As soon as A observes something which seems to him to be wrong, from which X is suffering, A talks it over with B, and A and B then propose to get a law passed to remedy the evil and help X. Their law always proposes to determine what C shall do for X or, in the better case, what A, B and C shall do for X. As for A and B, who get a law to make themselves do for X what they are willing to do for him, we have nothing to say except that they might better have done it without any law, but what I want to do is to look up C. I want to show you what manner of man he is. I call him the Forgotten Man. Perhaps the appellation is not strictly correct. He is the man who never is thought of. He is the victim of the reformer, social speculator and philanthropist, and I hope to show you before I get through that he deserves your notice both for his character and for the many burdens which are laid upon him.”

See the whole article

Good advice from Daniel Kahneman

I think academia would be a better place and with a little less ego if we all followed your lead on this! Finally, you’re working on well-being now. What can we do to boost our well-being?
I can think of three things. First, change the way you use your time. Time is the ultimate finite resource – we should use it as if it is. Second, try to pay attention to the things that make your life better rather than concentrating on the things that make your life worse. And the third I think is to invest your time on activities that you will continue to pay attention to. For example when people buy a car they imagine themselves driving the car and enjoying it. But most of the time when you actually own the car and are driving it you’re not attending to it. However, when you are socialising with friends you are attending to that activity. So there are activities that are attention-rich intrinsically. If there are good activities that are attention rich you should work on them – you should try to have a lot of them in your life. I think people don’t do that enough.
See the full article here.

Four Essential Lessons to Pass Down

If you could boil down everything you know into something concise that you would like to convey to the younger people in your life, what would you say? Below are some of my thoughts.

First, would be “Do unto others, as you would have done to yourself”. The golden rule. With this, you don’t need any other religion or morality.

Second would be to exercise. Exercise has so many benefits. Besides the obvious fitness, there are the self esteem and confidence benefits and I believe a strong relation to drive and intelligence.

Third would be to read. Read to learn and understand. Not romance novels and other useless crap, but the classics, history, psychology, economics. Learn the meaning of words, learn logic and clear thinking.

And lastly, question everything. Don’t take anything at face value, even and especially if its a view passed down from your parents. If you don’t understand something, seek to understand it. And don’t rely on others to teach you, teach yourself what you need to know to understand your questions.

I feel that if you follow these four simple to say, but not so simple to follow rules, you will have a significant advantage over a majority of your peers. In a global and ever more competitive world it might be a required edge.