Distillation of Zero to One by Peter Thiel (On How to Build the Future)

notes on zero to one by Peter Thiel
notes on zero to one by Peter Thiel

Photo Credit: Sarah Doody

Many of you may have already read “Zero to One: Notes on Startups, or How to Build the Future” by Peter Thiel. Some of you may not have got the chance to read it yet. I recommend adding it to your reading list.
 
(It’s a great read and also a prism to look inside Thiel’s mind, one of the smartest Silicon Valley entrepreneur).
 
This is not a book review or a summary. These quotes are my own thoughts which is the direct result of pondering over the core message of the book. In this post, I am going to basically share what I learned from this book and what thoughts best summarizes the essence of ‘Zero to One’.

Zero to One by Peter Thiel

  1. Because of the forward moving, linear nature of time, every moment happens only once.
  2. Create something new. When you create something new, you have a monopoly on it until you are defeated by your copy-cats.
  3. One superpower of technology is “ability to scale exponentially”.
  4. What is ‘your’ truth?
  5. Understating the difference between exponential (0 to 1, x^n) and linear (x to n) is key to business success. Ability to execute/build/invent a process that scales exponentially is the ‘key’ job of the founding team.
  6. Linear progress is horizontal. Exponential progress is orthogonal or vertical.
  7. It gets harder and harder to innovate as your organization gets bigger and bigger.
  8. The best advertisement spend is paying directly to your clients. Giving away a free product or service or even hard cash for joining/subscribing.
  9. A bad plan that is in execution is better than a good plan with no execution. Having a (bad) plan is better than having no plan at all.
  10. Selling the product/service is just as important as creating the product/service.
  11. If your market is competitive, your focus should be on market share acquisition and not on profit. Profit margin and competitive market don’t go together. Competition by definition destroys every competitors’ profits.
  12. Standing for yourself and thinking for yourself doesn’t mean ‘opposing’ the crowd. Opposing is an act. All acts cost attention, time, and energy.
  13. Your market is your core offering. The key functionality of your core product or service. Your competition is likely the whole market (and not necessarily the niche you serve.) For example, an Indian restaurant in New York is not only in competition to other Indian restaurants in New York but all restaurants in New York. The primary offering of a restaurant is feeding people who don’t want to cook at home.
  14. In business, sales are the most important thing. If you have a novel product, you also need an effective sales strategy. Product and Sales are both equally important. A successful business “must” have both.
  15. Sales, in essence, is all about finding a distribution channel that works. For a business to survive, all it needs is one successful product distribution channel. By this definition, the most profitable company in any market has the biggest distribution channels. (Note: It’s not the product but sales we are talking about.)
  16. It is better to be in the business in a very large market than to be a monopoly in a very small niche. By growing your market share in a very large market you can make more money but in a very small market where you are already a monopoly, you can’t grow without increasing the prices and therefore inviting new competition and destroying your monopoly.
  17. In a capitalist system, every business (no matter how large or small) fights for survival each day. Any day could be the beginning of their end.
  18. A creative business keeps their clients by keep creating and offering new categories of products.
  19. A business fails when it fails to escape competition. It’s capitalistic evolution. The survival of the fittest.
  20. All successful private companies in the world are successful because they each solve a unique problem and own a large chunk (monopoly) of their market.
  21. If you can’t beat your rival, merge with your rival or merge with other smaller rivals to become the biggest.
  22. Growth can be measured in a short timeline. Endurance (durability) can only be measured in the long term.
  23. Before starting a business or investing in one, always ask, “Will this business be still around in a decade from now? In 30 years from now? In 100 years from now?”
  24. If you have existing competition, a good rule of thumb is, it will take you to be 10X better than the current market leader (in the core offering) to be able to lead to a successful and enduring monopoly of your own.
  25. There are four ways to get 10X lead over your prime competitor: inventing something new, or creating a new market, or creating a 10X better product, or offering a 10X better UX. Ideally, you should have at least 2 of the four.
  26. To gain 10X lead over your most fierce competitor, you have to focus on one key product (one opportunity) and get 10X better there first. Dominate a small (key) market first then expand from there. (50% of $10M market > 1% of 1B market)
  27. A successful founding team is one where a core group of people is able to provide value to millions of other people. One to very many.
  28. To find the ideal business opportunity, look for ‘adjacent possible’ in the technology landscape. Adjacent possible is usually the intersection between two brand new technological developments.
  29. Nothing great is achieved without a great team. It’s a myth that you can go far alone.
  30. The challenge of creating network effect is making your product useful to its very first users (when the network is still so tiny that it doesn’t derive any value from its size or connectivity).
  31. Part-time employees are essentially consultants. Consultants are essentially part-time employees.
  32. Think how every employee can have the skin in the game? Perhaps, to start, offer to pay part salary, part equity or part bonus based on annual revenue. Those who prefer equity over cash, demonstrate long-term commitment. Those who prefer bonus or percentage of revenue from direct sales over cash show they have trust in their skill and are committed to hard work.
  33. The most productive companies define specific roles for each team member. Defining roles reduces future conflict and miscommunication.
  34. When you have identified a problem or market need that no one is working on, have a head start and innovate faster than anyone else that may come after you by essentially copying you.
  35. The 21st century has made it super easier to start a new business and incredibly difficult to succeed in one.
  36. It’s better to be the employee #17 at a unicorn startup than to be the CEO of “Hey, I Am Open For The Business Too”.
  37. Nothing lasts. Monopolies don’t last forever. Empires don’t last. Countries don’t last.
Now, let’s go and build something meaningful.
 
PS: If you liked this article and my take on Zero to One by Peter Thiel, then please let me know if you would like me to cover other books. If so, any recommendations? Thank you.
 
PPS: Spot any error/typo? Please let me know in the comments and thanks for catching.
 
Read Next: You may also like my take on Meta Learning.

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