If you talk to a product manager, founder, VC or anyone who has been part of start-up ecosystems for some time, chances are at some point they’d utter the word “zero to one”. Most likely, their frame of reference for this term came from the seminal book “Zero to One” by Peter Thiel. I had bought the book a few years back but never really went through it but when I read it recently, it was a great experience!
Since the book is written mostly in a note-taking style, it can be read from any chapter without losing much context. Here are a few key takeaways for me
- Courage is in shorter supply than genius. Questions like “what important truth do very few people agree with you on” force one to express their learnings about the world without the need for conformity even in a very formal set-up like a job interview. Hence this marks a great interview question 🙂
- We have inherited a richer society than any previous generation might have been able to imagine
- Future of the world will be defined more by technology (0→ 1 progress) than globalization (horizontal progress). In my opinion, this has been fairly evident in the last few years wherein we have seen chorus of nationalism and reality of a multi-polar world putting some halt to the march of globalization
- There have been a few key lessons from the dot com Crash a. It’s better to risk boldness than triviality b. A bad plan is better than no plan c. Competitive markets destroy profits d. Sales matter as much as product
- If you want to create and capture lasting value, don’t build an undifferentiated commodity business. Monopoly is the condition of every successful business. Lot of monopolistic businesses of our era exaggerate the power of their non-existent competition to hide the monopoly nature of their business (and profits!)
- In business, you should recognize competition as a destructive force instead of a sign of value. This essentially means cooperation with a competitor is often far more valuable than the hyped up notion of ‘war games’! Of course, if you must fight, you must and then pull no punches
- Rather than the first mover, it’s much better to be the last mover i.e. to make the last great development in a specific market and enjoy years of monopoly profits! The way to do this is to first dominate a small niche and then scale up from there
- A few characteristics of a monopoly are a. Proprietary technology (Google Search) b. Network effects (Facebook) c. Economies of scale (Amazon) d. Branding (Apple)
- From the dominant cultural theme of indefinite optimism (this terms means one is optimistic about future but doesn’t exactly feel agency over means to make the future happen), we have to move to definite optimism meaning accepting that we have agency not just over our small life but over a small and important part of the world. This is where startups as an endeavour play their role by rejecting the unjust tyranny of the Chance
- In the VC world, the best investment in a successful find equals or outperforms the entire rest of the fund combined
- Nobody knows ex ante which companies will succeed in a portfolio hence every single company in a good portfolio must have the potential to succeed at a vast scale
- Every great company is built around a secret that is hidden from the outside. In fact, the answer to the question “which valuable company is nobody building” is necessarily a secret
- A startup messed up at its foundation cannot be fixed. Bad decisions made early on like choosing the wrong co-founder are very hard to correct later on a. Everyone you involve with the company should be involved full time i.e. on the bus or off the bus b. Equity is one form of compensation that can effectively orient people towards creating value in the future c. CEO’s pay scale can either set the ceiling or the floor about compensation in a company
- From the outside, everyone in your company should be different in the same way but from the inside every individual must be sharply distinguished by their work
- Poor sales rather than bad products is the most common cause of failure. If one can get just one distribution channel to work, it’s a great business
- The fundamental question we need to answer is how can computers or technology help humans solve hard problems
- Every business must answer these seven questions a. Can you create breakthrough tech instead of incremental improvements? b. Is now the right time to start your particular business? c. Are you starting with a big share of a small market? d. Do you have the right team? e. Do you have a way to not just create but deliver your product? f. Will your market position be defensible 10 years down the future? g. Have you identified a unique opportunity that others don’t see?
- Founders are important because a great founder can bring out the best work from everybody at his company. We need unusual individuals to lead companies beyond mere incrementalism hence we should be more tolerant of founders who seem eccentric!
- Our task today is to find singular ways to create new things that will make the future not just different but better – to go from zero to one!
The book has been vicariously referenced in so many business articles, press and books that one would have come across the core concepts anyway. However, I am delighted that I finally read the book and would definitely recommend it to everyone in the start-up or technology world! It can be ordered from Amazon here
The Learning Curve: Interesting Readings for Product Leaders 