Zero to One – Thiel

Thiel often talks with such extremes that you can’t be sure if even he believe what he “writes”. Yet every now and then he drops a line so poetically profound that you can’t help but applaud him.

Despite coming across quite contradictory, this is a solid book that anyone involved in the “startup” world should read. It is good not because it is right, but because it makes you think.

Thiel seems a slight extremist in his approach to arguing. Rather than arguing a middle ground, he jumps form one extreme to the other (without believing it himself), so that the result is a concession to the middle ground where he wanted you from the beginning.

Should I read this book?

If you are in the “startup” world, yes.

TL;DR:

  • Competition kills companies
  • Better to be a monopoly of 1, than a competitor of 1 million
  • Every startup’s target market is the smallest monopoly it can find
  • The Lean Startup model is a strategy, not a mission

Reading Notes:

  • Competition is death. Monopoly is the way.
  • All great companies are founded on some sort of monopoly.
  • MVP isn’t a business strategy but a product strategy; the smallest product needed to fulfil the business mission.
  • Monopolise from day one! Just because startups need to be small, that does not mean you need to go after a fraction of a market. Rather, it means that you need to monopolise a niche.
  • Thiel has a slightly strange outlook on the world that comes across at times a little too possessed with success. Quotes like “europeans vacation mania” and referencing America’s ability to quickly build nuclear bombs in a section titled “definite optimism”, makes me weary of taking his words to heart. Sometimes I think he values success over life…
  • Thiel argues that chance has no place in business. That it is all about planning and execution of your goal. This seems a little stretched to me. I think often when trying to make an argument, Thiel goes to the opposite end of the spectrum as to try draw you across, rather than finding the middle ground where he wants you to reside.
  • He rejects the idea of “MVP”, “lean startup” and “iteration”, saying that they are doomed for failure since they lack coherent design (definite optimism). Again, I don’t think Thiel really means this, since looking at his own history, you could argue that the PalmPilot version of PayPal was his MVP, on which they iterated to email transactions.
  • I think what Thiel is really saying is that MVP & iteration are a strategy, not a goal; you must have a concrete goal of what you are trying to achieve (definite optimism), else just hoping you will get there wont wont (indefinite optimism).
  • A question: does “definite optimism” play out the same way in Product Design as it does in Business Planning? Is iteration and MVP ideas that belong in the Product Design world but not the Business Strategy world?
  • A business and product must know where it is heading to get there. However, how it gets there is not always known.
  • Look for secrets about the world or people, then when you find one, build a business of it by telling as few people as necessary about it.
  • The way to find a Contrarian Truth is to look at “facts” that are axiomatic to society and the inspect as to whether this truth has solid foundations or has simply been passed down from the last generation.
  • Hire people that want to solve your particular problem in your particular way (mission), and people that you would want to hang out with after work (culture).
  • Inner conflict kills companies just as much as outer conditions.
  • The key to reducing internal conflict is clear role definitions.
  • I can’t help but feel that Thiel has greatly romanticised and oversimplified the “supplementary” nature of technology in the future workforce.
  • Egotistical companies play up their monopoly to sound special. Smart companies play down their monopoly to avoid competition.
  • While Thiel acknowledges that the planet can’t sustain everyone living “as good as Americans”, he misses the point that Americans live in excess and that this is a problem.
  • The three Powers of internal culture:
    • Ownership – who legally owns the company’s equity
    • Possession – who actually runs the company on a day to day basis
    • Control – who formally governs the company’s affairs
  • Seven questions for starting a business:
    1. The Engineering Question – can you create a breakthrough technology instead of incremental improvement?
    2. The Timing Question – Is now the right time to start your business?
    3. The Monopoly Question – Are you starting with a big share of a small market?
    4. The People Question – Do you have the right team?
    5. The Distribution Question – Do you have a way to not just create but deliver your product?
    6. The Durability Question – Will your market be defensible 10 and 20 years in the future?
    7. The Secret Question – Have you identified a unique opportunity that others don’t see?

 

Quotes:

  • “A startup is the largest amount of people that you can convince of a plan to build a different future.”
  • “Under ‘perfect competition’, in the long run no company makes an economic profit
  • “A great business is defined by its ability to generate cashflow in the future.”
  • “As a rule of thumb, proprietary technology must be at least 10x better than its closest substitute.”
  • “Every startup should start with a very small market. Always err on the side of starting too small.”
  • “The perfect target market for a startup is a group of particular people concentrated together and served by few or no competitors.”
  • “Don’t disrupt! Avoid competition as much as possible.”
  • “In an indefinite world, people actually prefer unlimited optionality; money is more valuable than anything you can do with it. Only in a definite world is money a means to an end, not the end itself.”
  • “A great company is a conspiracy to change the world; when you share your secret, the recipient becomes a conspirator.”
  • “No company has a culture. Every company is a culture.”
  • “If you have invented something new but haven’t invented an effective way of selling it, you have a bad business – no matter how good the product is.”
  • “Superior sales and distribution by itself can create a monopoly, even with no product differentiation. The opposite is not true.”
  • “If you can get just one distribution channel to work, you have a great business. If you try for several but don’t nail one, you’re finished.”
  • “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 form everybody at his company.”
  • “To believe yourself invested with divine self-sufficiency is not the mark of a strong individual, but of a person who has mistaken the crowd’s worship – or jeering– for the truth.”

sebastiankade

Sebastian Kade, Founder of Sumry and Author of Living Happiness, is a software designer and full-stack engineer. He writes thought-provoking articles every now and then on sebastiankade.com

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