Zero to One by Peter Theil
Silicon Valley is amazing. Peter Thiel is one of those big names in Silicon Valley who has built world changing business such as PayPal and Palantir. He taught a course about startups in Stanford University. Once of his students, Blake Masters took down notes in his classes. Zero to One is a refined version of those notes published for global distribution.
Innovation drives Entrepreneurship. Startup entrepreneurs build businesses by creating new things. Copying what worked as a business model and adding to the familiar takes us from 1 to n, but creating something new from scratch takes the world from 0 to 1. This book is about the questions one needs to ask and think about to succeed in the business of doing new things. It helps a startup to question popular ideas and rethink business.
The book gives a brief of what happened during the 90’s in Silicon Valley. It talks us through the gold rush years of the dot com boom. It outlines the lesson one needs to learn from all the madness in the 90’s in Silicon Valley. Businesses today need to stay lean and flexible to improve on the competition. The book says, we need to abandon the dogmas created after the crash and think for ourselves in the business of building new things.
The book makes an interesting observation in the third chapter- All happy companies are different. These successful companies are successful because they managed to build and sustain a monopoly by solving a unique problem. Most failed businesses have a common reason for failure – they failed to escape competition. The book in fact mocks the concept of competition which amuses me. As a typical middle class Indian boy, I have aimed for all the things that I was taught to aim for. Degree from a great college, secure corporate job, big salary and responsibilities. In a crowded place like India, I had to be competitive to achieve mediocrity. This book made me think bigger, and to compete for what is worth competing.
The book helped me understand monopoly in a different light. It shows statistics to prove that the value of a technology company comes after a period of time, the time where it has to grow and endure itself. Monopoly is characterised by four qualities- proprietary technology, network effects, economies of scale and branding. With relatable examples, the book chalks out a guideline in building a monopoly business- one that able to generate cash flows in the future.
A debate opens out about whether success is a matter of chance or skill. The book makes an attempt at explaining the attitude of successful people in the lights of optimism. It debates how people, nations and schools of though fall in different categories of optimism and pessimism. It concludes into believing that a startup is the largest endeavour over which one can have definite mastery. We need to reject the possibility of chance.
Most tech companies raise money from venture capital firms by giving off equity. The venture capitalist “sprays and prays” to make a return on his investment when the value of the company increases in due course of time. However, most companies fail and the funds backing them fail too. As a pattern one can observe the power law, that is – the best investment in a successful fund outperforms the entire rest of the fund. An entrepreneur needs to understand this fact and operate it to his advantage.
The world is full of secrets. Most familiar ideas today were once an undiscovered secret. Some are with nature and some are with people. The book urges people to learn to uncover secrets. A hidden path might lead to hidden opportunities and gold. Are you confident enough to question convention and take the hidden path? A lot has been spoken about the importance of foundations in a startup. Most of us entrepreneurs have a hard time looking out for the right people. Once we get the mix right, then we have the power of the mafia at our disposal. We need to be careful about how we put that initial team together. The book explains how to go about with that by understanding the mechanics of mafia.
The importance of sales in business is underrated. It is surprising to note that geeky guys who develop technology have intolerance to sales people. People overestimate the difficulty in engineering and underestimate the hard times of salesmen. The book attempts to explain the types of sales such as complex sales, personal sales and viral sales. It goes on to conclude that everybody is a salesman.
Overtime, people have developed the fear that machines would take away jobs. It is a very relevant point in case given the fact that more and more companies are embracing artificial intelligence at a much faster pace. The book suggests that a computer can do only one set of things, it would still need the intelligence of people to work on it. A computer after all can only help a human solve harder problems. It cannot solve it by itself.
The book goes on to explain the failures of clean tech companies. It puts forth a set of seven questions every company needed to answer. It puts into prospective the surprising reasons as to why many clean tech companies failed. Keeping Elon Musk’s Tesla as a case study, it gives a picture as to how a cleantech company should operate.
The book concludes by evaluating if the future of the world will end up in stagnation or singularity. It explores four different possibilities and puts forth arguments. If singularity was to be achieved, as a species we need to think for ourselves to make the future better- to go from zero to one.
This book has a lot of ideas and information. It is not written keeping in mind a single objective. There is no one thing about this book; it is more of a thinking workshop. One has to put it down and think about the ideas discussed to get the best out of it. I had a hard time trying to review this book as each of the individual chapters is unique. It’s quite a task to connect the dots. The entire book is about defying convention and doing the unique, maybe that is why the book is unique. I spent a day to finish this book and it has definitely opened out my mind. Zero to One is a good book to read but hard to review. You must read this if you want to build the future and take the human race forward.
29th April 2017