Zero to One: Notes on Startups, or How to Build the Future

A book about Thiel’s life and his startup investments that inspired him to become an entrepreneur. Great book. Short, solid, to the point. I do not agree with Thiel on some views (anti-remote, right-leaning, capitalist, critical of Europe), but he knows how to run a company. Strong insights. I would recommend it to anyone who wants to build a startup.

Notes

• The next Facebook or Uber will not be a better Facebook or Uber. It will be something different, outside the usual patterns.
• Extending old patterns for creating wealth leads to damage, not improvement. Resources are limited, and improving technology is how we improve the world.
• Seek the contrarian truth: always ask yourself: “what is a popular belief everyone holds that you disagree with”? How can you use it to your advantage? And pursue it.
• Monopoly advantages: they have their market and lead it. Aim to become one.
• Good perspective on the dot-com mania: before it there were crises in Russia and Japan, inflation, a rough period. People went all-in on tech because that was what looked possible. Always keep perspective.
• Lessons from the dot-com bubble:
  • Make incremental advances Grand visions inflated the bubble, so they should not be indulged. Anyone who claims to be able to do something great is suspect, and anyone who wants to change the world should be more humble. Small, incremental steps are the only safe path forward.
  • Stay lean and flexible All companies must be “lean,” which is code for “unplanned.” You should not know what your business will do; planning is arrogant and inflexible. Instead you should try things out, “iterate,” and treat entrepreneurship as agnostic experimentation.
  • Improve on the competition Don’t try to create a new market prematurely. The only way to know you have a real business is to start with an already existing customer, so you should build your company by improving on recognizable products already offered by successful competitors.
  • Focus on product, not sales If your product requires advertising or salespeople to sell it, it’s not good enough: technology is primarily about product development, not distribution.
• Do not do the restaurant model; it does not scale. Do not focus on being 10% better than others. Either 10x, or it is not worth it and you will fight over competition.
• Example: British food ∩ restaurant ∩ Palo Alto; rap star ∩ hackers ∩ sharks. Not good. Use unions: search engine ∪ mobile phones ∪ wearable computers ∪ self-driving cars.
• People on the autism spectrum may be advantaged: they are less sensitive to social cues, so they think independently and avoid herd behavior.
• Every startup should start with a small market to dominate. For example, Amazon dominated online books. If you think your market is too big, it probably is.
• Essay on definite/indefinite pessimism/optimism. He says the US are irrepressible optimists, which helps you jump in, and lately the indefinite kind matters. Knowing that one day things will be better and easier pushes you to create and experiment. You do not know when or what plan, so you move quickly without a detailed roadmap.
• VCs know most of their companies will fail. They just need the one that returns 100x, so they only bet big.
• Thinking about it, it is tough. If you do not hit the next Uber, the fund often fails.
• Having 0.01% of Google, for example, is very valuable. So make small investments in many things.
• Look for secrets: remember to ask what truth everyone takes for granted. Work around it, find a secret, work on it. In many fields, like medical, these secrets show up if you go deep and invest a lot. Not easy.
• A great company is a conspiracy to change the world; when you share your secret, the recipient becomes a fellow conspirator.
• A startup that starts poorly is hard to recover. You need solid foundations.
• Not my favorite point, but understandable: everyone involved should work full time. Maximum commitment; no remote, no part time, no consultants.
• For example, at PayPal everyone was obsessed with creating a digital currency.
• Without a mission or a secret, you will not attract the best people to your startup. It is an art; you will find yours.
• Paradoxically, at PayPal many were similar, which let them start very quickly because they agreed on many things. This clashes with other books; likely context-dependent.
• It should feel like a tribe: less than a cult, but only a little less.
• Developers often think that because they built something cool, everyone will buy it. No. You need to sell (and sell yourself).
• Salespeople are in a sense performers. We react poorly to those who do it badly. Good salespeople persuade you.
• Depending on your product’s price (very expensive → few deals → sales matter more to work the customer).
• Another mistake developers (called nerds here) make: mistrusting the media. Too much media is not good, but selling yourself also means engaging with media.
• Look around. If you don’t see any salespeople, you’re the salesperson.
• Technology will not replace humans: it will be complementary, as it has always been.
• 7 questions to ask for a successful startup:
  • The Engineering Question Can you create breakthrough technology instead of incremental improvements?
  • The Timing Question Is now the right time to start your particular business?
  • The Monopoly Question Are you starting with a big share of a small market?
  • The People Question Do you have the right team?
  • The Distribution Question Do you have a way to not just create but deliver your product?
  • The Durability Question Will your market position be defensible 10 and 20 years into the future?
  • The Secret Question Have you identified a unique opportunity that others don’t see? We’ve
• Without these, you will have a short life. Good analysis on cleantech, which missed things like 1, 5, 6.
• Tip: at their fund, they reportedly avoided CEOs in ties. The ones who build and get their hands dirty show up in jeans and a T-shirt; the others are mostly Sales.
• Founders matter. Do not underestimate how much a single person can drive and change.
• Our task today is to find singular ways to create the new things that will make the future not just different, but better - to go from 0 to - The essential first step is to think for yourself. Only by seeing our world anew, as fresh and strange as it was to the ancients who saw it first, can we both re-create it and preserve it for the future.