“Zero to One” is a peak inside the mind of American venture capitalist Peter Thiel, as he shares how he became a Billionaire by selling Paypal, co-founding Plantir then investing in Facebook. With optimism and clarity, Thiel walks readers through the process of how to create innovative products that crush the competition by turning startups into monopolies. Aspiring technology startup founders will benefit from learning about his perspective on how to gain a competitive edge through innovation, although his philosophy can be applied to being successful as an entrepreneur as well as in life.
My key Takeaways from “Zero to One: Notes on Startups, or How to Build the Future" by Peter Thiel
Takeaway #1 Seeing The Future
How do you think the world will look in 100 years? When thinking about this topic we think about the progress that will be made, how the future will be different than it is now which comes down to horizontal progress and vertical progress.
Horizontal progress is when you go from 1 to n and means the expansion of ideas and processes that already exist. Vertical progress means going from 0 to 1, creating something entirely new whether a new technology or a new way of doing something.
You can only predict (or attempt to predict) vertical progress when you look at the present in a new light, one where you view it critically, and in a way that few others can.
In order to have your start up participating in the future, you must answer yes to these 7 critical questions.
1. Can your company create a technological breakthrough?
2. Is this the right time to start a business?
3. Will you have a large share of a small market?
4. Are you team up to the job?
5. Are your distribution channels setup?
6. Is the company durable?
7. Have you found a unique opportunity that others have missed?
Takeaway #2 Monopolies Are Good
You might mistakenly think that monopolies are a bad thing, huge companies that squeeze the life out of smaller competing companies. In fact, monopolies drive innovation, drive progress, and drive profits.
Monopolies are successful because they have a technology advantage (think of Google), they have network growth (Facebook), they benefit from cost scaling, and a strong brand image that cannot be replicated easily.
Having a monopoly means that you are at the top of your game, you can set your own price, there's no the need to compete in price wars, therefore you're likely to have a highly profitable business with happy customers.
Takeaway #3 Seeing Unique Opportunities and Chasing Them
Some people believe the dangerous misconception that we've hit the limits of vertical progress in today's world and cannot go any further – This limiting belief hinders success. The only problem is that the 'secrets' still left to uncover or solve are based on deeply embedded thoughts and beliefs that we have not yet accepted or recognized. Take slavery as an example, once upon a time it was common practice and considered acceptable by the elite. What are we doing today that will be considered barbaric in the future? In technology terms, think how Alexander Bell would perceive the internet!
Companies must always strive to find the next secret, the next thing that will open up new possibilities for the world otherwise the only progress being made will be horizontal and the company will lose its value, as happened with HP when they stopped inventing new products after their early pioneering success in the early 90's.
Takeaway #4 Start Small to Grow Big
A successful monopoly takes time to grow, especially when talking profits. Does this mean that start up companies who aren't profiting don't have value? No! Value should be determined by what the company will make over its lifetime not in the first few years – Just take Paypal as an example.
When starting out know that you only have to be the best in your chosen field, you can expand piece by piece after you've obtained a monopoly in that niche. Amazon is a great example here, they initially built the monopoly for books only dominating other products to become one of (if not the) world's greatest online retailer later on.
This is why it's so important to remember that you have to walk before you can run. Hire the right people, make sure your goals and interests align with those of the directors, and grow a strong company culture, this is what's needed for a solid foundation that sees businesses survive and thrive in the future.