A THREAD on key takeaways from 'Zero to One: Notes on Startups, or How to Build the Future' book
By Peter Thiel (@peterthiel):
1/
The most valuable businesses of coming decades will be built by entrepreneurs who seek to empower people rather than try to make them obsolete.
By Peter Thiel (@peterthiel):
1/
The most valuable businesses of coming decades will be built by entrepreneurs who seek to empower people rather than try to make them obsolete.
2/
As computers become more and more powerful, they won’t be substitutes for humans: they’ll be complements.
As computers become more and more powerful, they won’t be substitutes for humans: they’ll be complements.
3/
There are two kinds of progress - i) Vertical progress, ii) Horizontal progress.
When we create something new, we go from zero to one. This is vertical progress. And when we take things that work somewhere and make them work everywhere, it's horizontal progress...
There are two kinds of progress - i) Vertical progress, ii) Horizontal progress.
When we create something new, we go from zero to one. This is vertical progress. And when we take things that work somewhere and make them work everywhere, it's horizontal progress...
...New technology is vertical progress whereas globalization is horizontal progress.
Example - If you take one typewriter and build 100, you have made horizontal progress (1 to n). If you have a typewriter and build a word processor, you have made vertical progress (0 to 1).
Example - If you take one typewriter and build 100, you have made horizontal progress (1 to n). If you have a typewriter and build a word processor, you have made vertical progress (0 to 1).
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The most contrarian thing of all is not to oppose the crowd but to think for yourself.
The most contrarian thing of all is not to oppose the crowd but to think for yourself.
5/
Whenever Thiel interviews someone for a job, he likes to ask:
“What important truth do very few people agree with you on?”
Whenever Thiel interviews someone for a job, he likes to ask:
“What important truth do very few people agree with you on?”
6/
Under perfect competition, in the long run no company makes an economic profit.
Despite economics saying its best, it is actually the worst market to be in.
Under perfect competition, in the long run no company makes an economic profit.
Despite economics saying its best, it is actually the worst market to be in.
7/
The actual truth is that there are many more secrets left to find, but they will only yield to relentless searchers.
The actual truth is that there are many more secrets left to find, but they will only yield to relentless searchers.
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A good startup should have the potential for great scale built into its first design.
It shouldn't need more features to attract more users.
A good startup should have the potential for great scale built into its first design.
It shouldn't need more features to attract more users.
9/
The best entrepreneurs know this:
every great business is built around a secret that’s hidden from the outside.
The best entrepreneurs know this:
every great business is built around a secret that’s hidden from the outside.
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The best problems to work on are the ones nobody else even tries to solve.
The best problems to work on are the ones nobody else even tries to solve.
11/
Four principles for business:
a) it is better to risk boldness than triviality,
b) a bad plan is better than no plan,
c) competitive markets destroy profits,
d) sales matter just as much as product.
Four principles for business:
a) it is better to risk boldness than triviality,
b) a bad plan is better than no plan,
c) competitive markets destroy profits,
d) sales matter just as much as product.
12/
Like acting, sales works best when hidden.
None of us want to be reminded when we’re being sold.
Like acting, sales works best when hidden.
None of us want to be reminded when we’re being sold.
13/
The single greatest danger for a founder is to become so certain of his own myth that he loses his mind.
But an equally insidious danger for every business is to lose all sense of myth and mistake disenchantment for wisdom.
The single greatest danger for a founder is to become so certain of his own myth that he loses his mind.
But an equally insidious danger for every business is to lose all sense of myth and mistake disenchantment for wisdom.
14/
You should focus relentlessly on something you’re good at doing,
but before that you must think hard about whether it will be valuable in the future.
You should focus relentlessly on something you’re good at doing,
but before that you must think hard about whether it will be valuable in the future.
15/
You must study the endgame before everything else.
You must study the endgame before everything else.
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Every startup should start with a very small market.
Because it's easier to dominate a small market vs a large one.
Every startup should start with a very small market.
Because it's easier to dominate a small market vs a large one.
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Most businesses get zero distribution channels to work: poor sales rather than bad product is the most common cause of failure.
If you can get just one distribution channel to work, you will have a great business.
Most businesses get zero distribution channels to work: poor sales rather than bad product is the most common cause of failure.
If you can get just one distribution channel to work, you will have a great business.
18/
Unless you have perfectly conventional beliefs, it’s rarely a good idea to tell everybody everything that you know.
Unless you have perfectly conventional beliefs, it’s rarely a good idea to tell everybody everything that you know.
19/
Seven questions EVERY business must answer:
i) Can you create breakthrough technology instead of incremental improvements?
ii) Is this the right time to start your particular business?
iii) Are you starting with a big share of a small market?...
Seven questions EVERY business must answer:
i) Can you create breakthrough technology instead of incremental improvements?
ii) Is this the right time to start your particular business?
iii) Are you starting with a big share of a small market?...
...iv) Do you have the right team?,
v) Do you have a way to not just create buy deliver your product?
vi) Will your market be defensible 10 and 20 years into the future?
vii) Have you identified a unique opportunity that others don’t see?
v) Do you have a way to not just create buy deliver your product?
vi) Will your market be defensible 10 and 20 years into the future?
vii) Have you identified a unique opportunity that others don’t see?
20/
Advertising matters because it works.
Advertising matters because it works.
21/
Monopolists lie to protect themselves.
They know bragging about their great monopoly invites being audited, scrutinised and attacked.
Therefore they pretend to be part of a bigger pie than they actually are.
Monopolists lie to protect themselves.
They know bragging about their great monopoly invites being audited, scrutinised and attacked.
Therefore they pretend to be part of a bigger pie than they actually are.
22/
All failed companies are the same: they failed to escape competition.
All failed companies are the same: they failed to escape competition.
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Higher education is the place where people who had big plans in high school get stuck in fierce rivalries with equally smart peers over conventional careers like consulting and Investment banking.
Why are we doing this to ourselves?
Higher education is the place where people who had big plans in high school get stuck in fierce rivalries with equally smart peers over conventional careers like consulting and Investment banking.
Why are we doing this to ourselves?
24/
Every monopoly is unique, but they usually share some combination of the following characteristics:
i) proprietary technology,
ii) network effects,
iii) economies of scale, and
iv) branding.
Every monopoly is unique, but they usually share some combination of the following characteristics:
i) proprietary technology,
ii) network effects,
iii) economies of scale, and
iv) branding.
25/
Would-be entrepreneurs are told that nothing can be known in advance: we’re supposed to listen to what customers say they want, make nothing more than a “minimum viable product,” and iterate our way to success. But leanness is a methodology, not a goal...
Would-be entrepreneurs are told that nothing can be known in advance: we’re supposed to listen to what customers say they want, make nothing more than a “minimum viable product,” and iterate our way to success. But leanness is a methodology, not a goal...
...Making small changes to things that already exist might lead you to a local maximum, but it won’t help you find the global maximum.
26/
Actually, capitalism and competition are opposites.
Capitalism is premised on the accumulation of capital, but under perfect competition all profits get competed away.
Actually, capitalism and competition are opposites.
Capitalism is premised on the accumulation of capital, but under perfect competition all profits get competed away.
27/
Network effects can be powerful, but you’ll never reap them unless your product is valuable to its very first users when the network is necessarily small.
Network effects can be powerful, but you’ll never reap them unless your product is valuable to its very first users when the network is necessarily small.
28/
Two rules for VCs:
1. Only invest in companies with potential to return entire value of fund. Rule 1 eliminates most companies.
2. Rule 2 is that Rule 1 is the only rule.
Two rules for VCs:
1. Only invest in companies with potential to return entire value of fund. Rule 1 eliminates most companies.
2. Rule 2 is that Rule 1 is the only rule.
29/
Customers won’t care about any particular technology unless it solves a particular problem in a superior way.
And if you can’t monopolize a unique solution for a small market, you’ll be stuck with vicious competition.
Customers won’t care about any particular technology unless it solves a particular problem in a superior way.
And if you can’t monopolize a unique solution for a small market, you’ll be stuck with vicious competition.
30/
“Thiel’s law”: a startup messed up at its foundation cannot be fixed.
“Thiel’s law”: a startup messed up at its foundation cannot be fixed.
31/
Every living thing is just a random iteration on some other organism, and the best iterations win.
Every living thing is just a random iteration on some other organism, and the best iterations win.
32/
If you want to create and capture lasting value, don’t build an undifferentiated commodity business.
If you want to create and capture lasting value, don’t build an undifferentiated commodity business.
33/
A product is viral if its core functionality encourages users to invite their friends to become users too.
A product is viral if its core functionality encourages users to invite their friends to become users too.
