The single word for vertical, 0 to 1 progress is technology. By copying successful companies, you aren't learning from them. Humans are distinguished from other species by our ability to work miracles. We call these miracles technology
Peter Thiel is a Silicon Valley icon. He was behind Paypal with Elon Musk and Palantir; an early Facebook investor, creator of the Funders’s Fund, the Thiel Foundation. Zero to One is Thiel’s manifesto on building successful companies that create a better future.
Key learnings : The 9 questions of a great business
The Engineering Question - Can you create breakthrough technology instead of incremental improvements?
The clearest way to make a 10x improvement is to invent something completely new, a proprietary technology. If you build something valuable where there was nothing before, the increase in value is theoretically infinite. Companies must strive for 10x better because merely incremental improvements often end up meaning no improvement at all for the end user. Only when your product is 10x better can you offer the customer transparent superiority.
The Timing Question - Is now the right time to start your particular business?
A startup is the largest endeavor over which you can have a definite mastery. You can have agency not just over your own life, but over a small and important part of the world. It begins by rejecting the unjust tyranny of chance. You are not a lottery ticket, have a plan.
The Monopoly Question - Are you starting with a big share of a small market?
The perfect target market for a startup is a small group of particular people concentrated together and served by few or no competitors. If you can recognize competition as a destructive force instead of a sign of value, you’re already more sane than most. Huge, trillion dollar markets mean ruthless, bloody competition.
Just as war cost the Montagues and Capulets their children, it cost Microsoft and Google their dominance: Apple came along and overtook them all. In January 2013, Apple’s market capitalization was $500 billion, while Google and Microsoft combined were worth $467 billion. Just three years before, Microsoft and Google were each more valuable than Apple. War is costly business.
The people - Do you have the right team? It’s very hard to go from 0 to 1 without a team.
A startup messed up at its foundation cannot be fixed. Companies are like countries in this way. Bad decisions made early on—if you choose the wrong partners or hire the wrong people, for example—are very hard to correct after they are made. It may take a crisis on the order of bankruptcy before anybody will even try to correct them. As a founder, your first job is to get the first things right, because you cannot build a great company on a flawed foundation.
The Paypal Mafia
As a general rule, everyone you involve with your company should be involved full-time. Anyone who doesn’t own stock options or draw a regular salary from your company is fundamentally misaligned. Anyone who prefers owning a part of your company to being paid in cash reveals a preference for the long term and a commitment to increasing your company’s value in the future. That’s why hiring consultants or part-time employees don’t work. Even working remotely should be avoided, because misalignment can creep in whenever colleagues aren’t together full-time, in the same place, every day. If you’re deciding whether to bring someone on board, the decision is binary. Ken Kesey was right: you’re either on the bus or off the bus.
The Distribution - Do you have a way to not just create but deliver your product?
It’s better to think of distribution as something essential to the design of your product. If you’ve invented something new but you haven’t invented an effective way to sell it, you have a bad business—no matter how good the product.
Nerds might wish that distribution could be ignored and salesmen banished to another planet. All of us want to believe that we make up our own minds that sales don’t work on us. But it’s not true. Everybody has a product to sell—no matter whether you’re an employee, a founder, or an investor. It’s true even if your company consists of just you and your computer. Look around. If you don’t see any salespeople, you’re the salesperson.
The Durability - Will your market position be defensible 10 and 20 years into the future?
Every entrepreneur should plan to be the last mover in her particular market. Anticipate competition.
Moving first is a tactic, not a goal. What really matters is generating cash flows in the future, so being the first mover doesn’t do you any good if someone else comes along and unseats you. It’s much better to be the last mover, that is, to make the last great development in a specific market and enjoy years for even decades of monopoly profits. The way to do that is to dominate a small niche and scale up from there, toward your ambitious long-term vision. In this one particular at least, business is like chess. Grandmaster José Raul Capablanca put it well: to succeed, “you must study the endgame before everything else.”
The Secret - Have you identified a unique opportunity that others don't see?
There’s plenty more to learn. The best entrepreneurs know this: if you want to create and capture lasting value, don’t build an undifferentiated commodity business. Every great business is built around a secret that’s hidden from the outside, something hard to do but doable. A great company is a conspiracy to change the world; when you share your secret, the recipient becomes a fellow conspirator.
People are scared of secrets because they are scared of being wrong. By definition, a secret hasn’t been vetted by the mainstream. If your goal is to never make a mistake in your life, you shouldn’t look for secrets. The prospect of being lonely but right, dedicating your life to something that no one else believes in, is already hard. The prospect of being lonely and wrong can be unbearable.
The best place to look for secrets is where no one else is looking.
Don’t ever compromise – Why does the number’s game not work?
The biggest secret in venture capital is that the best investment in a successful fund equals or outperforms the entire rest of the fund combined. VCs must find the handful of companies that will successfully go from 0 to 1 and then back them with every resource. Once you think that you’re playing the lottery, you’ve already psychologically prepared yourself to lose.
This is important to everybody because everybody is an investor. An entrepreneur makes a major investment just by spending her time working on a startup. The investors who understand the power law make as few investments as possible. Life is not a portfolio: not for a startup founder, and not for any individual. An entrepreneur cannot “diversify” herself: you cannot run dozens of companies at the same time and then hope that one of them works out well.
Schools – How outdated are our most fundamental talent incubators?
Everybody who passes through the American school system learns NOT to think in 0 to 1 terms. We teach every young person the same subjects in mostly the same ways, irrespective of individual talents and preferences. Every university believes in “excellence,” and hundred-page course catalogs arranged alphabetically according to arbitrary departments of knowledge seem designed to reassure you that “it doesn’t matter what you do, as long as you do it well.” That is completely false. It does matter what you do. 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.
A whole generation learned from childhood to overrate the power of chance and underrate the importance of planning.
The criterias for magic
Years ago, in our childhood, when we believed in elves, magic and superheroes, (some of us still do), we learned in school that 0 is followed by 1. Such is the law. Through this book, rather than saying magic doesn’t exist, Thiel reminds us with 9 power laws, that going from zero to one is a very rare, magical thing. He believes in hope, hope for the long run, and unique businesses. Ideas that will make the future not just different, but better. The essential first step is to think for yourself.
By Jean-Philippe Gagnon