December 30, 2020

Zero To One by Peter Thiel - Book Summary

Today we are talking about Zero to One by Peter Thiel and Blake Masters. 

I am going to come right out and say this book is good, but it feels like it has a bit of Dr. Jekyll and Mr Hyde going on. Why, because some of the topics that are talked about are in fact mind-blowing and then there are other aspects that are just strange. I’ll be honest there were parts of this book that read really fast, and others that I struggled with. 

The books is built around a simplistic and beautiful concept, that novel ideas change the world. It hits home with some great concepts and frameworks, but also challenges our typical way of thinking. 

One of the questions Peter is fond of asking employees is “What important truth do very few people agree with you on? 

A few examples are: 

Sending Paper checks over mail is not convenient, obviously one held by him and he PayPal co-founders back in the day. 

College students would like to know more about each other through the internet. I think we all know that one belongs to Zuckerberb, he built Facebook on that very idea. 

There is no bookstore where you can find any book in the world. Clearly was the inspiration for Jeff Bezos fonding of Amazon. 

It’s finding problems in these unknown truths that helps entrepreneurs flush out the problem they are going to try and solve and come up with a solution. And as peter puts it “Properly understood, any new better way of doing things is technology” 

So find a better way. 

The next takeaway is to avoid competition. Or as peter puts it “competitive markets destroy profits” which is true. If you can monopolize a space by making something no one else can copy then you will be able to create a massively successful business. 

Now there are two ways to go about this. First is you can create a new technology or product and create a new market altogether, challenging, but possible. The second is that you can improve something that already exists, but to really stand out from others in the space and eliminate competition you need to be at least ten times better than the competition, so much better that competition falls by the waist side. 

As Peter said “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” so small iteration on someone else's idea isn’t going to be enough to win the market. 

Adding to this is to build a business that benefits from the network effect, that is that the more people who use it the more value it adds and that drives more people to it. 

While trying to build this monopoly business you have to be building your strong brand as well so that when you do control the market people begin to associate your brand with that whole space. We’ve seen this with companies like Xerox and Google their brand represents the market in general. 

You might have a great product, but if you don’t have sales then you have nothing. To quote Peter again “Sales mater just as much as product”. That means that no matter how smart your engineering team is and how amazing the product is you still have to go out and sell it. And if it’s not designed with the target market and user in mind then you are going to have a very difficult time. 

The last thing I want to touch on from this book is that building your team is the foundation to your success so you have to choose wisely along that path. As peter points out in the book “A startup is a team of people on a mission.” 

Now Peter has some thoughts on how this team should look, he says that “From the outside everyone in your company should be different in the same way” and that “ from the inside, every individual should be sharply distinguished by their work” 

Those two lines are worth thinking about, from the outside you want people to see your shared passion, your collective drive to change the world. 

From the inside tho you each have a unique role to play as you drive forward with the business. You are all aligned in the same goal, but individually chipping away at the problem in a different area. 

Keeping in mind that the team is the foundation of your business this book really puts some effort into helping you develop a structure and culture that will help you thrive. 

So, who is this book for? I would say it is for way more than entrepreneurs, this book has ideas and concepts that can add value to you no matter what you are doing, if you are an entrepreneur, you are running a side hustle or you work for someone else with no intention of branching off on your own. The ideas in this book will help you to think differently, look at markets in a new way and find secret problems that you can hopefully solve.