Zero to One

About the book

Book author: Peter Thiel

The book is about entrepreneurship and building businesses. Peter Thiel was a co-founder of PayPal and part of the PayPal mafia. He’s built many successful businesses afterwards. He wrote a book based on his Stanford lectures.

Reflection and takeaways

Some sentences and reflections really stuck out to me. Here are some of my notes. It’s transcribed citations, and not exact.

Technology is the real driver of abundance. 2x the energy output without new technology means 2x the pollution.

Competition drives down profit. The better companies innovate where there is no competition.

The right question: “What valuable company is noone building?”

There is a difference between creating value and capturing value. Airline businesses are enormous creators of value; people can travel all over the world and the airline industries are huge. But they don’t capture value at all, they only make cents per passenger. In fact, their most profitable product now is bonus programs and credit cards. It’s smarter to create less value but capture more value, like Google.

All failed companies are the same: they failed to escape competition.

And on that note: it’s competition, not business, that is war-like. Focusing on competition too much is a waste of time. There is a great story here about the Oracle founders and Siebel and Informix and their attempts to compete with each other by posting road signs et cetera. There’s also the case of Google and Microsoft. When Google was just a search engine, it was all good. And Microsoft was just an OS. But then Google did Google OS and Microsoft did Bing. Both were competition and it didn’t go so well for either bet.

Banks and finance and managers are the primary option for making money, when you have no idea how to create wealth.

This is a really good reminder. There are many smart managers, finance people and bankers. That is a smart route to pick if you don’t want to risk it with entrepreneurship.

Noone knows what to do with money. Not banks, PE or whatever. People just diversify in the end.

This is very true. I’ve worked a stint in finance (although quantitative finance, not banker-chad-finance). I’ve seen hedge funds. It’s a meme and a marketing job: they create 10 funds, kill the 8 or 9 that don’t do well and market the shit out of the one or two that beat index. Bankers are salespeople. PE seems a bit fraud-like, due to the classical management fee structure, but there are very competent A-level people who work there. In the end, buying a fund is diversification. Buying into PE is diversification. Banks will diversify for you. VCs diversify.

Power laws rule the world

Indeed they do. It’s all in Taleb’s Incerto series. Embrace it. And in the VC case: it’s all bad investments unless the company has the potential to be worth more than the entire fund.

You’re either on the bus or off the bus when it comes to commitment

This is very true, and also aligns with the “Skin in the game” thesis from Taleb. But, this one is more practical. And it’s a good co-founder and early-employee rule. If you’re not in it 100%, better not be in it.

A product has “viral” properties if it’s users are encouraged to invite other users. Facebook had friends, and PayPal had their emails.

PayPal mafia knew that their business would be profitable if they had a couple of million users. So, they gave $10 to someone if they recruited via email, and another $10 for the person about to be recruited to sign up. That went viral. Facebook had FOMO + Friend invitations. It’s smart to design viral properties if you’re ever building a business.

Peter believes “Human-in-the-loop” and human augmentation to be the key, not true automation.

This is interesting because Palantir is based on this concept. And I kind of agree, as an AI expert. There are many areas where true automation is so hard due to power laws and outliers, which are super easy for humans.

Cleantech was ruined by “non-tech & salespeople”.

Real tech people dress in a t-shirt and jeans, not a suit. People who know how to sell don’t wear a suit and don’t look at all like salespeople. This is so true. I’m always on guard with suit people, but just talk to t-shirt people as if they’re friends.

Why did I pick it

It’s been on my to-read for a long time.

Verdict

3.0/5. I’ve read so much tangential advice, that I am not blown away by this book. But it’s not a bad book, just not right for me.