Zero To One

Peter Thiel

1. Tolstoy opens Anna Karenina by observing: All happy families are alike; each
unhappy family is unhappy in its own way. Business is the opposite. All happy
companies are different: each one earns a monopoly by solving a unique
problem. All failed companies are the same: they failed to escape competition.
2. CREATIVE MONOPOLY means new products that benefit everybody and
sustainable profits for the creator.
3. Competition means no profits for anybody, no meaningful differentiation, and a
struggle for survival.
4. According to Marx, people fight because they are different. The proletariat fights
the bourgeoisie because they have completely different ideas and goals
(generated, for Marx, by their very different material circumstances). The greater
the differences, the greater the conflict.
5. Technology companies follow the opposite trajectory. They often lose money for
the first few years: it takes time to build valuable things, and that means delayed
revenue. Most of a tech companys value will come at least 10 to 15 years in the
future.
6. If you focus on near-term growth above all else, you miss the most important
question you should be asking: will this business still be around a decade from
now? Numbers alone wont tell you the answer; instead you must think critically
about the qualitative characteristics of your business.
7. Every monopoly is unique, but they usually share some combination of the
following characteristics: proprietary technology, network effects, economies of
scale, and branding.
8. The clearest way to make a 10x improvement is to invent something completely
new. If you build something valuable where there was nothing before, the increase
in value is theoretically infinite. A drug to safely eliminate the need for sleep, or a
cure for baldness, for example, would certainly support a monopoly business.
9. pport a monopoly business. Or you can radically improve an existing solution:
once youre 10x better, you escape competition. PayPal, for instance, made
buying and selling on eBay at least 10 times better. Instead of mailing a check that
would take 7 to 10 days to arrive, PayPal let buyers pay as soon as an auction
ended. Sellers received their proceeds right away, and unlike with a check, they
knew the funds were good.
10. Facebook started with just Harvard studentsMark Zuckerbergs first product
was designed to get all his classmates signed up, not to attract all people of Earth.
This is why successful network businesses rarely get started by MBA types: the
initial markets are so small that they often dont even appear to be business
opportunities at all.
11. A good startup should have the potential for great scale built into its first design.
Twitter already has more than 250 million users today. It doesnt need to add too
many customized features in order to acquire more, and theres no inherent reason
why it should ever stop growing.
12. Many have tried to learn from Apples success: paid advertising, branded stores,
luxurious materials, playful keynote speeches, high prices, and even minimalist
design are all susceptible to imitation. But these techniques for polishing the
surface dont work without a strong underlying substance. Apple has a complex
suite of proprietary technologies, both in hardware (like superior touchscreen
materials) and software (like touchscreen interfaces purpose-designed for specific
materials).
13. BUILDING A MONOPOLY
a. Start Small and Monopolize
b. Scaling Up
c. Dont Disrupt
14. 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 Jos Ral Capablanca put it well: to succeed, you must study
the endgame before everything else.
15. The other three views of the future can work. Definite optimism works when you
build the future you envision. Definite pessimism works by building what can be
copied without expecting anything new. Indefinite pessimism works because its
self-fulfilling: if youre a slacker with low expectations, theyll probably be met.
But indefinite optimism seems inherently unsustainable: how can the future get
better if no one plans for it?
16. A startup is the largest endeavor over which you can have 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.
17. 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. This implies two
very strange rules for VCs. First, only invest in companies that have the potential
to return the value of the entire fund. This is a scary rule, because it eliminates the
vast majority of possible investments. (Even quite successful companies usually
succeed on a more humble scale.) This leads to rule number two: because rule
number one is so restrictive, there cant be any other rules.
18. The actual truth is that there are many more secrets left to find, but they will yield
only to relentless searchers. There is more to do in science, medicine, engineering,
and in technology of all kinds.
a. There are two kinds of secrets: secrets of nature and secrets about people
b. Consider the monopoly secret again: competition and capitalism are
opposites. If you didnt already know it, you could discover it the natural,
empirical way: do a quantitative study of corporate profits and youll see
theyre eliminated by competition
c. The best place to look for secrets is where no one else is looking. Most
people think only in terms of what theyve been taught; schooling itself
aims to impart conventional wisdom. So you might ask: are there any
fields that matter but havent been standardized and institutionalized?
Physics, for example, is a real major at all major universities, and its set
in its ways.
 d. Unless you have perfectly conventional beliefs, its rarely a good idea to
tell everybody everything that you know.
e. The road doesnt have to be infinite after all. Take the hidden paths.
19. EVERY GREAT COMPANY is unique, but there are a few things that every
business must get right at the beginning. I stress this so often that friends have
teasingly nicknamed it Thiels law: a startup messed up at its foundation cannot
be fixed.
20. As a founder, your first job is to get the first things right, because you cannot
build a great company on a flawed foundation.
21. A company does better the less it pays the CEOthats one of the single clearest
patterns Ive noticed from investing in hundreds of startups. In no case should a
CEO of an early-stage, venture-backed startup receive more than $150,000 per
year in salary.
22. Company culture doesnt exist apart from the company itself: no company has a
culture; every company is a culture. A startup is a team of people on a mission,
and a good culture is just what that looks like on the inside.
23. Since time is your most valuable asset, its odd to spend it working with people
who dont envision any long-term future together. If you cant count durable
relationships among the fruits of your time at work, you havent invested your
time well even in purely financial terms.
24. The only good answers are specific to your company, so you wont find them in
this book. But there are two general kinds of good answers: answers about your
mission and answers about your team. (When recruiting talents).
25. But the most valuable companies in the future wont ask what problems can be
solved with computers alone. Instead, theyll ask: how can computers help
humans solve hard problems?
26. Questions:
a. 1. The Engineering Question Can you create breakthrough technology
instead of incremental improvements?
b. 2. The Timing Question Is now the right time to start your particular
business?
c. 3. The Monopoly Question Are you starting with a big share of a small
market?
d. 4. The People Question Do you have the right team?
e. 5. The Distribution Question Do you have a way to not just create but
deliver your product?
f. 6. The Durability Question Will your market position be defensible 10 and
20 years into the future?
g. 7. The Secret Question Have you identified a unique opportunity that
others dont see?
27. Doing something dif erent is whats truly good for societyand its also what
allows a business to profit by monopolizing a new market. The best projects are
likely to be overlooked, not trumpeted by a crowd; the best problems to work on
are often the ones nobody else even tries to solve.
28. The lesson for business is that we need founders. If anything, we should be more
tolerant of founders who seem strange or extreme; we need unusual individuals to
lead companies beyond mere incrementalism.
29. The lesson for founders is that individual prominence and adulation can never be
enjoyed except on the condition that it may be exchanged for individual notoriety
and demonization at any moment so be careful.
30. 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.
31.