Book Review of Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel & Blake Masters
Introduction of Zero to One by Peter Thiel, Blake Masters. Peter Thiel, the founder of Paypal in the United States, is known as a thinker in the investment world and an angel in Silicon Valley. The PayPal he founded sold for 1.5 billion US dollars, and then he established a founders fund and invested infamous companies such as Linkedin, SpaceX, and Yelp.
The number one leader of the "PayPal gang" in Silicon Valley. As an excellent investor, his course lectures at Stanford have been organized by students and become a book "From 0 to 1".
"From 0 to 1" can be seen as the crystallization of Peter's thinking, so there is a lot of information. If you are interested, you'd better read it as soon as possible.
But according to his own words, his own thinking about the Internet may be summed up in the following four points:
- Boldness is better than mediocre and conservative.
- A bad plan is better than no plan
- The competitive market is difficult to make money
- Marketing and product are equally important
here. Let's talk about competition. In Chapter 4, Peter talks about competition in detail. His core point is that competition is considered to be the essence of capitalism, but in reality, when companies are in competition, then the industry cannot make money; then you can't continue to enter or stay in the industry, you should do It is to turn away and find a newer industry and extract monopoly profits from there. Only a monopoly can profit.
Peter's statement is not new either. According to economics, when sufficient competition occurs, companies cannot obtain excess profits. Business management emphasizes achieving strategic differentiation when cost advantages cannot be achieved. Schumpeter talked about disruptive innovation, which means that companies can only achieve new breakthroughs by breaking the original organizational form.
There is a saying in the market economy, people who are good, I am good, people who are good and cheap, and people who are cheap, I will transfer, but Peter may be more direct, we simply don’t want to be cheap, and transfer directly.
Peter especially emphasized that the most important thing in starting a business is to get out of the competitive market, not only because it is difficult to make money in a competitive market, but also because if we pay too much attention to competition, then it means repeating the past model rather than innovating.
However, even if you are a leading entrant, you will inevitably have someone behind you or at the same time as you in certain market segments. So what to do at this time? Peter's advice:
If you can't beat your opponent, join forces with your opponent.
Back then, when Peter started PayPal, Musk (well, the father of Tesla) was also building a similar company, x.com. The two companies fought fiercely in 1999, and they went to war.
But the results were unsatisfactory: although the employees had worked overtime, Peter finally found out that this was simply wrong because he realized that the purpose of being a business is not to beat your opponents at all if you focus on Beat your opponents, so where do you have time to think of better ideas to develop?
After understanding the problem, the two companies merged quickly.
Peter Thiel said that the essence of entrepreneurship is to create a monopoly with a clear mind. Such a future is clearly more likely when mergers emerge.
So the competition is still fierce. So, what if there is another bloody battle? I think what Peter said is good: if you can fight then fight, if you can't combine then run, If you can't beat your opponent, you will join forces. For example, Peter Thiel and Elon Musk created Paypal.
Book: Zero to One by Peter Thiel, Blake Masters
Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel
About the Author: Zero to One by Peter Thiel
Peter Thiel is an entrepreneur and investor. He started PayPal in 1998, led it as CEO, and took it public in 2002, defining a new era of fast and secure online commerce.
In 2004 he made the first outside investment in Facebook, where he The same year he launched Palantir Technologies, a software company that harnesses computers to empower human analysts in fields like national security and global finance.
He has provided early funding for LinkedIn, Yelp, and dozens of successful technology startups, many runs by former colleagues who have been dubbed the “PayPal Mafia.” He is a partner at Founders Fund, a Silicon Valley venture capital firm that has funded companies like SpaceX and Airbnb.
He started the Thiel Fellowship, which ignited a national debate by encouraging young people to put learning before schooling, and he leads the Thiel Foundation, which works to advance technological progress and long-term thinking about the future.
Blake Masters was a student at Stanford Law School in 2012 when his detailed notes on Peter's class “Computer Science 183: Startup” became an internet sensation. He went on to co-found Judicata, a legal research technology startup.
Quoted from Zero to One by Peter Thiel
Sales are invisibleSalespeople are actors: their first priority is persuasion, not sincerity. That's why the term "salesperson" has a derogatory connotation, and why used car dealers are a proxy for unfair trade. But we only despise bad salespeople with ulterior motives, that is, the less capable ones. There is a wide range of sales capabilities: there are many levels between novices, experts and masters, and even super masters. If you don't know anything about super masters, it's not because you haven't met them, but because they're highly skilled and invisible. Tom Sawyer, the protagonist in The Adventures of Tom Sawyer, convinces his neighbors to paint the fence for him—a masterful move. And convincing his friends to spend money to paint the fence for him is a master move, and his friends aren't as smart as him. Not much has changed since Mark Twain wrote the book in 1876, the salesmanship of persuading people to willingly pay for fighting jobs.As with acting, quiet sales are most effective. This explains why people who work in promotion—whether in sales, marketing, or advertising—have titles that have nothing to do with the job description. People who sell ads are called "business managers," people who sell clients are called "business developers," people who sell companies are called "investment bankers," and people who sell themselves are called "politicians." The name change makes a lot of sense: No one wants to be reminded that they're being marketed.Sales power is used in all walks of life to differentiate winners from losers. On Wall Street, a novice starts out as an "analyst" who emphasizes technical expertise, but his goal is to become a trader. Lawyers pride themselves on their professional qualifications, but law firms are run by experts who can attract big clients. Even college professors with prestige for their academic achievements envy the self-promoters who can call the shots. Academic views on history and English are not popular because of a high level of knowledge. Even the research agenda for fundamental physics and future trends in cancer research are the results of lobbying. Even business people underestimate the importance of sales, and the fundamental reason is that a world driven by sales secrecy has collectively obscured sales at every level in every field.The engineer's dream is to produce a product that is good enough to "sell it for yourself." But the person who describes the actual product this way is lying: he's either fanciful (deceiving himself) or trying to sell something (which would be paradoxical). A very different old business talk reminds us that "the best product doesn't always win". Economists attribute this to "path dependence": specific historical circumstances determine which products are popular regardless of quality. That's true, but that's not to say the operating systems we use today and the keyboard layouts we type on are just random winners. It is more appropriate to make merchandising an essential factor in product design. If you invent new products and don't sell them in an efficient way, then your business will be hard to sustain - no matter how good your product is.
---Quoted from page 175
And in an uncertain optimistic future, there will be more bankers and lawyers. In fact, finance is not clear and it is a concentrated expression of thinking, because only when people do not know how to make money will they think of engaging in finance.Financial uncertainty can be eerie. Think about what happens when successful entrepreneurs sell their companies? What do they do with the money? In such a financialized world, it goes something like this:
- Entrepreneurs don't know what to do with their money, so they keep it in the bank.
- Bankers don't know what to do with their money, so they give it to different institutional investors for different investment directions.
- Institutional investors don't know what to get money for, so they invest in stocks.
- Companies try to generate free money flow to boost stock prices by paying dividends or buying back shares, and the cycle goes on and on.
---Quoted from page 94
Book Summary: Zero to One by Peter Thiel
The chapters of this book are short, well written, and easy to read.
Let's start with the first interesting point:
When I interview candidates, I always ask a question: What important issues do you think differently from others? Why ask this question?
In small terms, the future is just a moment yet to come, but what makes the future so unique is not that the future has not yet happened, but that the world of the future will be different from the present. If our society has not changed in the next 100 years, the future will be in 100 years. If the world changes in the next 10 years, the future is within reach.
Most answers to this anti-mainstream question are based on the present, and a good answer should give us a glimpse into the future as much as possible.
Any new method, any method that can make things easier to do is technology, and that's the right understanding of technology.
The charter company discussed the method of subdivided housing, allowing the tenants to live comfortably and generate income, making it easier to collect rent -> technology; company staff thought of ways to make things easier -> technology.
Monopoly and competition:
Google's motto "Don't be evil" is a brand strategy, and it also shows the characteristics of a successful enterprise - even if it strictly adheres to ethics, it will not affect the company's development, how domineering!
Every monopoly enterprise obtains a monopoly position by solving a unique problem (JD.com focuses on the fast delivery card, which solves the problem that buyers need to wait for Taobao small sellers to pack -> find express delivery -> delivery), and the reason for the failure of the enterprise But it's the same: none of them escape the competition.
The characteristics of a company/business with a future:
patented technology/network effect/scale economy, a brand advantage, the above four points have a low role in China's patented technology, and it is difficult to achieve at first glance, but if these steps are carried out, Relatively easy:
first, capture a small market, the perfect target market for a startup is a specific group of people with few other competitors to compete with you (Facebook started with campuses);
once you have successfully created or dominated a niche market, it is necessary to gradually enter a slightly larger market. (Amazon is slowly expanding the category starting with books);
When expanding into adjacent markets, do not engage in disruption, avoid competition as much as possible, and create non-zero-sum competition instead of zero-sum or even negative-sum competition.
A group of harmony, mutual support, do not take other people's jobs, to create new pie, create increments, rather than compete for stock.
Power (compound interest):
Power is the most powerful force in the universe. The exponential equation describes the most unequal distribution. It completely defines the environment around us, and we hardly notice it. The world we live in is not a normal world but is under a power law.
"It doesn't matter what you do, what matters is that you do it well" is a complete mistake. You should focus on what you are good at, and think carefully about whether it will add value in the future before doing it.
Power is very important to everyone because everyone is an investor. The biggest investment an entrepreneur makes is to spend time setting up a new company. Therefore, every entrepreneur must think about whether his company will be successful and valuable in the future.
Also, everyone is an investor, you choose a career because you believe that the job you choose will become valuable in the decades to come, the most important thing is that it is unique, Markets may trump all markets, and one sales strategy may trump all sales strategies.
The counter-mainstream question for business:
What valuable companies haven't been created yet? Every correct answer must be a secret: some things are important but no one knows, and some things are difficult but possible. If there are still many secrets in the world, there may be many companies that promise to change the world.
Why don't people explore secrets?
Reasons: Incrementalism, risk aversion, complacency, is there no secret to flattening the current world? The world is not fair everywhere, the market is not completely efficient, so the world now has secrets. When a company no longer believes in secrets, it will go downhill, and when a person no longer believes in secrets, it will become an urban hippie (vinyl records, obsessed with cafes, small luck);
Airbnb and Uber are all business opportunities that have evolved from simple ideas. If such a simple idea can support important and valuable enterprises, then there must be many good companies waiting for us to start.
Great businesses are built on secrets that uniquely make them successful, and no one else knows about it.
Time is the most valuable asset, and wasting it on people who can't work together for long is not worth the effort. If you can't build a lasting relationship at work, you're wasting your time -- even from a purely financial standpoint.
Startups should ask themselves: Why give up the opportunity to go to Google for a high salary and prestige, and go to your company as the 20th engineer?
The company should not fight the welfare war. People who come for free laundry or pet care will not be qualified members of your team. Tell employees why they are fighting and who they are fighting with to make employees do their best.
The difference between the best startups and cults is that cults are wildly wrong about important issues, while successful startups are very right about things that other companies don’t understand. There is no other difference.
The Myth of Philanthropy Entrepreneurship:
Doing Business for Good derives from the belief that for-profit companies and nonprofits are diametrically opposed: corporations have great influence, but are controlled by profit motives; nonprofit corporations pursue the public good but are more Vulnerable players in large economies. Philanthropy aims to combine the best of both worlds and succeed by doing good, but often fails in both.
Doing something different is what really benefits society and is how businesses make money by monopolizing new markets. The best projects may be the ones that people ignore or the ones that aren't hyped: the best problem is that no one tries to solve the problem!
In fact, any contribution to science is made only after you insist and discover that you are right when everyone does not know, disagree, or even strongly oppose it. In other words, if you want to make achievements, the most important thing is: that you can't do things that everyone has agreed with. That is, not following the crowd.
Book Review of Zero to One by Peter Thiel
I have to say that from the beginning of the chapter, "From 0 to 1" reveals a "best-selling book strategy" that successful people teach business secrets, which also made me regret buying this book for a while.
But aside from the prejudice against business books, this book provides readers with a clear idea from the very beginning - ask questions, put forward hypotheses, provide conditions, give proofs, and analyze conclusions.
My understanding is that from the first chapter, Thiel made his point distinctly --
"I'm not writing a recipe for a successful startup, I'm writing a guide to critical thinking."
Yes, he didn't Put forward a point of view related to the content of the book, but first clarify the difference between this book and other business success books. But there is an important emotional color that has been emphasized—criticism. I think the first keyword in this book is "criticism".
The book "Zero to One" is not a recipe for success, nor does it have much experience talking about how to start a business and run a business, Peter Thiel wrote that although he noticed many patterns and covered them in the book, "Zero to One" This book is by no means a recipe for success.
There is no secret formula for entrepreneurship, especially the secret formula from 0 to 1 does not exist, because any innovation is novel and unique, and it is impossible for any authority to stipulate how to innovate.
In fact, the most important pattern is that successful people always find value in unexpected places, and they follow basic principles, not recipes.
In the first chapter of the book, Peter Thiel expands his thinking about this model further, and he always asks a question during interviews, what important issues do you differ from others? And Peter Thiel believes that a good answer is that most people believe X, but the truth is the opposite of X.
Here, I would like to elaborate on this issue. I think this issue is of unparalleled importance. This issue is far more important than we think because it is essentially the same as many issues. At least I think it is the same as the following The chapter discussion are all related.
Below are the notes for each chapter.
Chapter 1: "The Challenge of the Future":
Globalization is a horizontal expansion that can only replicate previous successes, while technological innovation is a vertical expansion, creating something that did not exist before. Without technological innovation, only globalization, the world can only be finished. This is the reason for technological innovation.
Chapter 2: "Party Like It's 1999":
Review the pros and cons of the tech bubble in 1999. And how the world is dealing with the tech bubble of 1999 now. The failure of the Internet in 1999 led to enthusiasm for real estate, globalization, and four mistakes in technology.
- Play the incremental safe route;
- Trial and error instead of planning for the future;
- Play the competitive game;
- do not focus on sales.
The dot-com bubble of 1999 was a problem, but it can't be dismissed outright. It is necessary to maintain the passion to create the world. Subsequent chapters will discuss how to achieve this passion, rather than be destroyed by it, as it was in 1999.
Chapter 3: "All Happy Companies Are Alike":
This chapter explains that an innovative monopoly is what a company should be in. Perfect competition can only result in a total lack of profit. While innovative monopoly companies like Google create the "monopoly lie" to convince people that Google doesn't have a monopoly, the author tells us not to be fooled by the propaganda of companies like Google. Have the courage to create innovative monopoly companies.
Chapter 4: "The Ideology of Competition":
We often think that competition is the essence of business, and even in order to defeat our opponents, we put all our energy into the competition, but if we cannot win the competition quickly, it will only lead to the consumption of value, and not create value. If you can't beat your opponent, you will join forces. For example, Peter Thiel and Elon Musk created Paypal.
Chapter 5: "Last Mover" Advantage":
Persistence of high profitability. The valuation of a company is determined by the cash flow in the next few years, which is why many Internet companies have high valuations despite losses or little profits at this stage.
Persistence has several characteristics, namely:
- technical advantage (10 times better than the second place),
- a network effect (scale is required, but the scale of a large market is difficult to obtain, so it is necessary to enter a small market at the beginning),
- economic scale (Many traditional products are difficult to achieve scale effect, and the scale effect of network products is relatively obvious),
- brand (brand depends on products, and technology companies with only brands will not work, such as yahoo's Mayer pretending to be cool).
This chapter discusses these four characteristics in detail. The way to create an innovative monopoly is to first gain a monopoly in a niche market, then expand to adjacent markets on the basis of success, and expand the monopoly step by step. There is an industry, because it will bring trouble, and this principle should also be followed when expanding to adjacent industries.
The first-mover advantage is not necessarily good. The last mover advantage is to wait for others to create the market but to make the final blow by yourself. (The last advantage reminds me of how Apple created the iPod to kill other mp3s, created the iPhone to kill Nokia, created the iPad to kill the netbook)
Chapter 6: "You Are Not a Lottery" Ticket":
The question of outlook on life. Success comes from ability and planning, not luck. The comfort of the times in the United States, that is, the limitations of the times, has led Americans to think that successful people depend mainly on luck.
America was in an era of "visionary optimism" before 1970 when people were willing to build plans to achieve their desired futures. After 1970, the progress of science and technology has been greatly reduced, and the United States is in an "era of optimism without vision".
Americans believe that the future is optimistic, progressive, and technologically innovative, but they have not established a plan to realize this future. Therefore, no one knows what to take. What about money.
American parents think that if they send their children to college and follow the path they experienced before 1970, they can have a happy life like themselves. But the kids all went to law school, business school, and after graduation went to banking.
Bankers give money to investors, and investors put money into the stock market. After the company gets the money, it cannot create new value, but can only raise the stock price. In the end, money becomes the ultimate goal. Instead of being like before 1970, money is just a tool to realize the future.
Therefore, contemporary America is an "era of visionless optimism." Europe is an "era of visionless pessimism", the future will get worse, but whether it will get worse quickly or slowly, Europeans do not know, they are just adaptable. The best thing about
Apple is not clever design, but to design the future to realize the dream, and to realize the future. Our life is not a lottery ticket and we should not attribute everything we have to luck or even give up our control over the future. Controlling the future is what we should do.
In addition, Thiel also complained about two things in this chapter: American education and longevity research. The problem with American education is that parents' future plans for their children are based on their own smooth life experiences, and they lack interest in creating the world. And longevity research lacks the courage and plan to break the limit of human lifespan.
Chapter 7: "Follow the Money":
Explain where the value is. The inspiration of the 2/8 rule in life. Only look for the best, because the best generates more value. The world is disproportionate. But the law of large numbers is so insignificant in everyday life that most people don't notice it. Not even investors.
Investors invest in a bunch of companies every year. But investors will use their energy every day to develop together with start-up companies. In the end, among the companies invested by investors, one company brings more benefits than all the others, and the second place brings more benefits than all the other companies.
All in the first place. Less than 1% of U.S. startups receive venture capital, and venture capital amounts to only 0.2% of U.S. GDP, but venture-backed companies create 11% of jobs in the private sector, and these companies generate 22% of U.S. GDP. The top 12 companies that have received venture capital are worth 2 trillion.
We receive the same education in school, but in fact, according to the 2/8 rule, the top companies can get more than everyone in the back. 0 for Google stock. 01% is worth $35 million. The same is true of people, being in the right company is more valuable than doing the right thing in a company. This is the principle that individuals should follow when choosing a career.
Chapter 8: Secrets: The Why and Where to Start a Company.
Common sense, secrets, and unreachable knowledge.
- Among the three, secrets are the foundation for building a company. Common sense does not give an advantage, so it cannot be used to create a company. Unreachable knowledge cannot be achieved, so it cannot be used to create a company.
- Fundamentalism keeps people from pursuing secrets. Fundamentalism may be because most places on Earth have already been explored by humans. So people also feel that the same is true in other fields. Another reason people are afraid to pursue secrets is the fear of making mistakes.
- The third reason is complacency. School teachers and parents convince students that as long as they follow the path of school, life will be fulfilled.
- The fourth reason is the lack of self-confidence caused by globalization, the force which directs attention to undifferentiated competition, leaving people not believing that they can uncover secrets.
These four final summaries are a bit of a feeling that the current generation is not keeping up with the previous generation.
The economic unknowable led everyone to believe in the market economy indefinitely, and in the end, no one doubted whether the market was functioning normally, thus bringing about an economic bubble.
The agnosticism of HP's operating company has caused HP's board of directors to not pay attention to technological innovation, but just keep the company running normally, "waiting for innovation to come by itself", which has led to the continuous decline of HP's market value.
The way to find secrets is to doubt the things that ordinary people never doubt. And when a secret is found, tell it neither to anyone nor to anyone. Open a company, turn this secret into an idea, and share this secret with people inside the company.
Chapter 9: "Foundations":
The problem of the company's organizational structure.
This chapter points out that for most startups that fail, problems exist in the early stages of the business. Thiel's Law: A startup messed up at its foundation cannot be fixed. Early-stage decisions will be critical.
Then, Thiel explained which problems are crucial in the early stage of a startup and how to deal with them.
The first is a partner. The partnership is like marriage, and the disagreement of partners is like divorce. Well, it is as ugly as divorce. Ultimately, disagreements cost the company.
The second is the problem that the separation of equity, operator, and executor will cause. In particular, operators are generally entrepreneurs. Problems can arise between investors and entrepreneurs. Investors generally hope that the sooner the market can cash out, the better, but operators hope that the company can grow more and then go public.
This leads to a conclusion: the fewer people on the board, the better, three directors are the most ideal, and if it is a public listing, it is best not to exceed five.
The third is to require everyone in the company to work full-time, except for lawyers, accountants, and remote work should also be avoided.
The fourth is the salary issue. The CEO should not receive an annual salary of more than 150,000 US dollars. Even if it is the most excessive, it cannot exceed 300,000 annual salaries. Otherwise, the CEO will become a politician instead of an entrepreneur. The low salary of a CEO can also set an example for every startup employee. Cash in any form means the present, not the future.
The fifth is the question of vested interests. Replacing cash distribution with equity distribution is a good form. But this raises the question of vested interests. Even so, equity distribution is still the best way to attract employees.
For example, the painter who painted the walls of Facebook is now rich, and many people may feel it is unfair.
Chapter 10: "The Mechanics of Mafia":
The problem of people in the company. This chapter is about who formed the company, who was recruited, and what kind of company was built. It is most reliable to establish a company with friends and people with similar ideal temperaments.
Chapter 11: "If You Build It, Will They Come?:
This chapter talks about the importance of selling.
1. it clarifies the necessity of selling, and dispels the myth that "good products don't need sales to get customers". And put forward the theory that "the best sales skills are invisible". At the same time, it discusses the misunderstanding of the technical staff to the sales staff and even the misunderstanding of the whole society to the sales staff.
It shows that the core of sales is to subtly change people's minds (this thing is so disgusting that any sales must be hidden, and even if it achieves its purpose, it cannot be said), not customer loyalty.
Then, it expounds on several general sales skills: products between 1 and 1 million US dollars to 100 million US dollars are sold as CEOs. This kind of sales requires careful preparation in the early stage, superb personal skills, and personnel like CEOs. Grade;
2. Products between 10,000 and 100,000 US dollars need to be recruited to sell. This sales method should also follow the principle of "starting from the most urgent micro-market to obtain a monopoly first, and then further expand the results";
3. Products around $1,000 are more difficult to sell, so the cost of sales is greater than the benefits of sales. Small business software is generally in this range, which is why the development of small business software is very slow.
4. Sales of mass products. Rely on TV commercials and various mass advertisements.
5. Virus sales. The process by which one user uses a product leads to another is viral sales.
——Sales follow not only a power law but also a power law: the benefits of one of the sales methods mentioned above may be greater than all others. Sales should be aimed at the right groups, aiming at the pain points of the products that these groups are using, to achieve the monopoly purpose of completely replacing the existing products, and then expand the results and enter the non-pain point groups.
Finally, it's not just product sales that are sales. Media PR is also sales. Excellent media PR will bring excellent investors, excellent potential employees, and excellent potential customers to the company. In fact, anyone, at any time, is a salesperson.
Chapter 12: "Man and Machine: This chapter illustrates two points:
1. globalization is a substitution effect because people replace people; computers are a complementary effect because the role of computers is to help people do more work. Computers will not replace people in 200 years. In the past 100 years, using computers to help people do more work in the direction of entrepreneurship.
2. The second point is that big data is actually a lot of stupid data. Because computers are good at dealing with repetitive tasks, and people are good at making value judgments and logical judgments. Combining the advantages of computers and people is the right way to create the future. Instead of trying to completely replace people with computers, or ban the development of computers.
For example, Palantir is because there were a lot of scams when PayPal was founded. PayPal cannot identify scams only with computers, because scammers can change at any time, but computer software cannot.
Therefore, using software to mark suspicious elements, and then using people to judge whether they are really fraudsters, solves the problem of PayPal fraud. Based on this idea, Peter Thiel founded the Palantir company to help government departments and companies identify terrorists, financial fraud, etc.
Chapter 13: "Seeing Green":
This chapter uses a type of green energy source—solar panels—as an example to describe what proper entrepreneurship looks like.
Entrepreneurship is not based on the general direction of society but has a clear entrepreneurial basis, that is, it must have its own secrets. Seven conditions are proposed to test the success of a startup. And with American solar panels and Telsa, the former failed and the latter succeeded, to illustrate the way and logic of entrepreneurship.
Chapter 14: "The Founder's Paradox":
This chapter first takes American popular artists as an example to describe the contradictions among artists. Then compare tech startup celebrities to popular entertainers. Explain the issues that need to be paid attention to when starting a business. Don't take entrepreneurial success solely as your ability.
Hear what Peter Thiel thinks about the 0-to-1 startup trap, and 8 things his book teaches us
Peter Thiel has been innovating all his life. He co-founded PayPal and Palantir, was Facebook's first outside investor, and was an early investor in companies like SpaceX and LinkedIn.
He wrote a book, "From 0 to 1, Unlocking the Secrets of Business and the Future", to help us see the distant future "from what is in front of us". This book is an exercise in rethinking what you already know and offers many counterintuitive insights, all of which will lead you to see the world in a different light.
Here are 8 lessons from this book that everyone can learn and apply in their practice today.
1. The "0 to 1" trap
The next Bill Gates won't develop another operating system. The next Larry Page or Sergey Brin won't study search engines either. The next Mark Zuckerberg will not continue to bury himself in social networks. If you just copy the success of these people, you will never learn the essence of their success.
Similar to Heraclitus who said you can never step into the same river twice, Thiel believed that every moment of business success happens only once. This is worth thinking about.
In Thiel's view, there are two kinds of innovation. If you improve existing things, then you can go from 1 to infinity. But if we can create something new that doesn't exist at all, it's "from 0 to 1".
However, many people fall into the trap of "from 0 to 1".
When you indulge in wonderful innovations, your competitors may have gone from 1 to longer-term and eaten away at your lunch.
It's a competitive world. So don't forget the Spiral and the Red Queen Effect - non-stop optimization against the competition.
2. There has never been any formula for innovation, not now, and never will be
Contrary to entrepreneurial guidance, such a formula for innovation simply cannot exist; because every innovation is new and unique, no one can describe in clear words how to innovate.
In fact, the strongest pattern of individuals I've observed is that successful people always find value in unexpected places, and they do this because they think about business in nature, not formulae.
3. The best interview questions you can think of
When I interview job candidates, I like to ask this question: "Which truth do you think is important but few people agree with you?"
The question seems simple but straightforward. In fact, it is not easy to answer this. This question is actually quite tricky because the so-called truth everyone has learned in school is widely accepted by definition. Everyone trying to answer this question has to give a different answer.
Great minds are rare, but courage is rarer.
Usually, the answers I hear are like this:
"Our education system has problems and needs to be improved."
"America is outstanding."
"God doesn't exist."
These are poor answers. The first two statements are true, but most people already agree. The third answer simply selects one side of the long unresolved debate. A good answer should satisfy the following rule: "Most people believe something, but the opposite is true."
But what does this future have to do with it?
In the smallest sense, the future is nothing more than a set of moments that have yet to come. However, what makes the future unique and important is not this "not yet", but that the world at that time will be different from this time. The answers to most inverse questions are looking at the present from a different angle; good answers are very close to the way we see the future.
4. The most important strength of the new company
The general definition of a startup is a group of people who are persuaded by your plan to come together to change the future. The most important strength of a new company is new thinking: new thinking is even more important than providing flexible, small spaces for thinking.
5. The first step to clear thinking
Our reverse question - which truth do you think is important but few people agree with you? It- Difficult to answer directly. But the answer is much easier if you start with a presupposition: what is the truth that everyone agrees with?
"Insanity in an individual is rare, but it is common for groups, parties, countries, and times." — Nietzsche wrote before the insanity.
If you can discover false popular beliefs, you can discover the truth behind them: the reverse truth.
Conventional ideas show their errors and absurdities only when we look back; when a conventional idea collapses, we call it a bubble, but the distortions caused by the bubble do not disappear with it. The dot-com bubble of the 1990s was the biggest bubble in nearly 20 years, and the lessons that followed define and distort all thinking about technology today. The first step to clear thinking is to question what we know about the past.
Here is an example of Thiel's inspiration for such thinking.
Four important lessons that Silicon Valley-based entrepreneurs learned from the dot-com bubble still guide corporate thinking today:
- Continue to improve - "Great ideas inflate the bubble because it cannot be tolerated. Anyone who claims to be able to achieve great things needs to think about it, and anyone who wants to change the world should be humble. Take one small step at a time. Moving forward is the only way to be safe."
- Keep it lean and nimble - "All businesses must stay lean. You shouldn't know exactly what the company is going to do; planning is something arrogant and rigid. Instead, you should be experimenting, iterating, and experimenting with uncertainty." "
- Be more competitive - "Don't open new markets too early. The only way to know if you have a real business is to start with your existing customers, so your company should start by improving on market-approved products already launched by successful competitors ."
- Focus on product not sales - "If your product needs advertising and salespeople to sell it, it's not good enough: technology was originally about product development, not distribution. Advertising in the bubble era was clearly a waste, So the only sustainable growth is viral growth.”
These lessons have become dogma in startup circles; those who ignored them suffered a failure in the Great Depression of 2000.
However, the flip side of these dogmas may be more meaningful.
- Taking risks is better than doing nothing.
- A bad plan is better than no plan.
- Competitive markets destroy profits.
- Sales are as important as products.
We can only create the future by challenging the dogmas that shape outdated ideas. While this doesn't mean the opposite of conventional wisdom is necessarily true, you should learn to rethink "what's true and what's false?" and see how it shapes the world we see today. As Thiel said: "The thing that goes against common sense is not rebellion, but thinking from one's own perspective."
6. Progress comes from monopoly, not competition.
A big problem with competing businesses is the lack of profit. Imagine you are the owner of one of the many restaurants in Mountain View. You are nothing special compared to most of your competitors, so you have a hard time surviving. If you provide food at a low profit, you can't pay your employees high wages. And you also have to squeeze every efficiency: that's why small restaurants often employ mothers and children.
But a monopoly like Google's is very different. Because it does not have to worry about competition from others, the company can give great care to its employees, and the company's products and influence are spread all over the world. Google's motto -- "Don't be evil" -- is part of the company's branding and a characteristic of successful businesses enough to take ethics seriously enough without jeopardizing their very existence.
In business, funding is either key or everything. A monopoly can do more than make money; this is beyond the reach of a non-monopoly. In the face of fierce competition, companies are too focused on current profits and have no time to consider future strategies. The only way to free a business from its day-to-day struggle for survival is to monopolize profits.
So, internally, a monopoly benefits everyone. So what about the outside? Are excess profits at the expense of the rest of society? The answer is yes: Profits come from consumers, and the notoriety of monopolies is true—but only in an unchanging world.
In a static world, a monopoly is like a rent collector. If you circle a market, you can drive up prices; others have no choice but to buy from you. Consider the famous board game Monopoly: cards flow from player to player, but the board never changes. There is no other way to win than to invest in good real estate development. The relative value of an asset is always fixed, so all you have to do is buy and buy.
But in the dynamic world, we live in: we can invest in new and better things. Innovative monopolies present consumers with more choice by bringing in entirely new assortments. Innovative monopolies are not only good for society, but they are powerful forces that move society forward.
7. Competition makes us too fixated on past opportunities and rudely replicates past successes.
Marx and Shakespeare offer us two models for understanding each conflict.
According to Marx, people fight because they are different. The proletariat and the bourgeoisie fight endlessly because their ideals and goals are completely different. The bigger the difference, the tougher the struggle.
Shakespeare, on the other hand, sees all struggles as more or less alike. It's a mystery to keep fighting when there's nothing to fight for. Take, for example, the opening of Romeo and Juliet: "Two families, equally noble." The two families are very similar, yet they hate each other. As the hatred deepened, the two families became even more similar. Eventually, they forget what they were fighting for in the first place.
In business, Thiel sees Shakespeare as more instructive. What was the result? We became more and more obsessed with the struggle with our competitors so gradually we forgot our original intention.
8. Last but not least
You've probably heard of the "first-mover advantage": if you're the first to hit the market, you can grab a significant market share, and your competitors can only take the rest. It works, but getting ahead is a strategy, not a goal. What really matters is generating cash flow in the future, so it doesn't do you any good to be a first-mover if others catch up and replace you. It is the latecomers who have the greater advantage—bringing one last wave of great improvements in a given market and enjoying years or even decades of monopoly profits.
Reading Notes: Zero to One by Peter Thiel
Chapter 1: Future Challenges
- A key question: what important truth do very few people agree with you?
- Globalization is from 1 to n, and technology is from 0 to 1;
- Startups are the largest group of people you can convince to build a different future together.
Chapter 2: Inspiration from the Internet Bubble
Four key principles:
- Be bold and make transformative products that no one else has done (more than 10 times better than people);
- Have a plan and direction, even if it may change;
- Don't compete head-to-head, but It stands on the shoulders of giants and has unique advantages;
- Marketing and products are equally critical.
- Don't pay too much attention to what everyone thinks and what others do/wrong, but find your own direction.
Chapter 3: What is a successful company?
- Don’t just focus on subtle differences, avoid homogeneous competition in a large market environment and gain a monopoly position;
- Creative monopoly creates value for society, allowing users to share rather than extract value from others. Historical development is also a process in which creative monopoly continues to emerge and change society;
- Creative monopoly is the only mode of business success; All happy companies are different, each one earns a monopoly by solving a unique problem.
Chapter 4: About Competition
- Instead of staring at the competition, imagine what you can do;
- If you can't beat your opponent, it's better to merge with your opponent - if you need to fight, then make a quick peace after hitting hard.
Chapter 5: Core Concerns
1. The company must be sustainable, not short-term: will the company survive 10 years from now?
2. A monopoly company should have at least some of the following characteristics:
- Unique technology: 10 times better than competitors;
- Network effects: the product must be good enough to start with a small market and then expand to a larger scale;
- Economies of scale: there should be the potential to carry larger-scale applications from the beginning;
3. Build a start-up organization:
- It is best to start with a small group of people and focus on a field with few competitors;
- Make core breakthroughs in subdivisions, and then move to adjacent markets;
- When panning, avoid competition as much as possible, and adopt a cooperative approach.
4. Obtaining cash flow in the future is the core. You do not have to be the first to enter the market.
Chapter 6: Take Your Opportunity
- The targeted fine design will always work, your company is your opportunity to maximize your management and design talents;
- Focus on the long-term, use wisdom to plan the future, and manage the company, otherwise, it is like buying a lottery ticket.
Chapter 7: Finding the Platform
- Most startups fail, but the exponential returns obtained individually are greater than the sum of all others (VC theory), only 1% of startups in the United States have received VCs, but they have driven a major factor in the development of technology and value creation in the United States. part;
- Venture capital is to find such companies (5-7 for Peter Thiel's fund), not just put funds in different baskets;
- The same is true of finding a job. Do something that is valuable to the future and that you can continue to do. Finding a good platform can bring much greater potential benefits than a good job on a general platform.
Chapter 8: About Secrets
- It is meaningful to discover secrets that others have not discovered, which generally means breaking the routine, not limited to your professional field;
- Don't tell everyone about good ideas, tell those who can conspire with you, and pull them in.
Chapter 9: Teams are the foundation
- Partners are too critical, it is best to be familiar with each other and have cooperation experience;
- There must be clear rules between partners; ownership (shareholders), management rights (team), and decision-making rights (board of directors) may conflict, so the best three people on the board of directors, the more the less effective;
- Full-time participation only makes sense. Part-time jobs, consultants, and even telecommuting should be avoided as much as possible;
- Salary means short-term value and valuable returns. Equity is the most useful. The more cash is given to the CEO at the start-up stage, the more likely the company will be ruined;
- Equity allocation should be precise, big pot meals should be avoided, and confidentiality is a must (there is no complete fairness); the earlier people come, the more they should take, and the later ones may not be more important than the predecessors even if they are critical;
- As long as the company is still creating new things, it is the establishment stage; otherwise, the establishment stage is over.
Chapter 10: Gangster Culture
- People in the company should like to work together, more than they like to work with other people;
- When it comes to your strengths: mission and team, this is always different from others and possibly better than others. Recruiting employees: In addition to the core benefits, focus on the opportunity that you can do this kind of thing with such people;
- Everyone should be different from the outside world/other companies in the same way: such as the same clothes, spirit;
- Everyone only does one thing: the tasks of employees should be clear and effectively differentiated from others to avoid unclear responsibilities and internal conflicts (to avoid bearing such costs);
- The employees inside a successful startup should also be wildly identified with a thing that the outside world doesn't notice - like a gangster.
Chapter 11: Marketing and Promotion
- It is invisible and invisible, and excellent sales never make people feel like they are selling;
- The cost of acquiring a new customer is limited by the profit margin of the product;
- The promotion of startups should not compete with big companies in traditional channels, but it can effectively use the fan economy and self-propagation effect. To seize the most effective way, you don’t need a lot of ways!
- Sales are not only for customers but also for investors and employees.
Chapter 12: The relationship between machines and humans
Machines improve efficiency, talents provide creativity and judgment, and symbiosis can generate maximum value, which is the general trend;
Chapter 13 &14: Examples
1. When starting a business, ask yourself 7 questions:
- Are there key breakthroughs in technology rather than just minor improvements?
- Is the time right now?
- In the beginning, can you take a major share of a market segment first?
- Is your team the right fit?
- Can you make excellent products and effectively promote them?
- Is your market position sustainable in 10 to 20 years?
- Do you see market opportunities that others see?
2. Successful companies have grasped the truth that others cannot see, and the best opportunities are the ones that others have ignored and never tried, not the ones that are sought after by the market;
3. Reduce uncertainty and expect to wait for a lot of opportunities to come, such as seizing a final decision;
4. Look at the general trend, and more importantly, solve your own problems;
5. Tolerate eccentric entrepreneurs, who may see different opportunities; entrepreneurs themselves must maintain optimism and ideals, but also avoid being blindly arrogant by being fooled by flattery and achievements on the road to success.