Zero to One presents an optimistic way of thinking about innovation. In this book Peter Theil talks about the progress that can be achieved in any industry or area of business. Theil is known to us for investing in the Facebook and for co-founding the infuriating Paypal and Palantir. Thiel does best when commenting on startup structure and strategy, musing on monopoly and value. This book is a refinement, with new ideas added, of notes from a class that he taught at Stanford. While reading the book I took some notes for myself. These notes are indispensable to me or to anyone who is working in the industry of technology.
He starts with commenting accurately about that there would be no Bill Gates or Larry page or Mark Zuckerberg. Everything happens only for once. “It’s easier to copy a model than to make something new. Doing what we already know how to do takes the world from 1 to n, adding more of something familiar. But every time we create something new, we go from 0 to 1. The act of creation is singular, as is the moment of creation, and the result is something fresh and strange.”
THE FUTURE OF PROGRESS: “When we think about the future, we hope for a future of progress. That progress can take one of two forms. Horizontal or extensive progress means copying things that work—going from 1 to n. Horizontal progress is easy to imagine because we already know what it looks like. Vertical or intensive progress means doing new things—going from 0 to 1. Vertical progress is harder to imagine because it requires doing something nobody else has ever done. If you take one typewriter and build 100, you have made horizontal progress. If you have a typewriter and build a word processor, you have made vertical progress.”
ON MONOPOLY: “Monopoly is the condition of every successful business. 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.”
ON BUILDING A MONOPOLY:
- Start small and monopolize
- Scaling up: Once you create and dominate a niche market, then you should gradually expand into related and slightly broader markets.
- Don’t disrupt: avoid competition as much as possible.
ADVISING AGAINST COMPETITION:
We preach competition, internalize its necessity, and enact its commandments; and as a result, we trap ourselves within it—even though the more we compete, the less we gain. This is a simple truth, but we’ve all been trained to ignore it. Our educational system both drives and reflects our obsession with competition. Grades themselves allow precise measurement of each student’s competitiveness; pupils with the highest marks receive status and credentials. We teach every young person the same subjects in mostly the same ways, irrespective of individual talents and preferences. Students who don’t learn best by sitting still at a desk are made to feel somehow inferior, while children who excel on conventional measures like tests and assignments end up defining their identities in terms of this weirdly contrived academic parallel reality.
The best entrepreneurs know this: every great business is built around a secret that’s hidden from the outside. A great company is a conspiracy to change the world; when you share your secret, the recipient becomes a fellow conspirator.