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Book Summary & Review: Zero To One by Peter Thiel

Introduction  of Zero To One by Peter Thiel and Blake masters

"This book delivers completely new and refreshing ideas on how to create value in the world."---Mark Zuckerberg, CEO of Facebook

"Peter Thiel has built multiple breakthrough companies, and Zero to One shows how."---Elon Musk, CEO of SpaceX and Tesla

If you want to build a better future, you must believe in secrets.

The great secret of our time is that there are still uncharted frontiers to explore and new inventions to create. In Zero to One, legendary entrepreneur and investor Peter Thiel shows how we can find singular ways to create those new things.

Thiel begins with the contrarian premise that we live in an age of technological stagnation, even if we're too distracted by shiny mobile devices to notice. Information technology has improved rapidly, but there is no reason why progress should be limited to computers or Silicon Valley. Progress can be achieved in any industry or area of ​​business. It comes from the most important skill that every leader must master: learning to think for yourself.

Doing what someone else already knows how to do takes the world from 1 to n, adding more of something familiar. But when you do something new, you go from 0 to 1. The next Bill Gates will not build an operating system. The next Larry Page or Sergey Brin won't make a search engine. Tomorrow's champions will not win by competing ruthlessly in today's marketplace. They will escape competition altogether because their businesses will be unique.

Zero to One presents at once an optimistic view of the future of progress in America and a new way of thinking about innovation: it starts by learning to ask the questions that lead you to find value in unexpected places.

About the author 

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 serves as a director. 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 run 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. 
book-summary-review-zero-to-one-by-peter-thiel

Zero to One: Notes on Start-Ups, or How to Build the Future by Peter Thiel & Blake Masters  


Zero to One Book Summary

After reading the whole book, I will comment: The content of this book is actually very general. Basically, the feeling after reading it is that there are many shadows of other books in different chapters. I don't have any deep insights. I think you are right, but I already know the feeling. That is, the author applies the Silicon Valley example to the book he has read, and then a hodgepodge comes out.

It feels so-so...anyway, you still have to find your own unique way to make things that are important to you better.
  1. Successfully obey the exponential distribution instead of the normal distribution, and the most successful start-up brings more venture capital returns than the rest. 
  2. The secret of success: avoid competition, fight for monopoly, start from monopolizing a small market to grow bigger. 
  3. The importance of planning. If the author of this book is not a billionaire investment giant or a PayPal helper.
Of course, apart from the above-mentioned content, this book still emphasizes a view that Thiel is well-known in the venture capital community-if a company fails in the beginning, it will be irreparable.

As far as this book is concerned, I do not intend to go into too much detail on the entrepreneurial views and guidance in the book. What attracts me is far from a specific guide to business operations, but with the help of the topic of entrepreneurship and investment, Thiel provided an enlightening idea. 

This is how to look at the era we are in, how to look at the current Internet boom, and what is to promote social progress. the power of. Thiel, like many wise men in the investment field, practices every investor's understanding of the world in a condensed investment space. As the author wrote at the end of the book:

"Whether we achieve the "singularity" across the universe may not be important. What matters is whether we can seize unique opportunities and innovate in our daily work. For us-all The most important thing at this moment in the universe, the world, the country, the entire company, and the entire life is uniqueness."

Excerpts from the original text

Sales are invisible. Salespeople are actors: their first priority is to persuade, not to be sincere. This is why the term "salesperson" has a derogatory meaning, and why second-hand car dealers are representatives of unfair transactions. But we only dislike salesmen with poor tactics and ulterior motives, that is, those with poor ability. 

Sales ability covers a wide range: there are many levels among 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 are so skilled and difficult to detect. 

The protagonist Tom Sawyer in "The Adventures of Tom Sawyer" persuaded his neighbors to paint the fence for the him-a a master move. And letting his friends convincingly rushed to spend money to help him paint the fence is a super master action, and his friends are not as smart as him. Since Mark Twain wrote this book in 1876, this sales method of persuading people to spend money on fighting work has not changed much.

Like acting, quiet sales are most effective. This explains why people who work in promotion—whether it's sales, marketing, or advertising—have nothing to do with the job content. The person who promotes the advertisement is called the "business manager", the person who promotes the customer is called the "business development", the person who promotes the company is called the "investment banker", and the person who promotes himself is called the "politician." It makes sense to change your name: no one wants to be reminded that they are being promoted.

All walks of life use sales ability to distinguish the winners from the losers. On Wall Street, the novice starts with an "analyst" who emphasizes technical expertise, but his goal is to become a trader. Lawyers are proud of their professional qualifications, but law firms are run by masters who can attract major clients. 

Even university professors who enjoy prestige by their academic achievements will envy self-promoters who can call the wind and rain. Academic views on history and English will not be popular because of their high level of knowledge. Even the research agenda of basic physics and future trends in cancer research are the results of lobbying. 

Even business people have underestimated the importance of sales. The fundamental reason is that the world driven by sales secrets has concealed sales at all levels in all fields.

The dream of an engineer is to produce a product that is good enough to be "self-marketable". But the person who describes the actual product like this is lying: he is either whimsical (self-deception), or he is trying to sell something (and this creates a contradiction). This very different business talk reminds us that "the best products may not always win." 

Economists attribute this to "path dependence": Regardless of quality, specific historical circumstances determine which products are popular. This is true, but it does not mean that the operating system we use today and the keyboard layout we type on are just random wins. 

It is more appropriate to regard sales promotion as an indispensable factor in product design. If you invent a new product but don't have an effective way to sell it, then your business will be difficult to do no matter how good your product is.—— Quoted from page 175 





Zero to One Book Review

Read it the second time on October 25, 2014. The following are the notes of each chapter. 

Chapter One "The Challenge of the Future": 

Globalization is a horizontal expansion, which can only replicate previous successes, while technological innovation is a vertical expansion, creating things that did not exist before. Without technological innovation, only globalization, this world can only be played. This is the reason why technological innovation is needed. 

Chapter Two "Party Like It's 1999": 

Review the pros and cons of the technology bubble in 1999. And now the world is dealing with the problem of the technology bubble in 1999. The failure of the Internet in 1999 led to people’s enthusiasm for real estate and globalization, and also led to four mistakes in technology 
  1. Play the incremental security route; 
  2. Trial and error, rather than plan for the future; 
  3. Play competitive games; 
  4. Do not pay attention to sales). 
The Internet bubble of 1999 was indeed problematic, but it cannot be completely denied. It is necessary to maintain the passion to create the world. 

The next few chapters will discuss how to achieve this enthusiasm instead of being destroyed by it as in 1999. 

Chapter 3 "All Happy Companies Are Alike": 

This chapter explains that an innovative monopoly is a state a company should have. Perfect competition can only lead to no profit at all. Innovative monopoly companies like Google have created "monopoly lies" to make people think that Google does not have a monopoly. The author tells us not to be deceived 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 the opponent, we put all our energy into the competition, but if the competition cannot be won quickly, it will only lead to the consumption of value, and Not to create value. If you can't beat your opponents, you 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 its cash flow in the next few years. This is why many Internet companies have very high valuations even though they have few losses or profits at this stage. 

There are several characteristics of persistence, namely: 
  • technological advantage (10 times better than the second place), 
  • network effect (requires scale, but the scale of a large market is more difficult to obtain, so it is necessary to enter a small market at the beginning), and 
  • economic scale ( Many traditional products are difficult to achieve scale effect, and the scale effect of network products is relatively obvious), 
  • brand (brands are dependent on products, and technology companies with only brands are not feasible, such as yahoo's Mayer install cool). 
This chapter discusses these four characteristics in detail. 

The path to creating an innovative monopoly is: 

first, obtain a monopoly in a niche market, and then expand to adjacent markets on the basis of success, expand the monopoly step by step, do not find the trouble of the original industry, do not try to destroy the original like Napster. 

There is an industry, because this will cause trouble, and this principle must be followed when expanding to neighboring industries. 

First-mover advantage is not necessarily good. The last-mover advantage is to wait for others to create the market, but it is up to you to make the final blow. (The advantage of the last development reminds me of how Apple created the iPod to kill other mp3s, the iPhone to kill Nokia, and 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 plan, not luck. The comfort of the times in the United States, that is, the limitations of the times, has led Americans to believe that success depends mainly on luck. The United States was in an era of "visionary optimism" before 1970 when people at that time were willing to set up plans to achieve their desired future. 

After 1970, the progress of science and technology has been greatly reduced. The United States is in the "age of visionless optimism." 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 how to take it. What about the money. 

American parents think that by sending their children to college and following the path they had experienced before 1970, they can have a happy life like themselves. However, the children all entered law school, business school, and graduated from the bank. 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. Rather than as before 1970, money is only a tool to realize the future. Therefore, contemporary America is "a time of visionless optimism." 

Europe is the "age of non-visionary pessimism". The future will change, but whether it will change quickly or slowly. Europeans don't know. They just adapt to changes. The most powerful part of Apple is not smart design, but to design the future to realize dreams, and realize the future. Our life is not a lottery. We should not attribute everything to our 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’ plans for their children’s future are based on their own smooth life experiences, and they lack interest in creating the world. The longevity research lacks courage and plans to break through the limit of human life. 

Chapter 7 "Follow the Money": 

Explain where the value is. The enlightenment of the law of 2/8 to life. Only find the best, because the best produces more value. The world is disproportionate. However, the law of large numbers is so insignificant in daily life that most people do not notice it. Not even investors. Investors invest in a bunch of companies every year. However, investors will spend every day of the year on the common development of start-up companies. 

In the end, among the companies invested by investors, one company brings more benefits than all others, and the second place brings more benefits than other companies. First place all. Less than 1% of American startups accept venture capital, and the amount of venture capital only accounts for 0.2% of U.S. GDP. However, venture capital companies create 11% of the jobs in the private sector, and these companies account for 22% of U.S. GDP. 

The 12 most outstanding enterprises that accept venture capital are worth 2 trillion dollars. We receive the same education in school, but in fact, according to the law of 2/8, the top companies can get more benefits than everyone behind. Google stock 0. 01% is worth 35 million U.S. dollars. 

The same is true for people. Entering the right company is more valuable than doing the right things in a company. This is the principle that individuals should follow when choosing a career. 

Chapter 8 "Secrets": 

The question of why a company should be created, and where to create a company. 

Common sense, secrets, and inaccessible knowledge, among the three, secrets are the foundation of a company. 
  1. Common sense cannot bring advantages, so it cannot be used to create a company. Unreachable knowledge cannot be realized, so it cannot be used to create a company. Fundamentalism prevents people from pursuing secrets. Fundamentalism may be due to the fact that most places on the earth have been explored by humans. So people also feel that the same is true in other fields. 
  2. Another reason why people dare not pursue secrets is the fear of making mistakes. 
  3. The third reason is complacency. The teachers and parents of the school convince students that as long as they follow the path of the school, their lives will be fulfilled. 
  4. The fourth reason is the lack of self-confidence caused by globalization. The power of globalization directs people's attention to undifferentiated competition and makes people not believe that they can discover secrets. (These four final conclusions are a bit of the feeling that the current generation cannot keep up with the previous generation). 
The theory of economic uncertainty has led everyone to believe in the market economy infinitely. In the end, no one doubts whether the market is functioning normally, which leads to an economic bubble. 

The unknown theory of HP's operating company has caused HP's board of directors not to pay attention to technological innovation, but to keep the company running normally, "waiting for innovation to come", which led to the continuous decline of HP's market value. 

The way to find the secret is to doubt the places that ordinary people never doubt. After you find a secret, don't tell anyone or tell anyone. Starting a company, turning this secret into an idea, and sharing this secret with people inside the company is the right way. 

Chapter 9 "Foundations": 

The problem of the company's organizational structure. It's a bit difficult, read it again. I thought about the content of Chapter 9 clearly. This chapter points out that most of the startup companies that have problems, problems exist in the early stage of the startup. 

Thiel's law: A startup messed up at its foundation cannot be fixed. Decisions in the early stages of entrepreneurship will be crucial. Then, Thiel explained which issues are critical in the early stage of a business, and how to deal with them. 

The first one is a partner

The partnership is like marriage. The differences between partners want to divorce. Well, it is as ugly as divorce. In the end, differences will sacrifice the company. 

The second is the problem that the separation of equity, operators, and executors will cause. 

In particular, operators are generally entrepreneurs. There will be problems 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 of directors, the better. Three directors are the most ideal. If it is a public listing, it is best not to exceed five. 

The third is to work full-time 

It is to require everyone in the company to work full-time unless it is a lawyer or an accountant, 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. Even if it is the most excessive, it cannot exceed the annual salary of 300,000. Otherwise, the CEO will become a politician rather than an entrepreneur. The low salary of the CEO can also set an example for the employees of every startup company. Cash in any form means the present, not the future. 

The fifth is the question of vested interests. 

Using equity distribution instead of cash distribution is a good form. But this will bring about problems for those with vested interests. Even so, equity distribution is still the best way to attract employees. (For example, the painter who painted Facebook walls is now rich, and many people may think it is unfair.) 

Chapter 10 "The Mechanics of Mafia": 

The problem of people in the company. This chapter tells who will form the company, who will be recruited, and what kind of company will be established in the end. It is most reliable to build 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 sales. First, it clarified the necessity of sales and broke the rumors that "good products do not need to be sold, but customers can be acquired". And put forward the theory of "the best sales technique is invisible". 

At the same time, it discusses the misunderstanding of technical personnel to the sales personnel and even the misunderstanding of sales personnel in the whole society. It shows that the core of sales is to subtly change people's ideas (this thing is so disgusting, so any sales must be hidden, even if the purpose is achieved, it cannot be said), not loyal to customers. 

Then, several general sales techniques are explained: 

  1. Products between US$1 million and US$100 million are sold by the CEO. This kind of sales requires careful preparation, superb personal skills, and people like the CEO. 
  2. Grade; For products between USD 10,000 and USD 100,000, it is necessary to recruit sales staff to sell. This sales method must also follow the principle of "getting a monopoly from the most urgent small market, and then further expanding the results"; 
  3. A product of around US$1,000 is more difficult to sell, so the cost of sales is greater than the sales benefit. Small business software is generally in this range, which is why the development of small business software is very slow. 
  4. Sales of popular products. Rely on TV advertisements and various mass advertisements. 
  5. Virus sales. Viral Sales are the process by which one user will bring another user after using the product. 
Sales not only follow the power-law but also the power law: the benefits of a certain sales method mentioned above may be greater than all other methods. Sales should target the right groups and the pain points of the products that these groups are using, so as to achieve the monopoly purpose of completely replacing the existing products, and then expand the results to enter the non-pain point groups. 

Finally, not only product sales are sales. Media public relations are also sales. Excellent media public relations will bring excellent investors, excellent potential employees, and excellent potential customers to the company. In fact, anyone is a salesperson at any time. 

Chapter 12 "Man and Machine": 

This chapter explains two points of view: 

The first point is globalization is a substitution effect because people will replace people; computers are a supplementary effect because the function 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.
 
The second point is that big data is actually a lot of stupid data. Because computers are good at handling 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 prohibiting the development of computers. 

For example, Palantir is because there were many scams when PayPal was founded. PayPal can't just use computers to identify scams, because scammers can change at any time, but computer software can't. 

Therefore, using software to mark the suspicious elements, and then using people to determine whether they are really fraudsters, will solve the PayPal fraud problem. Based on this idea, Peter Thiel founded the Palantir Company to help government departments and companies identify terrorists and financial frauds. 

Chapter 13 "Seeing Green": 

This chapter uses a type of green energy-solar panels as an example to describe what a suitable business is like. Entrepreneurship is not based on the general direction of the society to act in a fuzzy way but has a clear basis for entrepreneurship, that is, it must have its own secrets. 

Put forward 7 conditions to test whether the startup company can succeed. And the 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 uses American popular artists as an example to describe the contradictory existence of artists. On the one hand, they are worshipped by others, and on the other hand, they are degenerate and fail. 

Then it compares the scientific and technological entrepreneurial names of human beings to the mass artists. Explain the issues that need to be paid attention to in entrepreneurship. Don't regard entrepreneurial success as your own ability. Otherwise, it will be crazy. 

Reading notes

Chapter Name: Chapter 1-8 Author's Main Points of View

1. From 0 to 1 is a process of starting from nothing 
A process of technological innovation. In the traditional era, the business model of a successful company is a process of level progress from 1 to n globalization, that is, copying past experience and continuous competition Expand your influence. And from 0 to 1 means breaking through traditional thinking, we must predict the ending before everything happens, find a unique and subversive innovative way, through the vertical advancement of science and technology, that is, to explore new ways to change the world, so that the future is not only unique but also Even more beautiful, from 0 to 1 also create unlimited opportunities and value for me.

2. A start-up company must have innovative thinking 
Thinking that questions the status quo, and constantly reviews the status quo. Compared with a large organization, a small team needs to cooperate and control the number of people, which is more conducive to thinking.

3. Traditional ideas are usually arbitrary and wrong 
Such as the Internet boom in the 1990s. The author believes that the most anti-mainstream thing is not to resist the trend, but not to abandon your independent thinking in the trend.

4. After the Internet bubble burst 
Innovation and technology still need the enthusiasm of 1999. Entrepreneurs should try boldly, make plans, find non-competitive markets, and regard marketing and products as equally important.

5. Regarding Monopoly
  1. A company with a complete monopoly is an unprecedented and high-value company. Monopoly here does not mean an illegal monopoly but has reached the pinnacle of its innovation. No other company can provide similar substitutes.
  2. It is not enough for a company to create value. It depends on how much value you can obtain. Large companies may not do business well. For example, American Airlines created a value of 160 billion U.S. dollars in 2012, and they could only earn 37 cents from each passenger, while Google only created 50 billion U.S. dollars in value, but Its profit accounts for 21%.
  3. Both the judges and competitors rely on distorting the facts to defend their own interests. Competitors exaggerate their own uniqueness, while monopolists fabricate stories to disguise their monopoly.

6. About competition
  1. The competitive system makes people become cold and even die. In business activities, evenly matched competition means stagnation, and stagnation means death.
  2. Competition is an idea, rooted in the ideology of the entire society, distorting people's thinking.
  3. The competition will cause companies to blindly repeat past models, making people think that where there is competition, there are opportunities.
  4. Competition means that no one is profitable, close to each other, fighting for survival.
  5. The competition will also make people focus on their competitors and ignore the really important and meaningful things, that is, focusing on their own development is the primary goal.
  6. If you can't beat the opponent, sometimes the better option is to merge.

The only way for companies to get out of the race for survival is to obtain monopoly profits. Creative monopolists create new things and give consumers more choices. Creative monopolies not only have no bad influence on the outside society, on the contrary, but they are also the driving force to make society better. Creative monopoly means that products bring benefits to everyone, but also sustainable profits for innovators.

As a business leader, the author advocates corporate monopoly in this book, but not an illegal monopoly, and does not approve of even competition among companies. From an economic point of view, a monopoly can provide strong motivation, generate innovation, and provide diversified products. 

However, because monopolistic enterprises control all the resources of a certain product, have patent rights, have government franchises, etc., they will reduce output and increase prices. Monopoly companies usually have only two options, either to become lazy and inefficient or to be able to grab higher profits from consumers through higher prices. Consumers are in favor of competition because the power of competition can encourage innovation, improve efficiency, produce lower-cost innovative products, enhance the provision of social welfare, and avoid "economic waste." 

However, competition can also cause fairness problems due to market failures, information asymmetry, externalities, public goods, and other reasons. This is also the reason why the government encourages competition on the one hand, and intervenes in the market through price control, tax regulation, etc., or regulations, such as the US antitrust policy.

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