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0 to 1

This post is part of a series of posts about book I've read. My objective in these posts is not to do a complete summary of the book, but more to give you an idea of the content and why you should read it. They are also memos I use to remind myself what I've read.

Book title : “0 to 1 – Notes on startups, or how to build the future”

Author : Peter Thiels

Summary

Peter Thiel is is a co-founder of PayPal, Palantir Technologies and Founders Fund . In this book he gives his view on how to create a new successful business :

  • to be a real game changer, a new business is nit a copy of an existing one. The Idea has to be totally new. From 0 to 1. Not from n to n+1.
  • monopoly is key. The new business has to be so new that it will be a monopoly.

The book is very practical and full of anecdotes and real examples.

My notes

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.

Today our challenge is to both imagine and create the new technologies that can make the 21st century more peaceful and prosperous than the 20th.

Positively defined, a startup is the largest group of people you can convince of a plan to build a different future.

This pessimistic undercurrent drove then-president Bush 41 out of office and won Ross Perot nearly 20% of the popular vote in ’92—the best showing for a third-party candidate since Theodore Roosevelt in 1912.

Under perfect competition, in the long run no company makes an economic profit.

Monopolists can afford to think about things other than making money

Monopolies drive progress because the promise of years or even decades of monopoly profits provides a powerful incentive to innovate.

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.

children, it cost Microsoft and Google their dominance: Apple came along and overtook them all. In January 2013, Apple’s market capitalization was $500 billion, while Google and Microsoft combined were worth $467 billion. Just three years before, Microsoft and Google were each more valuable than Apple. War is costly business.

Every monopoly is unique, but they usually share some combination of the following characteristics: proprietary technology, network effects, economies of scale, and branding.

As a good rule of thumb, proprietary technology must be at least 10 times better than its closest substitute in some important dimension to lead to a real monopolistic advantage.

As you craft a plan to expand to adjacent markets, don’t disrupt: avoid competition as much as possible.

Eroom’s law—that’s Moore’s law backward—observes that the number of new drugs approved per billion dollars spent on R&D has halved every nine years since 1950.

Biotech is difficult because we didn’t design our bodies, and the more we learn about them, the more complex they turn out to be.

progress without planning is what we call “evolution.”

Making small changes to things that already exist might lead you to a local maximum, but it won’t help you find the global maximum.

Darwinism may be a fine theory in other contexts, but in startups, intelligent design works best.

When Yahoo! offered to buy Facebook for $1 billion in July 2006, I thought we should at least consider it. But Mark Zuckerberg walked into the board meeting and announced: “Okay, guys, this is just a formality, it shouldn’t take more than 10 minutes. We’re obviously not going to sell here.”

In 1906, economist Vilfredo Pareto discovered what became the “Pareto principle,” or the 80-20 rule, when he noticed that 20% of the people owned 80% of the land in Italy

Remember our contrarian question: what important truth do very few people agree with you on?

All fundamentalists think this way, not just terrorists and hipsters. Religious fundamentalism, for example, allows no middle ground for hard questions: there are easy truths that children are expected to rattle off, and then there are the mysteries of God, which can’t be explained.

When a cheap laptop beats the smartest mathematicians at some tasks but even a supercomputer with 16,000 CPUs can’t beat a child at others, you can tell that humans and computers are not just more or less powerful than each other—they’re categorically different.

And that’s the point: computers are tools, not rivals.

Why do so many people miss the power of complementarity?

But when indefinitely optimistic investors betting on the general idea of green energy funded cleantech companies that lacked specific business plans, the result was a bubble.


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