Zero to one

Zero to One: Peter Thiel

Book Name

: Zero to One : Notes on Startups or How to Build The Future

Type of Book

: Autobiography

Author

: eter Thiel with Blake !asters

ubli"ation

: #irgin $igital % &&' age

1


In the technology investor Peter Thiel brilliant, or is he just strange? He is nothing if not industrious. Since he cofounded PayPal, in 1998, Thiel has had a hand in soe of the ost i!ortant and une"!ected tech co!anies of our era. His success has ade hi an oracular !resence in Silicon #alley. Thiel$s contrarianis is notorious, and he a!!ears to delight in saying or doing the une"!ected, even at the ris% of ridicule. &ach year, his non!rofit gives a handful of college students '1((,((( to dro! out of school and !ursue a ris%y startu!. He has declared hiself to be not only against ta"es but against )the ideology of the inevitability of death.* +nd hen the Seasteading Institute-a uto!ian grou! intent on building floating cities so as to esca!e the intrusions of governent-sought funding a fe years ago, Thiel !onied u! half a illion dollars. If one anted to eulate Peter Thiel$s success, ould one have to do ore than just the o!!osite of everyone else? His ne boo%-a !olished version of soe lectures he gave at Stanford for as!iring entre!reneurs in (1-suggests that there is such a creed as Thielis. His theories on hat a%es a good technology co!any and ho such co!anies can i!rove society are by turns bra/en, thoughtful, and !recise0 the challenge lies in se!arating the truth fro the truthiness. Thiel insightfully diagnoses the failings of today$s technology, but the cures he suggests are uestionable. +ccording to Thiel, ost startu!s funded by his fello Silicon #alley investors shouldn$t e"ist. +ll !ros!ective entre!reneurs, he suggests, should as% theselves a si!le and 2


essential uestion2 )3hat valuable co!any is nobody building?* If they don$t have an anser, they should do soething else.

TH(N) *+#(+,+$

4ou see, Thiel is not interested in funding entre!reneurs trying to build a business that ill beat the co!etition0 co!etition, in fact, is !recisely hat he thin%s every co!any should avoid . The true goal of every startu! is to becoe a ono!oly, a co!any so doinant in its technological arena that it can give investors enorous financial returns ith cash to s!are for the intensive 567 that can ensure its longter viability. oogle, Thiel !oints out, is a handy case study. The !rofits fro doinating the Internet search business since the early (((s have alloed it to diversify into cloud co!uting, obile devices, and robotics. +ccording to Thiel, this %ind of ar%et su!reacy offers returns to ore than just investors2 co!anies that create de facto ono!olies and use the !rofits to innovate, as oogle has, are truly valuable to society. ):ono!olies drive !rogress,* he rites, in his contrarian ay. )The !roise of years or even decades of ono!oly !rofits !rovides a !oerful incentive to innovate.* His !oint is a good one-at least as a source for debate. ;onsider that today$s counications infrastructure is largely built u!on innovations-the transistor, <=I>, digital signal transission-that cae out of +T6T, the <.S. !hone ono!oly for ost of the (th century. or contrary evidence, you ight loo% to :icrosoft, hich has ty!ified a !oerful co!any$s use of bullying and ar%et share to liit consuers$ choices ithout creating innovations of co!arable agnitude. In any event, Thiel sees bothered by the fact that any econoists focus on the dangers of ono!olies ithout considering the !otential benefits. In his cosology, they$re si!ly ista%en. His 3


faith in the aeliorative forces of the ar%et!lace assures hi that even a doinant co!any @such as :icrosoftA ill eventually be ecli!sed by a younger and ore creative co!any @such as oogleA. ;a!italis, he !roises us, has a habit of righting technological rongs in tie. Thiel says nothing about the !ursuit or funding of basic science or engineering, even though they under!in all of Silicon #alley. Thiel$s vie on ono!olies is a fair deonstration of the ay he can ta%e failiar business tro!es that have circulated in the #alley for years-alays create a technology that$s 1( ties as good as an e"isting one0 loo% for )netor% effects* that boost the value of your !roduct as ore !eo!le use it-and a%e the see ne. Soeties he a%es good !oints by flatout denying received isdo. He advises entre!reneurs not to see% the )firstover advantage* so often s!o%en of in technology business circles, for e"a!le. )It$s uch better to be the

last

over,* he says. ):a%e the last great

develo!ent in a s!ecific ar%et and enjoy years or even decades of ono!oly !rofits.* +ny ouldbe Silicon #alley founder should consider Thiel$s advice. He %nos ;alifornia$s startu! culture as ell as anyone, and he has an interesting ind. +lso, don$t forget2 he$s ade ore than a billion dollars !laying this gae. It$s less clear hether his ideas have uch to offer the rest of us. Thiel has been as%ing a huge uestion for a fe years no2 Ho can e avoid a disal future of resource de!letion, environental degradation,

ass une!loyent, and technological

stagnation? He thin%s the anser is a ne ave of startu!s that gro as large as :icrosoft, oogle, and +a/on but ta%e on bigger !robles, such as curing cancer or 4


!roviding chea!, clean energy. He clais e aren$t a%ing !rogress on such things no because e$ve gron less abitious as a society. But in fact, e are a%ing !rogress on civili/ation$s !robles. The steady !oer of increentalis is des!ised by #;s ho %no it ill never give the a thunderous !ayoff. But it gives us a trajectory toard chea! solar !oer and any other technologies that Thiel rightly says that e need. + sle of advances in agriculture have draatically increased cro! yields across the orld. Highly targeted cancer thera!ies are on the hori/on0 study of the icrobioe offers a ne frontier for !ersonali/ed edicine0 and neuroscience is lending fascinating insights into the design of softare and co!uter chi!s. Perha!s it$s disa!!ointing e haven$t yet ade it to :ars, but Thiel$s friend &lon :us% is or%ing on that. This is an adittedly o!tiistic ta%e. +nd aybe, in our dar%er oods-hen a loved one is ill and beyond the reach of current treatents0 hen e !onder the elting ice ca!s or our on ortality @Thiel is CDA0 hen e as% hy everyone in Silicon #alley ants to create the ne"t

+nd soething else is ary here as ell. Technology investing, even as !art of a larger !hiloso!hical vision, is not the sae as !lanning society$s future. It is about giving advice and funding to young !eo!le ho tend to be brilliant, cashstarved, and iature. It is about a%ing ise and calculated bets that ill earn a large financial return. 4ou ouldn$t %no it fro Thiel, but investing is ost of all about !roviding the feedstoc% ith hich soe of the larger co!anies-not to ention universities and governent agencies li%e =+S+ or 7+5P+-or% to solve difficult !robles. Eur ecosyste for innovation is no doubt i!erfect, but it has an established logic and a !roven success rate. Soeties a good idea is seeded through governent funding2 a 199C =S grant led Stanford grad students Farry Page and Sergey Brin to found oogle. In other cases, a startu!$s ideas only really start to s!read after the co!any gets salloed by a larger one. The biotech co!anies that have been bought by !haraceutical giants such as Pfi/er and =ovartis !rovide good e"a!les. Startu!s that isely resist getting bought u!, such as aceboo% or oogle, usually don$t have uch i!act until they gro uch larger @as Thiel ac%noledges in his arguents for ono!oliesA. Tesla-hich too% a 'CDG illion governent loan in its early daysanufactures G,((( electric cars a year, a%ing it interesting and successful. Producing 1((,((( electric cars a year, as Tesla ho!es it ill by (1D, ould a%e the co!any i!ortant and transforational. Though Thiel$s anifesto doesn$t entertain the !ossibility, it$s arguable that big, slo, bureaucratic businesses li%e IB:, &, Intel, Boeing, and Toyota have changed the

6


orld ore than the u!start ono!olies he a!otheosi/es. In fairness to Thiel, e ight ac%noledge that once u!on a tie, these graying co!anies ere startu!s, too. But hard as it ight be to believe, history tells us that the future often starts far, far aay fro the bustling garages of Silicon #alley.

Best (dea: Startups are based around se"rets

Thiel has a lot to say about secrets, hich he defines as truths that are un!o!ular or not idely %non. &very great startu! idea, he argues, is based around a thesis that ost !eo!le don$t believe is true.

•

Titch2 illions of !eo!le ill tune in to atch other !eo!le !lay video gaes online

•

S!ace>2 it is !ossible for a founding tea ithout significant s!ace or roc%et e"!erience to build a co!any that a%es anned s!ace flights better than =+S+

•

+irbnb2 hundreds of thousands of !eo!le ould be illing host strangers in their hoes, and illions of travelers ould !refer those hoes over a hotel

I thin% this is a really i!ortant !oint, and one that ost casual observers of startu!s don$t get. If everyone thin%s a startu! idea is a good one, then it ould have ha!!ened already, or there$s soe nonobvious challenge that !revents it fro ha!!ening. Enly ideas that see dub or i!ossible to ost !eo!le fall into the real of ideas that could be !otentially correct.

7


Paul raha !uts this another ay2 )the best startu! ideas see at first li%e bad ideas .* But even beyond the startu! idea itself, ost of the tie founders have a strategy that they can$t reveal because the eleent of sur!rise is !art of hat ill a%e it or%. That$s hy re!orters and the general !ublic are often cofounded by the vague and i!recise !lans that founders !rovide hen as%ed things li%e )hat ar%ets ill you e"!and into?* or )ho ill you oneti/e?*.

3orst2 &very great startu! has to have a grand !lan u!front

Thiel believes that the
8


3hile he$s got a !oint that entre!reneurs ust have a thesis about their !roduct and here the ar%et is going, but I thin% he overe!hasi/es this grand !lan thing. Sure, you can$t +JB test your ay to a vision, but even +irbnb definitely has had ulti!le re envisionings of its on !roduct. Before they got into 4 ;obinator, they literally just anted to !ut air beds in !eo!le$s houses. It as only after the Seuoia funding, as they reali/ed ho big the hoe rental ar%et as, that they got a bigger, grander !lan. +nd of course Path$s a!!arent loc% on their users !references a!!ears to have faded since (1.

9


-on"lusion

There are !lenty of other thought!rovo%ing ideas that I haven$t touched on here2

•

the best startu!s avoid co!etitive industries or otherise becoe so good that they becoe defacto ono!olies

•

distribution for startu!s atter, and ost channels follo a !oer curve

•

e need founders ho are a little e"tree because that$s hat it ta%es to build a successful co!any

Thiel is a really sart guy and incredibly successful as an entre!reneur and investor, so even y gri!es about the boo% aren$t !articularly frustrating. It$s ellritten and definitely orth reading if you or% in tech or have any interest in entre!reneurshi!.

10

Zero to one

Recommend Documents