Zero to One (New Version) Book Summary - Zero to One (New Version) Book explained in key points

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Zero to One (New Version) summary

Name: Zero to One (New Version)
Rating: 4.6 (893 reviews)
Author: Peter Thiel with Blake Masters

Peter Thiel with Blake Masters

Notes on Startups, or How to Build The Future

4.6 (893 ratings)

26 mins

Topics

Small Businesses Entrepreneurship Start-Ups

Table of Contents

Zero to One (New Version)
Summary of 10 key ideas

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What’s in it for me? Learn from one of the world’s most prominent venture capitalists.

Have you ever wondered what makes a start-up successful? There are a few answers to this question. But we’ll let you in on one of the biggest secrets to success right off the bat: your company has to achieve a monopoly. Monopolies have a bad reputation, but they can actually be good for innovation. Because to reach the state of being a monopolist, you have to create something utterly new. Something that can’t be copied. You have to go from zero to one.

This is the core of Peter Thiel’s philosophy. As you might know, Thiel is one of the world’s foremost venture capitalists. He cofounded PayPal and was the first outsider to invest in Facebook. In this Blink, we’ll break down the key messages of his book Zero to One, which is based on the notes for a course Thiel himself taught at Stanford University.

In the first three chapters, you’ll learn three things you should stop doing. Then, over the course of the following five chapters, we’ll show you five things you should do if you wish to be a successful monopolist. But first, let’s start at the mysterious place where every founder should spend some time. It’s called . . . the future!

Stop imitating, and start thinking outside established conventions.

Try to imagine the world in the year 2100. What can you see?

The future you imagine is probably different from today’s world in some ways. After all, thinking about the future means thinking about some sort of progress. We’ve all internalized this idea because we share the experience that the world we lived in as children was different from today in many ways. Most importantly, there was a lot of technological progress along the way.

So, let’s get back to the exercise. If you think about the year 2100, what comes to your mind? Maybe you imagine super-fast planes. Silent and sleek self-driving cars. Computer monitors that are so thin you can barely see them from the side. You probably imagine a future that’s full of improved versions of products and services that already exist today.

This is known as horizontal progress. It’s based on expanding on existing ideas and innovations. Here, globalization is a common driver because it helps spread existing ideas to more people. But if you want to be truly innovative, making horizontal progress isn’t enough. You should aim for vertical progress, creating an utterly new technology or method.

The invention of the smartphone was the result of vertical progress: we went from a world without smartphones to a world with smartphones. Distributing them to new markets in developing countries, on the other hand, was horizontal progress – companies simply expanded on what was already there.

And this is where Thiel’s idea of “going from zero to one” comes in. Think of a coordinate system. The x-axis represents horizontal progress – improving and copying – going from 1 to 2 to 3 to 4 and so on, or, in mathematical terms, going from 1 to n. The y-axis represents vertical progress – going from nothing to something, or from 0 to 1.

Stop relying on good luck – success is the product of focus and determination.

Vertical progress is more difficult to achieve than horizontal progress because you have to think of something that doesn’t exist yet and that will meet a future need. As a start-up founder, you have to be able to predict the future, and you can only do that if you’re able to view the present critically. Thiel believes that this is such a crucial ability that, in job interviews, he asks candidates, “What important truth do very few people agree with you on?” Why? Because only a person who can think outside established conventions can see and change the future.

Imagine you have completed your thorough analysis of the potential the future holds for you. The next step is: focus.

Stop making products that can be copied and create a monopoly instead.

Many people believe that competition is the ideal economic stimulus since it encourages companies to improve on each other’s products. But it’s actually monopolies that drive innovation.

When people hear the word monopoly they tend to think of large, evil companies unfairly squeezing out the competition. But if you have a monopoly, it doesn’t necessarily mean the competition is being treated unfairly. It can also show that you’re doing something very well – so well, in fact, that your competition just can’t survive. If that’s the case, it’s probably due to the fact that you’ve created something new that no other company can copy.

Here’s what you need to succeed.

That was a lot of theory. Now, let’s take a deep breath and put the theory to work. In the next five chapters, we’ll give you five pieces of advice on how to turn your startup into a successful monopoly. You need a vision, a secret, persistence, a strong culture, and an outstanding sales strategy.

You need a vision.

What do you think makes a typical start-up founder? Sure, many founders are adventurous, they’re passionate, but there’s something else. What we’re looking for here is the special ingredient, the secret sauce. In fact, founders – especially those of successful companies – are, well, a bit strange. Consider PayPal’s founding team: almost every member was a bit of an oddball. In fact, as teenagers, four of them even had the unusual hobby of building bombs.

You need originality in your founding team. That’s important because founders do far more than just starting a company and hiring people: they provide a vision. But a vision is something that you can’t just come up with by following a step-by-step guide from a business handbook. It has to be connected to unique personalities who bring their unique ideas to life.

You need a secret.

Let’s be honest: if you search for ways to make vertical progress, it’s easy to be discouraged. We live in a high-tech world that’s already filled with so many life-changing inventions. Sometimes it feels like there aren’t any new ideas to be had. But that’s not true.

In fact, the world still has plenty of secrets – things that are important but which most people don’t know about. Or, if they knew about them, they wouldn’t be interested in them. Sure, that makes them hard to discover because you’re on your own and you have to defeat a lot of skepticism. But it’s not impossible.

You need persistence.

PayPal was founded in 1998 by Max Levchin, Luke Nosek, and the author, Peter Thiel. In the early days, it didn’t make any profits. In fact, when Thiel calculated the value of the company in 2001, he found that most of it came from profits that didn’t even exist yet, profits that were expected to come in more than ten years! And, as we know now, the company did make a lot of profit later.

The key message here is that it can take years for a start-up to become profitable. But even if the company doesn’t initially make profits, it can still have value, because value is determined by the profits it will make over its entire lifespan. If you’ve founded a start-up, you can’t expect to be top dog in your business from the get-go. You need to be prepared to stick around for the long run.

You need a strong culture.

When you start out on the long road of building up a business, the first days are crucial. You have to create a strong culture where people support and believe in each other. For example, at PayPal, the team was so close that many of them even went on to start new companies together.

Now, typically, start-ups are so small that every single person on the team plays an important role. That’s why before making an investment in a company, it’s helpful to not only analyze the skills and vision of the people involved but also their personal connections.

You need an outstanding sales strategy.

Innovative products are worthless unless they’re sold. Still, many founders are enthusiastic about technology. That’s a good thing, but it has a downside. Tech enthusiasts would often prefer to work on product innovation all the time – and they don’t want to spend their time on sales. But they should.

So, what does it take to improve your sales?

Before you start, read this checklist.

Here’s a story from Silicon Valley. Between 2005 and 2009, an investment bubble was at its height. The underlying industry was clean technology, or “cleantech” – products and services that promote things like the sustainable use of natural resources and the use of renewable energy sources. Sounds like a great opportunity, right? Well, thousands of companies started in this industry, financed by over $50 billion in investments. But since then, many companies have gone under. It goes without saying that they took their investors’ money with them.

So why did they fail? Because their executives were starry-eyed. They simply didn’t analyze the market opportunity well enough. Here are a few examples:

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What is Zero to One (New Version) about?

Zero to One (2014) offers advice to start-up founders. It shows how to establish a monopoly by creating proprietary technology, a strong brand, scalable products, and by using network effects.

Who should read Zero to One (New Version)?

Current and potential start-up founders
Anyone interested in why certain start-ups succeed and others fail
Investors

About the Author

Peter Thiel cofounded PayPal and is one of the most prominent venture capitalists in the world. He was the first outsider to invest in Facebook and has a net worth of over seven billion dollars.

Blake Masters, a venture capitalist, served as the president of the Thiel Foundation until 2022.

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