Zero to One book summary

Actionable Book Summary: Zero to One by Peter Thiel & Blake Masters

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The Book In Three Or More Sentences:

A bunch of unrelated, sometimes, quotes and notes about starting a company: what questions to ask yourself before starting a business; how to hire people; how to advertise; a vague idea about how to build a monopoly. Zero to One by Peter Thiel and Blake Masters offers no formula for success. But offers something probably more valuable: prompts you to question your business idea so you can find new, and hopefully better ways to serve your audience.

The Core Idea:

Even though we know that we cannot predict the future, one thing is certain: it’s going to be different. In that sense, if you create a different company, in a good way, you’ll be creating the future. A company that offers something unique and innovative. That’s the only way to succeed in this highly competitive world.

5 Key Lessons:

Lesson #1: Focus on Vertical Progress

There are two different strategies to start a business:

  1. Horizontal: You copy an already existing business model – it’s strategies and know-how – and just insert your own products and ideas. For instance, you can observe for a couple of months how the local coffee shop is run and open your own. You don’t have to invent the wheel, nor bang your head against the wall when you’re aiming for horizontal business strategy. You just copy what works and hope people will visit your shop.
  2. Vertical: This is the real deal. Vertical businesses are usually such that change things – the future. Imagine companies like Uber and Facebook. It’s harder to create such a business because it requires doing something that nobody else has ever done. If you make it though, you’ll go from 0 to 1 in no time.

Obviously, option two is way better. But as you can figure out on your own, it’s much harder for execution. Not every day you have a billion dollar idea, right?

What you can do though, is to use technology in your favor. If you figure out a way to do old things better and faster, you can scale and quickly outperform your competitors.

Lesson #2: You Need To Capture Some of the Value You Create

Creating a valuable company is not enough. You also need to keep some of the value you create for yourself. Basically, to earn a healthy profit. Otherwise, you’ll be constantly worrying about the next quarter.

For instance, airline companies help millions of passengers to move across the world. However, most of them are not making good profits. That’s why flight attendants are constantly on strike, demanding for higher salaries.

And why airline companies are financially struggling?

Because all of them are offering the same product. Most people don’t care which airline they’ll use, as long as the price is good. And how the price is formed? The market determines the price. Meaning, if airline companies want to stay in business, they need to lower their prices. This is the only way they can stay competitive.

This is true in every business category. If too many firms enter the market, all of them will suffer. The competition is no longer healthy.

What you can do about it?

Own the market. Create a monopoly. Innovate. Differentiate yourself from the others.

Lesson #3: Don’t Get Too Obsessed With What Your Competitors Are Doing

When we become too obsessed about what our competitors are doing, we begin to waste our time. We lose sight of what matters for us. What are our true values and our culture. We focus on rivalry instead.

And rivalry leads to nothing productive. Instead of focusing your time on making better products and pushing the boundaries, you focus your resources on keeping up with your competitors. It’s like a never-ending chase game where there is no real winner, only exhaustion.

Watch what your competitors are doing, but don’t start a war. Do your own thing. Make your product by following your rules, not someone else’s.

Lesson #4: Ask Yourself the Following Question: Will My Business Still be Around a Decade From Now?

In today’s fast-paced world, it’s only natural to hope for short-term growth. Most new businesses and entrepreneurs wannabes, however, fail because they can’t bear the wait. They think that the money train will arrive only because they call themselves Founders on Twitter. But this is not how things work in the real world.

“I need to wait at least 3 years to make a profit? Hell no! I want quick results and glamours lifestyle. Like the other famous Instagram people.” This way of thinking is the reason so many people buy-in get-rick-fast schemes, visit conferences and buy a ton of self-help books. They think that there is a quicker way to financial freedom. Well, there isn’t.

When you start a business, or even before that, ask yourself the following question: Will this business still be around a decade from now? And this one: Will I enjoy working on this project a decade from now?

If you don’t have good answers to these two questions, you don’t have a good business strategy.

Get back to the drawing board and iterate on your idea.

Lesson #5: Successful People Aren’t Extraordinary, They Are Normal People

If successful people aren’t special, why aren’t we millionaires?

That’s a good question.

But the answer has nothing to do with your origin or your level of coolness. There are hundreds of thousands of founders who aren’t special nor good-looking. Like the authors of the book explain: “We need founders. If anything, we should be more tolerant of founders who seem strange or extreme; we need unusual individuals to lead companies beyond mere incrementalism.”

Above all, don’t think that you should do or be something special to start a company, simply start. Don’t underestimate your abilities or your uniqueness. In our highly connected world, you will surely find people who will like what you have done.

Actionable Notes:

  • Small doesn’t mean nonexistent: All startups are small initially. If you aim to dominate the whole market, product category, you’re aiming too high. Instead, focus on monopolizing a small market than a large one. It’s better to be a small niche leader than be considered “just another product out of many.”
  • Excel at one thing: If you’re a company of one, strive to be a monopoly of one. Today, you can easily get distracted and think that you should know everything before you start a company on your own. You don’t have to learn 5 different languages, learn how to code, take design lessons to start a website. You can outsource all these things and focus your efforts on your main idea only.
  • Choose your partners wisely: Partnership is like a marriage: if you don’t get along with your partner, get ready for an ugly divorce. It can be devastating for your business to choose the wrong partner or hire the wrong people. Think twice before letting someone in your team.

Commentary And My Personal Takeaway

The book tries to be something like a complete guide for building a startup company but it fails to deliver. There are some insights about founder wannabes, but nothing really new or exciting. The authors start with some interesting insights about their experience in PayPal and investing in big companies like Facebook and SpaceX, but later the text becomes tiresome to read.

My personal insight from the book is the following: Find ways to make the future different, better. Starting a company for the sake of earning a quick buck to won’t get you far. You need to think about ways to make the world a better place.

Notable Quotes:

What important truth do very few people agree with you on?”

All failed companies are the same: they failed to escape competition.”

If your product requires advertising or salespeople to sell it, it’s not good enough: technology is primarily about product development, not distribution.”

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