Zero to One

Peter Thiel’s book, Zero to One, gives his insight on start-ups and how business owners should model their business for optimal success. Thiel is the co-founder of Paypal, an online payment service, and Founders Fund, a venture capital fund. After years of developing his own startups and investing in others, Thiel taught a course at Stanford in 2012 about startups in order to educate a new generation of entrepreneurs. One of his students compiled the students’ notes from the course and worked with Thiel to create Zero to One for the public to learn from Thiel’s wisdom. His book is organized into fourteen chapters, each elaborating on one of his tips that revolve around a “zero to one” idea, maintaining a monopoly, having a small leadership team, and focusing on the future.

440px-Peter_Thiel_2014_by_Heisenberg_Media.jpg

Peter Thiel

Thiel starts with stating how real success comes from new ideas; instead of going from “1 to n,” people should be inventing something new and going from “zero to one” (1). Companies like Facebook, Google, Airbnb, and Amazon have already created and perfected their products so it is not worth trying to recreate their ideas. Thiel states that the “single word for [a] 0 to 1 progress is technology.” (7) Technology is made to help humans advance, not replace them. He reinforces how it is crucial for entrepreneurs to use technology to complement their ideas by creating software that helps with speed, efficiency and accuracy rather than completely undertaking the task. Thiel explains that less is more with technology, but entrepreneurs should take advantage of technology without letting it consume their business.

Thiel also explains how it is better for a company to create a new product, specialize in that area and dominate the field. A business will reap more benefits when it focuses on remaining the best in its business rather than trying to initially grow over different fields and be decent at many things. He compares a startup to a high school student. High school students are told that they are more desirable to colleges if they have experience in different fields and interests. On the other hand, companies should put all of their efforts towards one cause and purpose. If they expand their resources across many goals and fields they will be easy to overcome by other competitors. He also stresses that monopolies create progress because the threat of a successful monopoly serves as an incentive for innovation. Thiel acknowledges that people are trained to see the importance of competition in the economy, but in reality competition is “an ideology” (35). In a world where the free market and competition is put on a pedestal, Thiel argues that “monopoly is the condition of every successful business.” (34)

Another main point Thiel emphasizes is the importance of a small group of people in the business. Less people allow for more spreading of ideas and easier flow of communication.

He also advises startup owners to have a small board, ideally with three people, because as more people join opinions get diluted and it becomes harder to come to concise conclusions. Additionally, it is important to have full time employees, because part time employees are solely focused on the present. A successful company is constantly focusing on the future and how to adapt and improve, and full time employees will be dedicated to the success of the business in the future, whereas part time employees have a short term outlook.

Lastly, Thiel discusses how a company’s focus should be on the future instead of in the present. With a future-focused mindset, the leadership team and board will make conscious decisions to ensure the sustainability of the business rather than impulsive short term benefits.

In Depth:

My favorite chapter of the book was entitled “The Founder’s Paradox” where Thiel discusses how the founders of most startups are very intelligent, but usually also have extreme characteristics whether they are overly charismatic and personable or introverted and outsiders. There are few, if any, startups founded by an “average Joe.”  He reiterates the importance of having one, unique leader to ensure a more specialized business, because although it is risky to put all of your faith in one person, it will be more rewarding in the future than an interchangeable leader. He mentions Steve Jobs and how important he was to the development of Apple, especially after his absence. Many people believed Apple was going to decline once Jobs returned, but he shocked the public and introduced the iPod, iPhone and iPad. One person has the power to change an entire company.

This chapter stuck out because our class will have the opportunity to meet the people who created the companies that we will be so thoroughly studying. It is going to be such a rewarding experience to get the chance to ask them deep questions to learn how their businesses evolved from idea to business.

Recommendation:

I would definitely recommend Zero to One to anyone, especially those interested in startups and how to successfully implement a small business. This book is easy to understand and comprehend as Thiel does not use jargon and uses real world examples and analogies. I thoroughly enjoyed reading Zero to One and am looking forward to seeing Thiel’s advice play into action during our trip.

4 thoughts on “Zero to One

  1. Hey Elizabeth, after reading your report, this is definitely a book that I could see myself reading. I’ve often thought about whether it’s better to come up with a new idea, or to enter a thriving market. Explaining this question in the form of ‘1 to n’ vs. ‘Zero to One’ definitely makes a lot of sense.
    That’s an interesting analysis of founders, too. It really does seem like founders/CEOs are very much one or the other –– extroverted and outspoken, or introverted and low-profile.

    Like

  2. I loved reading this book and hearing Peter Thiel’s unique perspective on startups and value creation. Never forget the power of an individual and the value of a team, as you described. Zero to One offers almost universally applicable insights into startups and entrepreneurship and will serve as an excellent guide as we examine companies in-depth. Well done!

    Like

  3. Thank you for sharing! I think your point about how you have to go from 0 to 1 is very important. Oftentimes companies will try to grow too fast and can end up dying because of limited resources. I think that companies that go one step at a time and prove what they are doing in an intentional manner will be the most successful ventures.

    Like

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s