Zero to One

By Peter Thiel

22 January 2024 - 3 mins read time
Tags: Books Business Start-Ups

The Ideology of competitions

• In 2010 Microsoft and Google with both more valuable than Apple.
• They were caught up in a war, Windows vs Chrome OS, Chrome vs Edge, Bing vs Google search.
• Meanwhile Apple eclipsed them both, war is costly.
• By 2013 Apple was worth more than Microsoft and Google combined.

Last Move Advantage

• If you company can be described by its oppositions to already existing firms, then it’s not completely new and it’s probably not going to become a monopoly.

Follow the Money

• Every single company in a venture portfolio must have the potential to succeed at a vast scale.
• Each company must have the potential to become a multi-billion dollar company.

Don’t Start Your Own Company

• Even if you are the most talented person on the planet, too many people are starting their own companies right now.
• You can become tremendously successful by joining the very best company while it’s growing fast.
• You will have more of the pie if you start your own company but the pie will likely be much smaller.
• If you could have owned even just 0.01% of Google would be worth $194M as of January 2024.

Foundations

• When considering startups, the technical abilities and complimentary skills of the co-founders matters.
• What is more important though is that the founders work well together.
• They should have a pre-history together before starting a company, otherwise they are just rolling the dice.

Incentives

• A CEO of a large company like General Motors will own some stock but only a trivial portion.
• Instead focusing on the long term success of the company, he will focus on short term gains to maintain his position.
• Even if he is being rewarded with stock, mis-alignment can still exist since the CEO may find it much more lucrative to focus on cutting costs than investing in the future.
• A cash poor executive by contrast will focus on increasing the value of the company as a whole.
  • In general, a company does better the less it pays its CEO.

The Mechanics of Mafia

• You’ll attract the employees you need if you can explain why you mission is compelling; not why it is important in general.
• You should be able to explain why you company is a unique match for him personally, and if you can’t do that then you probably don’t have the right match.

Viral Marketing

• A product is viral if its core functionality encourages users to share it with their friends and they become users too.
• Sometimes paying for ads is not as efficient as directly paying for customer acquisition.
• If you pay $10 for a user to refer a friend and then give the friend $10 as well, you’ve acquired a new customer for $20.
• If the average lifetime value of the customer exceeds $20 then you have the potential for strong growth with this strategy.

Seeing Green

You business will fail if it cannot answer one of these seven questions:

1. The Engineering Question
   • Can you create a breakthrough technology instead of incremental improvements.
2. The Timing Question
   • Is not the right time to start you particular business?
3. The Monopoly Question
   • Are you starting with a big share of a small market?
4. The People Question
   • Do you have the right team?
5. The Distribution Question
   • Do you have a way, not just to create, but to deliver your product?
6. The Durability Question
   • Will you market position be defensible in 10 or 20 years?
7. The Secret Question
   • Have you identified a unique opportunity that others don’t see?