I recently read Zero to One by Peter Thiel (The co-founder of Paypal, the result of a merger between Elon Musk & his payment solutions startup). Thereafter, he’s invested in multiple businesses & shares his vision on the next big disruption. 

Zero to one

This is his guide to anyone looking to start a business. I believe it is as relevant to people who are associated with any business to upgrade their skill set to be relevant in the future. Below is my interpretation of the book –

  • Brilliant thinking is rare, but courage is in even shorter supply than genius – most people are good at a lot of things, the thing that differentiate creators from consumers is the courage to take the first step & then have the grit to follow it through
  • Progress can take two forms – Horizontal (going from 1 to n by simply copying; in other words “globalisation”) or Vertical (0 to 1). In a world of scarce resources, globalisation without technology is unsustainable – China is a classic example of globalisation. They just want to be where America is and are continuously chasing. But the important thing to note here is that America did it at a time when resources per capita were much more, if you simply replicate the same in today’s world of scarce resources it will be environmentally catastrophic
  • In the most dysfunctional organisations, signalling that work is being done becomes a better strategy for career advancement than actually doing work. Such organisations cannot develop new things – Suggestion from the author: If you’re working in such an organisation, quit right now!
  • Monopolies drive progress as they can think of things other than money – All happy families are alike, all unhappy families are unhappy in their own way. Business is the opposite. Uniqueness is what drives exponential & sustainable growth
  • Competition is where we lose. Amid all the human drama, people lose sight of what matters and focus on their rivals instead – Google & Microsoft started focussing on each other in OS (chrome/windows) & search engines (Bing/Google). War is costly business, Google and Microsoft were once each more valuable than Apple. Now Apple is the most valuable business on Earth
  • Every monopoly is unique, but basic attributes common –
    1. Proprietary technology (something that is at least 10X better than prevalent tech)
    2. Network effects (something that spreads with the human network. Rather, becomes a need for the human network)
    3. Economies of scale
    4. Branding (Uphold it!)

Start with a large share of a small market, any big market is a bad choice. Most people who dream of achieving 1% of a USD 100Bn market never reach there as any USD 100Bn will have immense competition eyeing the same prize (which cuts margins to sustain)

  • Is success driven by luck? If yes, how much? For this we need to conduct experiments as statistics don’t work when sample size is 1. And companies just start once. Luck is in past tense. Indefinite optimism isn’t sustainable if you have no plans to achieve the vision – Don’t wait for luck, be ready for it!
  • Arguing over process has become a way to endlessly defer making concrete plans for a better future. This is when politics takes over. It is no surprise entitlement spending has overtaken discretionary spending in our govt budgets
  • Never underestimate exponential growth. Money makes money – Compounding effect is a fundamental principle!
  • If it is conventional – it’s easy; if secret – it’s difficult; if mystery – it’s impossible. Same is with returns on these and concentrate your efforts accordingly. If we believe whatever could’ve been done has already been done, things are either too easy or impossible. This implies we believe there are no hidden injustices left in our society. What to do with a secret once you know? The golden mean between not telling anyone and telling everyone is called a Company
  • A start up messed at its foundation cannot be fixed. Same is applicable to countries and companies. Co-founder is like matrimony. It is unromantic to think of what could go wrong, so people don’t – Select your team wisely & check compatibility as this is what is going to for the foundation of the organisation/your function
  • It is useful to distinguish 3 concepts – ownership (who legally owns the company), possession (who actually runs the company on day to day basis), control (who formally governs the company affairs) – Big organisations provide a good understanding on this via their structure
  • By far the worst you can do is making your board extra-large – smaller cohesive group dedicated full time brings in more efficiency. You’re either on the bus or off the bus. If you’re not dedicated full time, misalignments creep in
  • No company HAS a culture. Each company IS a culture. Decorating office walls or free massages won’t work until you provide something of substance – Employer alert!
  • Recruitment is a core competency for any organisation. Never outsource it – Key question to answer for yourself: Why should the 20th employee join your organisation when she has plenty of options?
  • Sales is everywhere, most people underrate it – For those who think all sales people do is meetings/calls, their priority is persuasion, not sincerity. It is a hidden art.
  • For advertising, customer lifetime value (CLV) and customer acquisition cost (CAC) must be considered before rolling out any campaign
  • On automationpeople compete for jobs and resources, computers compete for neither. People have intentionality (form plans and make decisions in complicated situations) but we are less good at making sense of enormous data. Computers are the opposite.
  • 7 questions for a business
    1. engineering (can you create breakthrough instead of incremental improvements?)
    2. timing (is now the right time?)
    3. monopoly (are you starting with a big share of smaller market?)
    4. people (right team?)
    5. distribution (a way to not just create but deliver?)
    6. durability (will your market position be defensible 10-20 years from now?)
    7. secret (have you identified unique opportunities that others don’t see?)

Do share your views/feedback in the comments section 

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