Zero to One by Peter Thiel

Last week I finished reading Zero to One by Peter Thiel. I enjoyed this book because it was insightful and inspiring. It seems that Thiel’s purpose is to get entrepreneurs to think bigger about their startups. He argues that there is too much short-term thinking happening in the startup community.

(If you don’t know who Thiel is, he’s a German-American entrepreneur and investor, co-founder of PayPal, and an early investor in Facebook. All this makes him both a really smart and really rich capitalist.)

In the book, Thiel complains that too many of the startups he sees are simply improving on what’s already out there, which causes them to be mired in competition. He maintains that if human progress is to continue at a meaningful clip, there must be more startups that scale into durable monopoly businesses doing something truly revolutionary (e.g. Google, Facebook, Tesla) that didn’t exist before. This means going zero to one.

I like this argument and take it as a fun challenge to envision or uncover an idea for a startup that’s likely to scale up to a zero to one business. To help us along, Thiel provides some stimulating questions such as these, which I’m recalling from memory:

  1. What valuable company is nobody building?
  2. What important truth do a lot of people disagree with you on? (like Airbnb: Who would have believed that strangers would stay in the homes of other strangers?!?!)
  3. What unrevealed secrets might nature be hiding from you or hiding from everyone in plain sight? (like Uber: Who knew that strangers would pay another stranger, who wasn’t a licensed taxi driver, to give them a ride?)

Once you have an idea for a zero to one business, you can put it to the test with these qualifying questions:

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

If you can answer yes to all 7 of these questions, then you have a business idea that has the potential to become a zero to one business. Before reading the book, I had an idea that was bold and that I liked, so I refined it while reading. For this idea, I can say yes (I think) to at least 5 maybe 6 of the above questions and will keep working to discover if I can meet the others.

Have you read the book? What did you think and are you doing anything differently as a result of what you read?

Image credit Peter Thiel’s Zero to One: A book about secrets by Daniel Li on Medium.

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