Read This Book – Zero to One

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I just finished reading Zero to One by Peter Thiel with Blake Masters.  Refreshing!

If you are tired of the endless march of pop startup articles and books that advise how to use yet another variation of Lean Startup (or the Business Model Canvas, or SEO metrics, or social media prowess, or crowdsourced innovation, or …), then Peter is your man – and Zero to One is your book.

The title is derived from the difference between building another version of something already built or well known (going from 1 of something to version 2, 3, 4, etc.) and building something entirely new (going from 0 of something to the first 1).  Peter presents a framework for building a business that is entirely new (and valuable), and he injects various bits of standalone wisdom along the way.

The book is related to a 2012 startups course that Peter taught at Stanford.  Blake was one of the students, and he published his detailed course notes at http://blakemasters.com/peter-thiels-cs183-startup.  Zero to One will be published in September, 2014.  Before then, you may still be able to order a pre-release copy at http://zerotoonebook.com.

I don’t intend to summarize the book here (sorry – you’ll just have to buy it), but I would like to give you a few examples of why I called Zero to One “refreshing”.

  1. Peter’s preference for a monopoly mindset.  While most tend to view monopoly as a dirty word, Peter acknowledges that “… every business is successful exactly to the extent that it does something others cannot.”  He explains that fixating on competition tends to produce small value in the form of incremental improvement because companies tend to compete in large numbers around an existing model.  A monopoly, on the other hand, will produce tremendous value as a single new firm captures years or decades of profits from a decisively new (and valuable) technology. True, monopoly that somehow captures and controls a non-changing market is certainly bad.  But, monopoly that introduces a new technology to the world is good.  It drives innovation and progress and makes the world a better place.
  2. Peter’s observation that convention is a killer.  Being conventional produces incrementalism, risk aversion, complacency, and homogeneity.  Finding the unconventional secret, the important truth that few others agree with, is the beginning of creating something new and valuable.  If you can also find those few others who agree with you, you just might have the beginnings of a company.  As Peter puts it, “… every great business is built around a secret that is hidden from the world.”
  3. Peter’s explanation of how the Power Law works in business.  One venture will outshine everything else in the VC portfolio.  One market will dominate your company’s markets.  One distribution channel will dominate your company’s channels.  Even the decisions you make will follow the Power Law – the decisions you make when you found your business will likely influence your future far more than those you make later on.

Those of you who have read Zero to One realize that I’ve cited probably 1% or less of the ideas Peter presents.  Two things are important to know for those of you who haven’t read it yet.

  1. Peter cites and explains business first principles that are insightful.  Some may appear contrarian, but as he puts it, “The most contrarian thing of all is not to oppose the crowd but to think for yourself.”
  2. He then explains the implications of those principles for those of us who operate or are starting a business.  Although he states that no formula exists for creating a new, highly valuable business, I’ll state that Zero to One gives you plenty of practical advice toward that end.

Buy it.  Read it.