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.

Listen for the Whistle …

Before dawn on a chilly Saturday morning in October, they lined up at least a quarter of a mile long to board the train.  Why?  Steam locomotive Nickel Plate 765 was going on an excursion!  Tickets had sold out within hours!

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Even more remarkable, all along the way from Fort Wayne to Lafayette – and then back -they lined up at nearly every crossing to take pictures, movies, or just wave.  They  pulled over on the side of the road.  They stood outside in yards and fields.  Where the track parallels Highway 24, they caused a traffic jam in one lane by slowing down en masse to keep pace with the train.

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They stood in crowds or even by themselves, anywhere they could, to get a glimpse of 765 – to see the steam and hear the whistle.  There were hundreds of us riding the train, but I am absolutely sure that more than that were on the roadside – in groups of 1 to 30 or 40.

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Aboard 765, the atmosphere was a cordial throwback to the warm personalized service you’d expect from days gone by.  Here’s car host Scott giving us our overview of what to expect (yes, 765 might just lurch a bit now and then, so be careful when you get up to walk to the concession car).

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Fernando Tarango and one of the smoothest sax players around were adding to the mood.  Here they were teaching us how to sing the Wabash Cannonball (since we were in fact tracing part of the path of the Wabash Cannonball).  Fun fact – the gentleman on the left side of the photo below is one of the original engineers of 765, along for the ride!

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Perhaps the best part of the train experience is that you see an entirely different vista than when you travel by car.  Here’s a view of downtown Fort Wayne that I hadn’t seen before.

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765 is operated by volunteers, like Scott, associated with the Fort Wayne Railroad Historical Society.  Here they are poring over the locomotive at our stop in Lafayette to make sure we were ready for the return trip.

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This isn’t a 765 thing, but while we were in Lafayette I was able to grab lunch at a great food truck, EMT – Emergency Munchie Truck.  Gotta put in a plug for them.CAM00043

And, of course, Fernando couldn’t resist playing some more music as we waited for the shuttle to take us back to the train from downtown Lafayette.

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Among all of the volunteers, I need to call out Kelly Lynch.  Not only does Kelly handle communications for the Fort Wayne Railroad Historical Society, but he is leading a bold vision to bring Nickel Plate 765 to downtown Fort Wayne.

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The concept, Headwaters Junction, is on the table along with other plans to transform our downtown riverfront area.  It is a superb plan that deserves to happen – not just because it would be fun or cool – but because it can do so much to improve the quality of life in our city and bring tourism revenue here.

Think about it for a second.  For this weekend’s two excursions, 700 tickets sold out in a mere couple of hours.  Hundreds (maybe thousands) of people lined up at crossings, along highways, in fields, on overpasses – on both days – just to catch a glimpse of this historic steam locomotive.  Given the number of cameras I saw on tripods or being held by hand, I’d hazard a guess that more videos were shot between Fort Wayne and Lafayette this weekend than in Hollywood during all of last year.

I personally urge you to support this project however you can.  You can start by visiting the Fort Wayne Railroad Historical Society, googling the many videos online about 765, going to see 765 in its current home outside of New Haven, or riding the Santa train in December (yes, there’s another excursion coming up soon).

Whatever you do, remember to … Listen for the Whistle!

Innovating, Part 2 – Asking the Right Questions

So, you have studied your market and identified what customers and other stakeholders in the market value.

  • What they love.
  • What they hate.
  • What they wish for.

You’ve compared yourself to competitors.  You know what works and what doesn’t.

  • The various product features that provide best in class value.
  • Where your product lags behind in value.
  • Where your product is ahead in value.
  • The opportunities for creating value that NO ONE provides at all.

You have a great set of insights that can guide you as you create ideas for a new breakthrough product.  Time to go to work!

Identify the Right Challenges

You first want to identify the top 10 to 15 challenges – the areas where ideas will make the most impact.

  • Where you lag the farthest behind competitors.
  • The product interactions customers value most highly.
  • The big gaps that no one in the market provides.
  • The industry holy grails that no one thinks possible.
  • The short list of “Aha – NOW I see what they want!” ideas you gathered while organizing your market data.

You do have to “fix things” or catch up to competitors where you are so clearly behind that it works to your detriment.  But, your biggest gains will come from addressing the areas of customer value that your competitors don’t even know about.  When your solution appears on the market, it can look like magic to them since they don’t understand the base value being fulfilled by your solution.

Craft Effective Brainstorming Questions

There is science (and maybe some art) to getting good ideation results.  Follow this question formula.

  • Design a [element of the product] that fulfills [one or more of the contributors to value you have discovered].
  • Example – Design a [user interface] that [provides the experienced user some detailed control].

Or this formula.

  • Design a [element of the product] that fulfills [one or more of the contributors to value you have discovered] without diminishing [some other contributor(s) to value].
  • Example – Design a [user interface] that [provides the experienced user some detailed control] but [is still easy enough for a raw beginner to understand].

To make an effective question, always ask the brainstormers to design some TANGIBLE element or feature of the product.  And, always direct them to some specific set of CUSTOMER VALUES to fulfill.

Address a Variety of Produce Elements, Values, and Degrees of Difficulty

First, at the end of your ideation session you will want to have amassed hundreds of ideas for a variety of product elements – to compile into ideal product concepts.  To give your team a good inventory of ideas to compile, select a group of challenge questions that cover a range of tangible product elements.

Second, it may go without saying, but you don’t want your ideation questions to focus on just a few challenges.  Try to cover the most important challenges – across a range of customer values or customer interactions.

Third, you will want a range of difficulty. You’ll need some fairly easy questions – defined as ones where you are sure participants can come up with LOTS of ideas – to get the sessions started on the right foot or to pick up a sleepy session.  And, you will also want some questions that stretch your participants to go past their limits.  Once they have been primed with the simpler questions – so they are used to pumping out ideas a mile a minute – you can tackle the hard challenges.

  • holy grail issues
  • contradictions that look mutually exclusive
  • complicated issues where multiple customer values and interactions intersect

Write Your Ideation Session Prep

When you present the question at your ideation or brainstorming session, you can’t count on your participants having a deep understanding of the customer values or challenges you discovered in your upfront research.  Even if you sent them a primer to read ahead of time, don’t count on them to have read it (or to remember it).

Instead, create a brief handout or presentation that refreshes their memory about the issues.  It always helps to verbally highlight the interaction values and issues before you start the brainstorming for each question – and let them ask questions.  A one-page simple handout is helpful for them to use during actual brainstorming so they don’t have to keep all of the issues in their heads.

Ready

Once you have 1) effective questions 2)) across a variety of elements, values, and difficulty, and 3) background prep, you are ready for ideation.


Subsequent posts in this series will describe more about other innovation steps.

For more detail, Innovation Rules and Tools is a practical handbook that describes a complete set of innovation steps that you can use to make innovation happen on demand in your company.  For each step, it describes a set of general rules or keys to success along with multiple tools you can apply from day one.  It is available in paperback and Kindle from amazon.com.

A Marketplace of Ideas

A while ago, at Fort Wayne City Council, Eric Kuhne of CivicArts presented Headwaters 2.0, a vision for our downtown riverfront that builds on Headwaters Park.

Eric Kuhne at Fort Wayne City Council  Headwaters Park 2

In addition to a great civic architectural concept – which would dovetail quite nicely with my friend Kelly Lynch’s vision for Headwaters Junction – Eric presented an almost larger-than-life vision for downtown Fort Wayne.

Even more interesting to me was to hear Eric talk, in the midst of all this, about a concept that sounded awfully familiar.  Eric said that he envisions downtown Fort Wayne as a “marketplace of ideas”.  In our age, as he put it, “A city is more than a marketplace of goods.  It can now be a marketplace of ideas.  It is the true measure of a great city.”  Toward that end, he design of Headwaters 2.0 would bring people together and foster “that magical thing that occurs in a city – accidental encounters.”

When he said that, I immediately thought of Nick Arnett, who had introduced me to the concept of placemaking some time ago.  He had explained placemaking in much the same way – purposefully designing the physical assets of a place (typically downtown Fort Wayne in our discussions) in a way that structurally encourages chance encounters among creative people – to foster innovation and city vibrancy.  Hearing Eric say the same thing made me love the Headwaters 2.0 plan even more.

I also thought of my own business, Founders, where we are building an entrepreneurial community with the same goal in mind.  We are purposefully bringing entrepreneurs, creatives, and independents together in our coworking space – and happily watching as they combine forces to bring new things to life.  By the way, Founders is located within a stone’s throw of the southwest border of the proposed Headwaters 2.0.  We could easily go hang out there on a cool summer evening.  We could recharge our batteries with a walk along the riverfront.  I could ride my bike on the trails and River Greenway through Headwaters 2.0 to about two blocks from Founders.  Sweet!

So, to those who are reading this, I say throw your support behind Headwaters 2.0 and help create that “Marketplace of Ideas” – and a very cool park – here in downtown Fort Wayne!