Who should read this book: Anyone starting a business or anyone who is wanting to take their business to the next level.
But read the book only if you’re interested in going from “Zero to One”. If you think there are no more frontiers to explore and no new inventions to be created, don’t waste your time, just read Kim Kardashian’s latest biography. Going from zero to one is what Peter Thiel says is the key to success. He advises those who want to build a business with lasting value to not fall into the trap of building “an undifferentiated commodity business”. What creates value is differentiation. Business success is more attainable when a company differentiates itself, rather than attempts to compete with other companies.
Zero to one is simply “vertical intensive progress”. Zero to one is when you have one typewriter and you build a word processor. Thiel says the most common business model is “zero to n”. Zero to n is taking one typewriter and building 100, which is just horizontal progress. Too often people start businesses as just another player in a big market, or as a disrupter, hoping to clobber the competition with something slightly better than what currently dominates the market.
He warns against both strategies.
Going from zero to one is the way to build a monopoly. Responsible, creative monopolies make the world a better place. Google and Apple are great examples of this. To build a monopoly the “essential first step is to think for yourself”, something he believes is the most important skill a leader should master. When Thiel interviews someone he asks, “What important truth do very few people agree with you on?” The answer to this question could very well contain your zero to one business opportunity.
He discusses the challenge that large companies have when it comes to innovation: “It’s hard to develop new things in big organizations, and it’s even harder to do it by yourself. Bureaucratic hierarchies move slowly, and entrenched interests shy away from risk. In the most dysfunctional organizations, signaling that work is being done becomes a better strategy for career advancement than actually doing work. ”
Thiel says you better keep these 4 things in mind if you seek to be “definitively optimistic” (the condition of building the future you envision):
- It is better to risk boldness than triviality
- A bad plan is better than no plan
- Competitive markets destroy profits
- Sales matters just as much as product
And he says there are 7 questions every business must answer:
- The Engineering Question: Can you create breakthrough technology instead of incremental improvements?
- The Timing Question: Is now the right time to start your particular business?
- The Monopoly Question: Are you starting with a big share of a small market?
- The People Question: Do you have the right team?
- The Distribution Question: Do you have a way to not just create but deliver your product?
- The Durability Question: Will your market position be defensible 10 and 20 years into the future?
- The Secret Question: Have you identified a unique opportunity that others don’t see?
My favorite quotes from the book:
- “Our task today is to find singular ways to create the new things that will make the future not just different, but better – to go from 0 to 1.”
- “If you want to create and capture lasting value, don’t build an undifferentiated commodity business.”
- “Every business is successful exactly to the extent that it does something others cannot.”
- “If you treat the future as something definite, it makes sense to understand it in advance and to work to shape it. But if you expect an indefinite future ruled by randomness, you’ll give up on trying to master it.”
- “Monopolists can afford to think about things other than making money; non-monopolists can’t.”
- “Don’t disrupt – avoid competition as much as possible….dominate a small niche and scale up from there.”
Bill Edmonds is an “Outside-Insider” (an Executive Coach and Consultant), who works with leaders to help them reach their full potential in the areas of organizational and personal development. He spent 24 years with Merrill Lynch until his retirement in 2014, where he led a $100+ million per year revenue wealth management business unit as a Director with the firm.
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