Zero To One by Peter Thiel

summary of Zero to One 

 The next Bill Gates will not build an operating system. The next Larry Page or Sergey Brin won't make a search engine. And the next Mark Zuckerberg won't create a social network. If you're copying this guy, You aren't learning from them.

1. The challenge of the future

When we think of the future, we hope for the future of progress. The progress can take one of two forms.

• Horizontal or extensive progress means copying things that work going from 1 to n. Horizontal progress is easy to imagine because we already know what it looks like.
• Vertical or intensive progress means doing new things-going from zero to one. Vertical progress is harder to imagine because it requires doing something that nobody else has ever done.

When we think about the future we hope for the future of progress. That progress can be horizontal or vertical.

A startup is the largest group of people you can convince of a plan to build a different future.

2. Party like It's 1999

The entrepreneurs who stuck with silicon valley learned four big lessons from the dot-com crash that still guide business thinking today:

1. Make incremental advances: Anyone who claims to be able to do something is great is suspect, and anyone who wants to change the world should be more humble.
2. Stay lean and Flexible: You should not know what your business will do. Planning is arrogant and inflexible. Instead, you should try things out, "iterate" and treat entrepreneurship as agnostic experimentation.
3. Improve on the competition: Don't try to create a market prematurely. The only way to know to have a real business is to start with an already existing customer, so you should build your company by improving products already offered by successful competitors.
4. Focus on a product, not a sale: If your product requires advertising or salespeople sell it, it's not good enough.

These lesson has become dogma in the startup world. And yet the opposite principles are more correct:

1. It is better to risk than triviality.
2. A bad plan is better than no plan.
3. Competitive markets destroy profits.
4. Sales matter just as the product.

3. All happy companies are different

The Business versions of our contrarian question are: what valuable company is nobody building? This question is harder than this looks Because your company could create a lot of value without becoming valuable itself.

• The airlines compete with each other, but Google stands alone. Economists use two simplified models to explain the difference: perfect competition and monopoly.
• The opposite of perfect competition is a monopoly. Whereas a competitive firm must sell at the marketplace, a monopoly owns its market, so it can set its own prices. Since it has no competition, it produces at the quantity and price combination that maximizes its profit

To an economist, every monopoly looks the same, whether it deviously eliminates rivals. secures a license from the state, or innovates its way to the top.

Monopolies drive progress because the promise of years or even decades of monopoly profits provides a powerful incentive to innovate. Then monopolies can keep innovating because profits enable them to make long-term plans and to finance ambitious research projects that firms locked in the competition you didn't dream of.

4. The ideology of competition

Creative monopoly means products that benefit everybody and sustainable profits for the creator.

Competition means no profit for anybody.

Our educational system both drives and reflects our obsession with competition. Grades themselves allow precise measurement of each student's competitiveness; pupils with the highest mark received status and credentials.

Competition makes people hallucinate opportunities where none exist. The crazy '90s version of this was the fierce battle for the online pet store market. It was Pets.com vs PetStore.com vs Petopia.com vs what seems like dozen of others. If you can't beat the rival it is better to merge.

Exposing what is mortal and unsure. To all that fortune, death, and danger dare, Even for an eggshell. Rightly to be great is not to stir without great arguement, But greatly to find quarell in a straw when honor's at the stake.

5. Last mover advantage

Technology companies follow the opposite trajectory. They often lose some money the first few years: It takes time to build valuable things, and that means delayed revenues. Most of the tech companies of a tech company's value will come at least 10 to 15 years in the future.

If you focus on near-term goals growth above all else, you miss the important question you would be asking: will this business still be around a decade from now? Numbers alone won't tell you the answer; instead, you must think critically about the qualitative characteristics.

Characteristics of monopoly

What does a company with a large cash flow far into the future look like? Every monopoly is unique, but they usually share some combination of the following characteristics:

1. Proprietary technology: Proprietary technology is the most substantive advantage of a company. As a good rule of thumb, proprietary technology must be at least 10 times better than its closest substitute in some important dimension to lead to a real monopolistic advantage. The clearest way to create something 10x better is to invent something completely new.
2. Network effect: The network effect makes a product more useful as more people use it e. g Facebook. Network effects can be powerful, but you will never reap them unless your product is valuable to its first users when the network is necessarily very small. Paradoxically, then, network effects business must start with especially small markets.
3. Economies of scale: A monopoly business gets stronger as it gets bigger: the fixed costs of creating a product can spread out over ever greater quantities of sales. Software startups can enjoy especially dramatic economies of scale because the marginal cost of producing another copy of the product is close to zero.
4. Branding: a company has a monopoly on its own brand by definition so creating a strong brand is a powerful way to claim a monopoly. When Steve Jobs returned to Apple, he didn't just make Apple a cool place of opportunities for 10x improvements. No technology company can be built on branding alone.

Every startup has a small one at the start. Every monopoly dominates a large share of its market. Therefore, every startup should start with a very small market.

Sequencing markets correctly is underrated, and it takes discipline to expand gradually. The most successful company makes the core progression- to first dominate a specific niche and then scale to adjacent markets- a part of their founding narrative. Disruptive companies often pick fights they can't win.

You must study the endgame before everything else.

6.You are not a lottery ticket

The most contentious question in business is whether success comes from luck or skill. If success were a matter of luck, these kinds of serial entrepreneurs probably wouldn't exist.

Optimists welcome the future; pessimists frear it.

A definite pessimism believes that the future can be known, but since it will be bleak, he must prepare for it.

A startup is the largest endeavor over which you can have definite mastery. You can have agency not just over your own life, but over a small and important part of the world. It begins by rejecting the unjust tyranny of chance. You are not a lottery ticket.

7. Follow the money

Money makes money. "For whoever has will be given more, ad they will have abundance. Whoever does not have, even what they have will be taken from them".

An entrepreneur makes a major investment just by spending her time on a startup. Therefore every entrepreneur must think about whether her company is going to succeed and become valuable. Every individual is unavoidably an investor too. When you choose a career, you act on your belief that the kind of works you act on your belief that kind of work you do will be valuable decades from now.

8.Secrets

Every one of today's most famous and familiar ideas was once unknown and unsuspected.

You can achieve difficult things, but you can't achieve the impossible.

Goals can be divided into three groups:

1. Goals can be satisfied with minimal effort.
2. Goals can be satisfied with serious effort.
3. Goals cannot be satisfied, no matter how much effort one makes.

People are scared of secrets because they are scared of being wrong. By defination secrets haven't been vetted by the mainstream.

If your goal is to never make a mistake in your life, you shouldn't make mistake in your life.

The prospect of being lonely but right - dedicating your life to something that no one else believes it - is already hard. The Prospect of being lonely and wrong can be unbearable.

If you think something hard is impossible, you will never even trying to achieve it. Belief in secrets is an effective truth.

A great company is a conspiracy to change the world; when you share secrets, a recipient becomes a fellow conspirator.

9. Foundation

A startup is messed up at its foundation and it cannot be fixed.

A board of three is ideal. Your board should never exceed five people unless your company is publicly held. By far the worst you can do is to make your board extra large. Actually, a board will exercise no effective oversight at all; it merely provides cover whatever microdicaotor actually uns the organizations.

Equity is a powerful tool precisely because of these limitations. Anyone who prefers owning a part of your company to being paid in cash reveals a preference for the long term and commitment to increasing your company's value in the future.

Equity can not create perfect incentives, but it's the best way for a founder to keep everyone in the company broadly aligned.

10. The mechanics of mafia

Eliminating competition makes it easier for everyone to build kinds of long-term relationships that transcend mere professionalism. More than that internal peace what enables a startup to survive at all. When a startup often fails, we often imagine it succumbing to predatory rivals in a competitive ecosystem. But every company is also its own ecosystem, and factional strife makes it vulnerable to outside threats. Internal conflict is like an autoimmune disease: the technical cause of death maybe pneumonia, but the real cause remains hidden from plain view.

11. If you build it, will they come?

Superior sales and distribution by itself can create a monopoly , even with no product differentiation. The converse is not true. No matter how strong your product is even if it easily fits already established habits and anybody who tries it likes immediately you must still support it with a strong distribution plan.

You should never assume that people will admire your company without a public relations strategy. Even if your particular product needs no media exposure to acquire customers because you have a viral distribution strategy, the press can help attract investors and employees. Any prospective employee worth hiring will do his own diligence; what he finds or doesn't find when he googles you will be critical to the success of your company.