This article is an excerpt from the Shortform summary of "Zero To One" by Peter Thiel. Shortform has the world's best summaries of books you should be reading.
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What is startup thinking? What do you have to do to think like a startup, and build a great one?
Startup thinking will help you build a successful business. In order to use startup thinking, you have to consider the basics, as well as long term goals and your future plans.
For several reasons, startups consisting of a few people with a mission are the source of most new technology.
Big organizations don’t often produce new technology because they tend to avoid risk. People working alone seldom produce new technology either. A brilliant loner might produce great art, but she wouldn’t have the means to create a new industry. They aren’t benefitting from startup thinking.
Startups work because it takes multiple people to create new technology, but also smallness for momentum and flexibility. Small companies encourage and are conducive to new thinking because they know new thinking is their biggest asset. These companies are using startup thinking, and it shows.
This book explores the questions that companies creating new things must answer in order to succeed. It’s a starting point rather than a manual. The first job of a startup is to question everything and rethink business from the beginning. This is true startup thinking.
The Path of Progress
Startup thinking means always wanting to make progress. But how? Progress can be either horizontal or vertical. Horizontal or expansive progress results from duplicating success—going from 1 to n. We can easily envision this kind of progress because it’s much like the present. Vertical or intensive (focused) progress requires doing something new—going from 0 to 1. It’s more difficult to envision because we’ve never seen it before.
For example, starting with one typewriter and building 100 would be horizontal progress (duplicating something). In contrast, starting with a typewriter and building a word processor would be vertical progress (creating something new).
Globalization is horizontal progress—it entails taking something that works in a particular place and replicating it everywhere. For instance, China’s 20-year plan is to be like the West is today.
Technology, going from 0 to 1, is vertical progress—it encompasses anything new and better, including but not limited to computers.
These modes of progress can occur simultaneously or one at a time. For instance, the period from World War I through Nixon’s visit to China in 1971 featured technological development but not much globalization. However, since 1971, we’ve seen rapid globalization without much technological development beyond information technology.
Globalization is a path to homogenization. The way we talk about it implies a belief that technological progress has a peak: we refer to the developed and developing worlds as though Western nations have reached a fixed level of achievement to which poorer nations must catch up.
But continued globalization isn’t feasible without technological progress, because the industrialization of more countries will lead to more problems. For instance, if China doubles its industrial production without technology improvements, it will double its air pollution. Spreading the practices of developed countries globally will bring ruin rather than wealth; it seems like startup thinking, but it’s not.
New technology has never been a given. From the primitive agrarian societies thousands of years ago up until the advent of the steam engine in the 1760s, there was little technological progress. From that point, technological advances continued through 1970. In the late 1960s, however, people looked forward to a future of tech advances that didn’t happen—for instance, cheap energy and vacations on the moon. Although they expected great advances to be automatic, only computers and communications advanced dramatically. The key to a better future is both imagining and creating the technologies to get us there.
A Checklist for Success
Use this summary for startup thinking. In summary, a startup won’t succeed without a business plan that addresses each of the following questions. If your answers are weak, your company will fail—however, with a solid answer for each, you’ll be on your way to having a great business.
- Engineering: Is your technology a significant advance or only incremental improvement?
- Timing: Is this the right time to sell this technology?
- Monopoly: Are you targeting a big share of a small market?
- People: Do you have the right people on your team?
- Distribution: Do you have a plan to sell your product?
- Durability: Will you dominate your market in the next 10 to 20 years?
- Secret: Have you identified a unique opportunity overlooked by everyone else?
Startup thinking doesn’t end when you launch your business. With startup thinking, you need to always be thinking about the next big thing.
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Here's what you'll find in our full Zero To One summary :
- Why some companies genuinely move the world forward when most don't
- How to build a company that becomes a monopoly (and why monopolies aren't bad)
- Silicon Valley secrets to selling products and building rockstar teams