{"id":10432,"date":"2020-07-08T21:10:00","date_gmt":"2020-07-09T01:10:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=10432"},"modified":"2020-07-10T22:05:13","modified_gmt":"2020-07-11T02:05:13","slug":"zero-to-one","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/zero-to-one\/","title":{"rendered":"Zero to One: Your Guide to the Best Startup Book"},"content":{"rendered":"\n

What is Zero to One<\/em> about? What does Zero to One<\/em> say about building startups and forming monopolies?<\/p>\n\n\n\n

Zero to One<\/em> outlines Peter Thiel’s views on forming successful startups. In Zero to One<\/em>, startups are only one step of the journey to building a successful business<\/a>.<\/p>\n\n\n\n\n\n\n\n

What Is Zero to One About?<\/strong><\/h2>\n\n\n\n

In Zero to One<\/em> Peter Thiel, PayPal co-founder and venture capitalist, contends that creating new things is the best way to profit economically, as well as the only path for human progress<\/a>.<\/strong><\/p>\n\n\n\n

However, technology has stagnated today. Much of what we do repeats or builds on what\u2019s been done before. It\u2019s easier to copy something than to create something new. This moves the world from 1 to n, refining something that already exists. However, creating something entirely new moves us from 0 to 1.<\/strong><\/p>\n\n\n\n

Unless companies create new things, they\u2019ll eventually fail regardless of how profitable they are today. There\u2019s a limit to what we can gain by refining things, a point at which best practices won\u2019t get us any further. We need to break new ground.<\/p>\n\n\n\n

The Path of Progress<\/strong><\/h3>\n\n\n\n

Progress can be either horizontal or vertical. Horizontal or expansive progress results from duplicating success<\/strong>\u2014going from 1 to n. This kind of progress is easy to envision because it looks a lot like the present. Vertical or intensive (focused) progress requires doing something entirely new<\/strong>\u2014going from 0 to 1. It\u2019s more difficult to envision because we\u2019ve never seen it before.<\/p>\n\n\n\n

Continued globalization isn\u2019t feasible without technological progress<\/a> because the industrialization of more countries will lead to more environmental problems and competition for limited resources<\/a>. 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 devastation rather than wealth. The key to a better future is both imagining and creating the technologies to get us there.<\/p>\n\n\n\n

Zero to One Startup Lessons<\/strong><\/h3>\n\n\n\n

In Zero to One<\/em>, Peter Thiel discusses lessons learned from past startups and the tech bubble<\/a>. Startups consisting of a few people with a common mission are the source of most new technology. <\/strong>But many tech startups today are hobbled by four erroneous lessons drawn from the 1990s dot-com bubble<\/a> and crash:<\/p>\n\n\n\n

  1. Make incremental advances: <\/strong>Be wary of big visions that drive bubbles. Move forward with small, incremental steps.<\/li>
  2. Stay lean and flexible: <\/strong>To stay lean and flexible, don\u2019t tie your hands with planning. Instead, try things and iterate or build on the ones that work.<\/li>
  3. Build on the competition: <\/strong>Don\u2019t try to create new markets. Build your business by improving on a product people are already buying from someone else.<\/li>
  4. Focus on product<\/a>, not sales: <\/strong>If you have a good product, it should spread virally without a need for advertising. <\/li><\/ol>\n\n\n\n

    Tech startups treat these lessons as sacrosanct, but they actually undermine success, especially big innovations. The opposite of each lesson is more accurate:<\/p>\n\n\n\n

    1. It\u2019s better to be bold than inconsequential.<\/li>
    2. A bad plan is better than none.<\/li>
    3. Don\u2019t compete: competition destroys profits.<\/li>
    4. Sales strategy matters as much as product.<\/li><\/ol>\n\n\n\n

      Zero to One on Monopolies and Competition<\/strong><\/h3>\n\n\n\n

      Monopolies are good for society<\/strong>. In Zero to One<\/em>, Peter Thiel explains why. While it may seem counterintuitive, they can be more ethical, treat workers with greater consideration, and create more value than companies locked in competition do.<\/p>\n\n\n\n

      Competitors are caught up in a daily struggle for survival<\/a>. For instance, with their low margins, restaurants have to do everything possible to minimize expenses\u2014which can include paying minimum wage to employees and putting family members to work for nothing. In survival mode, money is everything. <\/p>\n\n\n\n

      In contrast, in a monopoly where profits are assured, there\u2019s room to consider other things besides money<\/strong>. For instance, lacking intense competition, Google can give consideration to its workers, its products, and its impact on society. <\/p>\n\n\n\n

      Monopolies\u2019 bad reputation comes from sometimes earning outsized profits at the expense of society. Certain monopolies corner the market on something that\u2019s needed and jack up the price; customers have no choice but to pay it. This works for the owners in a world where nothing changes, like in the game of Monopoly, where you control as much real estate as you can, but you can\u2019t create new real estate.<\/p>\n\n\n\n

      In contrast, creative monopolies do good and drive social progress<\/strong> because they operate in a different environment, a dynamic one. Instead of controlling all the options like Monopoly real estate, they create new options. They expand consumers\u2019 choices by creating new categories of things. By adding value, creative monopolies make society better. Zero to One<\/em> supports the idea of creative monopolies in business. <\/p>\n\n\n\n

      Monopoly Characteristics<\/strong><\/h3>\n\n\n\n

      Monopoly businesses with strong future cash flows share several characteristics<\/strong>, the Zero to One <\/em>book explains. <\/p>\n\n\n\n