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Best Lessons From The Best Book On Entrepreneurship: ZERO TO ONE

Updated: Jan 4

‘This book delivers completely new and refreshing ideas on how to create value in the world’

_Mark Zukerberg, CEO of Facebook

‘Peter Thiel has built multiple breakthrough companies, and Zero to One shows how’

_Elon Musk, CEO of SpaceX and Tesla

Book cover: Zero To One (Source_Google)

Goodreads 4.2/5

Flipkart 4.4/5

amazon 4.4/5

About the author

Peter Thiel is a billionaire who co-founded PayPal which he sold to eBay for $1.5 billion in 2002. He also co-founded Palantir Technologies (Palantir valued $6 billion by Morgan Stanley in 2018) and Founders Fund a venture-capital firm. Founders Fund was the first investor in Elon’s SpaceX and one of the earliest investors in Facebook.

Thiel was born in 1967. He scored first in a California-wide mathematics competition. He studied philosophy at Stanford University then earned his Doctor of Jurisprudence degree in 1992 from Stanford Law School.

About the book

This book does not tell a shortcut to build a successful business but it’ll definitely tell you why the companies like Apple, Google, PayPal, and SpaceX did so great and are unbeatably successful. People like Steve Jobs, Elon Musk, and Bill Gates did not make a company based on a formula, they made it based on a principle. They found opportunities in unexpected places and brought innovations to the world.

The first thing any start-up needs to do to survive is going from zero to one. And the only way to do it is to ‘create something new’. When you create something new you create some value in the world and you’ve to capture some of it to create more.

In 2012 when Peter gave lectures at Stanford University about start-ups, one of his students Blake Masters made notes and circulated them throughout the campus. Peter with Blake revised those notes which became ‘Zero to One’.

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Chapter 1: Challenge of the future

Chapter 2: Party like it’s 1999

Chapter 3: All happy companies are different

Chapter 4: The ideology of competition

Chapter 5: Last mover advantage

Chapter 6: You are not a lottery ticket

Chapter 7: Follow the money

Chapter 8: Secrets

Chapter 10: Foundations

Chapter 10: The Mechanics of Mafia

Chapter 11: If You Build It, Will They Come?

Chapter 12: Man and Machine

Chapter 13: Seeing Green

Chapter 14: The Founder’s Paradox

Conclusion: Stagnation or Singularity?

‘Brilliant thinking is rare, but courage is in even shorter supply than genius.’

There are two types of progress vertical progress & horizontal progress. By copying something working well at another place, you may grow but that progress will be horizontal that is 1 to n progress. Globalization is an example of horizontal progress. By creating something new you go from 0 to 1 which is vertical progress. Developing new technology is an example of vertical progress. Countries like China are growing rapidly by globalization but it will not be sustainable without the use of the latest technology.

It's not bad to think about a better future but we need more people who will act using their imagination and creativity to make the 21st century better than the 20th.

To develop new ideas and create something new people need a conducive environment. Start-ups rather than big organizations can provide this environment.

When people start to believe blindly, that belief may collapse, it's called the old belief bubble. The most important thing is learning from it and questioning our beliefs next time.

From 1990 to 1998 was a time of economic crisis. Amidst the crisis, people were pouring money into start-ups. There was money everywhere. Capitalists were raining money on Dot Com companies like crazy. No one saw their profitability nor were they creating any value.

Finally, in April 2000 NASDAQ crashed to 3321 from 5048 in March.

‘Cause they say 2,000 zero zero party over, oops! Out of time! So tonight I’m gonna party like it’s 1999!’ —Prince

But some companies survived the Dot Com crash, includes PayPal and X.com.

Big lessons from Dot-Com crash;

_Small steps are the safest way to reach the destination.

_Every entrepreneur should try different things and then iterate them. Peter says entrepreneurship is agnostic experimentation.

_Know your market and start with existing market, by trying to capture big unknown market- you’ll get eaten by competition.

_Only viral growth is sustainable.

In perfect competition, companies compete with each other and have to give better qualities and lower price which in turn lowers the profit. A competition death of your business won’t matter to the world because there’s always someone to take your place.

Competition is bad for business because in long terms no one makes economic profit. The companies in competition get so busy in the daily margin that they don’t plan for long term future. These companies don’t have money for innovation, can’t take good care of their employees nor they can make future commitments.

But monopolies are good for business. They can set their product price and can accumulate sufficient funds for innovation. Monopolies can do research and do innovation. They improve their products and bring an abundance of categories, that’s why they are good for society also. Monopoly companies like Google are able to take good care of their employees and can make long term plans. Overall monopoly is a condition of a successful business.

All happy companies are different, they earn a monopoly by solving a unique problem and all failed companies are the same because they fail to escape competition.

The conventional ideology of competition is distorting our minds as everyone believes conventional wisdom without even thinking about it. The conventional ideology of competition is that it pushes us to do more, improves us. But in business the more we compete the less we gain.

In higher education, every person fiercely is in competition with another person at the same level over conventional careers like investment banking. They forget about what they really want or what they can do better?

The competition makes them hallucinate opportunities where none exists.

Same in the business, companies so much focused on rivals lose sight of things that really matter. Even the companies which can prosper independently engage themselves with each-other.

‘Winning is better than losing, but everybody loses when war is not one worth fighting.’

The value of the company cannot be determined by current statistics. When the business puts value in the world their true value can only be determined by its profits in the future, at least 10 to 15 years later.

There are four characteristics of a monopoly business. First is they have proprietary technology that bought innovation & value in the world. The second is the network effect which means as you go on acquiring more customers its productivity or usefulness will increase. The third is economies of scaling. Your idea of the company should be such that it will have the potential to scale it to a large market. The fourth one is branding.

Whoever first enters the market has the advantage of acquiring a large chunk of it that’s is called ‘First Mover Advantage’. But what if the company enters last in the market eats up all other companies before it and creates a monopoly.

The best way to do it is by dominating small markets and then gradually scaling up. This is called ‘Last Mover Advantage’.

Lots of successful entrepreneurs including Bill Gates and Jeff Bezos said that it was just luck that brought them this fortune but this is their humbleness, not the truth. If entrepreneurship is a mere luck game why play it?

The truth is these people were able to control the future. Yes! Right, through years of planning and definite optimism. Instead of following the conventional wisdom of trying to get knowledge of everything to survive the competition, they became so great at one thing and created a monopoly.

Entrepreneurship is not a lottery ticket, if it was then serial entrepreneurs like Bill Gates, Steve Jobs, Jeff Bezos, Jack Dorsey, Elon Musk, Peter Thiel were not possible. If you think you’re playing the lottery, you’ve already prepared yourself to lose.

“Success is never accidental” __Jack Dorsey

“For whoever has will be given more, and they will have an abundance. Whoever does not have, even what they have will be taken from them” (Matthew 25:29).

As Einstein said, everything around us works on power law. The same as surrounding, entrepreneurship also follows the power law. When Venture Capitalists invest in a start-up they try to see their future growth but sometimes it’s not visible and may lose great opportunities by regretting to invest. That’s why they diversify their portfolio but in the end, their bad investments eat their profits from a good investment.

Like investments an individual should not diversify his/ her career portfolio, doing the thing that we good at and passionate about is the only way to success. Like this, a start-up cannot use the principle of diversification because it may lose its goal and may fail.

At the stage of start-up, diversification means starting dozens of companies together and check which one works well.

Remember amazon started as a book-selling site then diversified after monopolizing the niche market.

If you think there are no secrets left behind to be discovered, there will not be inventions. But still, there are new inventions happening every day. So it means there are lots of fields that are unexplored and everyone still has a chance to start working on it.

Today's every successful company is based on long undiscovered secrets including Facebook, Apple, PayPal, Tesla, Microsoft, and Amazon. If you want to find a secret start with asking the right questions, most of the secrets lie in the question themselves.

People may come up with a once-in-a-decade idea but what stops them is their thinking that there must be someone wiser and smarter who may be working on the same or has done it already. They don’t research enough and drop it without even second thought.

Think about it, if Apple would have thought that touch screen phones are impossible or never would’ve started thinking about it, we may have been using phones with keyboards.

Tesla is built around the secret that cleantech was more of a social phenomenon than an environmental imperative.

The company’s rules made at the level of startup govern till the end of it. Same like rules, partners also be chosen wisely to avoid future conflicts. All founders must be driven by the same goals and follow the same path. You should choose your partner having some prehistory with you and others.

Peter says it’s better to have fewer board members and every member is crucial for deciding future prospects. If you want your board to be effective keep it less.

Founders should be given less than salary not to keep the less benchmark but to set an example. If a founder shows commitment then every employee starts following the same. Founders receiving high salaries may not work aggressively involving others to save their status quo.

Thiel’s law, ‘Startup messed up at its foundation cannot be fixed’.

Only having the best product cannot help you sell it. You must decide on proper sales and marketing strategies to show its feature to the public to attract the market. After a proper marketing and distribution strategy, if the product is better it will definitely start selling on its own without rigorous marketing_ all it needs is a little push.

Companies should more focus on providing employment rather than replacing them with machines. As entrepreneurs build better technologies it helps them to do more, to push more. Same like it better technologies, better machines do not replace human totally, it requires more skilled workers than previous ones.

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