Zero to One (by Peter Thiel) Summary – Overview and Preface

The following is a summary of Zero to One: Notes on Startups or How to Build the Future. I do not claim to own any of the book’s original work, the following is simply a bulleted summarization with a few direct quotes. All copyrights and trademarks belong to their respective owners.

Preface:

  • Next innovators won’t create social networks or search engines
    • By copying these things, you aren’t learning from them
  • Progress:
    • Doing what we know takes the world from 1 to n
    • Doing something new takes the world from 0 to 1

Navigate to Pages Here:

Chapter 1

Chapter 2

Chapter 3

Chapter 4

Chapter 5

Chapter 6

Chapter 7

Chapter 8

Chapter 9

Chapter 10

Chapter 11

Chapter 12

Chapter 13

Chapter 14

If you’ve liked this summary, I highly recommend you get the full book here:

Zero to One: Notes on Startups, or How to Build the Future

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– Alec Kriebel

Zero to One (by Peter Thiel) Summary – Chapter 14

The following is a summary of Zero to One: Notes on Startups or How to Build the Future. I do not claim to own any of the book’s original work, the following is simply a bulleted summarization with a few direct quotes. All copyrights and trademarks belong to their respective owners.

Chapter 14 – The Paradox:

  • Are all founders unusual people?
    • Normal people follow a bell curve with normal being the middle/top
      • Founders would be at the end
    • Founders follow an inverse normal distribution
    • The most famous people in the world are founders too
  • Where Kings Come From:
    • Leaders are given all fame/infamy
      • A scapegoat
    • Founders are the same way
  • We need founders
  • Individual prominence is good and bad, and can go between the two at any moment
  • Do not overestimate your own power
  • This chapter is odd
    • Thiel looks at many historical and pop culture icons and examines them
    • This barely ties into the theme of the book

 

Conclusion – Stagnation or Singularity?:

  • Thiel sees four possible futures:
    • Recurrent collapse
      • Society build, collapses, and repeats
    • Plateau
      • Society plateaus and stays relatively the same
    • Extinction
      • We do not survive
    • Takeoff
      • Exponential growth of society
  • Thiel sees takeoff as a more possible outcome
    • The most extreme is the singularity
      • Superhuman Artificial Intelligence is created
  • No matter what the future won’t happen on its own
  • Our job is to find ways to make the future better and new by going from zero to one
  • The first step is to think for yourself

 

If you’ve liked this summary, I highly recommend you get the full book here:

Zero to One: Notes on Startups, or How to Build the Future

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– Alec Kriebel

Zero to One (by Peter Thiel) Summary – Chapter 13

The following is a summary of Zero to One: Notes on Startups or How to Build the Future. I do not claim to own any of the book’s original work, the following is simply a bulleted summarization with a few direct quotes. All copyrights and trademarks belong to their respective owners.

Chapter 13 – Seeing Green:

  • At the start of the 21st century everyone agreed clean tech. was the next big thing
    • Clean tech. failed creating a bubble
      • 40 manufacturers filed for bankruptcy in 2012
    • Most failed because they didn’t answer the following vital questions in business:
  1. The Engineering Questions:
    1. Can you create breakthrough technology instead of incremental improvements?
      1. Need 10x improvement on current technology
        1. Anything else will just be incremental and you will not capture a large enough market share
  2. The Timing Question:
    1. Is now the right time to start your particular business?
  3. The Monopoly Question:
    1. Are you starting with a big share of a small market?
      1. Customers do not care about a product unless it can solve a product in a better way
      2. You can’t dominate a market if its fictional
  4. The People Question:
    1. Do you have the right team?
  5. The Distribution Question:
    1. Do you have a way to not just create but deliver your product?
      1. Distribution is as important as the product
  6. The Durability Question:
    1. Will your market position be defensible 10 and 20 years into the future?
      1. Plan to be the last mover in your market
  7. The Secret Question:
    1. Have you identified a unique opportunity that others don’t see?
  • A great business plan must address everyone of these 7 questions
  • Thiel uses this chapter to slam clean tech. and praise Tesla, using both as examples

 

If you’ve liked this summary, I highly recommend you get the full book here:

Zero to One: Notes on Startups, or How to Build the Future

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– Alec Kriebel

Zero to One (by Peter Thiel) Summary – Chapter 12

The following is a summary of Zero to One: Notes on Startups or How to Build the Future. I do not claim to own any of the book’s original work, the following is simply a bulleted summarization with a few direct quotes. All copyrights and trademarks belong to their respective owners.

Chapter 12 – Man and Machine:

  • Will a machine replace you?
    • Computers are complements for humans, not substitutes
    • Most valuable businesses in the future will enable people not remove them
  • Men and Machines are good at different things
    • people can form plans and make informed decisions, but can’t comprehend a lot at once and can’t multi-task
    • Computers can make sense of large amounts of data and can multi-task but can’t make good judgements
  • “Computers are Tools, not rivals”
  • Complementary Business:
    • Machines can be used as complements to a human’s job my allowing more efficient actions to be performed

 

If you’ve liked this summary, I highly recommend you get the full book here:

Zero to One: Notes on Startups, or How to Build the Future

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– Alec Kriebel

Zero to One (by Peter Thiel) Summary – Chapter 11

The following is a summary of Zero to One: Notes on Startups or How to Build the Future. I do not claim to own any of the book’s original work, the following is simply a bulleted summarization with a few direct quotes. All copyrights and trademarks belong to their respective owners.

Chapter 11 – If You Build it, will they Come?:

  • People underestimate sales
    • engineers are biased towards building things rather than selling them
  • Nerds VS. Salesmen
    • Advertising Works
      • Does not make anything work right away
      • Subtle impressions that build sales later
    • Nerds think sales is useless
      • In engineering a solution works or it doesn’t
      • sales is different, so its looked down upon
  • Sales is hidden
    • Salesmen don’t call themselves salesmen
    • The best salesmen are hidden
    • If you’ve created something new and have no way to sell it, its worthless
  • How to Sell a Product
    • Great sales can create a monopoly, but a great product without some sales/distribution will no
    • To make money the Customer Lifetime Value must overtake the Customer Acquisition Cost
      • the higher the product price, the higher the CAC
    • Complex sales involve product around seven figures
      • might take months to sell
      • Might only sell one or two a year
      • At this price point, the CEO is the salesman
    • Personal Sales
      • around $10k to $100k
      • Challenge is to establish a moderately sized sales team to efficiently move product
    • Distribution Doldrums
      • $1000 pricepoint
      • Advertising is too broad or inefficient
      • Don’t have the resources to send actual people out to talk
      • This is a dead zone
    • Marketing and Advertising
      • Low priced products used for mass appeal
      • CAC is lower
    • Viral Marketing
      • A product is viral if it encourages users to make others users too
      • This is cheap and fast
      • At Paypal, users were paid to sign up, and paid when others they referred signed up.
    • One of these methods is exponentially more effective than another
  • Your company also needs to sell [itself] to investors and employees
  • Every product needs sales

 

If you’ve liked this summary, I highly recommend you get the full book here:

Zero to One: Notes on Startups, or How to Build the Future

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– Alec Kriebel

Zero to One (by Peter Thiel) Summary – Chapter 10

The following is a summary of Zero to One: Notes on Startups or How to Build the Future. I do not claim to own any of the book’s original work, the following is simply a bulleted summarization with a few direct quotes. All copyrights and trademarks belong to their respective owners.

Chapter 10 -The Mechanics of Mafia:

  • No company has a culture, every company is a culture
  • Beyond Professionalism:
    • Many think that working with people you hate is necessary for making money
    • If you aren’t making lasting relationships with your co-workers, you haven’t invested your time well
    • People have to be excited to work with one another
  • Recruiting Conspirators:
    • A core skill every company needs
    • Need skilled people who will fit nicely with the whole team
    • Should be asking yourself: “Why does the company need this nth employee”
    • Truly talented individuals don’t need to work for your company
      • If they are actually talented, they’ll have many options
      • People that are hired should be very invested in your mission and not swayed by stock options or ridiculous perks (silicon valley is famous for these)
  • Do One Thing:
    • “On the inside, every individual should be sharply distinguished by her work”
    • Thiel says: “The best thing I did as a manager at PayPal was to make every person in the company responsible for doing just one thing”
      • People know they would be evaluated by only that one thing
      • Reduces conflict as people aren’t fighting to do one thing

 

If you’ve liked this summary, I highly recommend you get the full book here:

Zero to One: Notes on Startups, or How to Build the Future

< Previous Chapter | Overview | Next Chapter >

– Alec Kriebel

Zero to One (by Peter Thiel) Summary – Chapter 9

The following is a summary of Zero to One: Notes on Startups or How to Build the Future. I do not claim to own any of the book’s original work, the following is simply a bulleted summarization with a few direct quotes. All copyrights and trademarks belong to their respective owners.

Chapter 9 – Foundations:

  • A startup messed up at its foundation cannot be fixed (Thiel’s Law)
    • Decisions made early one are very hard to change later
  • You cannot build a great company only a flawed foundation
  • Founding Matrimony (upon founding, co-founders get ‘married’:
    • When starting something choosing a partner is the most important decision
    • If founders fight, the company suffers
    • Founders should have a background before the founding of the company
      • Otherwise, its luck
  • Ownership, possession, and control:
    • Everyone in your company needs to work well together
    • Doing it alone guarantees alignment
      • Its incredibly hard to do it alone though
    • Need structure in your company to keep everyone aligned for the long term
    • Misalignment can come from the following:
  1. Ownership: who legally owns the company(‘s equity)?
    1. Usually founders, employees, and investors
  2. Possession: who actually runs the company on a day-to-day basis?
    1. Usually managers and employees
  3. Control: who formally governs the company’s affairs
    1. Usually Board of Directors (founders and investors)
  • In the boardroom, less is more
    • The smaller the board, the better the communication
    • In a small board though, it is easy to oppose/accept anything
      • This is why choosing board members is very important
    • A board of three (3) is ideal
      • Should not exceed five (5)
        • Unless publicly held
  • On the Bus or Off the Bus
    • Everyone you involve with the company should be involved full time
      • Rule can be broken (accountants, lawyers, etc.)
    • Anyone who does not own stock (options) or get regular salary will not have the company in their best interest (misaligned)
      • They want value now, and will not help you build it for the future
      • This is why consultants, part time employees do not work
      • Even telecommuting should be avoided
  • Cash is King:
    • When people are fully committed, they should be properly compensated
    • A company does better the less the CEO pays himself
      • Thiel says this is the single clearest pattern he’s noticed in being a VC
      • “In no case should a CEO of an early stage, venture-backed startup receive more than $150,000 per year in salary.”
        • Bills do not matter in deciding a gigantic salary
      • A cash poor executive will focus on increasing the value of the company as a whole
      • A CEO sets the example for all under him, high or low salary
    • Cash offer optionality to your workers
      • High cash compensation teaches workers to take value from the company rather than to help build it
      • “Any kind of cash is more about the present than the future
  • Vested Interests:
    • Equity offers something better than high-cash salary because it vests interests of your employees in the company
    • Must be allocated very carefully as to not create misalignment
      • Handing out equal amounts is a mistake
        • People work different amounts, etc.
      • Employees should get more equity depending on how early the join due to risk
    • Some people only want cash and refuse equity (equity is tied to one company, could be worthless)
      • If they refuse equity it is useful to determine if they care about the cause
  • The ‘birth’ of a company happens just once and in that moment the founder has the opportunity to set the rules and foundation for the future

 

If you’ve liked this summary, I highly recommend you get the full book here:

Zero to One: Notes on Startups, or How to Build the Future

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– Alec Kriebel

Zero to One (by Peter Thiel) Summary – Chapter 8

The following is a summary of Zero to One: Notes on Startups or How to Build the Future. I do not claim to own any of the book’s original work, the following is simply a bulleted summarization with a a few direct quotes. All copyrights and trademarks belong to their respective owners.

Chapter 8 – Secrets:

  • There are many things we don’t yet understand
  • “Our contrarian Question: What valuable company is nobody building”
    • Every correct answer is a not yet discovered secret
  • Much of society believes that there are no hard secrets left
    • Thiel says this could be because there are no more geographic locations to discover
  • Four social trends have rooted out belief in secrets:
  1. Incrementalism: We are taught to proceed one step at a time, day by day etc.
    1. If we overachieve, its not on the test and we won’t get credit for it
    2. In exchange for doing exactly as asked you get all the credit (an A+)
  2. Aversion: People are scared to be wrong; secrets are unknown and could be wrong
  3. Complacency: Why search for unknown things if you can be comfortable where you are now?
  4. Flatness: As everyone gets more advanced (caught-up), people view the world as one market
    1. Basically the assumption that everything has been done
    2. No matter what you come up with, someone else has thought of it or tried it
      1. So it is not worth pursuing
  • The Case for Secrets
    • Need to try to find them
    • If one thinks something is impossible; one has to believe in secrets to find the truth
    • Spare capacity is all around us but often ignored
  • How to Find Secrets:
    • Two kinds of secrets:
      • Secrets about people
        • things people don’t want to know or don’t know about themselves
      • Secrets about nature
        • Exist all around us; undiscovered things about the physical world
    • Best place to look is where no one else is looking
      • “Are there any fields that matter that haven’t been standardized or institutionalized?”
  • What to do with Secrets – Should you tell anyone or keep it to yourself?:
    • Its rarely a good idea to tell everybody everything
    • Only tell whoever you need to and no more
      • There’s always a mean between telling nobody and everybody
      • every great business is built around secrets hidden from the masses

 

If you’ve liked this summary, I highly recommend you get the full book here:

Zero to One: Notes on Startups, or How to Build the Future

< Previous Chapter | Overview | Next Chapter >

– Alec Kriebel

Zero to One (by Peter Thiel) Summary – Chapter 7

The following is a summary of Zero to One: Notes on Startups or How to Build the Future. I do not claim to own any of the book’s original work, the following is simply a bulleted summarization with a few direct quotes. All copyrights and trademarks belong to their respective owners.

Chapter 7 – Follow the Money:

  • Pareto Principle (80-20 Rule) states that 80% of the effects come from 20% of the causes
    • Thiel says this effect also affects many social and natural things
  • This chapter shows that: “where investors try to profit from exponential growth in early stage, companies a few companies attain exponentially greater value than all others.
  • The Power Law of Venture Capital
    • VCs fund early stage companies in hopes of profit
      • raise money from wealthy people, pool it, and fund/invest it
    • If the company is successful, they take a chunk (usually 20%)
    • They make money when the companies they fund go public or are bought
    • Usually have a lifespan of 10 years (Companies take time to grow)
    • Most-venture backed companies fail and don’t get to be bought/IPO
    • VCs lose money at first, then hope the value of their funded companies will grow exponentially
    • VCs know that some funded ventures will fail
      • They try to balance their portfolio so that the winners counterbalance the losers
        • This pattern usually fails
        • Ventures do not follow normal distribution
          • They follow a power law
          • “…a small handful of companies radically outperform all others
    • “The biggest secret in venture capital is that the best investment in a successful fund equals or outperforms the entire rest of the fund combined
      • Implies that VCs should only invest if the company has the potential to return value of the entire fund
    • Since funds have great amounts of money to get the funds big returns, they have to net a lot of money.
      • $1.5 billion fund nets 80 million on a venture, would need 19 more to break even
    • This is why investors put a lot of money into single companies
    • “…every single company in a good venture portfolio must have the potential to succeed on a vast scale
  • Less than 1% of businesses each year are VC backed
    • .2% of GDP in funding
    • But, venture backed companies created 11% of private sector jobs
    • and 21% of GDP
  • “One market will probably be better than all others…”

 

If you’ve liked this summary, I highly recommend you get the full book here:

Zero to One: Notes on Startups, or How to Build the Future

< Previous Chapter | Overview | Next Chapter >

– Alec Kriebel

Zero to One (by Peter Thiel) Summary – Chapter 6

The following is a summary of Zero to One: Notes on Startups or How to Build the Future. I do not claim to own any of the book’s original work, the following is simply a bulleted summarization with a few direct quotes. All copyrights and trademarks belong to their respective owners.

Chapter 6 – You are not a Lottery Ticket:

  • Does success in business come from luck or skill?
    • If success were determined by luck single people could not create multiple billion dollar companies (Elon Musk, Steve Jobs, etc.)
    • No way to actually conclude this unless we start the same businesses in multiple worlds (impossible)
    • Thiel says: If everything is up to luck, why try to improve your chances (by reading this book).
  • Can you control your future?
    • Future is treatable as definite (can understand it and work to shape it)
      • Can determine the best thing to do and do it
      • Thiel strongly advocates that this mindset is needed for success as an entrepreneur
    • Can also think of it is indefinite and ruled by randomness
      • This thinking explains what’s wrong with the world
      • No plans means nothing to carry out (always preparing for nothing in particular)
      • Well-roundedness (pursuing many things to compensate for an unknown future)
    • Indefinitism – Thiel takes this part of this chapter to examine indefiniteness in many aspects of current society (finance, politics, philosophy, life, and more)
      • In finance:
        • People accrue money and give it to large banks because they don’t know what to do with it
        • Banks give it to a portfolio of investors because they don’t know what to do with it
        • Investors diversify it in companies because they don’t know what to do with it
        • Companies try to increase share price, when they do they buy back shares or issue dividends and the cycle repeats
      • Indefinitism prefers optionality; thus favoring the accumulation of cash
      • In reality Thiel thinks money should be definite, or used as a means to an end (aka a start of something new)
    • “Making small changes to things that already exist might lead you to a local maximum, but it won’t help you find the global maximum.
    • The Return of Design
      • I’ve excluded examples until now, but I feel this one is important enough to include
        • Steve Job’s iDevices are greatly designed, but Apple was designed better
        • Jobs saw you can change the world with careful planning
        • Introduced the iPod in 2001
          • People saw it as a nice, small thing
        • Jobs planned the iPod to be the first in a post PC world
        • Then came iPhone, iPad, etc.
        • Apple is now a 740 billion dollar company (2/15/15)
    • You are not a lottery ticket:
      • 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.
  • Main takeaway from this chapter is to be definite in your approach; have a well developed plan and stick to it.

 

If you’ve liked this summary, I highly recommend you get the full book here:

Zero to One: Notes on Startups, or How to Build the Future

< Previous Chapter | Overview | Next Chapter >

– Alec Kriebel