"Zero To One" by Peter Thiel

Book Review: Zero To One by Peter Thiel

Peter Thiel is known as one of the most controversial individuals in Silicon Valley due to his unique perspective on business. However, Thiel has the credentials to back up his views; he co-founded two well-known companies, PayPal and Palantir, and made early investments in Facebook, SpaceX, and LinkedIn.

 Peter Thiel

Peter Thiel

Thiel describes his thoughts on business and startups in his book “Zero to One.” His book has received praise from well-known entrepreneurs such as Mark Zuckerberg and Elon Musk, and has even become a required reading in several Baruch classes.

 

The book’s title refers to the idea of going from nothing to something, or from zero to one. Thiel starts the book by breaking up progress into two sections, vertical and horizontal. Ideally, it would be better to start a company that focuses on vertical progress, making something new, instead of horizontal progress which is copying something that already works.

Too often entrepreneurs create a business around incremental improvements on an already existing product. Making a faster or cheaper typewriter won’t change the world, but building a word processor like Microsoft Word will.

 

Throughout the book, Thiel provides readers with tips on what to look for when building a startup, how to grow a business, and what successful companies have in common.

Some of his theories may seem unorthodox at first, but Thiel uses data and facts to make a convincing argument.

 

In business classes, students are taught the benefits of the “first mover advantage.”

If a company is the first to market, it can capture significant market share while competitors scramble to get started.

But, Thiel argues, that being the first mover is not enough. Instead, companies should focus on being the last mover–that is making the last great development in a market.

 

There were social media networks that had first mover advantage, such as Myspace, but Facebook was able to make a better product and has overtaken Myspace in users and revenue several times over.

Similarly, Yahoo built its search engine in 1995, a whole three years before Google. Yet today, the vast majority of individuals use Google.

 

Another one of Thiel’s beliefs is that monopolies, for the most part, are good.

Having little to no competition allows a company to become profitable and build market share, eventually becoming a monopoly. In Thiel’s mind, a monopoly can be good because it provides a steady stream of revenue and motivates the company to keep innovating to maintain its profits.

 

The book uses Google as an example. The firm has a monopoly on search because it has a better product than Bing or Yahoo. Of course, individuals are free to use other searches, but they choose not to.

Google, meanwhile, wants to keep its profits so it constantly works on improving its products. Their large profits also allow them to be innovative and invest in other ventures such as driverless cars, Android, and artificial intelligence.

Thiel’s ideas may seem unconventional at first, but just by looking back on the last ten years, one will find that the best ideas often are often viewed as bizarre at first. Sharing a ride with a stranger or an apartment with one is an odd idea, but these beliefs have created multi-billion dollar startups we now know today as Uber and Airbnb.

Sometimes it takes a radical idea, to build a revolutionary company. 

 

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Get the book here.