Lessons Learned from Reading Zero to One

Peter Thiel

One of the founders of Paypal and Palantir and investor in dozens of other well-known companies. Thiel wrote Zero to One after teaching a class at Stanford on startups in 2002. One of the students, Blake Masters, took detailed notes which helped form the basis for the guide. In 195 pages, I learned more from Thiel & Masters than through any single class at the Ohio State University

Monopoly vs Competition

One of the central themes of the novel is the concept that competition should be avoided at all costs. Thiel discusses the flawed teachings of Economics 101 and other old philosophies. Included is the realization, “Under perfect competition, in the long run no company makes an economic profit.” On the other hand, he describes monopolies as companies so good at doing their thing that nobody else can offer a substitute. Monopolies exist at the UNION of several large markets while non-monopolists exist at the INTERSECTION of various smaller markets. The competitive market pushes companies to be ruthless or die to globalization. Monopolies, contrarily, survive by caring for its employees, products, and impacts.

The Power Rule

Based off the “Pareto Principle” or 80/20 law, the power rule is, as Thiel describes it, “the law of the universe.” Applied to venture capital, the best investment in a successful fund outperforms all other investments combined. Applied to college grades, 80% of your final grade will come from 20% of your work and studying. In life, we have the option to diversify our careers and life to try and capture as much value as we can. Thiel argues successful people avoid this, developing something they’re good at with relentless focus. Don’t get caught up in the wave of acquiring more. Ask which things are taking 80% of the time only to provide 20% of the overall value, and work tirelessly to get rid of them.

Indefinite Life

From the Fountain of Youth to the Sorcerer’s Stone, we love searching for an extension on the short hundred-year life we’re given. Thiel looks at life expectancy tables started in the 19th century to make the claim, “society is permeated by the twin ideas that death is both inevitable and random.” Renaissance minds saw death as something to be defeated like a rival. While we don’t have the solution for eternal life (yet), this is a field which millennials have immense opportunity to create new businesses and make an impact on society.

Last Mover Advantage

This chapter is a play on the popular belief that the first entrant to a market captures a large market share. Thiel argues this is a tactic, not a goal. It’s more important to generate future cash flow. Be the one to make the last great development in a market and enjoy years of monopolized profits.

Thiel is a very controversial man. While I enjoy his thoughts on college education and business practices, I think he misunderstands Malcolm Gladwell’s argument for achieving mastery in Outliers

 

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