Peter Thiel’s ‘Zero to One’ Is A Book Every Startup Should Read

I read very many books concerning technology and startups on a daily not only to be good at my job but also to tap into the insights of some of the big technology founders.

Peter Thiel is one of those founders and is well known for starting PayPal in 1998 and taking it public 4 years later. He is also well known for being the first outside investor in Facebook where he still acts as a director. He has also been an early investor in LinkedIn, Yelp, SpaceX, Airbnb and a dozen other startups.

This is someone every startup would be fighting to listen to, and in his book ‘Zero to One’ he advises startups on how to build the future and gives notes on startups according to his experience in the Valley.

Peter starts off this book saying, “Every moment in business happens only once. The next Bill Gates will not build an operating system. The next Larry Page or Sergey Brin won’t make a search engine. And the next Mark Zuckerberg won’t create a social network. If you are copying these guys, you aren’t learning from them.”

Doing what we already know how to do takes the world from 1 to n, adding more of something familiar. But every time we create something new, we go from 0 to 1. There are a lot of lessons in this book and I would recommend it but here are 5 lessons among the hundreds that you will learn from this book.

Find a Niche.

The book highlights that a valuable business must start by finding a niche and  dominating a small market. In the example of Facebook, it started as a service for just one university campus before it spread to other schools and then the entire world.

Make Incremental advances.

Grand visions inflated the dot-com bubble, so they should never be indulged and as most startup aim for changing the way we do things, they should be humble enough to start small and make incremental steps forward.

Business need founders, ‘strange’ founders.

If anything, every business needs and should tolerate founders who seem strange or extreme because it’s such individuals who will lead companies beyond mere incremental change and help these businesses innovate. PayPal was founded by these kinds of people and they sold it to eBay for $1.5 Billion.

The co-founders are now know as PayPal Mafias in Silicon Valley because they went on to move from zero to one. Elon Musk founded SpaceX and co-founded Tesla Motors; Reid Hoffman co-founded LinkedIn; Steve Chen, Chad Hurley, and Jawed Karim together founded YouTube; Jeremy Stoppelman and Russel Simmons founded Yelp; David Sacks co-founded Yammer; and Peter Thiel co-founded Palantir. All these companies are worth Billions, is it by luck?

All happy companies are different.

What Valuable company is no one building? This is a tricky question, because a company might create value but not be able to capture some of the value itself. If there is money to be made, very many companies will enter a given market, this will make the supply high and drive the prices down making these companies suffer with little profits.

If however you create a monopoly and by ‘monopoly’ Peter means the kind of company that’s so good at what it does that no other firm can offer a close substitute.

Google is a good example of a company that went from 0 to 1: it hasn’t competed in search since the early 2000s, when it definitively distanced itself from Microsoft and Yahoo! 

Such companies will produce the quantity and price combinations that maximize their profits.

Technology – Human Race – Innovation.

Technology is miraculous because it allows us to do more with less, ratcheting up our fundamental capabilities to a higher level. Other animals are instinctively driven to build things like dams or honeycombs, but we are the only ones that can invent new things and better ways of making them.

When we build new technology,  we rewrite the plan of the world.

Zero to One is one such a book that is going to give you some of the insights into how Peter Thiel built PayPal and how they survived the dot-com bubble, and some of the companies he has started and invested in. Its also about creating companies that create new things.

If you are struggling in such areas then this is the book for you. Share with a startup founder, they will definitely enjoy it.