My Zero to One summary: Smart takes on building Startups by Peter Thiel

 


My Zero to One summary: the bottom line.

The bottom line of my Zero to One Summary? Easy. This book is one of the reference books out there for those interested in business development. Or perhaps should I say startup development, as a matter of fact. 

Peter Thiel (who is one of the Paypal founders) elaborates on how startups work and on the kind of mindset you need to become a successful startup founder. Thiel has a tone and goes straight to the point, which makes him challenge some of the ideas you tend to see all the time in the mainstream way of thinking.

In short? A challenging book, totally worth your time if you need to boost your leadership skills. To find out more, just keep reading!


My Zero to One summary – Smart takes on building Startups by Peter Thiel.

Zero to One, Notes on Startups, or How to Build the Future by Peter Thiel is one of those books you bump into everywhere. In bookshops, on Amazon, on blogs of all sorts. So I’ve had it on my reading list for quite some time now.

A few weeks ago I found the book on a shelf and I decided to go for it. I was a little concerned about what I would find in there, to be honest. It is very easy to find generalities out there and those of you who follow I’ll Make You Think Smart regularly know that I have a thing for ideas and the way people write their message.

Simply put? I wanted to see if Peter Thiel‘s book would be just another book on business. Simple answer: no, it’s not. Reading Zero to One was a good opportunity for me to compare ideas on innovation and startup creation. Here’s why.

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As usual, here is what you get on this page:

  1. A brief overview of the book (that includes my SMART takes).
  2. A much more comprehensive commentary of what the book is about, with the author’s main topics explained in detail.
  3. The book’s main themes, questions, and conclusions in bullet points.
  4. Why the book was worth my time, why it will be valuable to you, and additional reading suggestions if you are interested in the topic!

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My Zero to One summary, the brief version (for starters).

As usual, let me start with a brief overview of what Zero to One is about.

I found three things particularly interesting with this book.

First, Zero to One focuses on the difficult necessity of creating innovatively. Thiel is very clear about this and has a very straightforward goal. His book “is about how to build companies that create new things”. And by company understand startups, of course.

Now, that sounds like a heck of a programme. I know. But Peter Thiel has the credentials to back it up. As a co-founder of Paypal, I guess that it’s fair to say that the guy knows a thing a two on the matter.

Second, Thiel delivers in special way.

I felt that the book was a little too long at times, and I didn’t always like the author’s tone, to be honest (more on that at the end of my book review). What I liked, however, was Thiel’s approach to doing stuff. The book isn’t perfect (hey, go write a perfect book before judging), but it asks the right questions in a challenging way.

For instance? Well. We often hear (or read) that competition is healthy. But Thiel says competition is BS. To him, what matters is to build monopolies. And that makes sense!

Last but not least, Thiel’s book is interesting because it gives another approach to doing business out of technology. Remember the dot-com crisis of the 1990s? He knows about it for a simple reason: he was there!

Now. As usual, I’m getting into the details with a much more comprehensive book review below (keep reading!), but in short, here is what the book says:

peter thiel zero to one summary book review

To wrap up?

To wrap up – Zero to One delivers several interesting messages, the main of which is that your success in building a startup depends on your ability to keep going and innovate. Overall, I’d say that the book is really worth your time if you are looking for food for thought on startup development. Now, if you want the details, keep reading!

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My Zero to One summary, the comprehensive version (yeah, now we’re talking).

Zero to One, Notes on Startups, or How to Build the Future elaborates on the idea that while creating a business is not an easy thing, what matters is to aim big enough to build the future.

Peter Thiel starts from a sound suggestion, i.e. that while copying other businesses is easy, the real stake (and challenge) is to “invest in the difficult task of creating new things”.

To him, there is only one valid business pattern. Success comes from what you don’t expect, therefore you need to follow several guiding principles to maximize your chances of success.

These guiding principles are explained in the book in fourteen chapters. I’ll however regroup them into five big themes or ideas to simplify this book review and summary:

One, look around and figure things out. Two, learn what competition is about. Three, learn to be successful. Four, do things right from the beginning. And, five, validate your process before moving on with the business.

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As usual, this more comprehensive part of the book review starts with the main themes and questions considered in the book – in bullet points. I’ll then elaborate on the themes more extensively. Let’s dig in!

The book in bullet points

Peter Thiel explores these major themes:

  • Startup-building lessons borrowed from a startup pro.
  • What it takes to succeed.
  • How the startup ecosystem works.

He also asks a variety of questions, including:

  • What is a startup and how does it work?
  • Where should you start when building your startup?
  • What is the goal of a startup product?
  • Is there a good way to create a revolutionary product? What to think about disruption?
  • How does competition work and what is the best way to deal with it?
  • What are the keys to being successful?

Sounds interesting, right? Now, let’s get into the details. Just keep reading!

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My Zero to One summary – Theme #1:  Look around and figure things out.

‘First things first’ isn’t just a stupid saying. If you want to succeed, you need to start from the necessary basics. That is, think about the future but don’t forget the past. Oh. And find out what nobody is doing, of course.

Dealing with tomorrow.

Thiel says that tomorrow will be different. His point is easy to grasp: the future is all about progress and that leaves you only one choice. You need to create new models or others will do it. And then you’re down, really…

To go from zero to one and create new models, however, you don’t just need technology. You need something that has the power to make tomorrow really different.

As it turns out, startups might be the ideal way to do just that. In contrast with the big giants, startups are flexible. Why? They are a great opportunity to move fast and innovate because using new ways of thinking is in their DNA.

>> Related Reading: Creativity lessons from Pixar – Creativity, Inc. by Ed Catmull.

Back to my Zero to One summary, what that means is that innovative thinking is your chance to play differently. If you are into developing a startup mindset, start from questioning ‘conventional beliefs’ and rethink your whole approach to whatever you are working on.

If your product cannot revolutionize tomorrow, what’s the point?

Don’t forget about yesterday.

Changing tomorrow is a big challenge but to get there you need to remember the mistakes of yesterday.

Thiel has a good example to give here. The Paypal business was created during the internet folly of the 1990 ‘s. As such, it had to face the dot-com bubble and when the bubble burst, things stopped going well and many startups just had to stop whatever they were trying to do.

Peter Thiel talks about the end of ”technological optimism” at the time, but his point isn’t just that things changed. His point is that you – as a startup person – need to stay reactive. Yes, your product must revolutionize the 21st century. But no, dreaming isn’t enough.

You need to stay flexible. And you need to be strategic. For instance, start with improving an existing service instead of aiming for the moon…

Find out what nobody does.

Peter Thiel asks a very important question here. Have you tried to determine what is the valuable business that nobody is building right now?

We always hear about the importance of creating value. All business books talk about value but Thiel goes further. To him, the point is not just to create value, it is to become valuable and profitable. If your goal is to attract investors, at least.

And what that means is this. To assess how valuable your product is, you need to look around. You need to find out what the market is like and what people do. The question isn’t to see if your thing has already been done. It is to see how you could make it more profitable.

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My Zero to One summary – Theme #2:  Understanding what competition is about.

The previous point suggests that knowing the status of competition is important. Right, that sounds fair. But Peter Thiel looks beyond that.

Build a monopoly or nothing.

Thiel discusses the idea of competition itself and his opinion on the topic is really clear-cut. To him, competition shouldn’t be a matter of surviving. I should be a matter of creating monopolies.

What does he mean by that? Well. Your company has a monopoly when it is “so good at what it does that no other firm can offer a close substitute.” In other words, thinking about your competitors shouldn’t just be a question of doing different or better. It should be a matter of creating your own monopoly.

Innovation may still be complex even if you are in a monopoly situation, however. That ‘s for sure. Still, Thiel’s key message here comes like this: happy companies hold a monopoly on their own niche while the other companies just focus on “fail[ing] to escape competition”.

Zero to One summary peter Thiel Pinterest picture

Monopolies are profit, healthy competition is BS.

Now, we often hear that healthy competition is good for business. It creates an incentive to do better and all that.

Thiel says that’s BS.

“The more we compete, the less we gain”, he says. When Microsoft fights against Google, Apple steals the show. In sum, competition has a negative impact on your business. Unless you find ways to collaborate or suppress competition, of course. But in that case, there’s no more competition.

Peter Thiel has a point here. At the end of the day, and as he rightly puts it, “a great business is defined by its ability to generate cash flows in the future […] and capture monopoly profits over the next decades”.

Perhaps making a profit will take a lot of time and investment. Yes. But what matters is that a form of market superiority takes place and guarantees a form of repayment.

For more ideas on the economic role of profit, see also my book review of Schumpeter’s book on Capitalism and my notes on Kling’s book on Specialization and Trade. The style is very different but there’s some good food for thought in there too.

Need to expand, again, and again.

Back to the book. To conquer, you need to plan.

for starters, you need to plan the “survival” of your business over the next decade. But there’s more. You also need to plan the building of a brand, to create proprietary technology, network capabilities, economies of scale and all that. Oh, and of course, you need to plan the creation of something people will see as valuable because it is new. You need to plan for exponential progress (in contrast with marginal progress which brings nothing).

You need to plan the way you will monopolize attention. And you need to plan your own expansion, always a little more than expected.

Disruption.

I said earlier that, in Zero to One, Peter Thiel goes against mainstream ideas. That’s particularly the case with regards to disruption.

When you read around, the idea of disrupting and changing everything is very common. See Kawasaki’s Rules for Revolutionaries for example.

But Thiel doesn’t agree. To the contrary, his idea is that disruption is nothing more than a Silicon Valley obsession comparable to a “self-congratulatory buzzword”.

The point, in other words, is not to disrupt everything. It is to improve the old and make money without trying to re-do everything. Revolutionizing the 21st century is about being smart.

Let’s get back to Paypal for a sec. Paypal is one of the revolutionary ideas as far as modern banking is concerned. But Paypal didn’t try to challenge the big banks frontally. They expanded the reach of an old market and gave people a way to think (and trade) more efficiently.

Said differently? Disruption is a matter of struggle and frontal confrontation. Disruption is a matter of beating the competition. In contrast, Thiel’s Zero to One approach to doing business is about “avoiding the competition as much as possible”.

The last mover’s advantage.

This brings the interesting question of first-movers and last-movers.

There are different ways to see the “when to start” dilemma. Take Guillebeau’s book on The $100 Startup for instance. That book tells the stories of numerous unexpected entrepreneurs who never planned and just went for it. Because they needed to. In contrast, Thiel’s Zero to One view is that acting last is a chance to make “the last great development” nobody thought about.

The discussion on competition is overall very interesting. I honestly had a great time reading it. For more, just get the book and see for yourself!

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My Zero to One summary – Theme #3:  Being successful.

The third big theme in Zero to One is success. How to get there, in fact. Again, Thiel deals with this theme in various ways.

Planning.

First, Thiel writes about success not being “a lottery ticket”.

The underlying topic here is the art of handling uncertainty, especially in a pessimistic environment. That part of the book is both scary and funny, but Thiel comes up with interesting tips.

For instance, although today everyone lives in the instant, Thiel goes for long-term planning. Startups aren’t a matter of chance according to him. Again, startups are an opportunity to plan for tomorrow and the day after that.

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Peter thier zero to one summary book summary book review I'll make you think smart

Investing (well).

Thiel also explains the importance of following the money – and again the idea makes sense! “Money makes money”, as he writes, yet again Zero to One goes against mainstream ideas.

Normally, what we read and hear is that diversification is a sound way of managing cash. Right?

In his experience as a Venture Capitalist, however, Peter Thiel sees portfolio diversification as a great way to invest in” flops”.

His view is straightforward: invest in the right companies and make cash. But don’t try to diversify or you won’t make any profit.

He has two rules to offer, as a matter of fact. The first is simple: seek a return on your investment, even if it eliminates most investment opportunities.

The second rule is even simpler: there is only one rule to apply! Invest in future monopolies and seek a return on your investment.

Thiel calls this the power law, and the discussion is really worth reading. For more, just get the book and see for yourself.

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My Zero to One summary – Theme #4:  Doing things right.

The next message is that you need to get your startup’s foundations right. Otherwise, that’s too late.

Thiel gives a variety of tips here. For instance, he explores the art (and importance) of finding the right startup co-founder. From the issue of technical skills to the existence of a personal “prehistory”, Thiel covers a lot of ground. If you have a startup or a business project, again, that ‘s worth a read. Just saying…

In a related way, Thiel also writes about the issue of ownership and control. He talks about teams and teambuilding. The topic of full-time commitments is also explored. In short? Stuff you need to get right if you plan on moving from zero to one sooner or later.

Startup culture.

As far as Startup culture is concerned, Peter Thiel talks about a Mafia logic. The idea is funny but again it makes a lot of sense!

“A startup is a team of people on a mission”, he says. Hence, team appurtenance is very important and the startup’s culture is what makes people hold on together.

What that means is… you need planning, and you need to invest time and money into your team. That’s what leadership is about, really.

Recruiting makes part of the challenge because you need like-minded people acting as a “tribe”. Again, get the book for more.

Build it and they’ll come?

I often read stuff about whether your clients will come to you provided that your product is there. That’s called the ‘build it they will come’ theory.

Thiel’s opinion on the issue is again very straightforward. No. They won’t. To get from zero to one, you need to plan for distribution and sales! And you need to make those sales happen.

That means, advertising, convincing, educating, and selling! Will you pay for ads? Will you pay clients up front as Paypal did to attract them? How do you identify your most relevant customers Again, get the book and read the discussion for yourself.

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Technology complementarity?

I was surprised to see Thiel discuss the issue of human and technology complementarity in Zero to One. The issue is usually treated in very specific books – see the books by Klaus Schwab, Martin Ford or Yuval Noah Harari for instance.

>> Related Reading: My technology book review and suggestions.

Thiel’s opinion is interesting, nonetheless, because in contrast with political discussions on technology revolutions, he sees tech as a business complement.

To him, people cannot be replaced by computers because they have intentions. They are not rivals!

Of course, technology will bring more ways to automate things. But the “power of complementarily” is bigger. The real question is not what computers can solve. What matters is how they can contribute. On this very argument, see also my comments on The Industries of the Future by Alec Ross.

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My Zero to One summary – Theme #5:  Moving on with success.

The last big theme of the book is the actual shift from… zero to one. I know, I know, that one was easy but that’s why that title was picked after all.

Thiel sort of tests his teaching there by looking at the potential of clean technologies. Here, he explains why green energies have long been a failure. His tone however becomes a little too judgmental (in my opinion) when he makes fun of people wearing suits and ties leading the company Instead of real engineers in tea tees and jeans.

Thiel also attacks the idea of social entrepreneurship (which he considers as a myth). Again, agree or disagree but that’s food for thought.

The last part of the book deals with the issue of Founders. And, again, Thiel goes for the extreme. In this case, however, the discussion went too far for me. I understand that a startup needs a passionate CEO more than an “interchangeable managers”, of course. But when a successful entrepreneur writes that good startup CEOs must be special people wearing tees or nothing because other guys just have no clue about technology my thought is… how about a slice of humble pie?

I know, that’s how this world works. My friends in this ecosystem told me the same. Tee shirts rule, and the dirtier the better. But still, that part of the book sounded like self-congratulation to me. Perhaps I didn’t get his point, but that’s opinion anyway.

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Zero to One: Thiel’s message.

All in all, I would say that Peter Thiel’s message comes as follows.

  • Startups are a very particular kind of businesses and require a special mindset: what matters is to aim big enough to build the future.
  • Start from the basis and make things right from the beginning. This includes knowing what the market was like yesterday and planning what it will be tomorrow.
  • A good startup product is a new service or technology that has the potential to revolutionize tomorrow. However, revolutionizing doesn’t mean breaking up everything, it means improving something to save time.
  • There is nothing such as healthy competition. Competition is a waste of resource and the only way to deal with it is to beat it. For that, the best way remains to build your own monopoly.
  • To be successful, a startup founder must get the right partner, create a strong startup culture and learn how to invest well and always plan ahead.

food for though I'll make you think smart

My Zero to One summary: Food for Thought.

As usual, let’s finish this Zero to One summary with some food for thought!

I finished my book review with a bit of skepticism, yes. But I know provocation is an argument. So, okay, fine.

Otherwise, I very much enjoyed Zero to One. Thiel has a tone, that’s for sure. But he also has an approach to startups that has the ability to make you think. And that’s all you want from a book.

Creating revolutionary products.

The question of how one can create a revolutionary product or service is well considered in Zero to one, but there are more books worth reading on the topic.

Guy Kawasaki wrote a great book on the topic, for instance. His point is a little long to explain here, but long things short he says that the best way to create tomorrow’s product is to create like a god, churn, churn, churn again, eat (acquire information) and poop (disseminate your conclusion) without forgetting to engage and empower.

>> Related Reading: How to innovate: Guy Kawasaki’s Rules for Revolutionaries.

Another source of inspiration here is a book on Capitalism, by Schumpeter. This book is definitely not a business book, it is an economics books. But it is interesting because by analyzing what capitalism is, Schumpeter explains the importance of entrepreneurship AND the core of an entrepreneur’s job, i.e. creating new products through a process known as creative destruction. Now, the book is a bit of a chew, but have a look at my comments to find out more about this.

>> Related Reading: What makes capitalism, socialism, and democracy for Schumpeter.

A third great source of information and inspiration if you are interested in creating differently is Ed Catmull’s book Creativity, Inc. The author is basically a co-founder of Pixar, and the book explores the complexity of integrating innovation into a business model. Again, have a look at my comments and see for yourself.

>> Related Reading: Creativity lessons from Pixar – Creativity, Inc. by Ed Catmull.

Not for every business.

Be careful though, not to make a confusion between startup creation and entrepreneurship here.

In Zero to One, Peter Thiel really follows an investor type of thinking so what he has to say works in a startup context but wouldn’t necessarily be a match otherwise.

If you want some food for thought on ways to build your own business outside of the startup world then other books might be more relevant.

I mentioned my book review of The $100 Startup by Chris Guillebeau earlier in this book review. This book has the word ‘startup’ in its title, yes. But it really focuses on small business development and only uses the word generically.

>> Related Reading: Business creation: Why raise millions? Chris Guillebeau’s $100 Startup works!

Alternatively, The E-myth Revisited by Michael Gerber is also a very good read. It depends on your expectations, really…

>> Related Reading: Entrepreneurship is tough, Michael E. Gerber’s E-Myth Revisited explains why.

In short!

  • Food for thought?
  • Easy to read?
  • Challenging?
  • Reading time?
  • Must-read book?
3.9

Peter thier zero to one summary book summary book review I'll make you think smart

 

Your turn now, get the book!

That’s it for now, but don’t stop here! My reading notes are meant to give you a very comprehensive overview of the books I read and some food for thought for the month. That’s why I’ll Make You Think SMART is the Kick-Ass Book Reviews blog after all!

Having said that, the next step for you is to keep digging! Remember, books are a cheap way to learn new things and to benefit from the experience of others at no cost. Not to mention the stories you’ll be able to tell after a good read!

So, if my book review picked your curiosity, you only have one choice: go for it! Get the book and READ IT! Don’t postpone or you simply won’t… Usual disclaimer: yes, this is an Amazon Affiliate link which means I’ll get a percentage of everything you buy on Amazon. That supports my blog, and it won’t cost you a cent! Thank you!

As always, I hope you enjoyed this book review! Please let me know what you think in the comment box down the page. Especially if you read the book, if you feel like buying it, or if you simply enjoyed my review!

Cheers!

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