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Starting and building

Peter Thiel

Zero to one

Peter Thiel (Contemporary · 1967–) — Zero to one.

Starting and buildingModernZero to one

What actually happened?

In 2004 Facebook was a few months old and looked to most people like a social directory for Harvard undergraduates. He put in half a million dollars for a bit over ten per cent. By the 2012 listing that half million was worth around a billion. What he had seen was not that students liked it. It was that once a network of that shape closes, leaving costs the user everything and nothing else can be substituted for it — which is his definition of the only kind of business worth owning.

Zero to one, not one to n

Going from one to n is copying: more of something that exists, in a crowd, at thin margins. Going from zero to one is making a category that was not there. Almost all commerce is the first kind. The second is rare, and when it works the value is not competed away because there is nobody to compete with yet.

A better version of an existing product is a fight over an existing pool. A thing people had no word for last year is not.

The power law is not a slogan about focus

Venture returns are not normally distributed: a single investment can return more than everything else combined. The consequence is uncomfortable — spreading effort evenly for the sake of balance guarantees you miss the only outcome that mattered. Back the one you believe can be that, with everything.

The portfolio designed so nothing can go badly wrong is also designed so nothing can go extraordinarily right.

Definite optimism

He divides views of the future by two axes: optimistic or pessimistic, definite or indefinite. His complaint about the present is indefinite optimism — a belief things will improve with no plan for how. Definite optimism is having an actual picture of the thing you intend to build, which is what makes long projects possible at all.

We are excited about the space is indefinite. We are building this specific thing and it will take six years is definite, and only the second can be worked on today.

How do I use it today?

Run the question on yourself: what important thing do you believe that most people disagree with? If you can give a real answer with evidence behind it, that is where your advantage probably is. If you cannot, your judgement is currently the room's average.

Deep read

Competition is for losersBoth sides lie, in opposite directionsListen to how a company draws its market, then invert itThe important truth few agree withThe question he asks in every interviewMost people believe X. What if the opposite is true

Read alongside

Paul GrahamOne starts from the structure of the market, the other from the hundred people in front of you. Duan YongpingThiel says be first into a category nobody believes in; Duan says be last into one somebody else has already proved. Both are refusals to fight in a crowd, from opposite ends. Jensen HuangThiel asks what important truth very few people agree with you on. Building CUDA in 2006, when the industry was certain a graphics chip was for drawing pictures, is a live specimen of the answer. The Innovator's DilemmaTwo sides of one event: the dilemma explains why a good company loses, Thiel tells you how to be the thing that makes it lose. Kevin KellyThiel wants a monopoly on a large market, Kelly wants depth with a thousand people — both routes avoid competition, one by scale, one by relationship. Finite and Infinite GamesThiel's monopoly is a finite game won completely, and Carse would point out that the moment you have won, that game is over.

Further

Steve Jobs Sun Tzu Warren Buffett Elon Musk Paul Graham Naval Ravikant Thomas Schelling Jensen Huang The Innovator's Dilemma Wang Xing Technological Revolutions The Sovereign Individual Albert Einstein

Lines to keep

The best businesses are the ones that do not compete.