Book Review | Zero to One: Notes on Startups, or How to Build the Future
13 Oct 2019Zero to One: Notes on Startups, or How to Build the Future
Authors: Peter Thiel, Blake Masters
Peter Thiel is the CEO of PayPal, provided funding for LinkedIn, Yelp, partner of founder’s fund that helped SpaceX and Airbnb.
TL;DR Book Review
Key Message:
To successfully run a startup, the founders have to consider seven factors: 1) significant tech breakthrough 2) timing 3) monopoly in small markets 4) right management team 5) effective distribution of products 6) durability of continuous monopoly 7) uniqueness.
Main Points
Seven keys
- Tech breakthrough
- Customers don’t buy incremental improvements
- Make sure you get 10X improvement
- Timing
- Choose the right time to join the competition
- Last mover advantage: the last development to productize the tech is more important than the first development
- Monopoly
- Gain monopoly in small markets with big share is important for high profit
- Facebook started as a social website in Stanford
- Right management team
- Choosing founders are like marrying people
- Balanced ownership, position and control
- Question who owns the company, who runs it, who governs it
- Distribution
- Think how to sell to customers
- Durability
- How the business can grow and endure, generating long-term cash flow
- Companies are valued by future cash flow
- Uniqueness
- Don’t just another internet company in dot com bubble
Thoughts on competition
- Competition drives down the growth and profit space
- So, better to build monopoly in a small market
- With much better tech
- With network effects
- Then scale it
- Then do some branding
Thoughts on lean startups
- Lean startup is a methodology that takes you to a local optimum
- However, the power law focuses on exponential growth
- Plan the blueprint of growth. Company sell shares and merge because they don’t know what to do.
How to recruit people
- Make sure people commit full-time
- Stock option is better than cash
- Either on bus or off the bus
- Great people join because of the mission and team (not cash and stocks)
How to build the board
- A board of three is health for private companies
Thoughts on clean tech bubble
- They failed to answer the seven key questions
- Tesla wins as it has the monopoly