Monday, January 4, 2016

Book Review: "Zero to One", Peter Thiel, 2014

I liked this book a lot. It inspired me to write about "How to go for 10X". That blog post and the "Zero to One" book I mentioned there got covered better than me by Todd Hoff at his High Scalability blog. I am including my brief and unstructured notes on Zero to One book here just for the record.

The main theme in the book is: Don't do incremental business, invent a new transformational product/approach. Technology is 0-to-1, globalization is 1-to-n. Most people think the future of the world will be defined by globalization, but the book argues that technology matters more. The book says: Globalization (copying  and incrementalism as China has been doing) doesn't scale, it is unsustainable. That's a hard argument to make, but a softer version of that argument is: "technology creates more value than globalization".

A related theme is that you should aim to become a monopoly with your transformational product/technology. If you compete, everybody loses: competitive markets destroy profits. (That is why a lot of restaurants fail.) A smarter approach is to start small and monopolize your area. Of course, over time monopolies also fade and outdated, so you should strive to reinvent another business.

This book also has a lot of interesting counterintuitive ideas. When the book
told me about these items, I thought they made sense:

  • make incremental advances
  • stay lean and flexible
  • improve on the competition
  • focus on product not sales

NO! Peter Thiel says that these lesson have become dogma in the startup world, and yet the opposite principles are probably more correct.

  • it is better to risk boldness than triviality
  • a bad plan is better than no plan
  • competitive markets destroy profits
  • sales matter just as much as product

It is easy to fool yourself to think you have an innovative thing. If you are defining your business in terms of intersections, it may not be that innovative, and maybe it shouldn't exist in the first place. It is hard to find something truly innovative/transformative, and you will know it when you find it. It will open a new market and will monopolize that market. If you are a monopoly, you try to downplay and define yourself as a union of many markets. Google is a monopoly in search, so it lies to underplay this by casting itself as a IT company.

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