Book Review of Zero to One by Peter Thiel
How does one create great breakthrough companies? the once in a generation kind.
What is it that made the Microsoft and the Apple’s of the World?
How did Google and Facebook become more valuable in a decade than majority of biggest companies running since century combined?
What is it that leads to creation of such huge progress for some companies in short span of time?
Zero to One is about creating such companies that create new things on a massive scale!
Humans don’t create radically new things based on existing choices, but invent by creating new Technologies.
The progress that we make are generally categorized as :
A. Horizontal progress – taking existing products to new places i.e. wider Markets.
B. Vertical Progress – Technological Improvements – creating new & better ways of doing things.
Lot of this Vertical progress comes from Startups generally as old companies don’t move fast for new ways & technology and Individuals don’t create new Industry, all by themself.
Asking an important question
“What valuable product/ service is nobody building?”
– if the startups are able to create & provide value to its customers in a technologically advanced way that is 10 times better than anything else currently offered, these startups lay the foundation for making a Monopoly.
Google offered a search engine that was not marginally better than existing search engines but manifold superior.
The success of Business is directly proportional to providing Unique value that no other company is close to offering and capturing the benefits of that great product. This creates sustainable profits which are not possible in perfectly competing business with similar products. That’s because companies have to fight Price wars, indulge in heavy Marketing/ selling expenditure and they can’t focus on building Great products that bring long term value. This is the primary reason Monopoly companies always do great and are able to build more and more Impactful products over time. Eg. Microsoft with Windows and MS Office or Apple with Ipod, Macbook, Iphone, Ipad etc
The 4 definite characteristics that make companies Monopolistic are:
- Proprietary Technology: the technology is multiple times better than anything existing eg. Google.
- Network Effects: the more number of people using it, more valuable it is. Eg. Facebook.
- Scalability: once developed, it can easily be used 1 million people just as it can be used by 10 people eg. Microsoft – software once developed can be easily be replicated.
- Branding – this is the result of creating Company’s name and following so impactful that customers prefer that brand for any products they build eg. Apple enjoys a big brand name.
Every one of today’s most famous ideas and companies were once unknown, small and very few people understood its potential.
Thus, keeping these things in mind its important to Start small with 1 segment or even just 1 Product – Dominate it and then keep on expanding to adjacent Markets.
Its best to look for places nobody else is focusing on large scale. Only by demanding to learn about such Market gaps and forcing ourselves to act on those opportunities can we create something so powerful it changes the world for forever. Eg. Airbnb created a marketplace in hospitality space for travelers to stay at homes and for home owners to effectively lent out their homes when nobody thought of this. Uber created a transportation giant by combining technology in transportation space in an industry which never imagined anything with technology.
There are still vast opportunities out there that can be revolutionized with technology and these are the kind of companies we should look to create that take things from Zero to One rather than one to n. This is the message Peter Thiel tries to convey by Zero to One.