I just finished reading Zero to One by Peter Thiel yesterday. I’m not known for having the sharpest memory, so was planning to re-read it again in a few months. I’m also on a personal challenge to write one article per day for this entire year, and while trying to think of a topic for today’s piece, the dots connected and the idea of writing a summary for the book struck me. Now instead of re-reading, I can just go through the summary in the future!

So what exactly is Zero to One?

Most people, and thus companies, follow the same proven models. They copy what has already worked for others, and often make good money in the process. You can think of this as horizontal growth, which helps expanding the availability of a given product to the general public. It also gives rise to competition, the effects of which we’ll talk in another article.

But significant moments in business only happen once. The next Zuckerberg is not going to build a better version of Facebook, s/he is going to create something new. Going from Zero to One is about building businesses that create new things, it’s about making vertical growth. It is not a formula for success, but an objective observation on the common patterns all great founders share, that even you can learn.

“Doing what we already know takes the world from 1 to n, adding more of something familiar. But every time we create something new, we go from 0 to 1” — Peter Thiel

A company that doesn’t take risk, that doesn’t even try to innovate and stay up to date, is going to fail no matter how much money they are making right now.

The Challenge of the Future

Ask yourself this question, “What important truth do I believe that very few people agree on?” Most people respond with “our flawed Education system” or “climate change.” Both being poor answers, because many already agree on them.

You can think of the future as the immediate progression of the present, but if nothing really changes in between, what’s the difference? Hence, when we talk about “the future”, we’re really talking about a time when things will be drastically different from today. Most answers are just reflections of the present, but the best ones might be the closest insights we can have of the true future.

Many people believe the future will be defined by globalization, but Peter thinks technological advancement matters far more. Because globalization means horizontal progress, making more copies of something, which might uplift developing countries like China, but it also gives rise to new problems that have’t been addressed yet. If everyone in India lived their lives as an average American citizen does today, the result would be environmentally catastrophic.

Let’s talk about startups. Why is it that behind every major advancement in history is a small group of people bound together by a common mission? The easiest explanation is that it’s hard to create new things in big organizations and even harder to do it yourself. You can think of startups as the largest group of people one can bring together to build a different future.

Party Like It’s 1999

Many people remember the 90’s as a prosperous decade that ended with the dot com bubble crash. But on close inspection, we notice that the entire decade was filled with instances of loss, like the recession in 1990, the East Asian financial crisis in ’97, and the Russian ruble crisis in ’98.

There was a reason to worry. Something had to work — a new door that gave us hope for a better future, and from the extreme growth of dot com website in recent times, it was clear that the internet was the only way forward.

There were four big lessons learned from the crash that still guide our thinking today :

Make incremental growth : Grand visions only inflate the bubble, thus small incremental steps are the safe path forward.

Stay lean and flexible : planning is arrogant and rigid, instead companies should stay ‘lean’ and iterate, as if entrepreneurship is agnostic experimentation.

Improve on the competition : Making improvements on already successful products from competitors makes it easier to find your initial customers.

Focus on product, not sales : If your product can not sell itself, it’s not good enough. Success relies on product development, not distribution, hence viral growth is the only way.

But these post-bubble conclusions are not necessarily true. In fact, the opposite seems to have worked for monopolies like Google and Facebook :

Take risk to make giant leaps

Have some plan for the future, rather than no plan

Competitive markets destroy profits

Distribution matters just as much as product development

To build a better future, we’re going to need advancements in technology, but we’ll also need some of that 1999 pre-crash style thinking.

All Happy Companies Are Different

The business version of the above question is, “what valuable company has no one built yet?” This question is harder because, a company can create a lot of value without actually being valuable itself. Take US Airline industry for instance, which provides value to millions of people through out the year, but compared to the profits of Google, which captures a bigger percentage of the value it creates, airline companies are barely valuable. This shows how competitive markets can kill profits.

Monopolies and competitive companies, both lie when it comes to their sales pitch. Monopolies want to avoid attention, make themselves seem powerless. While competitive companies intentionally try to describe their markets as extremely narrow, to give the impression that they dominate it by definition.

Being a monopoly also allows you to think about things other than making money, like taking care of your employees, expanding to new domains, R&D etc. Non-monopolists don’t have this liberty, they are so occupied with their immediate margins that they can’t possibly plan for the long-term future.

A lot of people think of monopolies as evil, which would be true in a static world. But we live in a dynamic world, where it’s possible to invent new and better things. If a monopoly refuses to create and change, that will be dangerous and we’ll be right to oppose them. But history shows that progress happens when better monopoly businesses replace incumbents.