Zero To One By Peter Thiel
*Collaborative post
Peter Thiel is the founder of Paypal, an early investor in Facebook and a venture capitalist with an estimated $4 billion net worth. It should go without saying that the man knows a thing or two about starting and running a successful business. Back in the early 2000s, he was even hotter than Elon Musk, with one board deciding to appoint him instead of the Tesla and SpaceX founder.
Thiel is the author of Zero to One, a book that encourages people to create businesses that create something fundamentally new – not just those that try to rehash existing products with a new brand or slogan – hence the name “zero to one.”
The reason for this isn’t necessarily that it’s a good thing to create something brand new, although usually, it is. Instead, Thiel argues that doing something new makes it much more likely that a company will continue to generate profits into the future.
Importantly, he’s not saying that you need to re-invent the wheel. You can still use all the usual ancillary services you need to run your business, including sites like https://physicaladdress.com. In fact, he encourages that kind of thing. But he points out that unless you depart from the status quo, you’ll be forever in a race to the bottom, trying to cut costs and squeeze profits from ever-tighter margins.
The Importance Of Maintaining A Monopoly
The critical concept in the book is the need to create and maintain a monopoly. You need a business that can’t easily be copied or, to use the language of Warren Buffet, has “a moat.” Thiel points out that this is the only real way to gain control over your price and charge a premium. When you don’t have something fundamentally unique, other entrepreneurs continually chip away at your market advantage, annihilating your profits.
Thiel takes a somewhat controversial on the subject of monopolies. He doesn’t see them as a temporary evil designed to entice people into the market so they create new things. Instead, he sees them as integral to capitalism and the opposite of competition.
In capitalism, the idea is to find a monopoly opportunity, exploit it, and make off with as much money as possible. In competition, profits disappear as new entrants continually whittle them away until there’s nothing left. Entrepreneurs, therefore, according to Thiel, should focus exclusively on creating monopolies and nothing else. There’s no real incentive to start a new company in an existing industry.
The most exciting part of Thiel’s book is his comments on excellence. He argues that people should actively position themselves to become exceedingly good at one thing instead of average at many. In his view, people should do whatever they can to shape their future and avoid becoming generalists or even studying many subjects at school and university.
Zero to One, therefore, is an interesting read for anyone who wants to start a business. It quickly brings you back down to Earth and forces you to focus on what matters. You can read more reviews of the book on https://www.goodreads.com/.
