Peter Thiel, the tech entrepreneur and investor, has been much in the news since he went all in on his support of Donald Trump. He’s also known as a contrarian investor, a libertarian and a mentor of the PayPal Mafia. Most recently he’s also been in the news for saying that Apple’s best days are behind it – which I totally agree with but more on that later!
Let’s start with a review of the book, Zero To One: Notes on Start Ups or How to Build The Future. It was written in 2014 but it’s still an absolute must-read for anyone involved in business, start-ups, new product development and technology. It provides a fascinating look into the mindset of Silicon Valley entrepreneurship. The book is a quick read (200 pages), succinct and on-point although I wasn’t fully immersed until about 30 pages in – and then I couldn’t put it down.
Here are the 5 points that especially resonated with me.
Strive to create a product that is clearly 10X better than the competition. If not, you will be an also-ran and face endless, debilitating competitors. This is an especially important consideration when evaluating Apple 2017 vs. Apple 2007 – and why I agree with Thiel that the age of Apple is over. None of their recent launches from watches to Beats to iPhone 7 with its inconvenient dongle are 10X better (Apple Pay, however, I LOVE.) This past year saw year-over-year iPhone sales decline for the first time and CEO Tim Cook got a 15 percent pay cut.
Read on below for points 2-5:
2. Monopolies are Preferable to Competition:
By creating a truly differentiated business you will be far more likely to succeed. Companies that are in direct competition spend all their energy and resources competing and everyone eventually loses.
3. Start Small:
Develop products specifically for small communities of power users who are served by few or no competitors. From there you can scale up, as long as you have the advantages of proprietary technology (your secret sauce) and network effects (the tendency of a service to become more valuable as more people use it). Examples include Facebook which was created for Harvard students, then scaled up for other universities and eventually for EVERYBODY. PayPal followed a similar trajectory starting for eBay power sellers.
I found this chapter especially intriguing e.g. he talks about how startups like Airbnb and Uber harnessed the secrets of spare capacity that is all around us. They saw untapped supply and unaddressed demand where others (like me!) saw nothing at all.
The best place to look for secrets is where no one else is looking. He gives an example of nutrition which matters to everybody but is a field you can’t major in it at Harvard. Most top scientists go into other fields and most of the big studies on nutrition were done 30 or 40 years ago – often funded by Big Food rather than real science.
Thiel does a great job of explaining why salesmanship is so important for any startup and why engineers and tech “nerds” hate it because they perceive it to be superficial. Per Thiel, without sales skills, nothing happens. His advice: learn from the master salesman of them all in Silicon Valley, Elon Musk!