For anyone interested in entrepreneurship and startups, you are going to hear this publication recommended over and over again. There is a fantastic reason behind that. Zero to One includes many fantastic notions that can change how you see technology and business.
I think you’ll find these ideas useful even if you’re a novice or aspiring entrepreneur. I particularly enjoyed his insights into choosing a target market and how to make a space in the market that allows you to avoid competition.
Who is Peter Thiel?
Peter Thiel (his official site ) is an entrepreneur, investor and billionaire.
- In 1998, he co-founded PayPal with Elon Musk. Four decades later, it had been sold to eBay for $1.5 billion.
- In 2004, he was Facebook’s first external investor. He purchased 10.2percent of the company shares for a half-million bucks. When Facebook went people at 2012, he offered most of these shares for over one billion dollars.
- And he’s made early stage investments in additional leading technology startups such as SpaceX, Airbnb, LinkedIn, Yelp and Spotify.
- In Stanford University, Peter Thiel gave a series of lectures about entrepreneurship. Pupils loved the course so much that he chose to flip the lectures into this publication. So today we can all benefit from Thiel’s exceptional business experience. Let us start!
1. Avoid Competing: Exceptional startups offer something unique.
Most people see business as cut-throat competition. And you do often hear business experts talk about winning market share and outperforming their rivals. However, Peter Thiel says creating ultra-successful businesses like PayPal and Facebook is really about avoiding competition and creating natural monopolies.
A company creates a (legal) monopoly by:
- Solving a unique problem, and thereby creating a whole new category of product. For example, Airbnb allowed people to rent out extra rooms in their home for the first time.
- Do something so incredibly well that nobody can offer a close replacement. For example, Google has invested so much into their search engine that it’s almost impossible for anyone to offer a better solution.
Usually we feel the word monopoly is negative and possibly illegal. However, even the government recognizes the value in some monopolies by enforcing patents and copyrights. Monopolies often provide large profit margins, which allows the company to treat their employees very well. That’s why the benefits provided by some Silicon Valley companies are so great.
On the other hand, when a company is stuck competing with other companies who offer basically the same solution, their profit margins shrink to nothing. One of Thiel’s examples is airlines, which make less than 1% profit from each flight ticket. As a result, it’s a very difficult business to be in.
2. Make the New: Great companies don’t do incremental improvement
Most business plans are based on incremental improvement. In other words, you take something which’s working and make it somewhat better. Or you just take something which’s working in one place and then spread all around the nation. It is about going from 1 to 2, or 2 to 3, etc.,. For instance, there used to be a hamburger store, then the McDonald’s brothers made a much better and faster burger shop. There was just one McDonald’s, then Ray Kroc spread new locations all around the area.
But, Thiel says really great companies do something entirely new. They offer something unique that hasn’t been provided before. It is about going from nothing to something, from 0 to 1. As illustrations, Thiel says Microsoft, Google and Facebook belong into this class.