Zero to One by Peter Thiel, Blake Masters

December 26, 2017
By smitten PLATINUM, Beijing, Other
smitten PLATINUM, Beijing, Other
20 articles 0 photos 1 comment

Zero to One is a widely acclaimed 2014 bestseller by PayPal co-founder and early Facebook investor, Peter Thiel. It’s the first business-related book I’ve ever read, so I have no preexisting frame of reference whatsoever. Moreover, I have no experience in running a startup, so I’m also incapable of testing just how well Thiel’s advice works in practice. Up to this point, your expectations for my review should be below the lowest. But before you turn away—this book has completely transformed my opinion of startups and businesses. In the past, I was admittedly prejudiced against people devoted to business and finance—they seemed skill-less and out to get me. Reading how the world’s most successful companies—Tesla, Facebook, PayPal, etc.—have made it to the top, however, has opened my eyes to this field of brilliant innovation and technological development that’s actually exciting to be a part of. For me, this is huge progress—my very own zero to one, if you will.

To make sense of Thiel’s suggestions and assertions, first understand that “zero to one” means innovation, not copying existent cases of successful businesses. Throughout the whole book, Thiel cites an abundance of detailed examples he’s familiar with, which is solid proof that the principles of running startups that he’s put forward are effective. However, it’s apparent that his biased perception of non-American businesses have severely limited the range of cases he can draw from. In fact, he repeatedly denounces the Chinese economy and industrialization, stating that China’s recent development isn’t sustainable because it’s a mere duplication of everything that’s proved to work in the West. In other words—China has no innovation. Obviously, Thiel’s stubborn and much too definite attitude restricts his case studies to all-American startups.

The main premise Thiel builds this book on is that monopoly and competition are two perfect opposites (the validity of which has been widely questioned and debated). Assuming this is correct nonetheless, it’s advised that starter-ups aim to build their businesses into monopolies—few or no notable competitors, innovative technology/service, and stand the test of time. He makes a valid point that nearly all of the most successful companies in the world are monopolistic in a sense, but the reasoning behind it is noteworthy. According to Thiel, the point of being a monopoly is being able to avoid competition, thus avoiding having your profits drained out by competitors. This means that he supports the idea of monopolies retaining high profits by manipulating prices however they want, which is to me, taking (slight) advantage of consumers. Another suggestion he advocates is going out of your way to avoid competition, which I’m also skeptical about—a little healthy competition never hurts, does it?

My favorite theory from this book is on how to gain a strong foothold in the business field—start with a small, but very specific group of customers, and build upward on that strong base. We always see new businesses with over-the-top plans to provide a certain service for everyone. But “everyone”, in the very beginning, is equivalent to “no one”. Instead, like how Facebook started with college students, targeting a small demographic with a distinctive shared characteristic (or, in the case of startups, a shared need) will build a stronger and more lasting foundation. This works not only in businesses but also in personal development—if you want to become strong in multiple fields, start with a few and gradually build your way up.

Breakthrough technology is also a key to building the future, and possibly the most nerve-wracking. Thiel states that in order to gain the “last mover advantage”, a startup must provide consumers with the last great innovation in the field—at least 10 times more efficient or convenient than the previously available technology. Incremental improvements won’t work because competitors can easily catch up. This is intimidating to think about since it’s not every day that we come up with creative pitches for revolutionary new businesses. But intuition tells us that this truly is the secret to building a lasting, durable, and influential empire. It’s nice that readers can have this quantitive standard to measure themselves against, but I wonder whether this is just an attempt to sound esoteric and contrarian on Thiel’s part.

In conclusion, this was an eye-opener for me regarding my past perception of businesses. I’m glad I took the time to probe into this unfamiliar field I’ll surely gain more knowledge about in the future.

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