Monday, March 16, 2015

Zero to One: Notes On Startups, Or How To Build The Future by Peter Thiel

I loved this book as it was full of new and creative thinking and ideas. I also think the ideas are very valid, for this economy and for this generation. This book should be required reading for all business students or people considering the start of a new business.

Shown below are my bulleted takeaways from this book:
  • Every time we create something new, we go from 0 to 1
  • Unless they invest in the difficult task of creating new things, American companies will fail in the future the matter how big their profits remain today.
  • Zero to One is about how to build companies that create new things.

  • Progress can take one of two forms. Horizontal or extensive progress means copying things that work going from 1 to n. Vertical or intensive process means doing new things going from 0 to 1.
  • Our educational system both drives and reflects our obsession with competition. Grades themselves allow precise measurements of each student's competitiveness; pupils with the highest marks receive status and credentials. We teach every young person the same subjects in mostly the same ways, irrespective of individual talents and preferences. 
  • For Hamlet, greatness means willingness to fight for reasons as thin as an egg shell: anyone would fight for things that matter; true heroes take their personal honor so seriously they will fight for things that don't matter. This twisted logic is part of human nature, but it's disastrous in business.
  • Simply stated, the value of a business today is the sum of all the money it will make in the future. To properly evaluate business, you also have to discount those future cash flows to their present worth, since a given amount of money today is worth more than the same amount in the future.
  • Comparing discounted cash flows shows the difference between low growth businesses and high-growth startups at its starkest. Most of the value of low growth businesses is in the near-term. Technology companies follow the opposite trajectory they often lose money for the first five years: it takes time to build valuable things and that means delayed revenue. Most of a tech company's value will come at least 10to 15 years in the future.
  • Bankers make money by rearranging the capital structures of already existing companies. Lawyers resolve disputes over old things are help other people structure their affairs, and private equity investors and management consultants don't start new businesses; they squeeze extra efficiency from old ones with incessant procedural optimizations. It's no surprise that these fields attract all this portion the numbers of high achieving Ivy Leaguers optionality chasers; what could be a more rewarding for two decades of resume building them a seemingly elite process oriented career that promises to “keep options open”?
  • We are more fascinated today by statistical predictions of what the country will be thinking in a few weeks time then by visionary predictions of what the country will look like 10 or 20 years from now.
  • US companies are letting cash pile up on their balance sheets without investing in new projects because they don't have any concrete plans for the future.
  • The greatest thing (Steve) Jobs designed was his business. Apple imagined and executed definite multiyear plans to create new products and distribute them effectively. Forget “minimum viable products" – ever since he started Apple 1976, Jobs saw that you can change the world through careful planning, not by listening to focus group feedbacks or copying others' successes.
  • A startup is the largest endeavor over which you can have definite mastery. You can have agency not just over your own life, but over a small and important part of the world. It begins by rejecting the unjust tyranny of Chance.  You are not a lottery ticket.
  • Every university believes in "excellence" and hundred page course catalogs arranged alphabetically according to arbitrary departments of knowledge seem designed to reassure you that 'it doesn't matter what you do, as long as you do it well'. That is completely false. It does matter what you do. You should focus relentlessly on something you're good at doing, but before that, you must think hard about whether it will be valuable in the future.

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