Bookcover - Zero To One

Zero To One

by Peter Thiel

Rating: 10/10


One of the best books in existence. Highly creative, highly unique, and extremely thought-provoking. How startups work, and how they don't. Why good ideas are important, and how to find them, and why we have to build the future ourselves, or else it won't happen.

Main Ideas

  • The distinction between definite vs. indefinite optimists/pessimists. We need to believe that it is possible to build a better future. But also know that without our work the future will be grim and that therefore we should go out and build the best future we can.
  • This work needs 0-1 thinking. It's not about making more of the same, improving things incrementally. It's about being unique and useful in novel ways. It's about innovation. It's about being a chef instead of a cook.
  • Finding truths not yet widely known is the best way to create startups.
  • Monopolies enable innovation. Every startup should aspire to become a monopoly.
  • Design and a Plan are important. The future might be uncertain, sure, but through careful consideration, and finding out what is true, we can prepare for that uncertainty and overcome it. But we need to be bold enough to stick out our necks and try. Otherwise, there is no going from 0 to 1.
  • Competition kills businesses.
  • Sales and Marketing matter just as much as do products. Being good at sales is hard.
  • 7 Questions a business has to answer
  1. The Engineering Question: Can you create breakthrough technology instead of incremental improvements?
  2. The Timing Question: Is now the right time to start your particular business?
  3. The Monopoly Question: Are you starting with a big share of a small market?
  4. The People Question: Do you have the right team?
  5. The Distribution Question: Do you have a way to not just create but deliver your product?
  6. The Durability Question: Will your market position be defensible 10 and 20 years into the future?
  7. The Secret Question: Have you identified a unique opportunity that others don't see?
  • The only alternative to constant growth and innovation is stasis and death. Equilibrium means heat death, which means perishing.
  • Let's go for growth and innovation. This means the path of hard work, sweat and tears, and boldness, but it's the only path.

Even though these are going to be quite detailed notes – go and buy the book. It's worth it.

Detailed Notes


Every moment in business happens only once.

Don't copy the successful people that came before you. Do something new. Creation is going from 0 to 1. Copying and improving an existing thing is going from 1 to n. 0 to 1 is working miracles. Pushing the boundaries of what is possible. And it's what every company has to do to not go extinct.

Humans are distinguished from other species by our ability to work miracles. We call these miracles technology.

There is no template to create new things. Thinking from first principles is the only way.

Chapter 1 - The Challenge of the Future

Question: What important truth do very few people agree with you on?

The future is simply the set of all moments yet to come.

The future is based on the present and a new way of looking at the present is looking into the future.

Globalization is going from 1 to N on the macro scale. It's horizontal progress and easy to imagine. Just copy and scale what's there already. 0 to 1 is harder to imagine and even harder to implement.

Globalization without technological progress is unsustainable.

Better technology doesn't happen automatically. We have to create it.

Startup Thinking

A startup is the largest group of people you can convince of a plan to build a different future.

Startups need to question things and think of new ways to do things.

Chapter 2 - Party Like it's 1999

Companies exist to make money, not to lose it.

The first step to thinking is to question what we think we know about the past.

A Quick History of the '90s

The internet seemed the only way out of an economically slow and somewhat disastrous decade.

Mania: September 1998 - March 2000

Irrationality was rational given that appending ".com" to your name could double your value overnight.

PayPal Mania

Lessons Learned

The result of the dot com bubble bursting was a disillusionment with the future. People stopped believing that the future could be changed for the better and globalization replaced technology.

From the burst 4 ideas emerged in the startup scene:

  1. Make incremental advances.
  2. Stay lean and flexible.
  3. Improve in the competition.
  4. Focus on products, not Sales.

In short, globalize, don't innovate. The opposites are probably closer to the truth.

  1. It is better to risk boldness than triviality.
  2. A bad plan is better than no plan at all.
  3. Competitive markets destroy profits.
  4. Sales matter just as much as products.

The question to ask:

How much of what you know about business is shaped my mistaken reactions to past mistakes?

The most contrarian thing of all is not to oppose the crowd but to think for yourself.

Reminds me of Kant. Kant thought that people dislike it if others think for themselves and are not thinking about themselves most of the time because that means work and people are more inclined to be lazy than to think.

Chapter 3 - All Happy Companies are Different

What valuable company is nobody building?

Creating value is not enough — you also need to capture some of the value you create.

Market competition regulates prices to an optimum where no company makes any profit margin beyond what is necessary for that company to offer its services. That's called perfect competition and it stands in contrast to a monopoly.

A monopoly owns its market, so it can set its own prices.

Monopolies can exist for different reasons, but the only interesting (and morally reasonable one) is that of a monopoly arising because of a technological advantage.

If you want to create and capture lasting value, don't build an unidfferentiated commodity business.

Lies people tell

Both types of companies lie about the state of things, hence there is a divide between the actual and the perceived difference between monopolies and competition-based companies. It's bigger And more black and white binary than most people think.

Monopoly Lies

Monopolists lie to protect themselves.

Google has a monopoly on search engine traffic (that's why the word "to google" exists) and is monetizing that well. But it's framing itself as "just another tech company" to avoid attention.

Competitive Lies

Non-monopolists say the opposite. They are exceptional, in a "league of their own". They bend the market definition they play in, to look as if they are dominating it, even if they don't dominate the real market at all and only make up a very small fraction of it.

Starting a new South Indian restaurant is a hard way to make money. If you lose sight if competitive reality and focus on trivial differentiating factors — maybe you think your naan is superior because of your great-grandmothers recipe — your business is unlikely to survive.

Monopolies frame their markets as unions of several large markets. Non-monopolists as intersections of small markets.

Ruthless People

The competitive ecosystem pushes people toward ruthlessness or death.

In business,money is either an important thing or it is everything.

Monopolies can afford other considerations than money because they have enough margins to not exploit every last drop of efficiency.

Monopolies can think about building the future because they are not bound to the daily struggle of survival.

Monopoly Capitalism

Creative monopolies aren't just good for the rest of society; they're powerful engines for making it better.

Monopolies have the freedom to invent a better future.

Monopolies drive progress because the promise of years or even decades of monopoly profits provides a powerful incentive to innovate.

Perfect competition is modeled after physics and uses the same mathematical tools. The Physics version of perfect competition, an equilibrium that is easy to model is called the heat death of the universe. Perfect competition means literal death and stasis.

Opposite Anna Karenina's saying that "all happy families are alike; each unhappy family is unhappy in its own way." Happy Companies are vastly different monopolies and unhappy ones are those that couldn't become monopolies and died in the mire of perfect competition.

Chapter 4 - The Ideology of Competition

Competition is an idealogy — the ideology —that pervades our society and distorts our thinking.

Schools make us believe in competition because that's how they are set up, the ones good at getting grades are rewarded for those who aren't.

Higher education is the place where people who had big plans in high school get stuck in fierce rivalries with equally smart peers over conventional careers like management consulting and investment banking.

The opportunity costs for smart people trying to climb the wrong hill are enormous. The concept of the wrong hill, of shadow careers, of optimizing for the wrong thing (usually money/success) is eating the dreams of grand futures away slowly, leaving humanity worse off than it could be. The cleverest people become stuck in the stupidest of games, wasting away their life's in things that are ultimately meaningless because they don't move the world (but are still extremely hard to get into because of their extreme competitiveness)

War and Peace

Competition is like war, allegedly necessary, supposedly valiant, but ultimately destructive.

Language in economics is invaded by words designed for war. Headhunters, sales forces, captive markets, making a killing etc.

Amid all human drama, people lose sight of what matters and focus on their rivals instead.

Microsoft fighting against windows, and both being overtaken by Apple. "Wenn zwei sich streiten freut sich der dritte".

War is a costly business.

Don't fight wars if you can avoid them. If you have to strike hard and end the war as soon as it started. Don't get lost in the jungle of competition.

Chapter 5 - Last Mover Advantage

The value of a business today is the sum of all the money it will make in the future.

Tech companies first often lose money because they capture value in the long run. It's expensive to create things of true value.

For a company to be valuable it must grow and endure.

The endurance part is much harder to measure and gauge accurately. An important question to ask:

Will this business still be around a decade from now?

Characteristics of Monopoly

  1. Proprietary Technology that's at least an order of magnitude better than everything else out there. An easy way to get there is to invent something new. The improvement of going from 0 to 1 is theoretically infinite.

  2. Network effects. Usefulness increases when a lot of people use the product. Once a critical mass is reached a monopoly has been formed.

  3. Economies of scale, monopolies get better when they grow. Scaling is hard and thinking about scale should be part of a monopoly plan for a startup. Software is easy to scale.

  4. Branding, a brand can't be replicated, hence a strong brand by definition has a monopolistic touch. However, branding alone is not enough to sustain a monopoly. It needs to be combined with the other 3 ideas.

No technology company can be built on branding alone.

Building a Monopoly

Choose the market carefully, and expand deliberately.

Start Small and Monopolize

Every startup is small at the start. Every monopoly dominates a large share of its market. Therefore, every startup should start with a very small market.

The perfect target market for a startup is a small group of particular people concentrated together and served by few or no competitors.

Scaling Up

Add new small markets, similar to the one(s) you already dominate. This way scale. Make it a part of the founding story.

Don't disrupt

The act of creation is far more important than the old industries that might not like what you create.

Avoid competition. Getting lost in competitive struggles and the mindset that goes along with it, takes its toll.

The Last Will Be First

Last Mover is the company that gets the monopoly. The last improvement that nobody can contest and cements the monopoly in place is what people should try to create.

Business is like chess. You must study the endgame before everything else.

Chapter 6 - You are not a lottery ticket

Success is not a matter of luck. Successful people have an easier time, due to networks, skills, money etc.

We can't run controlled experiments about the past and whether companies were just lucky or did something that was inevitably leading to them becoming successful monopolies.

Statistics doesn't work when the sample size is one.

No one pretended that misfortune didn't exist, but prior generations believed in making their luck by working hard.

If luck is all there is, what's the point in reading books and acquiring skills?

Can you control your future?

If we believe the future is uncertain and we can't plan for it, then we don't plan for it and the whole thing becomes a self-fulfilling prophecy.

Instead of pursuing many-sided mediocrity and calling it "well-roundedness," a definite person determines the one best thing to do and then does it.

4 ways of seeing the future.

  1. Indefinite Pessimism: Looking out on a bleak future and not knowing what to do about it. Europe falls into that category. If the future is bleak and there is nothing to be done about it, then we should enjoy the present. And hence hedonistic culture prevails in Europe.

  2. Definite Pessimism: The future can be known, it is bleak, but we can prepare for it to be not as bad. China belongs to that category. Economic growth happens, but not fast enough and people fear disaster looming in the future.

  3. Definite Optimism: The Future will be better, but only if planned and worked hard for. That's the enlightenment attitude that leads to industrial civilization as we know it today. Bold plans are important. Bold means they are positive about what can happen in the future. Plans mean that people will work hard to make it work

Big plans for the future have become archaic curiosities.

  1. Indefinite Optimism The future will be better, but we don't know how exactly it will be better... The prevalent thinking in America. Because people grew up in a society where things got better "on their own" and never questioned how things actually got better and never realized the hard work, their previous generations and parents put into making things better. They just know how to reorganize wealth, not how to create it from the ground up. Following a career that holds "options open" became a respectable and then an almost necessary thing.

A whole generation learned from childhood to overrate the power of chance and underrate the importance of planning.

Malcolm Gladwell is given as an example, but others such as Matt Ridley with his " The Evolution of Everything" or even Daniel Dennett thinking about the end of "top-down" design come to mind. Or the craziness of the movie Interstellar, where people stopped dreaming about a crazy future and stopped acting on that future as well. I think I am quite guilty of that attitude. Fall in-between different of these camps, mostly hovering between indefinite optimism and indefinite pessimism. My thinking is distorted by the things I have read and I don't believe I can make a difference anymore. I don't believe in my own power to change the future for the better. And that's crazy. That's the allure of a book like Atlas Shrugged. It keeps this thought of Definite Optimism at the top of awareness. It's what makes it so powerful. Another thing that comes to mind is the book Finite and Infinite Games and the idea of zero vs. positive-sum games. As well as the attitude of people like Naval Ravikant.

They know they can create wealth and they have confidence because they know how to plan for the future. The same is true for Elon Musk and all the other successful people like them. This type of human activity, of daring to venture further, of hard work and ethos, that's what's awesome about humans. That's the kind of spirit I want to have. I want to turn into a definite optimist.

Our Indefinitely Optimistic World

Indefinite Finance

Money is a means to an end in a definite future.

In an indefinite world there could be a better opportunity lurking around the corner and to not miss out on that opportunity you spread and buy in everything you can, admitting that you have no idea what the future is going to entail. You admit that the future is beyond your control.

Indefinite Politics

The government has become incompetent to organize plans to improve the long-term definite future of its society. It just hatches risk, as people do in finance.

The more I think about what he's writing here, the more I have to think about how crazily analogous the world we live in is to the one described in Atlas Shrugged and how that is a bitter pill to swallow. There is an extreme shortage of humans of the likes described in Atlas Shrugged... And that's a pity, and I am part of the problem, clever enough to become such a person, but too scared to dare it. That's the scary part of the Shadow Careers article by Nat Eliason and the question posed by it.

Indefinite Philosophy

Philosophers today lack specific visions of the optimistic future. They are indefinite optimists.

Book Recommendation: A Theory of Justice by John Rawls

Arguing over process has become a way to endlessly defer making concrete plans for a better future.

Just thinking of the Master Plan document of Tesla in this context gives me goosebumps. That's the secret sauce WaitButWhy describes, that's the difference between companies started by Elon Musk and other people and why he is less likely to fail. He has crazy dreams and even more importantly specific plans to bring those dreams into reality... And then proceeds to do just that.

Indefinite Life

Today our society is permeated by the twin ideas that death us both inevitable and random.

Biotech startups are an extreme example of indefinite thinking.

Biotech startups need actual engineering plans for creating value in the long run, with a more hacker-style mindset. They need to become definite optimists.

Is Indefinite Optimism Even Possible?

Indefinite optimism seems inherently unsustainable: how can the future get better if no one plans for it?

Darwinian evolution of ideas? Probably not.

Leanness is a methodology, not a goal. Making small changes to things that already exist might lead you to a local maximum, but it won't help you find the global maximum.

A company is the strangest place of all for an indefinite optimist: why should you expect your business to succeed without a plan to make it happen?

In startups, intelligent design works best.

The Return of Design

Steve Jobs designed his companies to execute multi-year plans, beyond the scope of what others could see at the time. That's why Apple is successful.

Startups only get sold, when the founders lack a definite plan to take the company further. In which case they are overpaid. If the founders know where they can go, and they have plans for that, they don't sell.

You are not a lottery ticket

A startup is the largest endeavor over which you can have definite mastery. You can have agency not just over your 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.

In other words, you're responsible for your life, act on that responsibility. In the words of 7 Habits - Be proactive and have the end in mind. It's crazy to see it in that context as well. The 7 Habits are everywhere. Found over and over and over again.

Chapter 7 - Follow the Money

Exponential growth is a facet of reality. It leads to power law distributions and it's one of the reasons why monopolies are vastly more profitable than non-monopolies.

The power law — so named because exponential equations describe severely unequal distributions — is the law of the universe. It defines our surroundings so completely that we usually don't even see it.

We don't live in a normal world; we live under a power law.

This idea is treated much more in any of the books of Nicholas Nassim Taleb. Probably the best one to read is The Black Swan

The Power Law of Venture Capital

Companies follow power law distributions. Single companies create all the wealth.

The biggest secret in venture capital is that the best investment in a successful fund equals or outperforms the entire rest of the fund combined.

Two rules follow from that:

Only invest in companies that have the potential to return the value of the entire fund.

There can't be any other rules.

VCs need to have a plan for which companies succeed in going from 0 to 1 and then fund those and only those heavily. It's not a lottery.

Why People Don't See the Power Law

Venture-backed companies create 11% of all private sector jobs.

Power Law hides in plain sight. Companies don't "feel" that different in their success, yet they are. The 12 largest make as much as the rest combined.

What to do with the Power Law

Everybody is an investor. We invest our time. Investors should reduce their portfolio size as much as possible and use planning to identify which things fall under the power law distribution and which don't. Investing heavily in a few things, and having good reasons for that, is the key.

But life is not a portfolio: not for a startup founder, and not for any individual. An entrepreneur cannot "diversify" herself: you cannot run dozens of companies at the same time and then hope that one of them works out well.

You can't diversify careers either. You are forced to pick something.

It does matter what you do. You should relentlessly focus on something you're good at doing, but before that you just think hard about whether it will be valuable in the future.

In other words - follow Tim Urban's advice for careers. Find out what you can do and what is valuable and then do the thing at the intersection.

Owning just part of something, but that something is on the power law end of the distribution is worth much much more than owning 100% of something on the opposite end. Hence founding a new company is not the default best choice, often it is more useful to hop onto another promising early-stage startup.

In a power law world, you can't afford not to think hard about where your actions will fall on the curve.

Chapter 8 - Secrets

There are secrets in this world. In other words, things currently not widely known, but possibly knowable. Things not ever knowable are mysteries.

You can achieve difficult things, but you can't achieve the impossible.

Why aren't people looking for secrets?

3 categories of goals - easy, hard and unattainable. Society believes that there are no, or only very few hard problems left to be done.

The unknown seems less accessible than ever.

It seems like there is not much of a human frontier anymore to a lot of people.

4 things conspire to aid that belief.

  1. Incrementalism. It is taught in schools and universities. You are good if you do everything, a little better than everybody else. Nobody pushes you to do things on a power law distribution.
  2. Risk Aversion. People Don't want to be wrong. Much less - wrong but not of the group's opinion.
  3. Complacency. People are happy with what they already have. It's good enough to be a lawyer or a doctor. The career landscape doesn't push you to do your "best"
  4. Flatness. Secrets would have been found already by other people. What could I find, that nobody else has found before?

Evidence for that - there are fewer cults today. People don't believe somebody taunting they have found the secret to everything as much as they used to.

We have given up our sense of wonder at secrets left to be discovered.

The World According to Convention

There have to be secrets. Otherwise, markets wouldn't have bubbles and everything in law we have would be perfectly just right now.

HP died because it didn't believe in finding secrets anymore. It went from going 0 to 1 to going from 1 to N.

The Case for Secrets

If you think something hard is impossible, you'll never even start trying to achieve it. Belief in secrets is an effective truth. The actual truth is that there are many more secrets to find, but they will only yield to relentless searchers.

Some people like David Deutsch would even go as far as saying that there is an infinite number of secrets left to be uncovered and that we are only at the beginning of uncovering that infinity and have to do our best to just keep playing the game of secret discovering (i.e. exploration)

There are many more secrets out there that can be the beginning of new, successful companies.

How to Find Secrets

There are two kinds of secrets: Secrets of nature and secrets about people.

Schooling itself aims to impart conventional wisdom.

There are two flavors of secrets - secrets about nature and secrets about people. The second is underappreciated and usually easier to find.

The best place to look for secrets is where no one else is looking.

There's plenty more to learn: we know more about the physics of faraway stars than we know about human nutrition.

What to do with secrets

Once a secret is found it should be shared only with a handful of people, namely the number necessary to build a company around it.

A great company is a conspiracy to change the world; when you share your secret, the recipient becomes a fellow conspirator.

Chapter 9 - Foundations

Thiel's law:

A startup messed up at it's foundations cannot be fixed.

Beginnings are special because decisions made at the beginning are often hard (or impossible) to change later on.

Founding Matrimony

Choosing cofounders is like choosing who to marry, relying on luck and marrying the first person you meet is not a good choice and disrupts the foundations of a company from the start. Founding teams have to cooperate well for the company to become good.

Ownership, Possession, and Control

  • Ownership: who legally owns the company's stock? Usually founders, employees and investors
  • Possession: who runs the company? Managers and employees
  • Control: who formally governs company affairs? Board of directors, usually founders and investors

Misalignment is a problem that results from this split. People have incentives to do things on their own and not for the company's best interests.

Effective boards are small. Small means better communication. There are usually diverging interests between board members and founders.

On the Bus or off the Bus

No gradient, either involved full-time or not at all.

Cash is not King

A company does better the less it pays the CEO.

Paying people in cash incentivizes them away from the long-term future of the company.

Vested Interests

Equity is a way of aligning people's interests with the long-term interests of the company. Equity is worthless if the company is worthless.

Extending the Founding

A company has to keep inventing and creating new things to survive. In a way, it has to extend its founding spirit into the future.

Chapter 10 - The Mechanics of Mafia

"Company culture" doesn't exist apart from the company itself: no company has a culture; every company is a culture.

Beyond Professionalism

Don't work with people you don't enjoy hanging out with. Time is the most valuable asset. Work should produce lasting friendships.

Recruiting Conspirators

Recruiting is a core competency for any company.

Skill is not all. Cohesion amongst teams is even more important. A question to ask - why should somebody talented join your company and not Google? Because the company is on a unique mission and the team fits that person well. This is specific for each person to get hired and each company.

What's under Silicon Valley's Hoodies

From the outside, everyone in your company should be different in the same way.

Obsession with values that are important to the company is what startup hires need. That's why they should wear a hoodie with the company logo. It's a way of showing the identification with the values.

Do one Thing

From the inside, every individual should be sharply distinguished by her work.

Internal competition between members of a company trying to do the same thing is like an autoimmune disease. It takes away work and focuses from the important thing, severely wearing the company.

Of cults and consultants

Startups fall on a spectrum. Cults are on one end of the spectrum, people forgo their families and friends for the intense relationship of working on the startup's mission. This is the kind of startup one wants to build a monopoly.

The best startups might be slightly less extreme kinds of cults.

And startups are right about an aspect of the world (their secret) whereas cults usually aren't.

Chapter 11 - If you build it, will they come?

Distribution may not matter in fictional worlds, but it matters in ours.

Nerds vs. Salesmen

Advertising works. And people who think it doesn't work on them are fools. Advertising is not about making you buy things right away but about changing your perception of a brand and its products in the long run making you more likely to buy from them.

What nerds miss is that it takes hard work to make sales look easy.

Sales Are Hidden

All salesmen are actors: their priority is persuasion, not sincerity.

Sales are hidden because people don't like being sold to. They want to believe they are in control of their actions and being sold to undermines that agency. Because sales are eternally hidden that way, it's very easy to underestimate their importance. Salespeople have names that have nothing to do with selling. Investment bankers account executives and politicians. Everybody has to sell something. Usually themselves or their work.

The most fundamental reason that even businesspeople underestimate the importance of sales is the systematic effort to hide it at every level of every field in a world secretly driven by it.

A good product without a way of distributing it is bad business.

How to Sell a Product

CLV - customer lifetime value and CAC - customer acquisition cost - have to be balanced so that CLV is higher than CAC, otherwise, that means losing money. Distribution methods lie on a spectrum depending on their CAC.

Complex Sales

Big deals are hard to work out but pay incredibly well. It might make sense to spend half a year meeting the right people, building up relationships etc. for a single sale in this domain. SpaceX is an example.

Sales have to start with small orders, and then you start building up trust and proof of good work over time, increasing the sales volumes slowly but surely.

Personal Sales

Need sales work of a small/big team, but is still worth that.

Distribution Doldrums

There is a dead zone between personal sales and Marketing/Advertising. Where the cost of the product is not high enough to warrant personal sales tactics, but not low enough to succeed without them. People Don't easily part with a semi-huge chunk of their money. And reaching those people in the right way at this point is hard/impossible.

Marketing and Advertising

For products where the price of the sale is so low that personal sales work doesn't work, but where the market appeal is big and wide enough so that untargeted TV ads etc. can work.

Good advertising is hard, and creating PR stunts that work is hard work.

Viral Marketing

Viral loops should be extremely short and frictionless. When they succeed they can generate exponential growth (hence the term viral)

The Power Law of Distribution

Find the distribution channel that works. Then focus the heck out of it. Don't hedge by doing a little bit of everything. Distribution channels follow power laws. I.e. a single channel will likely outperform all the others combined.

Selling to Non-Customers

Your company needs to sell more than its product. You must also sell your company to employees and investors.

Selling your company to the media is a necessary part of selling it to everyone else.

Everybody Sells

Everybody has a product to sell — no matter whether you're an employee, a founder, or an investor.

If you don't have any salespeople around, you are the salesperson.

Chapter 12 - Man and Machine

30 years from now, will there be anything left for people to do?

Humans should be empowered by computers and not replaced by them. The most successful businesses of the future will embrace that.

Substitution vs. Complementarity

Globalization Means Substitution

Humans compete for resources. Everybody needs food and shelter. And they have desires, and those desires grow as they become more wealthy.

All oligarchs have the same taste in Cristal.

Technology Means Complementarity

People have intentionality (computers don't have that ... yet)

Computers are tools, not rivals.

Computers don't demand anything, they don't compete for resources and they are categorically different from people in the things they are good at. Hence they should complement human activity and not replace it.

I think this is one of the few places in the book where Peter Thiel might be very very wrong. In the sense that computers do limit the work humans can still do competitively because well, computers are cheaper and better at a lot of "cognitive" tasks eventually. So the amount of available jobs shrinks because computers do them instead of humans, increasing the competition not between humans and computers, but between humans for the jobs that remain.

Complementary Business

Combining humans + algorithms makes for very efficient solutions.

Until the point where the human input is no longer necessary because there is nothing, the human input improves that the machine couldn't do on its own. I think we are getting closer to this point every year, especially with the work of OpenAI and DeepMind.

The Ideology of Computer Science

How can computers help humans solve hard problems?

Ever-Smarter Computers: Friend or Foe?

Strong Ai, machines that are better than humans in every dimension.

Technology is supposed to increase our mastery over nature and reduce the role of chance in our lives; building smarter-than-human computers could bring chance back with a vengeance. Strong AI is like a cosmic lottery ticket: if we win, we get utopia; if we lose, Skynet substitutes us out of existence.

Chapter 13 - Seeing Green

Cleantech failed in a huge bubble. Instead of cleansing the planet, the startups founded, wiped out a lot of capital.

7 questions every business must answer:

  1. The Engineering Question: Can you create breakthrough technology instead of incremental improvements?
  2. The Timing Question: Is now the right time to start your particular business?
  3. The Monopoly Question: Are you starting with a big share of a small market?
  4. The People Question: Do you have the right team?
  5. The Distribution Question: Do you have a way to not just create but deliver your product?
  6. The Durability Question: Will your market position be defensible 10 and 20 years into the future?
  7. The Secret Question: Have you identified a unique opportunity that others don't see?

If you can't answer all of them, you'll probably fail.

The Engineering Question

A product needs to be at least 10x (order of magnitude) better than what's out there.

The Timing Question

The Monopoly Question

Cleantech startups didn't dominate a small market and built their advantage from there. Instead, they joined one of the biggest, most competitive markets out there - the global energy market.

The People Question

Never invest in a tech CEO that wears a suit.

There's nothing wrong with a CEO who can sell, but if he looks like a salesman, he's probably bad at sales and worse at tech.

The Distribution Question

The Durability Question

Every entrepreneur should plan to be the last mover in her market.

The Secret Question

Great companies have secrets: specific reasons for success that other people don't see.

The Myth of Social Entrepreneurship

Doing something different is what's truly good for society and it's also what allows a business to profit by monopolizing a new market.

The best problems to work on are often the ones nobody else even tries to solve.

Tesla: 7 for 7

Tesla had all 7 questions answered amazingly. The small niche market of high-end electric cars, driven team, long-term vision, 10x improvements in core technologies for electric vehicles, owning the entire distribution chain, like Apple, and the secret that green tech was a social phenomenon more than an engineering necessity.

Energy 2.0

Energy is the master resource: it's how we feed ourselves, build shelter, and make everything we need to live comfortably.

No sector will ever be so important that merely participating in it will be enough to build a great company.

The main question with energy startups is this - what's the small niche market you want to dominate?

Chapter 14 - The Founder's Paradox

Are all founders unusual people?

The Difference Engine

Some people are strong, some are weak, some are geniuses, some are dullards — but most people are in the middle.

Founders are usually on the ends of spectrums, on the outside of the normal distribution. Those effects get amplified by their surroundings thinking of them as special and them adapting towards that unusualness.

Celebrities are founders of their brands.

Where kings come from

American Royalty

The idea of people being insiders/outsiders - i.e. at both ends of the spectrum at the same time applies to most founders.

The Return of the King

Apple's value crucially depended on the singular vision of a particular person. This hints at the strange way in which the companies that create new technology often resemble feudal monarchies rather than organizations that are supposedly more "modern."

The lesson for business is that we need founders.

Only founders can make long-term decisions and have a vision and the power to execute that vision.

While founders are special, they are special because they can motivate people to work for a common cause. It's not the solitary Ayn Rand superhero type that's reality. Founders can achieve great things mainly because they can assemble great teams and give them a long-term plan to execute.

Conclusion - Stagnation or Singularity?

4 models for the future:

  1. Recurrent Collapse
  2. Plateau
  3. Extinction
  4. Takeoff

The only stable one of the four is the takeoff scenario, all others collapse into extinction.

Even though the singularity is near, it won't happen on its own.

We cannot take for granted that the future will be better, and that means we need to work to create it today.

Our task today is to find singular ways to create the new things that will make the future not just different, but better — to go from 0 to 1. The essential first step is to think for yourself. Only by seeing our world anew, as fresh and strange as it was to the ancients who saw it first, can we both re-create it and preserve it for the future.

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