Zero to One Summary and Review – Peter Thiel's Insights on Competition, Monopoly and Innovation

12/1/2018 “Zero to One” Summary and Review – West Stringfellow – Medium
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Feb 6 · 28 min read
Source: Amazon
“Zero to One” Summary and Review
Keywords: Competition, Economics, Entrepreneurship, Future, Growth,
Innovation, Monopoly, Startup, Teamwork, Technology
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Book Review
Going from zero to one means going from nothing to something. This is
the greatest leap possible — greater than going from one to 10 or even
from one to 100. To go from zero to one is to conjure something into
existence from the dark void of oblivion. This is the essence of true
innovation.
In Zero to One, Peter Thiel draws on his experience at PayPal and

Palantir to o er ideas and suggestions for technology startups.
Unlocking the power of innovation is the primary goal. In order to
reach this goal, the entrepreneur will need to question conventional
wisdom, embrace monopoly and capture value for their new
enterprise.
A character as well known and controversial as Peter Thiel is at

something of a disadvantage as an author. As much as some readers
may admire him, others probably do not. The reader shouldn’t allow
any such baggage to keep them from reading Zero to One. Taken on its
own merits, the book is a well-written, thought-provoking read. The
reader should maintain an open mind and evaluate Thiel’s opus
critically. Intellectual honesty is challenging, but it can bring the
greatest rewards. This book is likely to challenge anyone’s opinions, no
matter where they may fall on the political spectrum. Groundbreaking
ideas have a way of doing that.
One example of Thiel’s unique reasoning is his enthusiastic embrace of

monopoly. Thiel demonstrates not only his ability to come at an old
topic from a new direction, but also a fearless ability to speak heresy.
Competition, he explains, is not the social good we were all taught that
it was in econ 101. It results in anti-social behavior and squelches
innovation. Monopoly, on the other hand, has the potential for positive
e ects. When a company knows it can earn a termed monopoly via
patents and similar methods, the rm is motivated to invent new
technology, which bene ts society. He is quick to state that monopolies
can be misused by the greedy, but he doesn’t linger on this point. No

safeguards to protect society are considered or recommended. Theil
seems to be too busy making his core argument to be sidetracked by
such considerations.
Again, the aws in this book shouldn’t stop anyone from reading it, as
long as they remain alert to the problems. Consider it an opportunity to
exercise critical thought. For the most part, this work o ers solid advice
for the entrepreneur and an intriguing peek into the mind of a truly
unique thinker. It is sure to stimulate new ideas in entrepreneurs and
non-entrepreneurs alike.
Chapter 1: The Challenge of the Future
The future is a time when things will look di erently than they do
today. By this de nition, the future might not happen for another 100
years if nothing changes. On the other hand, the future might come
tomorrow if there is rapid change. We don’t know much about the
future, but we do know that it will be di erent from the present and
that it will emerge from today’s world.
There are two di erent kinds of progress. Horizontal progress occurs

from copying things that work. It’s going from one to n, so that if you
have a typewriter and then you build 100 more, you’ve achieved
horizontal progress. Vertical progress is achieved by doing something
wholly new. It means going from zero to one. This kind of progress is
hard to imagine, because it’s something that’s never been done before.
If you have a typewriter and then you build a word processor, you’ve
achieved vertical progress.
Globalization — taking things from one place and applying them

everywhere else — is horizontal progress. Vertical progress comes from
technological breakthroughs, and “technology,” by the way, doesn’t just
describe computers. Any new way of doing things can be called
technology. Globalization and technology are two di erent kinds of
progress that might or might not happen concurrently. You can have
one type without the other, you can have both, or maybe neither of
them. Between the two kinds, technology will be the de ning force of
the future.
There’s a tendency to imagine that we’re nearing some sort of end

state. Even the expression “developed world” implies that some
countries have climbed the mountain and that “undeveloped” countries
just need to catch up. Our technology isn’t sustainable, however,
especially if everyone else adopts it. We have limited resources and our
environment can’t endure the pollution that level of “development”
would generate. Globalization without advances in technology would
devastate the planet.
At one time, people thought technology would continue to improve in

all directions. We wouldn’t have to work so many hours, we’d be riding
in ying cars, we’d be taking vacations to the moon. The only area
that’s seen real vertical progress, however, is computer technology.
Progress isn’t a given; it doesn’t happen automatically. We must rst
imagine and then create the world in which we want to live.
New technology comes from startups. Big organizations lumber around

uselessly, and individuals don’t have the resources to create an entire
industry. Small, agile groups foster innovation.
Chapter 2: Party Like It’s 1999
It’s easy to fall prey to popular delusional beliefs. Conventional wisdom
can be persuasive.
One way to think clearly and eliminate delusion is to study history.

Look at the 1990s: some people have warm, nostalgic sentiment for
this era, but both good things and bad things happened in the 1990s.
Grunge music proves how bummed out everyone was.
Then, dotcom mania raged from 1998 to 2000. Investors were throwing
money at any startup. People were leaving good paying jobs to strike
out on their own and form new companies, certain that they would
become rich. A lot of money was lost, but people believed so strongly in
the dotcom economy that they didn’t heed the warning signs. The
cognitive dissonance of Silicon Valley was terrifying. The tech bubble
and irrational exuberance made common sense seem like an eccentric
attitude.
The dotcom crash brought the good times to a halt, and this trauma still
a ects Silicon Valley. It instilled some deep-seated beliefs in the Valley
that persist to this day, including suspicion of grandiose visions. Small

advances, incremental changes are safer. Agility became one of the
most valuable characteristics a rm could have. Rather than investing
in long-term plans, companies needed to be lean and mean, able to
respond to changing circumstances. Improving products in existing
markets became more important than creating new markets. Look at
what competitors are doing and imitate them.
Many people consider these lessons learned to be of central

importance. Actually, there is probably more wisdom to be found in the
opposite principles. There’s a lot of value in being bold and making big
moves. If it even needs to be said, planning is important. Competitive
markets aren’t where the big pro ts can be found; it’s better to create
new markets. And it’s important to keep in mind that sales are as
important as product. Advertising is not a waste of resources.
People are overcompensating, but they need to get back to taking risks.
They shouldn’t go crazy with it like they did in the 90s; they have to
strike the right balance between caution and taking chances on
innovation.
Chapter 3: All Happy Companies Are
Di erent
It’s possible for a company to create a lot of value without actually
becoming valuable itself. A successful company captures some of the
value that it creates.
One important factor that determines how much a company earns is

competition. The level of competition varies from company to company
and industry to industry. Think of it like a scale. On one end, you have a
perfect monopoly where there is absolutely no competition. Some
companies become monopolies by using questionable tactics against
potential competitors; others become monopolies because they get
licenses or lucrative contracts with the state. Then, there are some
companies that achieve monopolies because they are innovative and
have something unique to o er. When Thiel talks about monopolies,
we’re talking about this last group, companies that are so good that
they have left their rivals in the dust.
On the other end of the scale, where there is a lot of competition, price
is a ected primarily by supply and demand. The product that one
company o ers is very similar to the product other companies sell.
These companies have to price the product at whichever point the
market forces determine. It isn’t possible for companies to make much
money under these circumstances.
Competitive businesses have super tight margins, while monopolies can

a ord to think about things besides the bottom line. (Monopolies are
better for pro t.) Both monopolies and competitive companies are
likely to tell white lies about themselves. Monopoly companies don’t
like to invite government scrutiny by admitting that they are a
monopoly; competitive companies tend to understate their competitive
condition and emphasize ways in which they’re unique.
In a static world, monopolies are bad because they just sit around and
collect money. They can jack up the price of their product, knowing
that people will have to pay whatever they charge. In a dynamic world,
however, monopolies are creative forces that give people more choices.
And the government understands this. That’s why we have the patent
system that we do. Patents allow companies to have monopolies for a
while. It incentivizes invention — companies know that if they invent
something new, they’ll have a monopoly on it for a substantial amount
of time, so they’ll be able to make a good pro t from it.
Tolstoy observed that all happy families are alike, but unhappy families
are each unique in their unhappiness. This is the opposite for business.
Happy companies create unique monopolies for the circumstances they
face. Unhappy businesses all have the same problem: competition.
Chapter 4: The Ideology of Competition
Innovative monopolies generate pro ts and create new products that
bene t society. Competition limits innovation and pro ts. We have
been indoctrinated to believe that it’s a positive force, but competition
is an ideology that doesn’t serve us very well. Our culture reinforces
this ideology, but that doesn’t make it any truer.
There are two di erent ways to look at competition. You can frame it
the way Marx did or the way that Shakespeare did. In Marx’s world,
people have con ict because their life circumstances have made them
di erent from each other. Workers ght the bourgeoisie because they
have con icting goals and ideas. The way that Shakespeare saw it,
however, is that people are mostly alike. They don’t have many reasons
to ght, but they do it anyway. The more they ght each other,
however, the more they become like one another.
When it comes to the world of business, Shakespeare’s viewpoint is

more accurate. People get competitive with their rivals and lose sight of
the important goals. (Look at Google and Microsoft like the warring
families in Romeo and Juliet. They battle each other because they are
similar.)
Competition limits vision and encourages obsessive hostility. It can

mess with people’s perceptions and priorities. It makes people copy one
another, which limits their creative potential. It can cause people to see
opportunities where none exist. In the 1990s, there was intense
competition among online pet stores: Pets.com, Petopia.com,
Petstore.com and who knows how many others ghting for market
dominance. They were too busy ghting amongst themselves to
determine if online pet stores were even a lucrative enough concept to
bother ghting over. Eventually, the online pet store market crashed
and burned, taking plenty of investment capital with it.
Sometimes the best way to resolve competition is to merge with your

rival. Thiel and Elon Musk were rivals until they both realized that the
dotcom bubble presented a greater threat than either of them. So they
merged. It was di cult to turn their rivalry into a partnership, but they
overcame that challenge.
Sometimes you have to ght, and in those situations, you should ght
hard and ght to win. But pick the right battles — it’s not ghting over
pride and honor.
Chapter 5: Last Mover Advantage
There are some startup companies that don’t make much money, yet
they are valued higher than established companies with good cash
ows. This seems illogical on its face, but there are actually good
reasons driving this reality.
An important part of the value of a company is how much potential it

has for pro t in the future. Established rms in established markets
have competition; their margins are chipped away by market forces.
Startups in innovative markets are more likely to have monopolies;
their good days are still ahead of them. So even if the startup is losing
money it may well be more valuable than the established company that
turned a pro t last year. Growth is ne, but for it to be any good, you
have to endure. A company has to survive in order to succeed.
There are some characteristics that are typical features of monopolies.

Every company is di erent, but spotting these elements should help
you to identify monopolies when you see them. Proprietary technology,
for example, can give a company a major advantage. Companies with
technology that o ers something much better than the nearest
competitor are well positioned to become monopolies. If the
technology is only moderately better, however, then it will be seen as a
marginal improvement. In a crowded market, it won’t impress anyone.
Network e ects make a product better. For example, the more friends
you have on Facebook, the more valuable Facebook becomes to you.
Network businesses usually need to start small and scale up, because
it’s hard to get millions of people to join at once. Many rms miss
opportunities to get in on these types of businesses when they start up,
because they are so small that they don’t look very promising.
Companies get stronger when they get bigger. Economies of scale

means that the cost of running a business, like o ce space and
engineering, doesn’t increase proportionally when the company gets
bigger. Monopolies scale up well. Labor intensive industries, for
example those that depend heavily on customer service, don’t scale
well.
A strong brand image can also strengthen a monopoly. Of course, there

has to be substance behind the brand. One reason Apple has strong
brand appeal is the high quality of its products. If a brand is little more
than a cool name, it’s possible for its product to become a temporary
fad, but it won’t have staying power.
The lesson is to start small and monopolize. Once you have found your
niche, scale up. But don’t intentionally set out to be disruptive. David
taking on Goliath is a big drain of energy and beside the point. The
whole idea of disruptive technology is totally overvalued. First-mover

advantage is another. Sometimes it’s better to have the last signi cant
boom and ride it longer. Think of business as a game of chess — your
strategy is important; you have to consider the endgame in order to
succeed.
Chapter 6: You Are Not a Lottery Ticket
Some people say that success is the result of luck. Others attribute
success to hard work. But if success really were just a matter of luck,
there wouldn’t be those who have been successful in a series of
enterprises. The argument may never be completely resolved; it’s not
possible to run the kind of experiments that would be necessary to
empirically prove whether success is the result of luck or hard work.
Historically, however, most great thinkers say that success comes from
hard work.
People today pay too much attention to process and not enough to
substance. People follow the rules for success, because they lack the
inspiration to work toward a substantive goal.
You can be an optimist or you can be a pessimist. You can have a

concrete image of the future or one that’s fuzzy. And so, you can have
these things in di erent combinations — for example, you can be a
de nite optimist or an inde nite pessimist.
Inde nite pessimists believe the future will be dark, but they don’t have
any ideas of how to change that. Decline is inevitable, so you might as
well enjoy yourself in the meantime. Inde nite pessimists are certain
the future will be bad, so people should prepare.
Most of the western world was in a state of de nite optimism from the
17th century until the 1960s or so. Scientists, engineers and
businessmen knew they were making the world a better place. Things
were great and constantly improving. Men dreamed big dreams and
built big projects. The party ended in the 1970s, when inde nite
optimism set in.
In our current era, people think the world will get better, but they don’t
know exactly how that will happen. So they don’t make any plans.
Inde nite optimism includes the world of nance, because nobody
knows what the market will do, but nevertheless, people keep investing
in it. Politics and government have become inde nite, too, through
myopic focus on the short term.
Philosophers are mapped out on a de nite/inde nite

optimistic/pessimistic chart. Postmodern philosophers Nozick and
Rawls share the inde nite optimistic quadrant. Although they may be
di erent from each other, they’re products of this inde nite optimistic
era that we live in. Another thing that’s inde nite? Biotech startups.
The problem is that inde nite optimism isn’t sustainable. The future
can’t get better if no one plans for it. We need to get back to a de nite
future. We have little power over philosophers or political pollsters, but
we can return agency to our lives, according to Thiel, through the
creation of startups.
Chapter 7: Follow the Money
There is a pattern that’s consistent across many di erent areas of
human endeavor: there are usually a few players whose productivity
eclipses those around them. It’s called the 80–20 rule, so named by
economist Vilfredo Pareto who noticed that 20% of the peapods in his
garden produced 80% of the peas. This tendency for the few to
dominate the many is known as the power law. It describes the
exponential increase of e ect at scale.
The power law is the backbone of venture capitalism. Venture

capitalists aim to nd, fund and pro t from early stage companies.
These are high-risk investments, and many of the companies will fail.
But high risk can bring high rewards. Eventually some of the
enterprises will succeed splendidly. They will become part of the
dominant 20% that win 80% of the earnings. This will cover the costs
of the less successful investments and bring in a healthy pro t, or so it’s
hoped.
It takes time for venture funds to pick a winner, and it takes more time
for that winner to emerge from the rest of the pack. There are usually
lots of early failures, which means that venture funds usually lose
money at rst. Venture capitalists just try to hang in there for the rst
few years, waiting for the kind of successes that will launch them into
exponential growth.
Just as most startups fail, most venture funds eventually fail. Fund
managers usually aim for a diverse range of companies in their
portfolio. Focusing on diversi cation makes it entirely possible that the
few successful companies will be missed entirely. For this reason,
venture companies should only fund enterprises that have the potential
to pay o the entire investment of the whole venture company. This is a
restrictive rule, and it means that venture funds will by necessity ignore
a lot of promising businesses. It also means that venture companies
can’t really a ord to restrict themselves any further, because they risk
overlooking the enterprise that will provide the big payo . Venture
companies need to nd the businesses that can go from zero to one.
Once they identify these businesses, they should back them with every
resource at their disposal.
It can be hard to stick to the discipline of the power law. It only

becomes evident over time. Day-to-day experience teaches that some
companies are more successful than others and that most companies
produce within the range of average performance. It’s easy to get lost in
these weeds. It’s also hard to dump companies once you are
emotionally invested in them.
In some respects, we are all investors, whether or not we’re venture

capitalists. We invest a great deal of resources in pursuing a career.
People try to stay diverse and try to avoid putting all their eggs in one
basket. They hedge against uncertainty. Schools provide a generalized
education. It is much better for people to focus relentlessly on
something that will continue to be valuable in the future.
Before you start a company, consider that it will likely fail. It’s much
better to hitch your star to a company that has rapid growth. You might
own 100% of your very own startup, but there’s a big danger that you’ll
end up owning 100% of nothing. It would be much better to own
0.01% of a company like Google.
Chapter 8: Secrets
This chapter is about secrets. But not real secrets. Rather, secrets in the
sense of discoveries.
Just about everything used to be unknown. Things that seem obvious

today were not always so, they had to be discovered.
There’s a modern tendency to say there are no hard questions left.

Technology has answered them. There are impossible questions that
can never be answered. There are questions that can be answered
easily, but answering easy questions isn’t very satisfying. Unabomber
Ted Kaczynski was of this belief. He was a terrorist who sought to
destroy existing institutions so that people could start over answering
di cult and satisfying questions.
Hipsters like facial hair and vinyl phonograph records. Maybe this is
because they don’t think there are new things that are worth pursuing.
There is a pencil drawing of Kaczynski wearing a hoodie next to a
drawing of a young man wearing a hoody. The caption reads, Hipster or
Unabomber? Attempts at humor notwithstanding, the reader may be
left with the impression that Thiel has a poor grasp of youth culture.
Fundamentalists also think this way. Religious fundamentalists think

there are the easy questions that everyone knows and the mysteries
that only God knows. Everything else is heresy. Environmentalism is
also a religion, a fundamentalist one. The fact that we must protect the
universe is the only truth that they know. Other than that, everything
else is in the hands of Mother Nature, who cannot be questioned.
People may think that there are no mountains left to climb; there is
nothing left to discover. But this is wrong. There are certainly secrets
left. Injustice, for example, thrives in an environment of ignorance;
justice is restored by the beacon of knowledge.
You’ll never nd something if you don’t look, you’ll never succeed if you
don’t try. If you believe it’s impossible, you won’t do it. You have to do it
or it won’t be done.
We can do amazing things. There are still amazing discoveries to be

done. But we have to try.
There are two kinds of secrets; there are secrets of nature and there are
secrets about people. To nd out about secrets of nature, you can study
the physical world. Secrets about people are usually harder to nd
because they are either things that people don’t know about themselves
or else they are things that people are actively trying to hide from
others.
If you learn a secret, be careful who you share it with. It could be

dangerous to reveal your knowledge. As a rule of thumb, it’s best not to
share secrets with anyone except for those you need to tell.
Sometimes you can shorten your journey considerably by taking the

hidden path.
Chapter 9: Foundations
The start of a thing, the foundations, are really important. Decisions
made early on can be hard to change later. Early mistakes can prove
fatal to startups. This is the time when the groundwork is laid, when
the rules are written. The beginning determines everything that comes
after.
Be very careful who your co-founder is. Don’t do it with just anyone. It’s
like getting married. Avoid an ugly divorce by being careful who you
choose for a partner.
Starting with the right team is also important. Everyone on your team
has to get along. There needs to be structure. Roles should be well-
de ned. Don’t worry about any of this sti ing creativity. Creativity
won’t thrive in a state of anarchy; having some amount of organization
is critical.
Ownership, possession and control are all di erent things. With

startups, the owner usually has ownership and possession, while
control often goes to the board. This can cause con ict.
Small boards are better than big boards. It will be easier for them to
reach decisions and manage con ict. Three board members are good.
Don’t ever have more than ve board members. Even small boards can
bring problems for the rm, however. A small board can be quite
e ective in opposing management; for this reason, be very cautious
about the people you choose to serve on the board of directors.
Avoid outsourcing. Keep everyone together, working full time for the
team. Avoid telecommuting and part time workers. Everybody needs to
feel like they are all pulling towards the same goal. It’s like Ken Kesey
said, “You’re either on the bus or o the bus.”
Keep the CEO lean and hungry. Low CEO pay keeps the CEO from
getting stuck on defending the status quo. It also telegraphs to
everyone else on the team how committed the boss is. Low CEO salary
will make it easier to keep everyone else’s pay low as well.
People need to be adequately compensated. Cash compensation tends

to keep people focused on short term value. For this reason, stock
options are preferable to bonuses. Equity gives employees a part of the
company and make them feel they really have a stake in it. Just be
careful to avoid letting people know the exact amount of equity their
coworkers hold; it could trigger jealousy and hostility. Employee stock
options are a good way to increase loyalty, but not everyone will like it
equally, though. Some people have a strong preference for cash pay.
Birth doesn’t have to be a temporary phenomenon. As Bob Dylan said,

those who aren’t busy being born are busy dying. Beginnings are
periods of exibility and are characterized by openness. This openness
can be institutionalized, instilling the company with a culture that
encourages innovation. Your company can remain new and innovative
inde nitely.
Chapter 10: The Mechanics of Ma a
Build a team. Don’t outsource core functions. Keep your group tight.
When you think about ideal company culture, maybe you imagine a
place where not only do people love their work, but the place is also a
fun place to be. Silicon Valley has been known for the rms that have
ping pong tables and sushi chefs in the workplace. But these fancy
perks do not make culture. In essence, the company is the culture.
Thiel built a team at PayPal that included many people who went on to
start all sorts of successful companies. After they left PayPal, they
founded well known startups including Tesla Motors, LinkedIn and
YouTube. This cohort became known as “The PayPal Ma a.” Thiel
didn’t follow the standard playbook of looking at resumes when he
built his team. He wanted to put together a group of people who
genuinely liked each other. He felt a fresh approach to hiring was
needed.
To hire a good team, look at it from the prospect’s point of view. Think
about why they should want to work for you. They probably hear from
recruiters at other companies that they will make a lot of money, that
they’ll work with smart people and that they’ll help solve important
problems. All of these are nice things, but they are the things that
potential employees hear from everyone. You aren’t giving them a
reason to pick your company over a di erent one when you use these
reasons.
When prospects ask you why they should want to work for you, the
answer should be speci c to your company. To draw talented
employees tell them why your company is unique and important. Don’t
try to sway anyone on the bene ts of perks. You want loyal employees,
not people who really care about free parking. Give your employees a
standard bene ts package that’s typical in your industry.
To start, everyone should be as similar as possible. They need to work

well together. They should all be di erent in the same way; if they all
love comic books or something like that it will help them to get along
and to work together.
Roles should be well-de ned. This reduces con ict. People won’t be as
inclined to compete over turf. Internal con ict can be deadly to a
startup.
You want really dedicated people, but you don’t want to start a cult. Not
too much, anyway. People in cults are usually misinformed fanatics.
You want a certain level of fanaticism in your group, but not
misinformation. You want a sense of specialness and separation from
the outside world. You shouldn’t mind too much if people say that your
group is a ma a.
Chapter 11: If You Build It, Will They Come?
Sales are important. Middlemen have a bad name, but they are crucial.
Distribution is crucial. Many people, especially tech people, don’t
understand the importance of this. But it’s important.
Marketing is important because it helps people discover products.

Advertising is useful because it works. It puts ideas in the consumer’s
mind. You might think that you personally have some immunity to
advertising that other people lack, but you would be wrong.
People are suspicious of sales sta because it isn’t always so easy to tell
how hard they are working. All that schmoozing looks an awful lot like
socializing. However, a good salesperson is like a good actor, they
perform so well that it’s di cult to see how hard they work.
Excellent sales and distribution can create a monopoly even if the

product itself isn’t much di erent from its competitors. You need to
have a strong distribution plan in order to succeed.
Distribution is measured with two numbers. The Customer Lifetime

Value (CLV) is the average amount of pro t you can expect to gain from
a customer. This gure has to be greater than the amount you spend to
get that new customer; a gure known as the Customer Acquisition
Cost (CAC). The more expensive your product is, the more you should
be willing to spend to get new customers. You should also be willing to
devote more time on each of them.
On one end of the scale there are personal scales, where sales people
deal directly with customers to sell expensive products. Really big deals
are performed by CEOs more than salespeople.
There’s a dead zone between the expensive products that call for
personal sales strategies and inexpensive products that can do ne with
traditional advertising. A product selling for, say, $1,000 isn’t really
worth the expense of paying sales sta . The ideal customer for the
product is probably the small business owner; mass marketing is a very
ine cient way to reach this market.
Marketing and advertising are for low-priced products, where there’s

not enough payo for salespeople to sell them. Advertising might be
appropriate for startups where the numbers aren’t there for other
distribution channels. But don’t try to compete with big companies
through advertising campaigns.
Viral marketing lies at the far end of the scale with the most
inexpensive products. It’s viral if it makes users draw in other users. For
example, if someone sends money via PayPal, the recipient is exposed
to the service automatically when they receive their money.
You have to get at least one distribution channel to work or else you’ll
fail.
Not only do you have to sell to customers, you also have to sell your
idea to investors and employees. And the media. Don’t expect that your
product is so wonderful that investors and everyone else will beat a
path to your door. Develop a public relations strategy. Decide how you
want to tell your story.
Chapter 12: Man and Machine
Information technology has become so dominant that it has become
synonymous with the very word “technology.” Computers continue to
grow in power. Many functions once performed by humans have been
taken over by computers. Some predict that this process will accelerate
and computers will continue take over more and more human
functions.
People worry about computers replacing people, that a process

mirroring that of globalization is taking place. Just as jobs were lost to
workers in other countries, they will now be lost to computers.
People need not worry that this will happen, however. While people in
one part of the world aren’t so di erent from people in another part of
the world, computers are very di erent from people. They do not
require the same provisions. Their capabilities are di erent. The kinds
of things that people are good at aren’t the same as the things that
computers are good at. People are able to make complex decisions.
Computers are good at processing large amounts of data.
Computers are tools. The big technological advances of the future will
happen in computers complementing — not replacing — people. We
shouldn’t be afraid that computers will replace us.
People and computers combined can do tasks better than either one
can by themselves. This presents business opportunities. At PayPal,
they developed a system for detecting credit card fraud that involved
algorithms that agged suspicious transactions which would then be
reviewed by human operators. This demonstrates how the abilities of
computers and people can complement one another.
With his startup company Palantir, Thiel developed similar software for
the FBI to analyze information from multiple sources. Computers alone
can’t do that sort of work, nor can humans do it alone. Computers and
humans combined are capable of much more. There are all sorts of
examples of how Palantir helped the feds bust terrorists, child
pornographers and all manner of fraudsters.
There are many ways that computers can be harnessed to crunch the
data and allow people to focus on complex problem solving. There are
many opportunities still to be developed that take advantage of this
synchronicity.
Software engineers have been taught to think up ways that computers

can do people’s jobs. But computers can’t learn everything. It isn’t just a
matter of feeding them enough data. You can give computers more and
more data, but this doesn’t actually make them any smarter. They can’t
come close to human analysis. Arti cial Intelligence is certainly
interesting, and it becomes more and more developed every day, but it
still isn’t close to being able to take on complex analysis. If the day ever
comes when it will be able to do so, that day is far in the future.
Chapter 13: Seeing Green
It seemed obvious that clean technology was going to be huge. At the
beginning of the 20th century, lots of money was poured into new
“cleantech” rms. Unfortunately, most of these rms ended up going
out of business. They failed because they ignored the basic elements
necessary for success.
To ensure success, a startup needs proprietary technology that’s

signi cantly better than the competition. The failed cleantech
companies really dropped the ball on this one. Many of them were
about twice as good as the competition, some of them didn’t even hit
this mark. In reality, a new product should be at least 10 times better
than the closest alternative. Your product has to be clearly, obviously
better than anything else in order to capture customer interest.
Good timing makes all the di erence. Some of those cleantech

companies expected solar technology to take o as fast as computer
technology. Solar technology has been around for a long time, however,
and its development has never been very fast. The growth of computer
technology has always been fast. You have to understand whether you
are dealing with a slow or fast growing technology and treat it
appropriately.
There isn’t much money to be made in a competitive market. Startups

emphasize their uniqueness for this reason. However, it’s better to be as
realistic as possible to understand whether your product has a chance
at a true monopoly. In order to do this, you have to know what market
you are actually in. If you make solar panels and you capture 11% of
the solar panel market, you might think you’re doing well. It’s possible,
though, that the relevant market that you should pay attention to is the
global solar market, or even the entire renewables market. If you don’t
look to the relevant market, you won’t have the information that you
need to evaluate your company’s position.
The people leading a startup should be experts in the product, like

engineers. You need the right team for the job. The executives probably
shouldn’t be salesmen.
Distribution is as important as the product. Find the right channel and

communicate with the customer.
Cultivate durability. Plan to be the last mover in the market. Figure out
your plan for the next 20 years or so. Anticipate changes in the market.
You need to have secrets. Great companies have reasons for success that
others don’t see.
Doing something good for society is a misguided goal. It’s better to do

something di erent. You will bene t society more that way.
One of the few cleantech companies that has found success is Tesla.
This is because they got all of the basic issues right. This shows that the
problem was never with the idea of cleantech by itself, rather the
problem was how most of the cleantech startups ran their rms.
Chapter 14: The Founder’s Paradox
The people who founded PayPal were unusual, from Thiel’s
perspective. His evidence for this is that many of them came from
outside of the United States. An accompanying illustration shows six
young men. The most striking thing about the picture is how alike they
all appear. They are all about the same age, most of them look to be
approximately the same height and build, and their hair is cropped
short in a similar style. While Thiel is rightly proud of his team’s
accomplishments, it’s achingly clear that he is either oblivious to the
issue of diversity or he simply doesn’t think it’s important enough to
address.
A chart is o ered with supposed negative traits on one side and

supposed positive traits on the other. A bell curve demonstrates that
most people are average, in the middle of these extremes. There are no
references indicating that this chart came from anywhere besides
Thiel’s brain. It’s presented as if it were empirical facts, but the astute
reader will not take it as such. The labeled traits are highly debatable.
Positive traits include qualities like rich, athletic and famous; yet
exclude anything that might be socially positive such as giving,
philanthropic or helpful. Negative traits include outsider and poor,
right next to disagreeable and villain. This chart is mostly useful for the
glimpse it gives us into Thiel’s mentality.
The point being made here is that founders aren’t normal people. They
tend to occupy extremes of bell curves, sometimes occupying both ends
at once — for example, by being cash poor but rich on paper.
Another chart with the same traits show a slightly less-distinct bell
curve. This chart is labeled Fat-Tailed Distribution. The term Fat-Tailed
isn’t de ned anywhere in the text. Perhaps all the cool kids who took
statistics know this means the possibility of a chart having skewed
results, but it will send everyone else to the dictionary to parse. Exactly
how this relates to the discussion isn’t mentioned. Another chart using
the same traits is at least explained. The Founder Distribution is an
inverse bell curve showing that founders have more of both the
designated positive and negative traits.
Unusual traits are self-reinforcing. The cycle goes that unusual people
act di erently and develop extreme traits, which they exaggerate.
Other people see this and exaggerate the extremeness of the person
when they describe them, which causes people to act di erently.
Look at Richard Branson. As someone who founded successful

businesses at a young age, he was certainly exceptional, but he didn’t
adopt some of his more eccentric traits until after he became successful.
Several others in this mode are discussed, including Sean Parker and
Lady Gaga.
Many examples are given of unique people who were founders. It can
be marvelous to not only think outside the box but to live outside of it
as well, but that isn’t without its problems. A tremendous problem with
standing out is that you can become a scapegoat when something goes
wrong. Celebrities provide us with many examples of how the mighty
can crash and burn.
Businesses need founders, even if they’re a little eccentric. They can be

magnets for hostility, however. Bill Gates is a prime example of this.
The most important thing to bear in mind is that founders shouldn’t

take the power and the glory too seriously.
Conclusion
Predicting anything beyond the next 20 or 30 years is perilous. At this
juncture, there are four possibilities for what our future may be.
In the past, the world cycled between good times and bad. This pattern
might be the inescapable norm, and the cycle could continue
inde nitely. The conventional wisdom, though, is that through modern
improvements, the world is reaching a plateau where things won’t suck
as bad anymore; the cycle will be broken. However, you don’t have to
be a huge pessimist to see the possibility that we, as a species, are
marching ourselves toward extinction. We’ll have wars and problems,
and poof, that’s it for us. The optimistic take is that we’re going to take
o into a vastly improved future. Hopefully, it’ll be this last option.
Hopefully, we’ll go from zero to one.
. . .
ADDITIONAL RESOURCES
Review of Zero to One by The Atlantic
Review of Zero to One by Forbes
Buy Zero to One on Amazon
Summary of Zero to One by Actionable Books Free
Summary of Zero to One by MeaningfulHQ Freemium
Summary of Zero to One by The Investors Podcast Free
Summary of Zero to One by Paul Miller Free
Summary of Zero to One by Blinkist Freemium
Summary of Zero to One by Get Abstract Freemium
Summary of Zero to One by Get Nugget Free
Summary of Zero to One by Four Minute Books Free
Summary of Zero to One by Book Video Club Free

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12/1/2018 “Zero to One” Summary and Review – West Stringfellow – Medium

Please Note: This summary is part of a collection of the best books on

In Zero to One, Peter Thiel draws on his experience at PayPal and

A character as well known and controversial as Peter Thiel is at

One example of Thiel’s unique reasoning is his enthusiastic embrace of

can be misused by the greedy, but he doesn’t linger on this point. No

There are two di erent kinds of progress. Horizontal progress occurs

Globalization — taking things from one place and applying them

There’s a tendency to imagine that we’re nearing some sort of end

At one time, people thought technology would continue to improve in

New technology comes from startups. Big organizations lumber around

One way to think clearly and eliminate delusion is to study history.

that persist to this day, including suspicion of grandiose visions. Small

Many people consider these lessons learned to be of central

One important factor that determines how much a company earns is

Competitive businesses have super tight margins, while monopolies can

When it comes to the world of business, Shakespeare’s viewpoint is

Competition limits vision and encourages obsessive hostility. It can

Sometimes the best way to resolve competition is to merge with your

An important part of the value of a company is how much potential it

There are some characteristics that are typical features of monopolies.

Companies get stronger when they get bigger. Economies of scale

A strong brand image can also strengthen a monopoly. Of course, there

whole idea of disruptive technology is totally overvalued. First-mover

You can be an optimist or you can be a pessimist. You can have a

Philosophers are mapped out on a de nite/inde nite

The power law is the backbone of venture capitalism. Venture

It can be hard to stick to the discipline of the power law. It only

In some respects, we are all investors, whether or not we’re venture

Just about everything used to be unknown. Things that seem obvious

There’s a modern tendency to say there are no hard questions left.

Fundamentalists also think this way. Religious fundamentalists think

We can do amazing things. There are still amazing discoveries to be

If you learn a secret, be careful who you share it with. It could be

Sometimes you can shorten your journey considerably by taking the

Ownership, possession and control are all di erent things. With

People need to be adequately compensated. Cash compensation tends

Birth doesn’t have to be a temporary phenomenon. As Bob Dylan said,

To start, everyone should be as similar as possible. They need to work

Marketing is important because it helps people discover products.

Excellent sales and distribution can create a monopoly even if the

Distribution is measured with two numbers. The Customer Lifetime

Marketing and advertising are for low-priced products, where there’s

People worry about computers replacing people, that a process

Software engineers have been taught to think up ways that computers

To ensure success, a startup needs proprietary technology that’s

Good timing makes all the di erence. Some of those cleantech

There isn’t much money to be made in a competitive market. Startups

The people leading a startup should be experts in the product, like

Distribution is as important as the product. Find the right channel and

Doing something good for society is a misguided goal. It’s better to do

A chart is o ered with supposed negative traits on one side and

Look at Richard Branson. As someone who founded successful

Businesses need founders, even if they’re a little eccentric. They can be

The most important thing to bear in mind is that founders shouldn’t

Review of Zero to One by Forbes

Buy Zero to One on Amazon

Summary of Zero to One by Actionable Books Free

Summary of Zero to One by MeaningfulHQ Freemium

Summary of Zero to One by The Investors Podcast Free

Summary of Zero to One by Paul Miller Free

Summary of Zero to One by Blinkist Freemium

Summary of Zero to One by Get Abstract Freemium