11 Big Takeaways From Peter Thiel’s Book Zero To One
When you unpack Peter Thiel’s ideas about innovation and business, you see that the mainstream education system is discordant with what we need to cultivate in society.
His book Zero to One came out in 2014 and operates as a how-to manual for business that is not formulaic (for reasons you’ll learn about below).
I know what you’re thinking… this guy is the Co-Founder of PayPal and first outside investor in Facebook… ‘just give us the answers!’ we say…
But that attitude is precisely the problem, and precisely the beast we feed with education. In that desire to copy success secrets, we begin conforming, and innovation usually goes in the precisely opposite direction to conformity.
Without any further ado, I’ll unpack here what’s discussed in episodes 199 and 200 of the With Joe Wehbe Podcast during our mini-series on Peter Thiel (episodes 195-202).
One — our current economic system doesn’t work too well if we don’t have continual growth.
This is the first (and quite obvious) idea to unpack. This is, in his mind, why we need a more innovative society.
I would cite Jeff Booth’s book The Price of Tomorrow though as I don’t think our financial system will last forever, and will eventually become deflationary… but I digress.
Two — he’s disappointed with our progress
He’s actually disappointed with our progress! Though it looks to us like there’s been a lot of innovation, Thiel points out that this is mostly in the information technology space, and not in other fields like genetic research and so forth.
I love this attitude — it holds society to a high bar. Our education system ironically constrains people to a very low bar, particularly via the stage-based system and treating everyone like they’re exactly the same. It breeds a kind of social mediocrity.
Three — education is anti-technological
Thiel says that ‘if technology is doing more with less, then education is the most anti-technological aspect of our society today,’ as it hasn’t changed but the price has gone up!
Four — science starts at two
First things first… ‘science starts at two’. What does this mean?
I use this example in the podcast episode #199 when I ask Luke to predict what number comes next in a sequence. ‘2, 4, ?’ — the answer is either 6 or 8. But what if we’re starting from zero? Where’s the pattern? How do we know what comes next?
This is where innovation begins, according to Thiel, whereas science needs a pattern… it needs a few instances in the sequence to begin making a hypothesis and extrapolate from there. In true innovation you’re creating something from zero, from nothing, which is the hardest thing.
So we come to the same conclusion we did when unpacking Nassim Taleb in episodes 181-194… innovation begins with entrepreneurship, not science.
Five — if you try to copy the greats you won’t learn from them
Now if you study Zuckerburg, Jobs, Gates, Larry Page, and try to copy them, you would ironically not be learning from them. You’d have to do something different! This is the opposite of what i) a non-risk-taking culture and ii) current mainstream education, which treats you like an identical batch, does. Remember previous episode we did #171: Education Cannot Be A Mass Product, and #168: Education Caters Least For The Areas We Need Most — innovators, entrepreneurs, thinkers.
The things they’ve done happened once, they were single-time events. Knowing exactly what they did won’t help you as much as you think.
Six — getting from zero to one is the hard part.
Getting from zero (nothing) to one (something) is the hard part, as one (something) to ‘n’ (more of that something) is way easier. The first customer is the hardest.
With the start of Constant Student we knew we needed feedback, so we ran a test cohort of 26 people, and from there we re-invented the entire concept! Our first 12 months has just been learning and seeing what people will pay for, show up to and get value from. It’s experiment, experiment, experiment, not succeed, succeed, succeed.
This is why ‘entrepreneurship is so hard’ and why it goes against the typical grain of linear thinking and the average person’s need for certainty.
Seven — Thiel’s favorite questions
Thiel’s favorite questions are, ‘what’s a business no one is building?’ and ‘what’s a belief you hold that no one agrees with?’ — funnily enough, the very opposite of consensus, the very opposite of box thinking, but in fact total Without-The-Box Thinking which we talked about in episode #136.
Eight — why competition is for losers
Thiel is famous for his dicta that competition is for losers! If you’re in a category-of-one, you’re in your own space where no one can compete with you, compared to the companies he says who just try to say they’re different, but lock themselves into competition because they can’t think Without-The-Box about a new value proposition or point-of-difference.
The thing is, these ideas come quite naturally to you… we can see how Thiel optimises for this in the next episode with the Thiel Fellowship.
Nine — the importance of companies and startups
And here I quote:
Properly defined, a startup is the largest group of people you can convince of a plan to build a different future. A new company’s most important strength is new thinking: even more important than nimbleness, small size affords space to think. Combine this with the monopoly point, if you don’t have to worry about money, you can think. I’ve felt this. Again, I don’t see this in our current system, especially with what we call the CONVENTIONAL CAREER. It necessitates that you’re worried or continually thinking about money, and the reward for more money is to think about getting more money.
Ten — we need to consider how we think about the past
Again, in education, the linear model where you’re taught to continue with what has come before is 1. instructive and prescriptive and 2. does not have a conception of Without-The-Box thinking. The whole thing is against Without-The-Box Thinking.
What am I talking about? Consider the below example collated on the Farnam Street blog.
The entrepreneurs who stuck with Silicon Valley learned four big lessons from the dot-com crash that still guide business thinking today:
1. Make incremental advances — “Grand visions inflated the bubble, so they should not be indulged. Anyone who claims to be able to do something great is suspect, and anyone who wants to change the world should be more humble. Small, incremental steps are the only safe path forward.”
2. Stay lean and flexible — “All companies must be lean, which is code for unplanned. You should not know what your business will do; planning is arrogant and inflexible. Instead you should try things out, iterate, and treat entrepreneurship as agnostic experimentation.”
3. Improve on the competition — “Don’t try to create a new market prematurely. The only way to know that you have a real business is to start with an already existing customer, so you should build your company by improving on recognizable products already offered by successful competitors.”
4. Focus on product, not sales — “If your product requires advertising or salespeople to sell it, it’s not good enough: technology is primarily about product development, not distribution. Bubble-era advertising was obviously wasteful, so the only sustainable growth is viral growth.”
These lessons have become dogma in the startup world; those who would ignore them are presumed to invite the justified doom visited upon technology in the great crash of 2000. And yet the opposite principles are probably more correct.
1. It is better to risk boldness than triviality.2. A bad plan is better than no plan.3. Competitive markets destroy profits.4. Sales matters just as much as product.”
To build the future we need to challenge the dogmas that shape our view of the past. That doesn’t mean the opposite of what is believed is necessarily true, it means that you need to rethink what is and is not true and determine how that shapes how we see the world today. As Thiel says, “The most contrarian thing of all is not to oppose the crowd but to think for yourself.
Eleven — rivalry and competition force us to copy the past
Rivalry and petty competition forces us to copy the past and prevents us from moving forward. Normally people fight but not for a clear reason — I think some part of this is the regression to the mean that is part of our education system, which again is the precise opposite of what should be happening. Short-term thinking is all about rushing towards ‘what works’ at the expense of broader thinking.
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The episodes on Peter Thiel are #195 to #202!