Author(s): Peter Thiel, Blake Masters

Published: September 16th 2014

Rating: 1.5

Of all the words of mice and men, the saddest are, "It might have been."

Kurt Vonnegut

Mr Vonnegut might not have been directly referring to Peter Thiel's book Zero to One in the above quote but if the shoe fits...

Innovation + Tech Startups + Famous Investor, what's not to love right? Zero to One is a book that I wanted to like and sounded promising, but quickly became a tedious read even given its short length (195 pages). Overall, I'm glad to have read the book and found that it caused me to pause and reflect at times, even if only to try to articulate why I disagreed with the point Mr. Thiel was trying to convey. 

One core idea that appears early in the book is that monopolies are beneficial to not only the business owner but also consumers and society as a whole. Competition is seen as a negative that hampers innovation and causes otherwise good companies to battle it out only to see everyone lose. When looking for new business opportunities, one should always strive to find a monopoly otherwise the endeavour is destined to fail.

Well...

I can see how a monopoly would be beneficial for the company, but fail to see how it is better at driving innovation than a competitive market. I thought I might have misread this and went back to re-read, but no, it appears that this is indeed the author's belief. There's a reason why monopolies are illegal -  it isn't because they are great for consumers.

Having said that, if you find yourself in a position where you can build a business idea in such a way that it presents itself as a monopoly then, by all means, do so. Some good examples given include launching Facebook into only a small market (Harvard grads) and making PayPal available to only eBay power users (20k). These decisions allowed both companies to focus, reach critical mass and then grow to the behemoths they are today.

Thiel identifies these characteristics for a monopoly:

  1. Proprietary Technology: This is the most substantive competitive advantage a company can have because it makes it difficult or impossible to replicate the product. Proprietary technology must be at least 10 times better that its closest substitute to lead to real monopolistic advantage.
  2. Network Effects: Makes a product more useful as more people use it.
  3. Economies of Scale: Gets stronger as it gets bigger. A good start-up should have the potential for great scale built into its first design.
  4. Branding: Creating a strong brand is a powerful way to create a monopoly

The other core tenet of the book (hence the name) is that we need what Thiel refers to as "Zero to One" innovation to grow as a society. What does this mean? According to Thiel, “Horizontal or extensive progress means copying things that work – going from one to n. Horizontal progress is easy to imagine because we already know what it looks like. Vertical or intensive progress means doing new things, going from zero to one.”

I suppose that I can't disagree with this outright. However, I don't believe that we should be so quick to dismiss "horizontal innovation" - otherwise how could we ever build a better mousetrap? Some of the examples provided were weak in my opinion (Facebook, Twitter, the usual Silicon Valley poster boys) and it felt like they were included more because of the author's involvement than them truly being good examples of innovation. Furthermore, the line between what is 'zero to one' and 'one to n' is unclear at best, seeing as all ideas build upon those that came prior in some manner. 

From here we move on to various ideas and philosophies that are of dubious value. There's the rant on education and being 'omnicompetent' (well-roundedness is bad! - coming from the author who admittedly started out studying philosophy, moved to practising law and then got interested in technology and investing). There's the anti-green tech chapter for a variety of reasons (technologies were not 10x better, poor timing, markets that were too large and competitive, etc.). And my personal favourite awful chapter on what real tech CEOs should look like (Elon Musk) including drawn pictures and my favourite quote: 

never invest in a tech CEO that wears a suit

Peter Thiel Zero to One

*Mic drop*

P.S. Despite my total negativity (maybe I'm just tired?) I really did find some parts of the book to be worthwhile. If you look at reviews on Amazon, it appears like I'm in the minority. It's also a quick read so I recommend borrowing a copy and seeing if anything resonates.


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Aaron Holmes

I'm a web developer who enjoys working daily with various web technologies, designs, and challenges.