Zero to One: Notes on Startups, or How to Build the Future
by Peter Thiel with Blake Masters. The book is scheduled to release in September but they were kind enough to send an "advance reader's edition" !!
This book was derived from Blake Masters CS813 notes but Thiel has added more of his wisdom. Highly recommended - each chapter has its own unique "Thielian" insight. You can pre-order the book here.
Back in class one, we identified a very key question that you should continually ask yourself:
What important truth do very few people agree with you on? To a first approximation, the correct answer is going to be a secret. Secrets are unpopular or unconventional truths. So if you come up with a good answer, that’s your secret.
How many secrets are there in the world? Recall that, reframed in a business context, the key question is: what great company is no one starting? If there are many possible answers, it means that there are many great companies that could be created. If there are no good answers, it’s probably a very bad idea to start a company. From this perspective, the question of how many secrets exist in our world is roughly equivalent to how many startups people should start.
How hard it is to obtain the truth is a key factor to consider when thinking about secrets. Easy truths are simply accepted conventions. Pretty much everybody knows them. On the other side of the spectrum are things that are impossible to figure out. These are mysteries, not secrets. Take superstring theory in physics, for instance. You can’t really design experiments to test it. The big criticism is that no one could ever actually figure it out. But is it just really hard? Or is it a fool’s errand? This distinction is important. Intermediate, difficult things are at least possible. Impossible things are not. Knowing the difference is the difference between pursuing lucrative ventures and guaranteed failure.
Discovery is the process of exposing secrets. The secrets are dis- covered; the cover is removed from the secret. Triangle math was hard for Pythagoras to discover. There were various Pythagorean mystery cults where the initiated learned about crazy new things like irrational numbers. But then it all became convention.
It can also work the other way, too. Conventions can get covered up and become secrets again. It’s often the case that people stop believing things that they or previous generations had believed in the past.
Some secrets are small and incremental. Others are very big. Some secrets—gossip, for instance—are just silly. And of course there are esoteric secrets—the stuff of tarot cards and numerology. Silly and esoteric secrets don’t matter much. And small secrets are of small importance. The focus should be on the secrets that matter: the big secrets that are true.
The purpose of this class is to share and discuss some secrets about starting companies. The big ones so far have involved monopoly vs. competition, the power law, and the importance of distribution.
“Capitalism and competition are antonyms.” That is a secret; it is an important truth, and most people disagree with it. People generally believe that the differences between firms are pretty small. They miss the big monopoly secret because they don’t see through the human secrets behind it. Monopolists pretend that they’re not monopolists (“Don’t regulate us!”) and non-monopolists pretend that they are (“We are so big and important!”). Things only tend to look similar on the surface.
The power law secret operates similarly. In one sense it’s a secret about finance. Startup outcomes are not evenly distributed; the follow a power law distribution. But in another sense it’s a very human secret. People are uncomfortable talking about inequality, so they either ignore it or rationalize it away. It is psychologically difficult for investors to admit that their best investment is worth more than the rest of their portfolio companies combined. So they ignore or hide that fact, and it becomes a secret.
by Peter Thiel with Blake Masters. The book is scheduled to release in September but they were kind enough to send an "advance reader's edition" !!This book was derived from Blake Masters CS813 notes but Thiel has added more of his wisdom. Highly recommended - each chapter has its own unique "Thielian" insight. You can pre-order the book here.
Secrets
Back in class one, we identified a very key question that you should continually ask yourself:
What important truth do very few people agree with you on? To a first approximation, the correct answer is going to be a secret. Secrets are unpopular or unconventional truths. So if you come up with a good answer, that’s your secret.
How many secrets are there in the world? Recall that, reframed in a business context, the key question is: what great company is no one starting? If there are many possible answers, it means that there are many great companies that could be created. If there are no good answers, it’s probably a very bad idea to start a company. From this perspective, the question of how many secrets exist in our world is roughly equivalent to how many startups people should start.
How hard it is to obtain the truth is a key factor to consider when thinking about secrets. Easy truths are simply accepted conventions. Pretty much everybody knows them. On the other side of the spectrum are things that are impossible to figure out. These are mysteries, not secrets. Take superstring theory in physics, for instance. You can’t really design experiments to test it. The big criticism is that no one could ever actually figure it out. But is it just really hard? Or is it a fool’s errand? This distinction is important. Intermediate, difficult things are at least possible. Impossible things are not. Knowing the difference is the difference between pursuing lucrative ventures and guaranteed failure.
Discovery is the process of exposing secrets. The secrets are dis- covered; the cover is removed from the secret. Triangle math was hard for Pythagoras to discover. There were various Pythagorean mystery cults where the initiated learned about crazy new things like irrational numbers. But then it all became convention.
It can also work the other way, too. Conventions can get covered up and become secrets again. It’s often the case that people stop believing things that they or previous generations had believed in the past.
Some secrets are small and incremental. Others are very big. Some secrets—gossip, for instance—are just silly. And of course there are esoteric secrets—the stuff of tarot cards and numerology. Silly and esoteric secrets don’t matter much. And small secrets are of small importance. The focus should be on the secrets that matter: the big secrets that are true.
The purpose of this class is to share and discuss some secrets about starting companies. The big ones so far have involved monopoly vs. competition, the power law, and the importance of distribution.
“Capitalism and competition are antonyms.” That is a secret; it is an important truth, and most people disagree with it. People generally believe that the differences between firms are pretty small. They miss the big monopoly secret because they don’t see through the human secrets behind it. Monopolists pretend that they’re not monopolists (“Don’t regulate us!”) and non-monopolists pretend that they are (“We are so big and important!”). Things only tend to look similar on the surface.
The power law secret operates similarly. In one sense it’s a secret about finance. Startup outcomes are not evenly distributed; the follow a power law distribution. But in another sense it’s a very human secret. People are uncomfortable talking about inequality, so they either ignore it or rationalize it away. It is psychologically difficult for investors to admit that their best investment is worth more than the rest of their portfolio companies combined. So they ignore or hide that fact, and it becomes a secret.
No comments:
Post a Comment