Book Review Zero to One: Notes on Startups, or How to Build the Future

By Dustin Smith

By Peter Thiel with Blake Masters

At Inovo, we are constantly dealing with the front-end of innovation so we were interested in Thiel and Master’s take on this phase of value creation. As one of the founders of Paypal and now a Silicon Valley fixture, Thiel has a large megaphone with which to voice his ideas and this book articulates many of them. Thiel’s central argument is that progress can take one of two forms: 0→1 and 1→n.The form that is harder, but more important and rewarding, is the move from 0->1: creating new technology.

But, according to the authors, for at least the past 40 years, we’ve been progressing only in 1→n, with the exception of information technologies. Nixon goes to China in ‘71 and eventually we have Thomas Friedman pronouncing the world flat. That disappointing world implies me-too companies (see on-demand laundry:  LaundryLocker, Sfwash, Sudzee, Washio), incrementalists (Pocket Avatars, Swiffer BISSELL® SteamBoost™) and those copying models in other industries or geographies (Yelp meets Squarespace in Lebanon). You get progress as proliferation rather than advancement.

Thiel’s remedy is secrets. Secrets that would enable 0→1 progress in the world of atoms, not only the digital world. He asks, “What important truth do very few people agree with you on?” and later explores the corollary, “What valuable business is no one starting?”

For instance, take the notion of first mover advantage, part of corporate and business school dogma. Gain the first mover advantage, then keep innovating to retain your edge. Often this is countered with equivalent of “the second mouse gets the cheese”: Learn from the mistakes of the first mover and assemble a truly powerful offering that bakes-in lessons learned. By contrast, Thiel contends that you want to be the “last mover,” creating a market with a technology-driven monopoly advantage that leaves you 10 times more appealing than your closest substitute.

The book has a more highly-produced feel than the Stanford class for which he originally prepared the material (notes converted into essays here by co-author Blake Masters). I prefer Thiel unplugged, riffing and digressing, but for the time-strapped, Zero to One is a fine introduction to his thesis.