Author, Screenwriter, Creative Consultant
“What I Talk About When I Talk About Zero to One” (Journal)
Is your startup or business or career dangling between life and death?
Battling entrenched competition? Burning marketing dollars? Growing too slowly?
In “What I Talk About When I Talk About Zero to One,” Stefano Boscutti quickly reviews the assumptions laid out in Peter Thiel’s breakthrough best seller “Zero to One” and shows you how you can profit from them in your startup or business or career.
You can quickly see how to build ongoing success in a world increasingly dominated by information technology.
Are you ready to create a better and more profitable future?
‘Why did I write this? To question some of Thiel’s assertions and quickly give you a better, deeper understanding of his thinking to save you having to spend days reading and taking notes. There’s more than a few insights and takeaways you can action today to make your future come true.’ Stefano Boscutti
‘Deeply subjective review of Silicon Valley’s reigning philosopher king.’ Louise Harkins
‘Prompts you to think hard about the future of business.’ Martin van Rhyn
‘Full of playful insights into creating a new world.’ David Nealson
Exclusive Author Edition / Rated PG-13 / 4,000 words / 16 minutes of monopolistic reading pleasure /
Prefer to read free online? Scroll on to read the whole journal.
‘We wanted flying cars, instead we got 140 characters.’ Peter Thiel
WHAT I TALK ABOUT WHEN I TALK ABOUT ZERO TO ONE
Copyright 2017 Stefano Boscutti
All Rights Reserved
Discover new stories, screenplays, novels and more by Stefano Boscutti at boscutti.com
What a magical word.
It conjures up a valley of silicon unicorns, prancing in the low grass, spraying bitcoins from their golden horns. Enchanted platforms that effortlessly scale into millions and billions of users. Endless clouds of technological wonders raining cash.
Of course, the reality is sleep-deprived coders and hackers hanging on for dear life as depression, bad skin and way too many energy drinks derail their dreams. The road from startup to fuckup is short indeed.
You can set up a startup in a blink of an eye. You don’t even need a garage anymore. Hell, you don’t even need pants. All you need is an idea and a domain name. And maybe a few secrets.
Who wouldn’t want to learn the startup secrets from one of the world’s most prominent billionaire venture capitalists?
Peter Thiel co-founded PayPal with a bunch of bomb-making immigrants who dreamt of crashing the U.S dollar only to sell out to eBay for more money than God. Peter went on to become the first outside investor in Facebook which, thanks to the explosion of social media, has made him very rich indeed.
“Zero to One: Notes on Startups, or How to Build the Future” began as a series of notes taken by Blake Masters while attending Peter Thiel’s CS183 Startup Course at Stanford in Spring 2012. Masters posted the notes on his blog where it drew hundreds of thousands of readers. Thiel and Masters expanded the notes into a book published by Crown Business, a division of Random House, in 2014.
With its defiantly contrarian perspective, it became an instant best seller, and a must read for anyone in or around (or flying over) Silicon Valley.
Its key points have been flipped, questioned, stretched and distilled in the following seven chapters.
They apply to anyone with a taste for the future.
As well as the odd unicorn or two.
1 - Incrementalism won’t save you or the world
‘What important truth do very few people agree with you on?’ Peter Thiel
Creating the future by making the present a little bit better is a little bit stupid.
There’s little risk (which may sound smart). But little risk means there’s also very little reward.
Worse still, if it’s an improvement any of your competitors can make, then all you’ll really do is increase the breadth of competition. You’ll give your competitors an extra improvement to match and compete on.
True progress is not minimal progress. True progress is inventing the future, not polishing the present. It’s going from zero to one instead of one to n. Thiel sees vertical progress as zero to one, and horizontal progress as one to n.
For example, horizontal progress is mass-producing phones and distributing them to developing countries while vertical progress is building the first smartphone. Building a product or service that creates its own market is a sure way to go from zero to one.
Horizontal progress is easy because it expands on existing ideas and innovations. (Rose gold, anyone?) Globalization helps spread existing ideas to more people.
Vertical progress demands you create something entirely new that didn’t exist before. A totally new technology. A brand new method.
Focusing on the status quo will limit the potential for you to make your own future. Looking into the present (or worse, the past) is no way to step in the future.
You can only predict the future successfully if you can look at the present critically. You have to be massively dissatisfied with the current options. Not just irked. Seriously annoyed. Angry even.
You have to think beyond established conventions to see and make the future. The status quo is not your friend.
If the majority of people disagree with your future idea, you’re probably on the right track.
2 - You make the future or the future makes you
‘By the time a student gets to college, he’s spent a decade curating a bewilderingly diverse resume to prepare for a completely unknowable future. Come what may, he’s ready for nothing in particular.’ Peter Thiel
Do you see the future as a billion points of light with infinite possibilities?
Hmmm, time to change your view. Don’t think indefinitely in an attempt to prepare yourself for all possible future events. It’s futile thinking because the future holds way too many unknowns and variables. You can’t possibly prepare for all of them. Sure, it’s fun to think of all the possibilities, but you’ll spend your life in a dreamland of what could be.
Let’s bring the future down to earth. Let’s focus on achieving the future that’s best for you. Don’t just make any future. Make your own future come true.
Education is of little help in this regard. Schoolchildren are raised on a buffet of extracurricular activities in the hopes that a wide range of experience will get them into a leading university. They know nothing about lots of things.
Thiel believes it makes far more sense for them to focus on mastering a single subject so they can become the best in one thing instead of the worst (or at best middling) in a lot of things. Being like everyone else is the best way to guarantee you’ll be average. Excellent for a banking or management consulting career but a serious handicap to successfully building the future.
Success is not deemed by fate and luck. Success is the result of focus, dedication, and determination. This explains why driven people like Steve Job founded one thriving business after another. Their focus and determination can be applied to one business after the other.
Focus is key for your startup because your startup only has one best future. It isn’t going to happen by accident. It requires concerted effort
Your startup can only be successful under very specific conditions. There’s only one best market for the product or service, only one best time to launch, and so on.
For you to make your startup a success, you must choose the future you’re pursuing very carefully.
If you miss, you don’t get a second chance.
3 - You’ve got to be slightly strange
‘I think one of the most contrarian things you can do in our society is try to think for yourself.’ Peter Thiel
Odd, loopy, weird, crazy, eccentric, bizarre.
Successful startup founders are far from conventional.
Steve Jobs used to wash his feet in a toilet and go on month-long diets eating only apples. He said taking LSD was a profound experience. LSD showed him there’s another side to the coin. It reinforced his sense that creating great things was more important than making money.
Almost every member of PayPal’s founding team was, well, strange. As teenagers, most of them built bombs as a hobby. (One of those founding members was Elon Musk who went on to launch the private space company SpaceX. What’s a rocket except a slowly exploding bomb with fins?)
Being original is critical because as a founder you do more than just start a company. You give it a vision.
A company without a vision doesn’t know where it’s headed. Not surprisingly, it tends to wobble around in circles or quickly loses its way. It doesn’t matter how amazing the strategy is or how fantastic management is, without a vision to pursue you’re lost.
Consider Steve Jobs return to Apple in 1997 after being kicked out of the company by the board a decade earlier. When Jobs came back, Apple was months away from bankruptcy with a stale me-too product line, declining market share and a stock most analysts had written off.
But Jobs had a vision to create a different kind of computer company. When he launched the iPod in 2001, most people thought it was just a cool gadget. 1,000 songs in your pocket? Neat!
Jobs knew it was part of his larger vision to put computing in your hand, away from desktops and laptops. The iPod led to iTunes which led to the iPhone which led to apps which led to the iPad which created an entire family of products and a singular ecosystem for the post-PC world.
Jobs made Apple the most valuable company in the world by following a carefully thought-out plan based on his personal vision.
Forget the focus groups, ditch the surveys, torch the pilot studies. Forget trying to blend in and acting normal. Look at what makes you different. Look at how you look at the world and how you can make it better.
That’s your vision. That’s what you need to hold on to. That’s what you need to focus on.
Think like a heretic.
Be a misfit.
4 - What’s your monopoly?
‘If you can’t monopolize a unique solution, you’ll be stuck with vicious competition.’ Peter Thiel
Thiel thinks monopolies are the second coming.
Rather than giant evil companies crushing competitors at every turn while milking consumers dry, Thiel believes it’s monopolies that drive innovation and create economic stimulus. (Given he’s invested in more than few monopolies, it’s hard for him to argue otherwise.)
Monopolies are profit machines because they can set their own prices and market parameters. True monopolies don’t have competitors cutting prices or launching new products or any of those shenanigans. They don’t have competitors period. This is an excellent way to make serious money.
Entering a competitive market is a fool’s paradise because competitors are constantly cutting corners and prices to make sales. This erodes profits.
Look at the highly competitive U.S. airline industry. In 2012, a single passenger trip generated a measly $0.37 of profit. That’s right, 37 cents per trip. Whoop de doo!
Meanwhile, Google keeps over a quarter of its revenues as profits. (Yes, it’s a lot of money. That’s why you never read stories about Google’s monopoly position and instead lots of stories about self-driving cars and internet toasters and whatever. Anything to distract governments away from the fact they control pretty much all online advertising.
If your startup isn’t a monopoly, you’re not going to make any money. I know it sounds blunt, but it’s true.
Want your monopoly to thrive? You’ll need these four defining characteristics - technological advantages, network effects, economies of scale and strong branding.
Technological advantages require your proprietary technology to work at least ten times better than anyone else. Google is ten times faster and better than the next search engine which makes it incredibly difficult for a competitor to supplant them. (Although Facebook is given them a run for their money.)
Network effects mean your product becomes more useful as more people use it. Telephones and fax machines were an early example. Facebook is a more current case in point. Newcomers face an uphill battle when trying to lure customers away from monopolies with broad existing customer bases.
Economies of scale produce massive cost savings as you grow your customer base. This means you can offer customers more attractive prices than any newcomers and further strengthen your position.
Strong branding unifies and sets you apart from potential competitors. Apple is an excellent example of well-designed products, stores, and customer experiences that competitors haven’t been able to come close to matching.
How well does your startup deliver on these four characteristics? It’s not a question of picking and choosing. You have to excel at all four to create a true monopoly.
The more you excel at all four, the more you have a monopoly. (And the more reason you have to contact me as a potential investor.)
5 - Can you keep a secret?
‘If your goal is to never make a mistake in your life, you shouldn’t look for secrets. The prospect of being lonely but right - dedicating your life to something that no one else believes in - is already hard. The prospect of being lonely and wrong can be unbearable.’ Peter Thiel
It’s tempting to think there are no more ways to be truly original. No more secrets to uncover.
It’s easy to think there are no more new ideas in the world. Easy but stupid. It’s a dangerous misconception that will keep you from being successful. It strangles your thinking. It kills possibilities.
The world still has plenty of secrets that most people cannot see and cannot agree on. Plenty of hidden ways to go from zero to one. They’re not easy to discover. But they’re there. You just have to look harder.
Some secrets are so deeply buried in society that it takes generations to discover them. Up until a few centuries ago, slavery was common and socially acceptable. Everyone agreed that it was just fine and dandy. Back then, the immutable fact that slavery was wrong was a secret. It took generations (and a civil war) for the truth to come out.
You don’t have that much time. If you’re a tech company, the best secret is to produce better technology than your competitors. This will make your position as market leaders unassailable.
But here’s the problem with secrets. Once they become public, they’re no longer secret. Everyone knows about them. And everyone can copy them
You have to keep chasing secrets if you want to hold onto your position as market leader. You can’t rest on your laurels.
In the 1990s, Hewlett-Packard chased secrets like a motherfucker. It had the best technology and used it to bring out one innovative product after another to gain increasing market share and bolster their leadership. That changed in the 2000s when technological engineering gave way to financial engineering and they stopped chasing secrets and inventing new products. Their leadership position dissolved, they lost half of their market value, and they’ve never recovered.
Who wants to become just another provider of horizontal progress, offering conventional products in a competitive market that makes little if any profit? Seriously, why bother?
Chasing secrets will keep you primed for the future.
6 - You need the right people that believe what you believe
‘The best entrepreneurs know every great business is built around a secret that’s hidden from the outside. A great company is a conspiracy to change the world. When you share your secret, the recipient becomes a fellow conspirator.’ Peter Thiel
Finding the right people for your startup is critical.
Regardless of whether your startup is in a hostel in Silicon Valley or in glittering offices high above Wall Street, you need a solid foundation in your early days to survive.
You need strong personal ties. (If you’re thinking of investing in a startup, look closely at the personal interaction between the founders. Are they getting on like best friends? Good. Are they distant and look like they’ve only come together for the money? Pass.)
At the start of every startup, everyone has to do more than one job. There’s lots of overlapping and treading on toes. It’s easier and far more productive if everyone gets on. Far more successful if everyone is there for the same reasons.
A strong culture helps everyone work effectively together. That doesn’t mean bean bags and a climbing wall in the foyer. (While we’re at it, can we ease up on the primary colors and childish furniture. It’s a startup, not a day care center.)
There’s more to company culture than some perks, organic sodas and success posters. True culture is the relationship between people. It’s typically felt rather spelled out. If you don’t care about your company culture, it doesn’t mean you don’t have one. It means that your company culture is that you don’t care. (Good luck riding that into the future.)
Culture plays out with investors too. If your board is pressing for profits at all costs while you and your team want to focus on quality at all costs, this misalignment will end in tears if it’s not resolved up front.
Building a successful monopoly takes time.
It can take a startup years to become profitable. Value? Not so long.
It’s easy to confuse profitability with value. But even when a startup doesn’t initially make profits, it can still have significant value. Why? Because value is determined by the profits made over a company’s entire lifespan.
In 2001, PayPal wasn’t making any profits. Not even close. In fact, the team expected the first profits to come more than ten years later. But that didn’t stop eBay from buying PayPal just a year later in 2002 for $1.5 billion.
Why would eBay pay $1.5 billion for a startup that was losing money hand over fist? Why would eBay pay $1.5 billion for a company that was paying $10 to acquire each customer? Because Thiel and his team cleverly targeted PayPal as the simple credit card based payment gateway for eBay payments. User numbers exploded because of PayPal’s technological advantages, network effects, economies of scale and strong branding. Before long, more than 70 percent of all eBay auctions used PayPal payments.
All eBay did was work out the lifetime value of owning those PayPal payments and paid accordingly.
PayPal didn’t become a success overnight. You need to be prepared, organized and motivated to grow for the long term.
Start small and expand bit by bit. Don’t rush it. If you stumble and fall, it’s quite likely you won’t be able to get up again.
Don’t think big. Think small. Make your market as narrow and specific as possible. Don’t try and be all things to all people. Be all things to a handful of people. Create a market that is either non-existent or underserved that you can dominate from the beginning.
It’s only after you’ve secured a monopoly in a niche that you can move on to the next, broader market.
Be clear about what you’re selling. Choose your sales strategies and distribution channels carefully.
7 - Can you answer these seven key questions?
‘The most valuable businesses of coming decades will be built by entrepreneurs who seek to empower people rather than try to make them obsolete.’ Peter Thiel
Are you rushing in where angels fear to tread?
Are you letting your emotions get the better of you? Have you analyzed and understood the market with a clear mind and an open heart?
Thiel has seven key questions he asks every company before he considers making an investment. One no is all it takes to move onto the next opportunity.
How does your startup stack up?
The Timing Question - Is this the right time to start your business? Is government regulation in your favor? Is society moving in your direction? Being just ahead of the curve is the sweet spot.
The Engineering Question - Can you create a true technological breakthrough? Do you understand that all technology is information technology? Is your technology ten times better than your competitors? Slightly better doesn’t count.
The Monopoly Question - Will you start off with a large share of a small market? How fast can you build a monopoly in that small market? The faster, the better.
The Secret Question - Do you see a unique opportunity that others have missed? What can you see that no one else can? What’s your secret? It’s okay if people don’t understand it. (The test of an extraordinary idea is if it bamboozles ordinary people.)
The People Question - Can your team pursue this opportunity? Can your team roll up their sleeves and actually build this product or service? Outsourcing doesn’t cut it.
The Distribution Question - How will you deliver your product to customers? What distribution channels will you use? It’s good to leverage more than one.
The Durability Question - Will you still be able to defend your market position in 10 or 20 years? Or will competitors (or legal bills) eat you alive?
Innovative companies like Tesla have answers to all these key questions.
Your success is not a matter of luck.
It’s not a fluke. It’s not just a question of timing (although that does matter).
You can pursue the future you want as long as you’re able to challenge established conventions and obtain a monopoly by being 10 times better at something than anyone else.
You can make your life magic.
Stefano Boscutti is an award-winning writer based in Melbourne, Australia. Stefano is also an
expert creative consultant specialising in world-changing creative projects and
campaigns for Ford, Foxtel, Lexus, Porsche, Qantas, SBS, Warner Bros. and more. McKinsey & Co?
Not after the consultancy’s role in helping Saudi Arabia target online critics. Questions?