When joining Veeva one of the CEO book read recommendations was Zero to One by Peter Thiel… His ideas at least, even if he didn’t write it. On the way back from a recent work trip to Korea I dropped in to a book shop not realising that all the books would be in Korean!
I now know that the smaller the selection the better the choice as the shop had a great selection including
this one. (Alain de Botton, Jack Reacher series, Game of Thrones etc.)
It’s clear why our CEO really likes that book and you can tell that he modelled or is in complete alignment with many of the philosophies.
The most profitable companies build a monopoly. At the same time you don’t want anyone to realise you are a monopoly so always compare yourself to a bigger segment. Both statements make complete sense and it’s making me re-evaluate my ideas on how I would start a company.
Why is that? If you’re not in a monopoly situation ( or various other positions that let you control the market) then you are in a cycle of endless competition. Endless competition means that everyone is fighting for margin. As you fight for margin you slowly make your way down to zero. Keeping the lights on doesn’t make sense to me so my idea of opening a restaurant is gone. It was a sad day that dream died 🙁
So how do you manage to create a monopoly? The book has this one question that was a recurring theme: What important truth do very few people agree with you on?
It’s that answer that will likely guide the way. There’s a lot of people without the resources to test those beliefs. There’s a lot of people with the resources who aren’t willing to take the risk or make the effort to prove those truths. Creating the truth is the essence of zero to one.
Globalisation on the other hand is seen as 1 to n. And that makes sense I think. When you look at competition there’s no bigger factor and it relentlessly grinds its way down to the point where even China finds it too expensive to manufacture some goods.
So how do you avoid competition and particularly a business war? What is Uber doing right now? You merge with the competition, purchase it, or invest and exit. While Grab may have market dominacdo in Singapore now I bet Uber is making more money here than they did before.
What are some of the ways that we can build a monopoly then? Zero to One suggests proprietary technology, network effects, and economies of scale, and branding as some. Hence your latest and greatest app might not go so far. Particularly as sales just as much as product. There’s no greater triviality than saying that your product is the best if no one buys it.
There’s no need to be a disruptor. Start small and monopolise. As you scale up try to repeat that same process – start small and monopolize. This is definitely at odds with most of what silicon valley promotes. Obviously you need to have a bigger picture in mind but its execution that matters. You want to be the last one left in the market – not the first.
There’s a bit of philosophy in the book too. Should you be indefinitely pessimistic or finitely optimistic? Thiel definitely recommends the latter as an other option puts you at the hand of fate. We all want to make our own destiny and how you see the world plays a big part in that. So what do we need? A bad plan is better than no plan at all.
My god this book packs the advice in. Consider these questions:
- The engineering question: Do we have a proprietary technology? Is it 10x better than the competition?
- The timing question: Is the market or trchntechn moving fast enough or in a way we can take it over?
- The monopoly question: Do we have any realistic monopoly?
- The people question: Do the people know their stuff or are they dressing to impress?
- The distribution question: Do I have a way to scale the distribution and keep the quality?
- The duarabidur question: What will the market look like in 10-20 years? How will my business fit in?
- The secret question: Do we really know a truth that no one else believe yet?
And finally… It’s okay to be a bit weird if you are chasing a dream. Just find some like minded consiprators so you’ll love the journey from Zero to One.