Book Highlights: Zero to One: Notes on Startups, or How to Build the Future (Peter Thiel)

in the long run they could never create enough to save the average person from an extremely hard life.

Creating value is not enough—you also need to capture some of the value you create.

by “monopoly,” we mean the kind of company that’s so good at what it does that no other firm can offer a close substitute.

If you lose sight of competitive reality and focus on trivial differentiating factors—maybe you think your naan is superior because of your great-grandmother’s recipe—your business is unlikely to survive.

Non-monopolists exaggerate their distinction by defining their market as the intersection of various smaller markets:

Monopolists, by contrast, disguise their monopoly by framing their market as the union of several large markets:

Do outsized profits come at the expense of the rest of society? Actually, yes: profits come out of customers’ wallets, and monopolies deserve their bad reputation—but only in a world where nothing changes.

If your industry is in a competitive equilibrium, the death of your business won’t matter to the world;

All Rhodes Scholars had a great future in their past.

Sometimes you do have to fight. Where that’s true, you should fight and win. There is no middle ground: either don’t throw any punches, or strike hard and end it quickly.

However, disruption has recently transmogrified into a self-congratulatory buzzword for anything posing as trendy and new.

Grandmaster José Raúl Capablanca put it well: to succeed, “you must study the endgame before everything else.”

“half luck, half good timing, and the rest brains.”

Today the whole Eurozone is in slow-motion crisis, and nobody is in charge.

The indefinite pessimist can’t know whether the inevitable decline will be fast or slow, catastrophic or gradual. All he can do is wait for it to happen, so he might as well eat, drink, and be merry in the meantime: hence Europe’s famous vacation mania.

Whether you were born in 1945 or 1950 or 1955, things got better every year for the first 18 years of your life, and it had nothing to do with you.

a whole generation learned from childhood to overrate the power of chance and underrate the importance of planning.

Gladwell at first appears to be making a contrarian critique of the myth of the self-made businessman, but actually his own account encapsulates the conventional view of a generation.

Finance epitomizes indefinite thinking because it’s the only way to make money when you have no idea how to create wealth.

To Nozick, any voluntary exchange must be allowed, and no social pattern could be noble enough to justify maintenance by coercion.

It starts with the professors who often become part-time consultants instead of full-time employees—even for the biotech startups that begin from their own research.

Jobs saw that you can change the world through careful planning, not by listening to focus group feedback or copying others’ successes.

Actually, there’s no evidence that Einstein ever said any of those things—the quotations are all apocryphal.

The error lies in expecting that venture returns will be normally distributed: that is, bad companies will fail, mediocre ones will stay flat, and good ones will return 2x or even 4x. Assuming this bland pattern, investors assemble a diversified portfolio and hope that winners counterbalance losers.

First, only invest in companies that have the potential to return the value of the entire fund. This is a scary rule, because it eliminates the vast majority of possible investments. (Even quite successful companies usually succeed on a more humble scale.) This leads to rule number two: because rule number one is so restrictive, there can’t be any other rules.

VC investment accounts for less than 0.2% of GDP. But the results of those investments disproportionately propel the entire economy. Venture-backed companies create 11% of all private sector jobs. They generate annual revenues equivalent to an astounding 21% of GDP.

Less obvious but just as important, an individual cannot diversify his own life by keeping dozens of equally possible careers in ready reserve.

You should focus relentlessly on something you’re good at doing, but before that you must think hard about whether it will be valuable in the future.

Most people act as if there were no secrets left to find. An extreme representative of this view is Ted Kaczynski, infamously known as the Unabomber. Kaczynski was a child prodigy who enrolled at Harvard at 16. He went on to get a PhD in math and become a professor at UC Berkeley. But you’ve only ever heard of him because of the 17-year terror campaign he waged with pipe bombs against professors, technologists, and businesspeople.

Religious fundamentalism, for example, allows no middle ground for hard questions: there are easy truths that children are expected to rattle off, and then there are the mysteries of God, which can’t be explained.

Free marketeers worship a similar logic. The value of things is set by the market. Even a child can look up stock quotes. But whether those prices make sense is not to be second-guessed; the market knows far more than you ever could.

Physics, for example, is a real major at all major universities, and it’s set in its ways. The opposite of physics might be astrology, but astrology doesn’t matter. What about something like nutrition? Nutrition matters for everybody, but you can’t major in it at Harvard. Most top scientists go into other fields. Most of the big studies were done 30 or 40 years ago, and most are seriously flawed.

“Thiel’s law”: a startup messed up at its foundation cannot be fixed.

Actually, a huge board will exercise no effective oversight at all; it merely provides cover for whatever microdictator actually runs the organization. If you want that kind of free rein from your board, blow it up to giant size. If you want an effective board, keep it small.

However, anyone who doesn’t own stock options or draw a regular salary from your company is fundamentally misaligned.

START WITH A THOUGHT EXPERIMENT: what would the ideal company culture look like? Employees should love their work. They should enjoy going to the office so much that formal business hours become obsolete and nobody watches the clock.

Why would someone join your company as its 20th engineer when she could go work at Google for more money and more prestige?

But there are two general kinds of good answers: answers about your mission and answers about your team.

People at a successful startup are fanatically right about something those outside it have missed.

Whatever the career, sales ability distinguishes superstars from also-rans. On Wall Street, a new hire starts as an “analyst” wielding technical expertise, but his goal is to become a dealmaker. A lawyer prides himself on professional credentials, but law firms are led by the rainmakers who bring in big clients. Even university professors, who claim authority from scholarly achievement, are envious of the self-promoters who define their fields.

Americans fear technology in the near future because they see it as a replay of the globalization of the near past. But the situations are very different: people compete for jobs and for resources; computers compete for neither.

And that’s the point: computers are tools, not rivals.

Social entrepreneurs aim to combine the best of both worlds and “do well by doing good.” Usually they end up doing neither.

Elon describes his staff this way: “If you’re at Tesla, you’re choosing to be at the equivalent of Special Forces. There’s the regular army, and that’s fine, but if you are working at Tesla, you’re choosing to step up your game.”