“Zero to One” by Peter Thiel: Part Two

  1. Every startup should start with a very small market. Always err on the side of starting too small. The reason is simple: it’s easier to dominate a small market than a large one.
  2. From the Renaissance and the Enlightenment to the mid-20th century, luck was something to be mastered, dominated, and controlled; everyone agreed that you should do what you could, not focus on what you couldn’t. Ralph Waldo Emerson capured this ethos when he wrote: “Shallow men believe in luck, believe in circumstance… Strong men believe in cause and effect.” In 1912, after he became the first explorer to reach the South Pole, Roald Amundsen wrote: “Victory awaits him who has everything in order—luck, people call it.” No one pretended that misfortune didn’t exist, but prior generations believed in making their own luck by working hard.
  3. A definite view, by contrast, favors firm convictions. Instead of pursuing many-sided mediocrity and calling it “well-roundedness,” a definite person determines the one best thing to do and then does it. (See “Essentialism” and why it’s so easy to spread ourselves too thin at the expense of just doing a few things really really well)
  4. China is probably the most definitely pessimistic place in the world today. When Americans see the Chinese economy grow ferociously fast (10% per year since 2000), we imagine a confident country mastering its future. But that’s because Americans are still optimists, and we project our optimism onto China. From China’s viewpoint, economic growth cannot come fast enough. Every other country is afraid that China is going to take over the world; China is the only country afraid that it won’t.
  5. To an indefinite optimist, the future will be better, but he doesn’t know how exactly, so he won’t make any specific plans. He expects a profit from the future but sees no reason to design it concretely.
  6. In an indefinite world, people actually prefer unlimited optionality; money is more valuable than anything you could possibly do with it. Only in a definite future is money a means to an end, not the end itself.
  7. The other three views of the future can work. Definite optimism works when you build the future you envision. Definite pessimism works by building what can be copied without expecting anything new. Indefinite pessimism works because it’s self-fulfilling: if you’re a slacker with low expectations, they’ll probably be met. But indefinite optimism seems inherently unsustainable: how can the future get better if no one plans for it?
  8. Progress without planning is what we call “evolution.”
  9. Most sayings are forgotten. At the other extreme, a select few people like Einstein and Shakespeare are constantly quoted and ventriloquized. We shouldn’t be surprised, since small minorities often achieve disproportionate results. In 1906, economist Vilfredo Pareto discovered what became the “Pareto principle,” or the 80-20 rule, when he noticed that 20% of the people owned 80% of the land in Italy—a phenomenon that he found just as natural as the fact that 20% of the peapods in his garden produced 80% of the peas. This extraordinarily stark pattern, in which a small few radically outstrip all rivals, surrounds us everywhere in the natural and social world.
  10. It does matter what you do. 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.
  11. Every one of today’s most famous and familiar ideas was once unknown and unsuspected.
  12. Kaczynski (the Unabomber) claimed that in order to be happy, every individual “needs to have goals whose attainment required effort, and needs to succeed in attaining at least some of his goals.” He divided human goals into three groups:
    1. Goals that can be satisfied with minimal effort;
    2. Goals that can be satisfied with serious effort;
    3. Goals that cannot be satisfied, no matter how much effort one makes.

This is the classic trichotomy of the easy, the hard, and the impossible. Kaczynski argued that modern people are depressed because all the world’s hard problems have already been solved. What’s left to do is either easy or impossible, and pursuing those tasks is deeply unsatisfying.

  1. Four social trends have conspired to root out belief in secrets. First is incrementalism. From an early age, we are taught that the right way to do things is to proceed one very small step at a time, day by day, grade by grade. (Counter to the ideas presented in “The Tipping Point”). Second is risk aversion. People are scared of secrets because they are scared of being wrong. Third is complacency. Social elites have the most freedom and ability to explore new thinking, but they seem to believe in secrets the least. Why search for a new secret if you can comfortably collect rents on everything that has already been done? Fourth is “flatness.” As globalization advances, people perceive the world as one homogeneous, highly competitive marketplace: the world is “flat.”
  2. Very few people take unorthodox ideas seriously today, and the mainstream sees that as a sign of progress.
  3. Why work with a group of people who don’t even like each other? Many seem to think it’s a sacrifice necessary for making money. But taking a merely professional view of the workplace, in which free agents check in and out on a transactional basis, is worse than cold: it’s not even rational. Since time is your most valuable asset, it’s odd to spend it working with people who don’t envision the long-term future together.
  4. On the inside, every individual should be sharply distinguished by her work.
  5. Defining roles reduces conflict. Most fights inside a company happen when colleagues compete for the same responsibilities.
  6. The most fundamental reason that even businesspeople underestimate the importance of sales is the systemic effort to hide it at every level of every field in a world secretly driven by it.
  7. The most valuable companies in the future won’t ask what problems can be solved with computers alone. Instead they’ll ask: how can computers help humans solve harder problems?
  8. Customers won’t care about any particular technology unless it solves a particular problem in a superior way.
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