Book Review: Zero to One by Peter Thiel, Blake Masters

Book Review of Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel & Blake Masters

19 min readApr 27, 2023

Introduction of Zero to One by Peter Thiel, Blake Masters. Peter Thiel, the founder of Paypal in the United States, is known as a thinker in the investment world and an angel in Silicon Valley. The PayPal he founded sold for 1.5 billion US dollars, and then he established a founder’s fund and invested infamous companies such as Linkedin, SpaceX, and Yelp.

The number one leader of the “PayPal gang” in Silicon Valley. As an excellent investor, his course lectures at Stanford have been organized by students and become a book “From 0 to 1”.

“From 0 to 1” can be seen as the crystallization of Peter’s thinking, so there is a lot of information. If you are interested, you’d better read it as soon as possible.

But according to his own words, his own thinking about the Internet may be summed up in the following four points:

Boldness is better than mediocre and conservative.
A bad plan is better than no plan
The competitive market is difficult to make money
Marketing and product are equally important

here. Let’s talk about competition. In Chapter 4, Peter talks about competition in detail. His core point is that competition is considered to be the essence of capitalism, but in reality, when companies are in competition, then the industry cannot make money; then you can’t continue to enter or stay in the industry, you should do It is to turn away and find a newer industry and extract monopoly profits from there. Only a monopoly can profit.

Peter’s statement is not new either. According to economics, when sufficient competition occurs, companies cannot obtain excess profits. Business management emphasizes achieving strategic differentiation when cost advantages cannot be achieved. Schumpeter talked about disruptive innovation, which means that companies can only achieve new breakthroughs by breaking the original organizational form.

There is a saying in the market economy, people who are good, I am good, people who are good and cheap, and people who are cheap, I will transfer, but Peter may be more direct, we simply don’t want to be cheap, and transfer directly.

Peter especially emphasized that the most important thing in starting a business is to get out of the competitive market, not only because it is difficult to make money in a competitive market, but also because if we pay too much attention to competition, then it means repeating the past model rather than innovating.

However, even if you are a leading entrant, you will inevitably have someone behind you or at the same time as you in certain market segments. So what to do at this time? Peter’s advice:

If you can’t beat your opponent, join forces with your opponent.

Back then, when Peter started PayPal, Musk (well, the father of Tesla) was also building a similar company, x.com. The two companies fought fiercely in 1999, and they went to war.

But the results were unsatisfactory: although the employees had worked overtime, Peter finally found out that this was simply wrong because he realized that the purpose of being a business is not to beat your opponents at all if you focus on Beat your opponents, so where do you have time to think of better ideas to develop?

After understanding the problem, the two companies merged quickly.

Peter Thiel said that the essence of entrepreneurship is to create a monopoly with a clear mind. Such a future is clearly more likely when mergers emerge.

So the competition is still fierce. So, what if there is another bloody battle? I think what Peter said is good: if you can fight then fight, if you can’t combine then run, If you can’t beat your opponent, you will join forces. For example, Peter Thiel and Elon Musk created Paypal.

Book: Zero to One by Peter Thiel, Blake Masters

Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel

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About the Author: Zero to One by Peter Thiel

Peter Thiel is an entrepreneur and investor. He started PayPal in 1998, led it as CEO, and took it public in 2002, defining a new era of fast and secure online commerce.

In 2004 he made the first outside investment in Facebook, where he The same year he launched Palantir Technologies, a software company that harnesses computers to empower human analysts in fields like national security and global finance.

He has provided early funding for LinkedIn, Yelp, and dozens of successful technology startups, many runs by former colleagues who have been dubbed the “PayPal Mafia.” He is a partner at Founders Fund, a Silicon Valley venture capital firm that has funded companies like SpaceX and Airbnb.

He started the Thiel Fellowship, which ignited a national debate by encouraging young people to put learning before schooling, and he leads the Thiel Foundation, which works to advance technological progress and long-term thinking about the future.

Blake Masters was a student at Stanford Law School in 2012 when his detailed notes on Peter’s class “Computer Science 183: Startup” became an internet sensation. He went on to co-found Judicata, a legal research technology startup.

Quoted from Zero to One by Peter Thiel

Sales are invisible
Salespeople are actors: their first priority is persuasion, not sincerity. That’s why the term “salesperson” has a derogatory connotation, and why used car dealers are a proxy for unfair trade. But we only despise bad salespeople with ulterior motives, that is, the less capable ones. There is a wide range of sales capabilities: there are many levels between novices, experts and masters, and even super masters. If you don’t know anything about super masters, it’s not because you haven’t met them, but because they’re highly skilled and invisible. Tom Sawyer, the protagonist in The Adventures of Tom Sawyer, convinces his neighbors to paint the fence for him — a masterful move. And convincing his friends to spend money to paint the fence for him is a master move, and his friends aren’t as smart as him. Not much has changed since Mark Twain wrote the book in 1876, the salesmanship of persuading people to willingly pay for fighting jobs.
As with acting, quiet sales are most effective. This explains why people who work in promotion — whether in sales, marketing, or advertising — have titles that have nothing to do with the job description. People who sell ads are called “business managers,” people who sell clients are called “business developers,” people who sell companies are called “investment bankers,” and people who sell themselves are called “politicians.” The name change makes a lot of sense: No one wants to be reminded that they’re being marketed.
Sales power is used in all walks of life to differentiate winners from losers. On Wall Street, a novice starts out as an “analyst” who emphasizes technical expertise, but his goal is to become a trader. Lawyers pride themselves on their professional qualifications, but law firms are run by experts who can attract big clients. Even college professors with prestige for their academic achievements envy the self-promoters who can call the shots. Academic views on history and English are not popular because of a high level of knowledge. Even the research agenda for fundamental physics and future trends in cancer research are the results of lobbying. Even business people underestimate the importance of sales, and the fundamental reason is that a world driven by sales secrecy has collectively obscured sales at every level in every field.
The engineer’s dream is to produce a product that is good enough to “sell it for yourself.” But the person who describes the actual product this way is lying: he’s either fanciful (deceiving himself) or trying to sell something (which would be paradoxical). A very different old business talk reminds us that “the best product doesn’t always win”. Economists attribute this to “path dependence”: specific historical circumstances determine which products are popular regardless of quality. That’s true, but that’s not to say the operating systems we use today and the keyboard layouts we type on are just random winners. It is more appropriate to make merchandising an essential factor in product design. If you invent new products and don’t sell them in an efficient way, then your business will be hard to sustain — no matter how good your product is.

— -Quoted from page 175

— — — — — — — — — — — — -

And in an uncertain optimistic future, there will be more bankers and lawyers. In fact, finance is not clear and it is a concentrated expression of thinking, because only when people do not know how to make money will they think of engaging in finance.
Financial uncertainty can be eerie. Think about what happens when successful entrepreneurs sell their companies? What do they do with the money? In such a financialized world, it goes something like this:

Entrepreneurs don’t know what to do with their money, so they keep it in the bank.
Bankers don’t know what to do with their money, so they give it to different institutional investors for different investment directions.
Institutional investors don’t know what to get money for, so they invest in stocks.
Companies try to generate free money flow to boost stock prices by paying dividends or buying back shares, and the cycle goes on and on.

— -Quoted from page 94

Book Summary: Zero to One by Peter Thiel

The chapters of this book are short, well-written, and easy to read.

Let’s start with the first interesting point:

Author:

When I interview candidates, I always ask a question: What important issues do you think about differently from others? Why ask this question?

In small terms, the future is just a moment yet to come, but what makes the future so unique is not that the future has not yet happened, but that the world of the future will be different from the present. If our society has not changed in the next 100 years, the future will be in 100 years. If the world changes in the next 10 years, the future is within reach.

Most answers to this anti-mainstream question are based on the present, and a good answer should give us a glimpse into the future as much as possible.

Technology:

Any new method, any method that can make things easier to do is technology, and that’s the right understanding of technology.

The charter company discussed the method of subdivided housing, allowing the tenants to live comfortably and generate income, making it easier to collect rent -> technology; company staff thought of ways to make things easier -> technology.

Monopoly and competition:

Google’s motto “Don’t be evil” is a brand strategy, and it also shows the characteristics of a successful enterprise — even if it strictly adheres to ethics, it will not affect the company’s development, how domineering!

Every monopoly enterprise obtains a monopoly position by solving a unique problem (JD.com focuses on the fast delivery card, which solves the problem that buyers need to wait for Taobao small sellers to pack -> find express delivery -> delivery), and the reason for the failure of the enterprise But it’s the same: none of them escape the competition.

The characteristics of a company/business with a future:

patented technology/network effect/scale economy, a brand advantage, the above four points have a low role in China’s patented technology, and it is difficult to achieve at first glance, but if these steps are carried out, Relatively easy:

first, capture a small market, the perfect target market for a startup is a specific group of people with few other competitors to compete with you (Facebook started with campuses);

once you have successfully created or dominated a niche market, it is necessary to gradually enter a slightly larger market. (Amazon is slowly expanding the category starting with books);

When expanding into adjacent markets, do not engage in disruption, avoid competition as much as possible, and create non-zero-sum competition instead of zero-sum or even negative-sum competition.

A group of harmony, and mutual support, do not take other people’s jobs, to create new pie, create increments, rather than compete for stock.

Power (compound interest):

Power is the most powerful force in the universe. The exponential equation describes the most unequal distribution. It completely defines the environment around us, and we hardly notice it. The world we live in is not a normal world but is under a power law.

“It doesn’t matter what you do, what matters is that you do it well” is a complete mistake. You should focus on what you are good at, and think carefully about whether it will add value in the future before doing it.

Power is very important to everyone because everyone is an investor. The biggest investment an entrepreneur makes is spending time setting up a new company. Therefore, every entrepreneur must think about whether his company will be successful and valuable in the future.

Also, everyone is an investor, you choose a career because you believe that the job you choose will become valuable in the decades to come, the most important thing is that it is unique, Markets may trump all markets, and one sales strategy may trump all sales strategies.

The counter-mainstream question for business:

What valuable companies haven’t been created yet? Every correct answer must be a secret: some things are important but no one knows, and some things are difficult but possible. If there are still many secrets in the world, there may be many companies that promise to change the world.

Why don’t people explore secrets?

Reasons: Incrementalism, risk aversion, complacency, is there no secret to flattening the current world? The world is not fair everywhere, the market is not completely efficient, so the world now has secrets. When a company no longer believes in secrets, it will go downhill, and when a person no longer believes in secrets, it will become an urban hippie (vinyl records, obsessed with cafes, small luck);

Airbnb and Uber are all business opportunities that have evolved from simple ideas. If such a simple idea can support important and valuable enterprises, then there must be many good companies waiting for us to start.

Great businesses are built on secrets that uniquely make them successful, and no one else knows about them.

About employees

Time is the most valuable asset, and wasting it on people who can’t work together for long is not worth the effort. If you can’t build a lasting relationship at work, you’re wasting your time — even from a purely financial standpoint.

Startups should ask themselves: Why to give up the opportunity to go to Google for a high salary and prestige, and go to your company as the 20th engineer?

The company should not fight the welfare war. People who come for free laundry or pet care will not be qualified members of your team. Tell employees why they are fighting and who they are fighting with to make employees do their best.

The difference between the best startups and cults is that cults are wildly wrong about important issues, while successful startups are very right about things that other companies don’t understand. There is no other difference.

The Myth of Philanthropy Entrepreneurship:

Doing Business for Good derives from the belief that for-profit companies and nonprofits are diametrically opposed: corporations have great influence, but are controlled by profit motives; nonprofit corporations pursue the public good but are more Vulnerable players in large economies. Philanthropy aims to combine the best of both worlds and succeed by doing good but often fails in both.

Doing something different is what really benefits society and is how businesses make money by monopolizing new markets. The best projects may be the ones that people ignore or the ones that aren’t hyped: the best problem is that no one tries to solve the problem!

In fact, any contribution to science is made only after you insist and discover that you are right when everyone does not know, disagrees, or even strongly opposes it. In other words, if you want to make achievements, the most important thing is: that you can’t do things that everyone has agreed with. That is, not following the crowd.

Book Review of Zero to One by Peter Thiel

I have to say that the beginning of the chapter, “From 0 to 1” reveals a “best-selling book strategy” that successful people teach business secrets, which also made me regret buying this book for a while.

But aside from the prejudice against business books, this book provides readers with a clear idea from the very beginning — ask questions, put forward hypotheses, provide conditions, give proofs, and analyze conclusions.

My understanding is that from the first chapter, Thiel made his point distinctly —

“I’m not writing a recipe for a successful startup, I’m writing a guide to critical thinking.”

Yes, he didn’t Put forward a point of view related to the content of the book, but first, clarify the difference between this book and other business success books. But there is an important emotional color that has been emphasized — criticism. I think the first keyword in this book is “criticism”.

The book “Zero to One” is not a recipe for success, nor does it have much experience talking about how to start a business and run a business, Peter Thiel wrote that although he noticed many patterns and covered them in the book, “Zero to One” This book is by no means a recipe for success.

There is no secret formula for entrepreneurship, especially the secret formula from 0 to 1 does not exist, because any innovation is novel and unique, and it is impossible for any authority to stipulate how to innovate.

In fact, the most important pattern is that successful people always find value in unexpected places, and they follow basic principles, not recipes.

In the first chapter of the book, Peter Thiel expands his thinking about this model further, and he always asks a question during interviews, what important issues do you differ from others? And Peter Thiel believes that a good answer is that most people believe X, but the truth is the opposite of X.

Here, I would like to elaborate on this issue. I think this issue is of unparalleled importance. This issue is far more important than we think because it is essentially the same as many issues. At least I think it is the same as the following The chapter discussion are all related.

Below are the notes for each chapter.

Chapter 1: “The Challenge of the Future”:

Globalization is a horizontal expansion that can only replicate previous successes, while technological innovation is a vertical expansion, creating something that did not exist before. Without technological innovation, only globalization, the world can only be finished. This is the reason for technological innovation.

Chapter 2: “Party Like It’s 1999”:

Review the pros and cons of the tech bubble in 1999. And how the world is dealing with the tech bubble of 1999 now. The failure of the Internet in 1999 led to enthusiasm for real estate, globalization, and four mistakes in technology.

Play the incremental safe route;
Trial and error instead of planning for the future;
Play the competitive game;
do not focus on sales.

The dot-com bubble of 1999 was a problem, but it can’t be dismissed outright. It is necessary to maintain the passion to create the world. Subsequent chapters will discuss how to achieve this passion, rather than be destroyed by it, as it was in 1999.

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