11 Insights from Zero to One

Hey y’all — this week I re-read one of my favorite books that I recommend to all founders, Zero to One by Peter Thiel.

There’s no single book that inspired me think big like Zero to One.

It’s the manual for how to think as a founder.

While I was reading, I jotted down 11 insights from the book and am sharing them as this week’s issue.

11 Lessons from Zero to One

Create Something New

Going zero to one means starting at zero.

Your goal shouldn’t be to make something marginally better than an existing solution, and win some small chunk of the market.

Instead, build a groundbreaking product that owns an entire market and change the world.

Create — don’t imitate.

I talked about this with Gamma’s founder Grant Lee a few weeks ago.

Aim to be a Monopoly

Monopolies scare people — 99% think they’re inherently bad — but Thiel argues they can be good not just for the business that becomes the monopoly, but for society as well.

The argument for making a monopoly your goal is surprisingly simple:

Focus on longterm domination of your market rather than short-term wins, much like Airbnb’s Brian Chesky who talks about his “infinite time horizon” as one of the two defining characteristics of Airbnb.

By doing this you incentivize yourself to always be aware of emergent threats and the need to consistently innovate to stay ahead of them — you’re not just trying to put more pennies in your pocket today.

In this way, aiming to be a monopoly incentivizes continued value creation (and is a net positive for society) even though your chances of actually achieving a monopoly are low.

Most companies that succeed in becoming monopolies end up losing their edge and no longer innovating, but this isn’t an inherent trait of monopolies — it’s just bad management.

Start Small, Win Big

Most investors will tell you they look for markets that are big enough to support a venture-scale return for their fund. Typically this means they have to see a path to a few hundred million dollars in annual revenue.

But Thiel says founders should actually target small, niche markets.

NVIDIA is a good example of this.

They just became the 3rd most valuable company in the world, but they started out building chips for a specific use case (graphics processing for video games). It just turned out that those chips were also much more generalizable than they expected as new technology emerged (aka AI, in particular).

Even if the market doesn’t open up quite as nicely for you as it has for NVIDIA, the lesson still applies:

Target a small niche market. Dominate it by building the best possible product for it. Then, once you have a strong customer base expand strategically to tangential markets.

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