Zero To One, Ten-ish Years Later
Thiel's book turns 12 this year. It's got #2016 vibes though.
Peter Thiel published Zero to One in September 2014. I bought and read the book immediately, and it was career-defining for me.
That same September, I gave notice that I was leaving my job in equity research. I loved the work, but it was time to move on. I also turned 30 that week. The book felt like it was published at the exact moment I needed a push to make a change — one I’d been mulling over for most of that year as my birthday approached.
There’s much I loved about the book, and I was reminded of its primary lessons this weekend after re-stumbling upon this video from #2016. I’ll revisit some of the book’s core themes below. But there was one thing in particular that struck me more than anything, and at the time, reinforced my choice to design an entrepreneurial career path.
From Chapter 10, “The Mechanics of Mafia”
In the most dysfunctional organizations, signaling that work is being done becomes a better strategy for career advancement than actually doing work (if this describes your company, you should quit now).
At the time, I was vying for a pay raise — one I could only get by receiving a competing offer from a rival bank. (My direct boss actually encouraged me to interview, pointing out others at the firm who’d secured higher pay this way.) I took his advice, interviewed around, and landed a verbal offer from a competitive firm that paid double.
But then, literally that same week, I read chapter ten. A few weeks later, I quit and took a job at a startup I was advising on the side — one that paid half instead. The text resonated. I wanted upside tied to my output, not my ability to interview and “play the game.”
I’m more comfortable with competitive dynamics now than I was back then. At the time, I was frustrated that being a top performer wasn’t enough. I was more incentivized to interview around than commit to the organization and stay focused? That frustration absolutely contributed to my decision to quit. But I’ve come to realize that if you want to work on Wall Street, or in any competitive field, you do have to stay sharp and play the game. I’m not suggesting you leave the game altogether. (Take it from someone who tried. It doesn’t work.) What I am suggesting is to choose work where the game isn’t the thing. You can choose work that’s generative and creative. Where the incentive to create value for other humans and produce great work outweighs one’s ability to interview well.
Peter Thiel: Going from Zero to One (Video from 2016)
Starting or joining an early-stage company is one great way to produce great work and create value for other humans. So is funneling capital toward these endeavors, in my opinion. Everything a startup creates is net new, even if it’s a riff on an old idea.
So in the spirit of things that are ten years old, and older, here are a few lessons I learned about building and investing in new things from watching this video on repeat in 2016:
Competition is for losers. All unhappy companies are the same because they endlessly compete with one another. All happy companies are different because they’ve escaped competition. I think this applies to people, too. Society has a tendency to discourage original, creative thinking in favor of conformity. Most of us have experienced that ick feeling of comparing ourselves to others. Competing with others directly is more of the same. You can win your market, and your life, by escaping competition and doing something creative, new, and true to your unique viewpoint. Sure, you’ll have to play the competitive game sometimes. If it weren’t for competitive markets, we wouldn’t get to create new things at all. But your ventures, projects, and career choices can be more about your self-expression than the game.
Go for monopoly. Contrary to conventional wisdom, successful capitalists—investors and founders—don’t seek competition. They aim for monopoly. And opposite to popular opinion, attempting to create a monopoly is good for the world. When markets are perfectly competitive, economic theory teaches us that all profits erode to zero. This has generally played out true. Zero profit means nothing left to reinvest, which means fewer jobs, fewer new products, and less return on invested capital for investors. The entire pie shrinks, and worse, usually leads to increased borrowing and bad behavior. We know how this story goes. Monopolies get a bad rap because of US antitrust laws, so companies like Google, which monopolized search, pretend they don’t have one. Meanwhile, small startups pretend they dominate markets when they don’t.
Secrets exist. There are undiscovered truths about the world that one can find through persistent hard work and independent thinking. Thiel distinguishes between “conventions” (things everyone knows), “secrets” (things that are hard but possible to figure out), and “mysteries” (things that are unknowable). Fields like basic chemistry appear fully explored, but areas like biotech, space exploration, and AI still hold massive untapped potential. Secrets don’t always need to be earth-shattering. PayPal’s secret was that you could combine email with money and make it easier for people to transact on the Internet—difficult to achieve but not impossible. Thiel argues that the most valuable companies are built on secrets, and that the best way to uncover secrets yourself is to ask: what do I believe to be true that most people think is false?
Technology is zero to one. Going from 0 to 1—creating something new—is fundamentally different from going from 1 to n, which is copying what works. Globalization is a 1 to n activity that leads to horizontal growth: taking things that work and spreading them everywhere through copying. China persistently copying what works in the West is the best example of globalization, and there’s nothing wrong with it. Technology, on the other hand, is a 0 to 1 activity that leads to genuinely new things. The contemporary view has a tendency to treat the developed world as a place where nothing new will happen. But Thiel and Silicon Valley in general ask the contrarian question: how might we continue to develop the developed world?