
Zero to One, by Peter Thiel with Blake Masters - beniaminmincu
http://zerotoonebook.com/
======
loup-vaillant
> _Progress comes from monopoly, not competition._

Okay, that was a surprise. I get the idea that one should work on new things,
that merely trying to out-compete is counter-productive (competition is a
zero-sum game after all).

On the other hand, some benefits may only come when there's enough players
that compete with each other. Take Virtual Reality, for instance. There's the
Occulus Rift, Now Sony is working on it, there was valve… at one point, there
will be enough player to make a market for low-latency, low-persistence, high-
frequency, ridiculous-resolution flat panels. The smartphone industry pushed
in that direction of course, but the limit of what's useful for this industry
is clearly not enough for VR. Anyway, with this new market, VR will improve as
a whole. Without the competition that is currently forming, I think those
miraculous flat panels wouldn't come out as fast as they will. That said,
those folks are still working on something new…

\---

Now that I think of it, maybe he was talking about maximizing one's marginal
impact? Like, let the Occulus people work on their Rift alone, and try and
work on something _different_. Even if that slows the VR revolution down, we
may now have _two_ revolutions. Hmm…

~~~
spindritf
There are two forces at work there. First is that without being granted a
monopoly by force, only really smart people manage to monopolize an industry
(think Google).

 _The benefit monopolies offer is not just that they’re good investments, but
that they concentrate wealth in the hands of someone smart enough to
monopolize something. Wealth tends towards entropy, so brief concentrations of
it are a beautiful thing. And while markets are great at optimizing the last
.1% increase in efficiently for a known process, they suck at paradigm
shifts—unless there’s someone really smart with enough money to singlehandedly
shift that paradigm. Google’s near monopoly on search has probably hastened
the arrival of self-driving cars by a few years, saving numerous lives. Score
one for monopolies! Even my least favorite monopoly, USG, has deployed money
in interesting and otherwise infeasible projects, such as landing on the moon
and defeating the USSR._ [1]

Second is integration and incentive structure.

 _One simple robust solution to the innovation problem would seem to be manic
monopolists: one aggressively-profit-maximizing firm per industry. Such a firm
would internalize the entire innovation problem within that industry, all the
way from designers to suppliers to producers to customers – it would have full
incentives to encourage all of those parties to put nearly the right amount
and type of efforts into innovation._ [2]

[1]
[http://oddblots.tumblr.com/post/85817835358/stoptheslowlane-...](http://oddblots.tumblr.com/post/85817835358/stoptheslowlane-
is-short-bus-economics)

[2] [http://www.overcomingbias.com/2014/04/rah-manic-
monopolists....](http://www.overcomingbias.com/2014/04/rah-manic-
monopolists.html)

~~~
delluminatus
Yeah, very smart people are exactly who we want driving innovation. Just like
how Thomas Edison and his monopolizing Edison Trust brought American
electrical systems into the future by embracing AC power, instead of clinging
to clearly inferior DC power for as long as possible.

</sarcasm>

If you expect monopolies to drive innovation, you're going to be disappointed.
A monopoly doesn't promote paradigm shifts or destructive innovation. In fact,
historically speaking, monopolies often take drastic steps to ruthlessly crush
any such innovation.

In your second link, at least Robin acknowledges that, historically, there is
no reason to expect monopolies to behave as described. Actually, the idea of a
"manic monopolist" is fairly interesting. But, if a corporation already
controls an industry, how do we incentivize it to take risks by promoting
rapid innovation in that industry?

~~~
latj
Yeah, I dont want smart people driving innovation. I want everyone to have the
freedom to create and live their lives free and unhindered by the threat of
violence, the encroachment of propaganda, or economic bullying- even if the
bully is able to rationalize his actions.

This idea of giving all the smartest people the money is interesting- in the
way that eugenics was interesting.

------
dkyc
I would suggest he finishes his other book, "The Blueprint", first, since it
is "pre-ordered" on Amazon for two years now... Talk about a slow launch.

~~~
CmonDev
This time he hired "Blake Masters" to actually write the book.

~~~
calcsam
Blake is a real guy and a friend of mine. Remove the scare quotes please?

~~~
jseliger
_Blake is a real guy_

Can confirm: I met him once, briefly, in San Francisco.

------
koonsolo
"ZERO TO ONE is about how to build companies that create new things.", but
then as an example uses: "The next Bill Gates will not build an operating
system. The next Larry Page or Sergey Brin won’t make a search engine."

Maybe my history is not that good, but as far as I know Bill gates didn't
build the first operating system, and when he bought 86-DOS, its success was
mainly thanks to IBM. Same for Google, it wasn't the first search engine, it
just improved on an existing concept.

~~~
rjtavares
The point is that the first mature dominant players in those markets were
Microsoft and Google. That's not to say that the dominant player can't be
challenged, it's just that the next 100 billion dollar company will start in a
new market with no mature dominant player (e.g. Facebook on social networks).

~~~
sergiosgc
Altavista was dominant when Google entered the fray. MySpace was dominant when
FB took off.

Whenever there is space for innovation and the incumbent does not react, a new
player appears.

Facebook is my next to be toppled over bet. There is a huge space for
innovation and FB is not nimble and quick to react nor it is particularly
innovative on its own. Acquisitions and the social network barrier to entry
protect FB, but they don't hold forever.

~~~
jessriedel
At some point the incumbent becomes so large and diversified that it can't be
destroyed by a single competitor. Think IBM. You may come in and beat the
incumbent company in the market that originally led to its success, but the
incumbent still lives on in many other markets. The only way it is killed is
by being consistently less fficient than the average entrant in many markets
(i.e. Goliath falls, but there is no David to point to).

Facebook may reach that point before to long, although I'd guess they're not
there yet.

~~~
sergiosgc
IBM was beaten. They failed to evaluate the importance of the micro computer.
Further, they failed to see the threat of micro computer-born CPUs to their
business. The fact that IBM had enough momentum and clarividence to pivot into
consulting is not relevant for this discussion. Today's IBM is not at all the
IBM from the seventies.

------
prof_hobart
>And the next Mark Zuckerberg won’t create a social network.

Unless they are creating Twitter. And an article written before Facebook
started would probably have said "The next Tom Anderson won't create a social
network"

Yes, every successful business will need to find what their particular unique
niche is, and it certainly helps to be the first major player in a whole new
area, but the reality is that at this macro level "Every moment in business"
doesn't happen "only once". Most markets have plenty of space for multiple
innovators making relatively minor tweaks to existing industries.

For instance, you could easily present Steve Jobs being "the next Bill Gates",
and he certainly did well out of a company creating OSs (and the hardware to
run them on, but at least with Macs, and potentially with iPhones/iPads, the
OS was almost certainly the more important part).

~~~
Haul4ss
I think his point is that the next hugely successful billionaire will not be
creating a competitor to something that is already hugely successful today.

That's not to say you can't make a comfortable living building a better
mousetrap. It just means you won't be Gates or Zuckerberg.

Of course, you could easily make the argument that Gates (for example) merely
built a better mousetrap. It's not like Microsoft invented the operating
system. Or the personal computer. Or word processing. Microsoft, through
strategy, lots of hard work, and a little luck, happened to be doing just the
right thing at just the right time.

~~~
lrm242
Wait, you mean like Elon Musk? The guy is not only competing against hugely
successful incumbents, but he's doing it in parallel in two markets! Somewhat
ironic given Musk and Thiel are cut from the same cloth.

Thiel's book might be a fun read. Take from it what you want, but it certainly
isn't gospel.

~~~
adventured
Or Bezos in retailing. First he beat Barnes & Noble etc, then he beat Walmart
and Target (and everyone else). All from a guy that hadn't spent a minute in
retail previously.

Both Bezos and Musk took advantage of an exception to what Thiel is talking
about: inflection points in technology sometimes provide massive competitive
openings that are better viewed as blue ocean because they're so different
from the establishment.

------
muhuk
See also: [http://blakemasters.com/peter-thiels-
cs183-startup](http://blakemasters.com/peter-thiels-cs183-startup) (notes from
Peter Thiel’s CS183)

~~~
pbreit
I'm wondering if this book is mostly a massaging of those note? It would still
be a good read and nice to have but not entirely new.

------
rattray
I think a number of people here may be misinterpreting what Thiel means by
"monopoly". Here is the likely backbone of that chapter[0].

I personally believe each company should do _one thing_ , and do that _one
thing_ better than anyone else in the world _possibly_ could. Companies should
therefore be constantly perfecting that one thing to the degree that no
competitor could possibly catch up. I may be wrong, but I hope that's the kind
of monopoly Thiel is talking about.

[0] [http://blakemasters.com/post/21169325300/peter-thiels-
cs183-...](http://blakemasters.com/post/21169325300/peter-thiels-
cs183-startup-class-4-notes-essay)

~~~
rayiner
I don't think that's really what that essay is about. Arguably, the point is
the opposite of that. Read the part about Thiel interviewing for and not
getting a Supreme Court clerkship. That process involves out-competing people:
the pool of applicants looking to get into Stanford Law, the pool of
classmates looking to get a circuit clerkship, the pool of circuit clerks
looking to get a Supreme Court clerkship. Out of the 100,000 people who apply
to law schools each year, 36 will get a Supreme Court clerkship 4-5 years
later. Being in that 36 just requires doing the same thing everyone else is
doing, but doing it better than the other 99,964 people.

The moral of the story is that Thiel became incredibly successful by doing
something nobody else was doing. If 100,000 people were all working for 4-5
years trying to create PayPal, maybe Thiel's version wouldn't have been the
best. But that doesn't matter, because those people were off applying to law
school. That's what Thiel seems to mean by "monopoly." Go find an area where
you can make money, where there aren't 100,000 people trying to do the same
thing you're doing.

------
swombat
Peter Thiel's writings are often thought-provoking and insightful. They
frequently think several steps deeper than the usual blog posts that we read
on the topics... The CS183 notes bear that out.

I've pre-ordered the book. Looking forward to it.

------
relaxatorium
"Progress comes from monopoly, not competition."

Seems rich coming from the guy who founded Paypal, which was widely loathed
and seen as pretty stagnant in the payments space after it achieved dominance
over that market.

------
return0
Some of his ideas are elaborated in his public speaking, and the book sounds
to be very interesting. I just hope he sticks to the release date and it
doesn't get canceled like the previous one.

~~~
bgmasters
I can confirm the book will be released on Sept. 16 :)

------
xsace
Like if Microsoft was the first OS.

Like if Google was the first Search Engine.

Like if Facebook was the first Social Network.

...

~~~
ironchef
Exactly...and then those are interesting in _how_ they became the dominant
player. Did they offer something the predecessor didn't, etc. Why MS succeeded
can be argued around various points re: digital (re: CP/M), the boom of
compatibility issues with the 808x machines (back in the DOS days and the
proliferation of white box machines (aka IBM compatibles)), and the failure of
OS/2 (I'm sure it's more complex than this, but.... Google succeeded as it was
(imo) largely faster and more complete than the akebono preliminary as well as
the adoption/evolution of the goto.com advertising paradigm. As to how
facebook beat out myspace? I haven't heard convincing arguments that are
definitive; however, they appear to have placed more of a focus on social
aspects than myspace did (and they were less "geocities-like").

------
netcan
I don't think that "there can be only one" Bill Gates for any given category.
I don't even think he's saying that there won't be any new OS or Social
Network billionaires.

I think he's drawing new types of businesses making new kinds of products for
a new market vs businesses "competing in the __ space.

A good litmus test might be the words that were used early on to describe the
company/product. Twitter used to be "micro-blogging" or "like SMS but everyone
can see it".

MSFT may have had some early users who switched to DOS from Apple II Unix but
most learned the words Operating System & DOS in the same instant. Investor's
hadn't invested in an operating system company before. etc.

------
yp_all
"... competition destroys profits for ... society as a whole."

What is meant by "profits"?

"Progress comes from monopoly..."

What is meant by "progress"?

Does the Antitrust Division at the DOJ do Book Reviews?

I would enjoy reading their review of this one.

------
sferoze
I have recently been reading blake masters notes on the class and I find them
extremely valuable. They are written so well I feel like I am reading a
transcript of the real lecture. It feels like I am getting the source material
even though they are a students notes.

I bet the book will be even better since it is revised by Peter himself. I
can't wait to read it as well.

------
chasing
> Progress comes from monopoly, not competition.

> ... competition destroys profits for individuals, companies, and society as
> a whole.

Profits != progress.

------
rubinelli
This blurb makes it sound like a repackaged Blue Ocean Strategy. Don't try to
fight entrenched players in mature markets? This doesn't sound novel at all.

------
davidw
Added to my wishlist. I'll wait for the reviews to come out. I like books, but
so many business books have little actionable advice.

------
jedione
Zuck creates a social network when we had so many social networks- but its
almost like he's saying going after a 100% blue ocean... ?

------
feifan
Everyone in the comments here are getting caught up in the examples of Gates,
Zuck, etc. But the vast majority of people who are even interested in creating
something new are creating an app that riffs off an existing concept and are
looking for a (quick) exit. I see this book as an evolution of The Blueprint
and the Founders Fund manifesto, where Thiel is calling on people to stop
squandering creative energy and build something truly great.

~~~
npsimons
_Everyone in the comments here are getting caught up in the examples_

Maybe that's because the examples appear to contradict the thesis of the book
- that's not exactly a ringing endorsement.

 _I see this book as an evolution of The Blueprint and the Founders Fund
manifesto, where Thiel is calling on people to stop squandering creative
energy and build something truly great._

Perhaps people are pushed to "quick exits" (and quick bucks) because that's
what's emphasized today? Maybe if people didn't have to worry about where
their next paycheck was coming from, they'd have more time to "build something
truly great."

But no, let's not question the wisdom that monopolies are the only way
innovation occurs, ignoring the plenty of counterexamples (Internet Explorer,
anyone?).

------
elwell
A perfect example of a site that has indication of further content below the
fold.

------
saraid216
So, anyone want to reconcile this with his version of libertarianism?

------
girvo
Can you not pre-order Kindle books, or am I missing something?

