“Zero to One” by Peter Thiel
When I mentioned to some friends (they’re real, I swear!) that I was reading Peter Thiel’s book, the first response was that he is an a-hole. Surely, if you make the argument that monopolies are good, you are going to be polarizing. His reputation reminds me a bit of Jordan Peterson. Some people love him, others hate him, few people are ambivalent. I’d like to think that I’m one of those people in the middle, but I’m also sure that everyone thinks that they are that reasonable, middle-of-the-road person that can understand both sides of a person or an issue.
However you feel about Peter Thiel, it can’t be argued that he has been very successful. Perhaps it’s survivorship bias and he is just one of Taleb’s Black Swans. But whatever he is, I do enjoy an opinionated person and I like that he makes this argument that monopolies are good because it’s the opposite of what we’ve all learned in school. I admire the guts he has to make the argument. And… he has some good points.
To sum up the argument: when there is competition, companies make less money, and when they make less money, they can not afford to innovate. Therefore, without monopolies, there is no innovation.
“Zero to One” is about how to create a successful startup company. This argument about monopolies is only one of the arguments that he makes. Here are some quotes from the first couple chapters that I liked:
“Brilliant thinking is rare, but courage is in even shorter supply than genius.”
This quote is on page one, where he discloses that he asks people he interviews: “What important truth do very few people agree with you on?” I’m not surprised he gets a lot of bs answers. That’s a tougher interview question than “What don’t you do well?” or “What is a flaw of yours?” (When I was thinking how I would answer this question, what I came up with is the Alan Watt’s idea that you can not improve yourself. I think there is some nuance there, I’m not sure that I fully believe that statement, but I think it would be a bold and interesting answer to his question.)
In the second chapter, Thiel lists some lessons learned in the dot-com boom and bust of the 90s and then refutes them. The lessons learned were: 1) Make incremental advances 2) Stay lean and flexible 3) Improve on the competition and 4) Focus on product, not sales, and then argues that the opposite of each lesson is true and:
- It is better to risk boldness than triviality.
- A bad plan is better than no plan.
- Competitive markets destroy profits.
- Sales matters just as much as product.
(The headline for this post, “monopolies are good”, comes from his argument to support the #3 bullet point above)
When he writes about the questions that an entrepreneur should ask he says: “You have an incentive not to ask [the hard questions] at all.”
When I read that, I wondered: Do we have a negative incentive to question our own characters and behaviors in the same way that we have a negative incentive to question our business ideas? If asking “What is wrong with my idea?” is hard, then asking yourself “What is wrong with my character?” is easily an order of magnitude harder and more painful.
(Maybe these thoughts are coming from the audiobook I’m listening to, “The Righteous Mind: Why Good People Are Divided by Politics and Religion” by Jonathan Haidt… And now I’m wondering if this is the only blog post that has kind words for both Peter Thiel and Jonathan Haidt.)
This blog post is getting a bit unfocused… but I will say that I am enjoying Zero to One thus far and include this one last idea: in the Chapter titled “The Ideology of Competition” Thiel talks about how the praise for competition is often unfounded and describes situations where it was better to not compete but rather to partner or avoid conflict. Explaining that “pride and honor can get in the way” he includes this quote from Hamlet:
Exposing what is mortal and unsure
– William Shakespeare, Hamlet, Act IV, Scene IV
To all that fortune, death and danger dare,
Even for an egg-shell. Rightly to be great
Is not to stir without great argument,
But greatly to find quarrel in a straw
When honour’s at the stake.
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