Zero to One
A few new perspectives from Peter Thiel’s book, Zero to One:
He thinks the future needs to be defined more by vertical progress (new technology — going from 0 to 1) than by horizontal progress (globalization — going from 1 to n). Vertical progress can only be achieved by monopolies, because any business that doesn’t capture its entire market ends up being relentlessly focused on short-term competition and survival. It has no resources left over for invention or long-term planning.
Monopolies are built on “secrets” — ideas that are true, and often obvious in hindsight, but that the mainstream isn’t even thinking about, let alone disagreeing with. (AirBnB: people will let complete strangers stay in their homes if the price is right.) Monopolies are usually the “last mover” in their domain: on some key dimension, their product is at least an order of magnitude better than the second best thing. This makes it impossible for competitors to catch up. Building a monopoly is not about disruption, and it’s not about substitution of human work. It’s more often about figuring out how to complement human strengths with the strengths of technology.
The core idea of the book is that competition is vastly overrated. It’s easy to model (think Econ 101) and easy to administer (think standardized tests), but ties everyone up in zero-sum status games. Thiel’s advice: don’t compete. Play games where you can create and recapture lots of value over long periods of time without needing to outsmart others.
The book is very short and conversational, and it tells story of the tech bubble in the 90s through the eyes of someone who was at the centre of the action. Even if its ideas don’t appeal to you, I’d say it’s worth reading just to better understand where we are today.