#7 - Zero to One by Peter Theil

When reading the book Zero to One, it becomes undeniably clear that Peter Theil views the world differently from most people. The core message of Zero to One is that a startup needs to be based on a contrarian idea, a concept that the rest of the world disagrees with. This is what he calls Zero to One, whereas most businesses are predicated on improving something familiar, or One to ‘n’. 

It could be argued that Peter Theil has had as much influence on the technological revolution as any other human being. In 1998, he founded Paypal which later merged with Elon Musk’s X.com in 2000, which allowed users to transfer money via email rather than by exchanging bank account information. 

Theil acted as CEO of the company until it was acquired in 2002 by eBay for $1.5 billion. The original Paypal employees had difficulty adjusting to eBay’s more traditional corporate culture, and within 4 years, all but 12 of the first 50 employees had left. They remained connected as social and business acquaintances, and a number of them worked together to form new companies in subsequent years. This group of PayPal alumni became so prolific that the term PayPal Mafia was coined, and Thiel was labeled the ‘Don of the Paypal Mafia’. 

The Paypal Mafia are responsible for founding an astonishing amount of today’s global technology companies, including Tesla, SpaceX, LinkedIn, Youtube, Yelp, and Palantir. Thiel’s investment fund has also been the lead investor in many of the most influential companies today. Most notably, Thiel was the angel investor in Facebook, making a 500K investment for a 10.2% stake in the company and sitting on the board until today. Theil also made early-stage investments in Airbnb, Spotify, Quora, Stripe, and bitcoin. 

An anomaly like this doesn’t occur by chance. Theil’s attitude to innovation is invaluable information for entrepreneurs, who often fall into the trap of chasing profits over product. This book has had a large influence on our business to date, and I anticipate I’ll re-read it yearly to remain focused on the bigger picture. 

My Most Important Lesson from this Book?

The first chapter of Zero to One poses a question that is extremely difficult to answer: “What important truth do very few people agree with you upon?” 

I’ve legitimately thought about this question for days on end, and every time I think I’ve found a good answer, I realize that either I don’t actually believe it’s true, or that a lot of people agree with it. 

The business version of this question is “What valuable company is nobody building?” 

In the age of rapid innovation, answering this question is the key to going from zero to one. Every world-changing innovation started with founders believing in a concept that no one else did and building the correct infrastructure to prove everyone wrong. 

No one believed that every household would own a personal computer, or that you could send money to someone’s via their email address, or that people would step into a strangers car to get from A to B. But Steve Jobs, and Peter Theil, and Garret Camp took the world from Zero to One.

How we’ve used this lesson in our company? 

Luckily, MultiplyMii has had its fair share of doubters who disbelieve in the entire premise on which the business is built: that you can scale your business efficiently with an offshore team as the driving force.

Most people view outsourcing as something you do for easy, repetitive tasks. Most people don’t believe that someone on the other side of the world can do any meaningful or innovative work in your business. Most people don’t see the value of integrating your remote staff into your company culture. 

This is an important truth that we believe in that very few people agree upon. 

We believe in it because it’s worked for us - we scaled an Amazon business from 2-5M in a year, by building an integrated team in the Philippines. We believe in it because we’ve seen it work for our clients time and time again.

But receiving reinforcement from Peter Theil’s philosophy certainly gives us the motivation to continue on our path to true innovation. I read Zero to One in May when we’d just started to gain some meaningful traction, and we were receiving a lot of requests for project-based or part-time work. A lot of people in the venture capital space instructed us to mimic the trajectory of Fiverr/Upwork by entering the gig-economy, but this would be one to ‘n’, not zero to one. 

Additional Nuggets of Gold

Incrementalism - Facebook started for Harvard students exclusively. Tesla targeted a tiny submarket of electric sports cars. Amazon started by selling books. Startups should begin by focusing on a small market that they can dominate, instead of aiming for global monopolization from Day 1. 

Don’t be a jack of all trades - Theil frequently refers to well-roundedness as a college myth that stalls too many people from achieving their maximum potential: “This describes Americans today. In middle school, we’re encouraged to start hoarding ‘extracurricular activities’. In high school, ambitious students compete even harder to appear omnicompetent. By the time a student gets to college, he’s spent a decade curating a bewilderingly diverse résumé to prepare for a completely unknowable future. Come what may, he’s ready—for nothing in particular.”

Who Should Read this Book?

This book adds practical value at a strategic level, which is rare for most strategic advisory books that tend to be high-level and conceptual. However, from a day-to-day operational perspective, this book doesn’t add practical value. Any founders approaching a strategic workshop should read this book, or more importantly, any aspiring entrepreneurs looking for their unicorn idea. 

Favorite Quotes

“All Rhodes Scholars had a great future in their past.”

“You should focus relentlessly on something you’re good at doing, but before that you must think hard about whether it will be valuable in the future.”

“The best projects are likely to be overlooked, not trumpeted by a crowd; the best problems to work on are often the ones nobody else even tries to solve.”

“When Yahoo! offered to buy Facebook for $1 billion in July 2006, I thought we should at least consider it. But Mark Zuckerberg walked into the board meeting and announced: “Okay, guys, this is just a formality, it shouldn’t take more than 10 minutes. We’re obviously not going to sell here.” Mark saw where he could take the company, and Yahoo! Didn’t.”

“Competition can make people hallucinate opportunities where none exist”

“Instead of pursuing many-sided mediocrity and calling it “well-roundedness,” a definite person determines the one best thing to do and then does it.”

Series Introduction - How Books Replaced a College Degree

#10 - The Hard Thing About Hard Things - Ben Horowitz

#9 - The Lean Startup - Eric Ries

#8 - Outliers - Malcolm Gladwell

#7 - Zero to One - Peter Theil

#6 - The Undoing Project - Michael Lewis

#5 - Freakonomics - Stephen D Levitt & Stephen J Dubner

#4 - Steve Jobs - Walter Isaacson

#3 - The Sales Acceleration Formula - Mark Roberge

#2 - Multipliers - Liz Wiseman

#1 - Traction - Gino Wickman