Thoughts on Peter Thiel's "Zero to One"

I've owned a copy of Peter Thiel's "Zero to One" for a few years now and I find myself continually returning to it to wrestle with what he has to say. 

 In a world where everybody is either parroting an ideology they got from someone else, or hedging their words so hard that they end up saying nothing, I find Mr. Thiel's willingness to make fresh, decisive claims about his views of the world to be unusual and challenging.

I'm finding that I both agree and disagree with him. I love that he's willing to be explicit and original enough for me to do that. As I've built a business of my own over the last few years, my theoretical knowledge has been transformed into practical experience and many of the points that he makes in this book which went over my head the first time I read it, now have a deep significance. Some of the points that I thought sounded really profound - I find myself now questioning. 

 I'm putting this post up because A) if you care about the future, this is an important book to read and B) I want write down some thoughts on points that I'm still wrestling through.

The Premise

There are a few basic claims that the books is built upon.

One is the the power law, also known as the 80/20 rule, or the Pareto Distribution. The basic idea is that a very small percent producers generate of the value/productivity.

A tiny fraction of employees do most of the work in a company

A single product makes up most of a company's profit

A few artists produce more work than the rest combined 

A very small number of companies generate most of the value in an economy

The second major premise (from which the book derives its title) is the difference between incremental improvement vs innovation. To paraphrase, he defines innovation as something completely new or something that is 10x better than a previous solution or iteration. Thiel argues that very few people or companies actually produce zero-to-one levels of creativity and/or innovation - but that a hopeful future depends on whether we can achieve this feat with more frequency than we are now.

After establishing these principles he spends the rest of the book exploring how someone can pursue zero-to-one innovation in the context of entrepreneurship and business startups. 

I like this book - one of his opening concepts is the famous interview question "What beliefs do you hold that most people would disagree with?" he contends that the only way to achieve innovation is to explore things that other people have overlooked, dismissed, or denied.

For me the Pareto distribution is the stronger of his two basic premises. It's mathematically difficult to deny as you look at the world that the realm of productivity and creativity do not operate according to a "normal distribution" like most things do.

But rather with an 80/20 rule where a small percentage of the players accomplish the vast majority of the work.

I've learned a lot about the concept of Pareto Distribution from Dr. Jordan Peterson, I even animated one of his lectures that deals with the impact of this phenomenon on creative professions which you can watch here: https://youtu.be/ol2Cl3ePGxM

 Thiel presents the Pareto phenomenon (which he frequently refers to as the Power Law) as a force that applies to zero-to-one innovation with the implication that only a small number of ideas can achieve exponential impact. 

 The Zero-to-One concept is the shakier of the two ideas. Thiel argues that "horizontal growth" - increasing the speed and scale at which we can use an innovation - is inferior to vertical growth - where we invent something new, or something an order of magnitude better than the previous version. 

A distinction I think he fails to make is that it is necessary to scale an innovation to create a solid foundation for the next innovation.

For example you can elevate the creation of the internet as a great innovation, and the creation of streaming online video as a great innovation - but unless the internet had been scaled "horizontally," both in terms of number of users and bandwidth, streaming video would have never been a viable innovation. 

Thiel argues that the U.S. and China for the last few decades have been focused on horizontal growth rather than coming up with new solutions. He predicts that this will lead to catastrophic failure if we don't have the courage to seek out new answers to to our problems. 

 I don't disagree that an overly conservative and risk-averse spirit seems to be dominating many sectors, and I agree with his diagnosis that part of the reason for this lack of exploration is a cultural attitude that assumes everything new has already been created and we're doomed to just recycle old ideas.

I disagree, both with the belief that there are no new ideas, but I also semi-disagree with Thiel's tendency toward an "absolute" idea of innovation.

Here's a challenging philosophical question. Can human beings create in a vacuum? Are we able to generate something from nothing? Or are we cultivators and re-presenters? Do we study the forms and mechanics of life and the physical universe and recombine them in new and useful ways?

The Ecclesiastical phrase "There's nothing new under the sun" is depressing to most people - but not to me. While the physical universe is finite - it's capacity for fractal recombination is infinite. 

I guess what I'm trying to say is that - I don't think there's any such thing as a true "innovation" in the sense that you could interpret Thiel to mean. Human beings have a finite set of needs and desires and our creativity will always be constrained to the boundaries of our nature - but I agree with Thiel that we should not despair, thinking all the good ideas have already been discovered. To the contrary, as he eloquently describes, the universe is still full of secrets. I simply believe that these secrets map onto a finite pattern of fractal forms and that rather than searching for something fundamentally new in an absolute sense, we should be eagerly examining the familiar to experience that which we already know from a new perspective.

 It may seem like splitting hairs, but when I first read this book, it fanned the flame of my desire to come up with something so innovative nobody had ever conceived of it. Then as reality set in and I learned through the process of building my company that as a human being, I really wasn't capable of creating something with that kind of "absolute innovation" characteristic. It was easy to grow depressed at the prospect of living in a prison of repetition for the rest of my life. Now I can better hold the tension between the two.

 The foundations of the human experience are constructed to a finite set of building blocks that we cannot (and would not want to) cast aside for something new - however as we build on top of those familiar pillars, there is no end of variety to the ways we can recombine those elements in ever more useful and beautiful ways. 

After all, think of how much we've accomplished with ones and zeros in our binary computing. We don't abandon the ones and zeros in our search for new ideas, (even Thiel couldn't escape them!) we simply continue recombining them in fresh ways. That is what I would call true innovation. 

This is an idea I want to continue exploring in future posts. I believe looking for new perspectives in the familiar is key he key to true innovation.