Deep Dive: Ten ideas for founders from Peter Thiel’s Zero to One

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Peter Thiel’s book Zero to One is about how to build companies that create new things and draws on what Thiel learned as a co-founder of PayPal and Palantir and then as an investor in hundreds of startups, including Facebook and SpaceX.

In the essay below, I summarize my ten favorite ideas from the book:

1. Technology is important

2. The world needs more founders

3. Monopoly is the condition of every successful business

4. Reject the tyranny of chance

5. Every great business is built around a secret

6. The best startups might be considered slightly less extreme kinds of cults

7. Make every person in your company responsible for doing just one thing

8. Distribution follows a power law

9. Computers are complements for humans, not substitutes

10. The seven questions that every business must answer

#1 Technology is important

Thiel argues that progress comes in two forms: horizontal (copying what works) and vertical (creating new and better things). For example, making more typewriters is horizontal progress, but inventing the word processor is vertical progress.

At a macro level, globalization is horizontal progress—taking things that work somewhere and making them work everywhere. However, globalization without new technology is unsustainable. If the hundreds of millions of households in China and India were to live the way Americans do today—using only today’s tools—the result would be environmentally catastrophic.

The world needs new technology, but new technology is not an automatic feature of history.

Our ancestors lived in societies where wealth was taken from others and new wealth creation was rare. It was only with the advent of technology like the steam engine around the 1760s that rapid progress began. And this technological progress has given us a richer society than any previous generation would have been able to imagine. But around 1970, progress began to slow.

Thiel challenges us to reaccelerate technological progress and create new technologies for a more peaceful and prosperous 21st century.

#2 The world needs more founders

Thiel suggests that large organizations are burdened with bureaucratic hierarchies, entrenched interests, and risk aversion. In the most dysfunctional organizations the best strategy for career advancement is signaling that work is being done rather than actually doing work.

At the other extreme, individuals can create great art or literature, but they can’t create an entire industry by themselves.

Startups find a balance: they operate on the principle that you need to work with other people to get stuff done, but you also need to stay small enough that you actually can.

Thiel proposes that a startup is “the largest group of people you can convince of a plan to build a different future.” It takes courage to create something new, and we need brave, unusual individuals to lead companies beyond mere incrementalism. Unique founders can make authoritative decisions, inspire strong personal loyalty, and plan ahead for decades.

He quips: “brilliant thinking is rare, but courage is in even shorter supply than genius.”

Importantly though, founders shouldn’t overestimate their own power as an individual. Thiel argues that founders are important not because they are the only ones whose work has value, but because a great founder can bring out the best work from everybody at the company.

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