Thoughts on How to Build the Future
Like about 40% of all Americans I work for a large company. There are many self-help books out there to guide the 40% through how to be successful managers. These books are about maximizing your current position to attain goals and allow the organization to be successful. Zero to One: Notes on Startups, or How to Build the Future is not one of these books.
The author, Peter Thiel, did not write this book with a goal of helping the 40% become better managers. This book is about providing a framework for entrepreneurs so that they can build the future. It isn’t about being successful in your current role, it's not going to teach you how to compete in or disrupt markets, and it's not for cynics & pessimists. Zero to One is a book about escaping competition, creating new opportunities for success, having a definite view of the future, and building strong cultures.
The basics of the book…
“Doing what we already know how to do takes the world from 1 to n” but when we “create something new, we go from 0 to 1”. A 1 to n world is not a vibrant, expanding, place. When we live 1 to n, we can be optimistic or pessimistic about the future - but we don’t have a definite understanding of where we want to be, with detailed plans of how to get there. 1 to n understands the world is complex and things happen and so we should figure out how to carve out an existence within these constraints. 0 to 1 thinking recognizes a complex world but pushes us to find novel solutions to our problems and improve the world around us - 0 to 1 thinking is about accepting the challenge of building the future.
Thiel makes a concise argument that when you build a startup your goal is to achieve monopoly status - though in a small market - and scale up from there. One of the keys to this monopoly status is to create a product which is an order of magnitude better than what exists. This 10x goal isn’t about being ten times more productive, ten times more profitable or ten times larger than the next nearest competitor. Creating a product which is 10x better than any substitute good will create the distance between you and competitors so you can focus on future cash flows, not maintain a short-term focus on maintaining market position today. This type of differential separation means you need to build technology.
Building is fundamentally an optimistic task - and building the future requires optimism. In a pessimistic and uncertain world, it is easier to point blame and tear down than it is to focus on building. Thiel discusses the fear of technology in America, a viewpoint based on workers’ experiences with globalization. In Thiel’s telling, globalization is about the substitution of an expensive labor force with that of a cheap labor force e.g. all those manufacturing jobs which moved to China and Mexico.
Thiel doesn’t advocate for building substitutive technology - instead he believes strongly in building technology which complements human skills. Leveraging technology to complement human ability leads to outsized productivity gains and creates new markets. This point is illustrated using LinkedIn as an example - here is a case where creating a data source to assist recruiters made recruiters more effective - it didn’t replace the role of recruiters - that was never the goal. Instead LinkedIn provided recruiters with a large & deep pool of talent and tools to search & filter through that pool to identify more candidates for more jobs.
Zero to One pushes the reader to embrace an optimistic and definite view of the future. The optimism part is spread throughout the book. Optimists build, create & explore while pessimists entrench and protect. No book advocating building the future can support a pessimistic worldview. Having a definite view for the future is a bit more challenging concept. Indefinite thinking is illustrated by Thiel thusly, “Finance epitomizes indefinite thinking because it's the only way to make money when you have no idea how to create wealth”. It is an outlook based on hedges, optionality and being comfortable lacking specific knowledge since everything is random anyway. A definite view sets a course for a future defined by you. It requires careful planning and a belief that you can control your destiny - you are not the product of luck and chance.
The last major theme I’ll touch on is Peter Thiel’s view on building culture. Here Thiel goes more into the learnings he’s had while involved in Silicon Valley’s VC scene. People should look the part - engineers & creators don’t wear suits, they wear t-shirts. Finding talented people is part of the challenge, finding people who can work together and bring complementary skills is the other piece of the puzzle. A founder-culture is built on trust and on bringing in people you have experience with and are known quantities - you should be very risk averse when it comes to building a team. This is required because the decisions, speed-to-action, and costs of mistakes are outsized relative to what most roles in large organizations. Startups are much more fragile than mature organizations, for instance given my current span of control I can’t think of a decision I’ve been faced with which would sink the company if I get it wrong – in startups team members are faced with decisions much more frequently.
Some general thoughts…
I tend to think of most technology as solving problems along two axes: Space & Time. Communication tools bridge the gap in geographic space - telegraphs are faster than the pony express, email is better than snail mail, and video conferences are showing up as a decent replacement for face to face meetings. The industrial revolution unleashed a world of time saving technologies which have allowed us to produce more outputs in less time.
While I agree with Thiel that we should look at technology as a complementary product I don’t think we can escape the substitution effect it has. For all the folklore around John Henry we don’t rely on manual labor to drive tunnels anymore - expensive capital, and the skilled workers with the knowledge to operate it - continue to be developed. Technology erodes the value of the skills of many workers. I know that the ATM did not make bank tellers obsolete and that LinkedIn didn’t put recruiters out of business. At the same time, I don’t feel like bank tellers and recruiters are at the highest risk category i.e. they aren’t our least skilled workers. We shouldn’t sacrifice developing space & time technologies - but we need concurrent effort focused on education. Increasingly the question will be how do we more effectively prepare future low-skilled workers, so they do not get lost as the economy continues to make transitions in response to technological progress?
Zero to One has a lot of ambition and energy. I think most book reviewers would say something like “it's one book you can’t put down” or some similar cliché. I’m in the opposite camp. I read the book in a single weekend - but would often set it down and reflect on the need to get out of my chair and go do more work and think through how to position the company for future success. I found the book to be very mentally stimulating and the framework provided is helpful for future internal pitches for new products & roles.
The building theme in the book is a positive force. While I try to be optimistic, I know there have been times when I’ve found myself in the camp of complaining that some department, manager, or process won’t let me do what I “need to do” to be successful. Zero to One thinking would say that as long as what you “need to do'' isn't illegal, immoral, or unethical then build! Complaining is negative and destructive and the future can’t be based on tearing things down only by creating new.
The book also pushes a person to create a personal monopoly on a skill to deliver results which are ten times better for the business than anything others are doing. If you find that your skill doesn’t match the role you’re in, go find a new market. This is why it’s so important to believe in controlling success i.e. embracing definite thinking. Take time to understand the future you want to see and figure out how to build the bridge from here to there. You can’t get there on random chance.