- [Narrator] Zero To One
by PayPal co-founder,
entrepreneur, and venture
capitalist Peter Thiel.
The main idea behind Zero To One
is that it's imperative
to focus on businesses
that create something new,
going from zero to one,
as opposed to copying
things that already work,
going from 1 to n.
The author prescribes
how to build a company
that generates profits
well into the future.
To succeed, you need to build
and maintain a monopoly.
We'll start with a concept,
why are monopolies critical.
Then we'll look at ourselves,
how to position ourselves
to start a zero to one type of company.
And then we'll shift to the company,
how can we actually build a monopoly?
Finally, how do we
protect such a monopoly?
First why a monopoly?
The author makes the
controversial statement
that capitalism and
competition are opposites.
That's because capitalism is
all about generating profits,
whereas competition eliminates profits.
Competition is all about
lower prices and margins.
In contrast, monopolies enjoy high profits
and afford a company the luxury
of investing in the future
because the profits will
compensate for such investments.
Therefore, entrepreneurs should be intent
on creating monopolies.
So the question is,
how to create and
maintain such monopolies?
It all starts with looking at ourselves.
The author has the contrarian
belief that success
is not a matter of luck.
If you think your future is ruled by luck,
you have to be ready for anything.
Our entire system is
built on this premise,
and emphasizes diversification
in education and skills.
In high school, you
spend the exact same time
on each discipline, same thing in college.
We are rewarded for knowing
just enough of everything.
The result?
You'll be average at everything,
and really good at nothing.
Instead, taking the approach
that you can actually
shape your own future,
you will think very hard
about your next steps,
and take the time to plan ahead.
You are not a lottery ticket.
Getting laser-focused early on
can help you develop standout skills,
and come up with those
zero to one solutions
we so desperately need.
So how do you go about
building a monopoly?
First, develop a zero to one type offering
for a niche market and then scale up.
You need to come up with a
product or service solution
that delivers a 10x speed, performance,
or convenience benefit
over the status quo,
in order to get noticed and
shift consumer behavior.
And don't worry about global domination
at these early stages.
In fact, talking about addressable markets
in the billions is a red flag
because these markets often lack a good,
well-defined starting point,
and they face a lot of competition.
Remember, the key to
success in value creation
is to avoid competition at all costs.
After all this work,
you're still not finished
because a monopoly isn't worth much
unless it can be protected.
You can maintain your monopoly
through network effects,
economies of scale and branding
Network effects address
the value of your offering.
The more users you have,
the greater the value to each user,
making it more difficult for someone
to compete with you later.
Economies of scale address
your production costs.
The larger your volume,
the lower your average cost
because of high fixed costs,
making it difficult for a competitor
to generate any profits.
And branding addresses awareness,
which lowers your distribution costs.
A competitor will need that much more
upfront investment in
advertising to generate awareness
and penetrate your market.
The author has three core beliefs
that form the backbone of
his prescription for success,
globalization is doomed without
technological innovation,
capitalism is the opposite of competition,
and we can shape our own future.
Therefore, we need to
focus on specific skills
that will prepare us to
create innovative startups
with monopoly power,
and we need to figure out ways
to protect these monopolies.
The bad news is we need
to make bets on the future
which to a certain extent is unknowable.
The good news is that, as the author says,
even a bad plan is better than no plan.
Perhaps not the most
optimistic conclusion,
but it's encouraging us to plan ahead,
so that at least some of us
may come up with these much
needed zero to one startups.
(mid-tempo lively music)
