Monday, November 10, 2014

Zero to One: Some useful insights in a sea of dross

Many people have said good things about the Peter Thiel (with Blake Masters) book Zero to One: Notes on Startups, or How to Build the Future, and there were several parts I found worthwhile, but I can't add it to the recommended reading list for startup founders.

There's nothing particularly objectionable about the major theme—have a bold vision and a plan to get there—but there's very little in Thiel's underpinning for that theme that's going to be of much value. It's heavy on personal ideology—which may be enjoyable to read if you share the same views—but not so useful as a guide for startups.

I'm sure I could pull a dozen good tweets from the book (and will do, below ... 10 of them, anyway), but I found the first half to be largely a waste of time. Thiel's recollections of the late 90s dot-com boom are very different from mine. He looks back with nostalgia at a golden era characterized by big visions that he rarely sees these days. I remember the period as being as much awash with triviality as any other era. It wasn't the visions that were big as much as the budgets, as pie-eyed investors provided millions of dollars to anyone who incorporated "online portal" into their elevator pitch.

I can't image that the "four big lessons" he claims Silicon Valley learned from the crash were actually anyone's main takeaways. If anything, "focus on product, not sales"—one of the lessons he claims—was a guiding principle of the dot-com boom. Who needed sales when you had investors lining up to give you cash? It was all about the product -- building the website and growing traffic. Revenue was something that would come in the future.

Thiel's characterization of the lean startup approach as having no plans—another of the claimed lessons—is every bit as inaccurate when he says it as when some lean proponents imply the same thing. I can't call it a strawman argument when there are self-identified lean supporters who make planning sound like some quaint artifact of an earlier time, but the lean approach really isn't anti-planning as much as an acknowledgement that—in the earliest stages—whatever your plans are, they're going to change as you start getting feedback from the market. It's about contingent planning rather than a rejection of planning—against carving plans in stone early on, when startups have little more than a vision and guesses. But Thiel doesn't appear to be a fan of contingent plans—it seems they're part of the feeble "indefinite" worldview that he criticizes in one of the chapters I didn't find very useful.

That was my view of his discussion of monopolies. If we define "monopoly" so loosely that it includes every successful business—as Thiel does—then it would also include every unsuccessful business too. If you're interested in learning about Thiel's ideology, then it might be worth a read. For building startups, though, I found little that was worthwhile, although Chapter 5—which continues the discussion of monopolies—would certainly be the source of some of those dozen good tweets.

Most of them, though, would be pulled from chapters 7 to 11—where it finally felt that the book was worth reading ... before it tailed off in the final four sections (last three chapters and the conclusion). There are a dozen other books I would suggest startup founders read ahead of this, but chapters 7 to 11 may very well be worth a read. (A minor point, but when Thiel says that "very few people take unorthodox ideas seriously today" I'm not sure he gets out of the house much—or goes on YouTube. Fluoridation, Wi-Fi, wind turbines, Illuminati, 9/11 truthers, Obama birthers, and dozens more come to mind. It may not be a majority of people, but it's definitely at cult levels, which Thiel says doesn't happen anymore.)

So here are 10 tweets I would take from the book. Not necessarily original ideas, but good ones to consider (I wouldn't take the last one as literally as he apparently does, but then again I haven't worn a suit in public since the 90s.):
  • Every startup should start with a very small market. Always err on the side of starting too small
  • Being the first mover doesn’t do you any good if someone else comes along and unseats you
  • 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
  • When you start something, the first and most crucial decision you make is whom to start it with
  • By far the worst you can do is to make your board extra large
  • As a general rule, everyone you involve with your company should be involved full-time. Sometimes you’ll have to break this rule
  • In no case should a CEO of an early-stage, venture-backed startup receive more than $150,000 per year in salary
  • The best thing I did as a manager at PayPal was to make every person in the company responsible for doing just one thing
  • The engineer’s grail is a product great enough that “it sells itself.” But anyone who would actually say this about a real product must be lying
  • Never invest in a tech CEO that wears a suit

Can Windsor use a non-snub to energize a focus on innovation?

OMG, did you hear? There's a new $100 million "Innovation SuperCorridor" initiative from the province introduced in the budget...