Sunday, November 23, 2014

Zero to One -- Peter Thiel

* Important truth that few people agree with me on
* technology vs. globalization

1. Risk boldness not triviality
2. Bad plan is better than no plan
3. Competitive markets destroy profits
4. Sales matter as much as product

Monopoly when creating something new -- U.S. government encourages with Patents. Society gains.

Future cash flow = company must Grow & Endure. We know how to measure growth.
1. Proprietary technology
2. Network effects
3. Economies of scale
4. Branding

Every startup should start with a small market and monopolize.  Amazon started with books. Facebook with Harvard.

Disruptive technology means a distracting challenge to a large competitor. Instead work within an ecosystem. Paypal worked directly with credit card companies and grew their market.

U.S. was definite optimistic, now indefinite optimistic. The world will be better, but it is unclear how to make that happen and in what way it will be better. So, makes no specific plans.

Biggest secret in venture capital is that best investment in a successful fund outperforms the entire rest of the fund combined.

Two rules:
* Only invest in companies that have potential to return the value of the entire fund.
* Because rule #1 is so restrictive, there can be no other rules.

Secrets. Goals that can be satisfied only with serious effort.

* Competition and capitalism are  opposites.

Nutrition is exactly the kind of field that could yield big secrets. Nutrition matters for everyone. Many studies are old and seriously flawed. Food pyramid more a product of big food than real science (not it is published by the department of agriculture not the NIH or CDC). We know more about far away stars than about human nutrition.

Startup messed up at its foundation cannot be fixed.
Small board (ideally 3 members for effective governance)

Everyone involved with the company should be involved full time. (Except lawyers & accountants.)
Own stock options and draw a regular salary from company.

Hiring consultants doesn't work. Part-time employees doesn't work. Meeting in person is essential.

CEO should not be earning more than $150k per year. CEO's salary functions as ceiling for salaries.

Equity compensation:
* Not liquid
* Tied to specific company
* If that company doesn't succeed, it is worthless.

That's why it is a powerful tool precisely due to these limitations. Preference for commitment and long-term.

First 4-5. Large equity stakes. High profile responsibilities.

Answers about your mission. About your Team. Why mission is compelling. Why you are doing something important that no one else is going to get done. That is the only thing that can make its importance unique.

Explain why your company is a unique match for each candidate personally or it isn't a fit.

T-Shirts with your company's logo.

On the inside, each person should be distinguished by her work. Clarity reduces conflict.

Salespeople. Title has nothing to do with it. Investment bankers. Business development. etc. Even academia is sales and promotion.

Engineer wants product to sell itself. (But that doesn't happen, typically.)

* Personal Sales
* Marketing & Advertising
* Viral marketing (dominate most important segment of market will be last mover in whole market)

Complementarity between computers and humans isn’t just a macro-scale fact. It’s also the path to building a great business. And good teachers aren’t just experts in their disciplines: they must also understand how to tailor their instruction to different individuals’ interests and learning styles.

Whatever your industry, any great business plan must address every one of the following questions. If you nail all seven, you’ll master fortune and succeed. Even getting five or six correct might work.

1. The Engineering Question
Can you create breakthrough technology instead of incremental improvements?
2. The Timing Question
Is now the right time to start your particular business?
3. The Monopoly Question
Are you starting with a big share of a small market?
4. The People Question
Do you have the right team?
5. The Distribution Question
Do you have a way to not just create but deliver your product?
6. The Durability Question
Will your market position be defensible 10 and 20 years into the future?
7. The Secret Question
Have you identified a unique opportunity that others don’t see?

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