The Thiel Deal #ZerOtoOne.

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Peter Thiel hardly needs an introduction; his name has been tied to some of the most successful companies of our time ,He is an American entrepreneur, venture capitalist,hedge fund manager, and social critic.He also co-founded Palantir, of which he is chairman. He was the first outside investor in Facebook .Over the span of his career, he has had the chance to watch companies make it and break it, he taught a class at Stanford University covering everything he knew about startups.The class,was developed out of Founders Fund and specifically, notes taken by a student led to the publication of his book, Zero to One.

Here is its description of “zero to one”: 

“Zero to One” describes the process of creating something radically new and taking it to the first step (Horizontal or intensive growth). The phrase is used in contrast to the term “1 to n” (Vertical or extensive growth), which means creating incremental improvements to what is already familiar. The aim of the phrase is to encourage more “zero to one”, or entrepreneurial, behavior. There are Three kinds of innovation:

  • Performance-improving innovations that replace old products with new and better models.
  • Efficiency innovations that help companies make and sell mature, established products or services to the same customers at lower prices.
  • Market-creating innovations that “transform complicated or costly products so radically that they create a new class of consumers, or a new market.”

By Contrast Market creating innovations are the most important of these, because they usually generate whole new industries, new jobs and new economic growth.Peter-Thiel-Zero-to-One-700dpi

Thiel speaks from experience. He was involved in a number of successful market creating firms. He cofounded PayPal, which was sold in 2002 for $1.5 billion. The team that he put together at PayPal is known in Silicon Valley as the “PayPal Mafia.” It included a number of entrepreneurs who have gone on to launch successful startups. “Elon Musk has founded SpaceX and co-founded Tesla Motors; Reid Hoffman co-founded LinkedIn; Steve Chen, Chad Hurley , and Jawed Karim together founded YouTube; Jeremy Stoppelman and Russel Simmons founded Yelp; David Sacks co-founded Yammer. Thiel also helped fund the launch of Facebook.

The core philosophy of his book is ,If  you do what has never been done and you can do it better than anybody  else, you have a monopoly and every business is successful exactly  insofar as it is a monopoly. But the more you compete, the more you  become similar to everyone else. From the tournament of formal schooling  to the corporate obsession with outdoing rivals, competition destroys  profits for individuals, companies, and society as a whole.The next Bill Gates will not build an operating system. The next Larry Page or Sergey Brin won’t make a search engine. Tomorrow’s champions will not win by competing ruthlessly in today’s marketplace. They will escape competition altogether, because their businesses will be unique.Not all truly innovative design is completely “zero to one”, however. Facebook was not completely “Zero to One”, as it built on ideas that were improvements over Friendster and Myspace. But it is important to note that Facebook’s improvements were not incremental improvements rather it started doing things differently from a new zero ground.

I think we can all agree that some types of work have more “zero to one” characteristics than other types of work. For example, the creation of the Thiel Fellowship was definitely a “zero to one” event, and Peter Thiel’s creation of the fellowship was partially inspired by the need to inspire more people to do truly “zero to one” work.

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