This is a continually updated collection of notes on Peter Thiel and his book Zero to One.
- Many of Thiel's beliefs and visions have contrarian themes. This is driven by his views on human mimesis and imitation (more to be said about this later on).
- His legendary interview question, “What important truth do very few people agree with you on?”, is a good filtering mechanism for finding other contrarians. This question is notoriously difficult to answer because of the courage needed to express something socially unpopular. If your answer is something the interviewer agrees with you on, it's probably a bad answer. A good answer will make your interviewer uncomfortable. Most good answers take the following form: “Most people believe in x, but the truth is the opposite of x.”
- If you have a good answer, apply for a job at Thiel Capital and become the next Eric Weinstein.
- Contrarians aren't always right, but when they are, they are really right.
- The rate of technological innovation is decelerating in the US, not accelerating.
- Eric Weinstein's stagnation test: Get rid of the electronics in your room. How can you tell you aren't in the 1970s except for aspects of design?
- The US manufacturing is in a steep decline due to globalization. Free trade is a scam. The worse you are at negotiating free trade agreements, the better at it you think you are.
- We haven't had any great scientific discoveries in the fields of physics in the past 50 years. The last great discovery in the field of physics was relativity. This work was done by Einstein 80 years ago. We've been spinning our wheels for decades. String theory is a scam and doesn't make sense.
Why is this happening?
- Some claim all the low-bearing fruit has been discovered and it's now harder to make progress.
- The only industry which has significantly accelerated is information technology. Historically, inventors were not rewarded for their work. It's difficult to capture value in engineering and the sciences. Software is different because it allows you to capture a large portion of the value you create.
- The Wright brothers invented the first airplane, but they didn't get rich. Albert Einstein came up with relativity and transformed physics, but didn't even become a millionaire. Jack Dorsey came up with a social media platform capped at 140 characters. He's now a billionaire. Also see Jordan Peterson's The Curse of Creativity on the struggles to monetize creative endeavors.
- Thiel's venture capital firm, Founders Fund, has the tagline: "We wanted flying cars, instead, we got 140 characters"
- In the 1950s-60s, the term technology meant all sorts of industries. Bio, medical, civil, aviation, climate, nuclear. In the 2020s, we only use the term technology to describe the IT industry. Where is the cure for cancer? Where are the flying cars? Why aren't we on Mars? What happened to VR?
- Even in the computing industry, growth is starting to decelerate. The iPhone has not seen any substantial changes ever since it's invention nearly a decade ago.
- We're in a battle between atoms and regulation. Atoms have been regulated, bits have not. Changes in government regulations and culture have stagnated many industries such as biotech, pharma, and aerospace. It now costs 1 billion dollars to get FDA approval.
- We now have a culture that fears technological progress. This is even more true in Europe where the governments want to regulate everything.
Innovation Moves from 0 to 1
- Technology and innovation take things from 0 to 1 while globalization takes things from 1 to n. Globalism is copying what works. Technology invents "what works".
- From 1971 to now, our world has been engulfed by globalism (emphasis on the rise of China). This helps explains the technological stagnation we've experienced in the Western world over the last 40 years. Instead of developing new technologies, we are profiting by exporting them to other countries.
- The ability for the United States to innovate and produce 0 to 1 technologies is what made it so great. The US has cultural and economic factors that make it friendly for innovation. Countries that copy the US, such as China, cannot innovate. Culturally, the US tolerates the ambitious dreamers working on crazy ideas. Failure is not stigmatized. Ambition is not considered cool in Europe. The Canadians are too conservative. In these countries, people don't embrace technology, they fear it.
Think for Yourself (Mimetic Theory)
Stanford philosophy professor René Girard's work on Mimetic Theory influences a large part of Thiel's worldview. There's too much that can be said about Girard's work so I highly suggest you do more of your own research. I've linked related resources on mimetic theory at the bottom of this post.
- Mimetic theory proposes that every single desire, excluding our most basic needs, are imitated from our peers.
- When Shakespeare was alive, the word "ape" also meant to imitate.
Man is the creature who does not know what to desire, and he turns to others in order to make up his mind. We desire what others desire because we imitate their desires. - René Girard
- Our culture causes us to self-doubt our most creative and original ideas. We abandon them before they fully form. We're too scared of being seen as unorthodox.
Competition is for Losers
Competition makes us better at that which we're competing on, but it narrows our focus to beating the people around us. It distracts us from things that are more valuable or more important or more meaningful. - Peter Thiel
- Our world is obsessed with competition. School teaches us to aggressively compete with one another for academic accolades and prestige.
Don't Copy Business Ideas
- There is no formula for building a great business. Each great moment in business happens only once.
The next Bill Gates will not build an operating system. The next Larry Page or Sergey Brin won’t make a search engine. And the next Mark Zuckerberg won’t create a social network. If you are copying these guys, you aren’t learning from them.
- This also explains Thiel's negative view of business schools and MBAs.
- This is what makes going from 0 to 1 so difficult compared to 1 to n. Doing something familiar will always be easier.
- The ultimate start-up question we're trying to answer is,
What valuable company is nobody building?
Monopolization as a Rational Bussiness Strategy
When I first read Thiel's views on monopolies, it made me uncomfortable. I knew what he said was true, but I did not know it could be literally be taken as advice. This section was very eye-opening and controversial.
- Monopolies are good for monopolists but may not be good for society. If you're a rational and self-interested entrepreneur, you should aim for monopoly.
- Not all monopolies are bad for innovation or society. Being able to deploy large amounts of money, people, and energy gives the company the ability to work on moonshot projects.
- For example, Bell Labs researchers developed radio astronomy, transistors, the laser, solar panels, information theory, UNIX, C, C++ and in total won 9 Nobel prizes.
- Always start small and monopolize. Many large companies today started out being small experiments that solve one very specific problem. Amazon sold books. Microsoft made compilers. Apple made the Apple II. PayPal found a niche market on eBay.
- Non-Monopolies claim they are not.
Getting Back to Growth
- Growth is what sustains civilization. There cannot be a society without growth. Economic, social, political, spiritual.
- The growth in US GDP over the past 40 years is not enough to sustain society.
- A useful theoretical framework to categorize visions of the future is to divide our ideologies into a 2x2 matrix. Let's put optimistic and pessimistic on the Y-axis, and determinate and indeterminate on the X-axis.
- Determinate means to have a clear vision of the future. One where we know what we want to accomplish. Our scientific and technological goals are clear.
- The US during the 1950s to 1960s was optimistic and determinate. Crazy infrastructure ideas were being flown around. Nixon declared war on cancer.
- The US has now moved to a period of indeterminate optimism. We're still optimistic about our futures, but its lost sight on what it looks like.
You Are Not a Lottery Ticket
- The way we look at luck has radically changed in the past few decades. Our modern-day vision of luck has destroyed our free will.
- Elon Musk (PayPal, Tesla, SpaceX). Peter Thiel (PayPal, Palantir). Steve Jobs (Apple, Pixar). Jack Dorsey (Twitter, Square). These people have started multiple unicorn companies. Would it be reasonable to say they were incredibly lucky many times?
The Education System and its Failures
- Intuitional education systems teach what is already known. For us to go from 0 to 1, we need to innovate, not copy.
- What is the actual purpose of the education system? It depends on who you talk to. The answer is unclear.
- There are three ways to look at the purpose of college:
- An expensive insurance product to ensure students don't fall between the cracks. Joining the middle class is becoming evermore difficult.
- A consumption good for students (4 year party). However, being saddled with debt and not being able to find a well paying job isn't enjoyable. It's a bad product unless you are very wealthy.
- A crazy, mimetically driven competitive tournament.
Elite students climb confidently until they reach a level of competition sufficiently intense to beat their dreams out of them. Higher education is the place where people who had big plans in high school get stuck in fierce rivalries with equally smart peers over conventional careers like management consulting and investment banking. For the privilege of being turned into conformists, students (or their families) pay hundreds of thousands of dollars in skyrocketing tuition that continues to outpace inflation. Why are we doing this to ourselves?