Zero to One

SF from Shack15, taken the morning of Anthropic's Claude 2 Hackathon

SF from Shack15, taken the morning of Anthropic's Claude 2 Hackathon

I read a large portion of this book over Chinese New Year.

I've been wanting to start a company with my friend ever since freshman year.

We've started to build last year but we still haven't found an idea we're really passionate about. Right now we're still experimenting, but I feel a certain urgency. There's untapped potential and infinite possibilities with what we can build with LLMs. We just need to find the right idea. An idea that is new, that no one else has capitalized on. But what separates a good and great idea? A secret that no one else knows about? A company that no one else is building?

This book helped answer some questions I had, and questions I didn't know I had in the first place.

As quoted from the book: "This book is about the questions you must ask to succeed in the business of doing new things: what follows is not a manual ora record of knowledge but ane exercise in thinking. Because that is what a startup has to do: question received ideas and rethink business from scratch."

Quotes from the book:

0 to 1

  • Doing what we already know how to do takes the world from 1 to n, adding more of something familiar. But every time we create something new, we go from 0 to 1.
  • "What important truth do very few people agree with you on?"
    • good answers are as close as we can come to looking into the future
    • preliminary: "what does everybody agree on?
  • Brilliant thinking is rare, but courage is even shorter supply that genius
  • Horizontal progress is globalization – taking things that work somewhere and making them work everywhere. Vertical, 0 to 1 progress is technology.
    • globalization without technology is unsustainable
  • startups
    • a startup is the largest group of people you can convince of a plan to build a different future. New thinking is the most important strength of a new company, even more important than nimbleness.
  • the first step to thinking clearly is to question what we think we know about the past

Lessons from the dot com crash

  1. make incremental advances: small incremental steps are the only safe path forward
  2. stay lean and flexible: try things out, "iterate", treat entrepreneurship as agnostic experimentation
  3. improve on the competition: improve on recognizable products already offered by successful competitors
  4. focus on product, not sales: technology is primarily about product development, not distribution


  • "What valuable company is nobody building?"
    • creating value is not enough – you also need to capture some of the value you create
  • monopolist lie to protect themselves: Google framing itself as just another tech company to escape unwanted attention
  • the biggest mistake a startup can make is the bias to understate the scale of the competition. The fatal temptation to describe your market extremely narrow so you can dominate it.
  • non-monopolies exaggerate their distinctions by defining their markets as the intersection of various smaller markets
  • monopolists disguise their monopoly by framing their market as the union of several large markets
  • in a static word, a monopolist is just a rent collector. But we live in a dynamic world, creative monopolists give us more choices, they're powerful engines for making society better.
  • monopolies drive progress because their profits enable them to make long-term plans to finance ambitious research projects
  • monopoly is the condition of every successful business


  • competition is an ideology, it pervades our society and distorts our thinking. our education system both drives and reflects our obsession with competition
  • rivalry causes you to overemphasize old opportunities and slavishly copy what has worked in the past
  • competition makes people hallucinate opportunities where none exists
  • recognize competition as a destructive force rather than a sign of value.

last mover advantage

  • moving first is a tactic, not a goal
  • it's much better to be the last mover – to make the last great developments in a specific market and enjoy years, even decades of monopoly profits.
  • business is like chess: "to succeed, you must study the endgame before anything else"
  • a great business is defined by its ability to generate cash flow in the future
  • the value of a business today is the sum of all the money it will make in the future.
  • comparing discounted cash flow shows the difference between low-growth business and high growth startups at its starkest
  • tech companies lose money for the first few years: it takes time to build valuable things, and that means delayed revenue
  • most of a tech company's value will come at least 10 to 15 years in the future
  • growth is easy to measure but durability is not
  • most important question: "will this business still be around a decade from now?"

characteristics of a monopoly

  1. proprietary technology
    • 10x better than its closest substitute
    • invent something completely new
    • or radically improve an existing solution
  2. network effects
    • product must be valuable to tis very first users when the network is necessarily small
    • network effect business must start with especially small markets (facebook), they're so small that they don't often appear to be business opportunities at all
  3. economies of scale
    • software startups can enjoy dramatic economies of scale because the marginal cost to producing another copy of the software is close to zero.
    • service business are especially difficult to make monopolies
    • potential for great scale has to be built into its first design (Twitter)
  4. branding
    • a company has a monopoly on its own brand by definition
    • Apple has a complex suite of (1) proprietary technology in hardware and software, it manufactures products at a (2) scale large enough to dominate pricing for materials it buys. And it enjoys a strong (3) network effect from this content ecosystem: developers creating apps for Apple devices.
    • no technology can be built on branding alone

Building a monopoly

  1. start small and monopolize
    • it's easier to dominate a small market than a large one
    • if you think your initial market might be too big, it almost certainly is
    • the perfect target market is a small group of particular people concentrated together and served by few or no competitors
  2. scaling up
    • once you dominate a niche market, you should gradually expand into related and slightly broader (adjacent) markets.
  3. don't disrupt
    • disruption has transmogrified into a self-congratulatory buzzword for anything posting as trendy and new
    • if your company can be summed up by it opposition to already existing firms, it can't be completely new and it's probably not going to become a monopoly
    • disruption attracts attention, disruptive companies pick fights they can't win
    • avoid competition as much as possible

more to come...

Blogs about the book