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June 20 - July 8, 2024
startup is the largest group of people you can convince of a plan to build a different future.
if you want to create and capture lasting value, don’t build an undifferentiated commodity business
every business is successful exactly to the extent that it does something others cannot.
happy companies are different: each one earns a monopoly by solving a unique problem. All failed companies are the same: they failed to escape competition.
the value of a business today is the sum of all the money it will make in the future.
If you focus on near-term growth above all else, you miss the most important question you should be asking: will this business still be around a decade from now?
Every monopoly is unique, but they usually share some combination of the following characteristics: proprietary technology, network effects, economies of scale, and branding.
As a good rule of thumb, proprietary technology must be at least 10 times better than its closest substitute in some important dimension to lead to a real monopolistic advantage.
startup should have the potential for great scale built into its first design.
Therefore, every startup should start with a very small market.
The perfect target market for a startup is a small group of particular people concentrated together and served by few or no competitors.
Once you create and dominate a niche market, then you should gradually expand into related and slightly broader markets.
As you craft a plan to expand to adjacent markets, don’t disrupt: avoid competition as much as possible.
Instead of pursuing many-sided mediocrity and calling it “well-roundedness,” a definite person determines the one best thing to do and then does it.
a whole generation learned from childhood to overrate the power of chance and underrate the importance of planning.
Jobs saw that you can change the world through careful planning, not by listening to focus group feedback or copying others’ successes.
You can have agency not just over your own life, but over a small and important part of the world. It begins by rejecting the unjust tyranny of Chance. You are not a lottery ticket.
Every individual is unavoidably an investor, too. When you choose a career, you act on your belief that the kind of work you do will be valuable decades from now.
You should 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.
Most people act as if there were no secrets left to find.
Kaczynski argued that modern people are depressed because all the world’s hard problems have already been solved. What’s left to do is either easy or impossible, and pursuing those tasks is deeply unsatisfying. What you can do, even a child can do; what you can’t do, even Einstein couldn’t have done. So Kaczynski’s idea was to destroy existing institutions, get rid of all technology, and let people start over and work on hard problems anew.
The actual truth is that there are many more secrets left to find, but they will yield only to relentless searchers.
There are two kinds of secrets: secrets of nature and secrets about people. Natural secrets exist all around us; to find them, one must study some undiscovered aspect of the physical world. Secrets about people are different: they are things that people don’t know about themselves or things they hide because they don’t want others to know.
So when thinking about what kind of company to build, there are two distinct questions to ask: What secrets is nature not telling you? What secrets are people not telling you?
Unless you have perfectly conventional beliefs, it’s rarely a good idea to tell everybody everything that you know. So who do you tell? Whoever you need to, and no more.
“Thiel’s law”: a startup messed up at its foundation cannot be fixed
As a founder, your first job is to get the first things right, because you cannot build a great company on a flawed foundation.
Choosing a co-founder is like getting married,
Technical abilities and complementary skill sets matter, but how well the founders know each other and how well they work together matter just as much.
It’s very hard to go from 0 to 1 without a team.
You need good people who get along, but you also need a structure to help keep everyone aligned for the long term.
it’s useful to distinguish between three concepts: • Ownership: who legally owns a company’s equity? • Possession: who actually runs the company on a day-to-day basis? • Control: who formally governs the company’s affairs?
A board of three is ideal. Your board should never exceed five people,
anyone who doesn’t own stock options or draw a regular salary from your company is fundamentally misaligned. At the margin, they’ll be biased to claim value in the near term, not help you create more in the future. That’s why hiring consultants doesn’t work. Part-time employees don’t work. Even working remotely should be avoided,
whenever colleagues aren’t together full-time, in the same place, every day.
company does better the less it pays the CEO—that’s one of the single clearest patterns I’ve noticed from investing in hundreds of startups.
Startups don’t need to pay high salaries because they can offer something better: part ownership of the company itself.
Anyone who prefers owning a part of your company to being paid in cash reveals a preference for the long term and a commitment to increasing your company’s value in the future. Equity can’t create perfect incentives, but it’s the best way for a founder to keep everyone in the company broadly aligned.
we set out to hire people who would actually enjoy working together. They had to be talented, but even more than that they had to be excited about working specifically with us. That was the start of the PayPal Mafia.
should ask yourself a more pointed version of the question: Why would someone join your company as its 20th engineer when she could go work at Google for more money and more prestige?
The only good answers are specific to your company, so you won’t find them in this book. But there are two general kinds of good answers: answers about your mission and answers about your team.
You’ll attract the employees you need if you can explain why your mission is compelling: not why it’s important in general, but why you’re doing something important that no one else is going to get done.
You should be able to explain why your company is a unique match for him personally.
and then promise what no others can: the opportunity to do irreplaceable work on a unique problem alongside great people.
The best thing I did as a manager at PayPal was to make every person in the company responsible for doing just one thing. Every employee’s one thing was unique, and everyone knew I would evaluate him only on that one thing.
But then I noticed a deeper result: defining roles reduced conflict. Most fights inside a company happen when colleagues compete for the same responsibilities.
In the most intense kind of organization, members hang out only with other members. They ignore their families and abandon the outside world. In exchange, they experience strong feelings of belonging, and maybe get access to esoteric “truths” denied to ordinary people. We have a word for such organizations: cults.
But entrepreneurs should take cultures of extreme dedication seriously. Is
underestimate the importance of distribution—a catchall term for everything it takes to sell a product—because we share the same bias the A Ship and C
It’s easy to resist the most obvious sales pitches, so we entertain a false confidence in our own independence of mind.
