Zero to One: Notes on Startups, or How to Build the Future

by Peter Thiel

the single most powerful pattern I have noticed is that successful people find value in unexpected places, and they do this by thinking about business from first principles instead of formulas.

Entrepreneurs are always biased to understate the scale of competition, but that is the biggest mistake a startup can make.

Winning is better than losing, but everybody loses when the war isn’t one worth fighting.

Sometimes you do have to fight. Where that’s true, you should fight and win. There is no middle ground: either don’t throw any punches, or strike hard and end it quickly.

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.

The most successful companies make the core progression—to first dominate a specific niche and then scale to adjacent markets—a part of their founding narrative.

As you craft a plan to expand to adjacent markets, don’t disrupt: avoid competition as much as possible.

The biggest secret in venture capital is that the best investment in a successful fund equals or outperforms the entire rest of the fund combined.

Secrets about people are relatively underappreciated. Maybe that’s because you don’t need a dozen years of higher education to ask the questions that uncover them: What are people not allowed to talk about? What is forbidden or taboo?

The best place to look for secrets is where no one else is looking.

A board of three is ideal. Your board should never exceed five people, unless your company is publicly held.

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, because misalignment can creep in whenever colleagues aren’t together full-time, in the same place, every day. If you’re deciding whether to bring someone on board, the decision is binary. Ken Kesey was right: you’re either on the bus or off the bus.

A 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.

The most valuable kind of company maintains an openness to invention that is most characteristic of beginnings. This leads to a second, less obvious understanding of the founding: it lasts as long as a company is creating new things, and it ends when creation stops.

If you’ve invented something new but you haven’t invented an effective way to sell it, you have a bad business—no matter how good the product.

Whoever is first to dominate the most important segment of a market with viral potential will be the last mover in the whole market.

If you can get just one distribution channel to work, you have a great business. If you try for several but don’t nail one, you’re finished.

Doing something different is what’s truly good for society—and it’s also what allows a business to profit by monopolizing a new market. The best projects are likely to be overlooked, not trumpeted by a crowd; the best problems to work on are often the ones nobody else even tries to solve.

An entrepreneur can’t benefit from macro-scale insight unless his own plans begin at the micro-scale.