Zero to One

What important truth do very few people agree with you on?

This is an incredible hard question to answer for most people. It is especially hard to answer if you have accepted the pattern of educational content regurgitation. Its intellectually difficult because the knowledge taught in school is by definition agreed upon.

As students, and children, we are told to believe because someone has told us to. Brilliant thinking is rare, but courage is in even shorter supply than genius.

We desperately need Christians who are willing to go from 0 to 1, pursuing vertical progress with the totality of their lives. We need Christian innovators who will live by the following principles:

1. It is better to risk boldness than triviality.
2. A bad plan is better than no plan.
3. Competitive markets destroy profits.
4. Sales matters just as much as product.

Every monopoly is unique, but they tend to share some of the following characteristics.

1. Proprietary Technology

Proprietary technology must be at least 10x better than its closest substitute in some important dimension to lead o a real monopolistic advantage.

This is the advantage that Apple had with iTune and the iPod. It actually worked together in a seamless experience and enabled you to keep all your music in one place. It is worth noting that Apple no longer has this advantage.

2. Network Effects

The product becomes more useful as more people use it.

This is most easily understood through social networks like Facebook and Snapchat. The reason we like using these platforms is because celebrities and friends already do it. Without them, we would be disinterested. If you are interested in why people originally sign up, look at the research on Early Adopters.

3. Economies of Scale

A monopoly gets stronger as it gets bigger: the fixed costs of creating a product (engineering, management, office space) can be spread out over ever greater quantities of sales.

Amazon Web Services is a great example. As they grow, the software does not change. The only change is the number of servers needed.

4. Branding

The perceived value of the company or product by consumers.

Apple now uses branding as their primary means of advantage. From the sleek stores, packaging, and products, everyone wants to have the newest product to show off their creative side.

Every startup is small at the start. Every monopoly dominates a large share of its market. Therefore, every startup should start with a very small market and dominate it.

The perfect target market for a startup is a small group of particular people concentrated together and served by few or no competitors. Any big market is a bad choice, and a big market already served by competing companies is even worse.

Paypal made their real money by targeting a few thousand "Powersellers" on Ebay. It is simply easier to make a few thousand people really happy than 1 million. This is important because a perceivable option for Paypal would have been attacking Visa. This would have doomed Paypal to failure. For that matter Paypal could have started by generically targeting online sales. This too would have been doomed to failure. What worked was a concentrated effort on a few thousand "Powersellers".

Let's start to land the plane. Schools are a problem for a lot of reasons but a big one is this: They teach students to believe the facts have been found. Every one who passes through the 12 years of American education is taught how not to pursue the unknown beauty beyond the present. Because of this training, American's tend to follow four social trends:

1. Incrementalism - proceed in small steps, grade by grade, test by test, class by class.
2. Risk Aversion - don't be wrong, if other people do not believe in this, it is for a reason.
3. Complacency - why search for a new secret when you can live in the comfort of your education.
4. flatness - the world is flat, the global talent pool no longer needs your help.

The contrarian thinker knows this is short sighted. The contrarian thinker has an answer to the beginning question:

What important truth do very few people agree with you on?

1. What do we mean by going from 0 to 1?
2. What is the difference between a monopoly and competitive market? (Answer from the perspective of a firm in the industry)
3. Where do most companies become fixated in a competitive market? How does this lead to a lack of innovation?
4. What important truth do very few people agree with you on?

• Zero to One By Peter Theil