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Zero to One
Notes on Startups, Or
How to Build the Future.
Summarized by Eric Driggs
Competitive lies Monopoly lies
“we’re special” “It’s competitive”
Going to corner the market not the monopoly government looking for
Overestimate your market, proposition
value, or marketing
Mask your monopoly through diversification
(e.g. google non-advertising businesses)
Intersection of narrow markets Union of large markets
British food ∩ restaurant ∩ Palo Alto search engine ∪ mobile phones ∪ wearable
computers ∪ self-driving cars
Optimistic “We chose to go to the
moon in this decade and do
the other things, not
because thy are easy, but
because they are hard”
“keep options open”
Pessimistic “Winter is Coming” “Kick the can down the
Software has good risk/reward
Biotech? Not so much.
Startups have high risk, so
only invest in startups with
the potential for orders of
magnitude of improvement
Secrets have tremendous value
• what important
truth do very few
people agree with
Easy Hard Impossible
Attractive if you believe
hard problems are solver
Secrets Is it really?
(Wiles solving Fermat’s last
“If you think something hard is impossible, you’ll never even start trying to achieve it.
Belief in secrets is an effective truth.”
How to find secrets?
Study physical world Study people
What secrets is nature not
What secrets are people not
Where is no one else looking?
(accountability, vision and goals)
Ownership Possession Control
Shared between founders,
Managers / employees Board of directors
Ineffective alignment: DMV
(possession not accountable to ownernship or control)
Ownership Possession Control
We the people DMV employees Government
When to sell
Founders only sell when they have no more concrete visions for the
company, in which case the acquirer probably overpaid; definite
founders with robust plans don’t sell, which means the offer wasn’t
When Yahoo! offered to buy Facebook for $1 billion in July 2006, I
thought we should at least consider it. But Mark Zuckerberg walked
into the board meeting and announced: “Okay, guys, this is just a
formality, it shouldn’t take more than 10 minutes. We’re obviously
not going to sell here.”
Mark saw where he could take the company, and Yahoo! didn’t. A
business with a gooddefinite plan will always be underrated in a
world where people see the future as random.
Lifetime value > Acquisition cost
Consumer Small Business Big Business
Traditional Advertising Dead zone Sales teams
Cheap per customer Customer value < sales team cost
Customers acquired < advert cost
Lots of sales Few big sales
First to dominate = last
Will tech replace humans?
Computers are tools, not rivals
No intention Intentionality
No desire Desires
Large data processing Complicated plans
Deterministic Complex Judgements
Recognizing cat 75%
Recognizing cats 99.9%
Complementary Fraud Prevention
The fraudsters’ adaptive evasions fooled our automatic detection
algorithms, but we found that they didn’t fool our human analysts as
easily. So Max and his engineers rewrote the software to take a hybrid
approach: the computer would flag the most suspicious transactions
on a well-designed user interface, and human operators would make
the final judgment as to their legitimacy.
Thanks to this hybrid system—we named it “Igor,” after the Russian
fraudster who bragged that we’d never be able to stop him—we
turned our first quarterly profit in the first quarter of 2002 (as opposed
to a quarterly loss of $29.3 million one year before). The FBI asked us if
we’d let them use Igor to help detect financial crime. And Max was
able to boast, grandiosely but truthfully, that he was “the Sherlock
Holmes of the Internet Underground.”
Founders aren’t average.
Faith in secrets changes your behavior.