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"Zero to One", by Peter Thiel and Blake Masters

Peter Thiel and Blake Masters discuss in “Zero to One” how to successfully found a start-up.

They say the goal is to become a monopoly and they warn against a culture of competition. The aim is not to enter an industry and compete hard in it, but rather to found a new industry and be safe from competitors.

I liked the book and many of their thoughts. I think the following citation is great and I read it as a criticism an alleged contentedness and satiation of my generation:

“Consider the trivial but revealing hallmarks of urban hipsterdom: faux vintage photography, the handlebar mustache, and vinyl record players all hark back to an earlier time when people were still optimistic about the future. If everything worth doing has already been done, you may as well feign an allergy to achievement and become a barista.” (p96)

Before reading this book, I would have placed Thiel in the libertarian corner so I was surprised to read a criticism of the idea of efficient markets:

“But the existence of financial bubbles shows that markets can have extraordinary inefficiencies.” (p100)

Also, this is fun:

“This is why physics PhDs are notoriously difficult to work with – because they know the most fundamental truths, they think they know all truths.” (p104)

They spend some pages defending auxiliary business operations such as marketing and sales:

“But advertising matters because it works. It works on nerds, and it works on you. You may think that you’re an exception; that your preferences are authentic, and advertising only works on other people.” (p127)

I’m doing research on the effects of automation on labor markets, so I was happy to see a discussion like the following:

“The stark differences between man and machine mean that gains from working with computers are much higher than gains from trade with other people. We don’t trade with computers any more than we trade with livestock or lamps. And that’s the point: computers are tools, not rivals. […] Properly understood, technology is the one way for us to escape competition in a globalizing world. As computers become more and more powerful, they won’t be substitutes for humans: they’ll be complements.” (p144)

and further,

“Why do so many people miss the power of complementarity? It starts in school. Software engineers tend to work on projects that replace human efforts because that’s what they’re trained to do. […] Just look at the trendiest fields in computer science today. The very term “machine learning” evokes imagery of replacement, and its boosters seem to believe that computers can be taught to perform almost any task, so as long as we feed them enough training data. […] Google Translate works […] because it has extracted patterns through statistical analysis of a huge corpus of text.” (p148-149)

and

“But big data is usually dumb data. Computers can find patterns that elude humans, but they don’t know how to compare patterns from different sources or how to interpret complex behaviors. Actionable insights can only come from a human analyst (or the kind of generalized artificial intelligence that exists only in science fiction).” (p149)

The book is surprisingly deep, non-standard and well-written. I found the parallels to academia striking. In some sense every new research project is a start-up. You own it, protect it and want it to succeed. If we follow Thiel’s advice in research, we should look for novel research projects to escape the competition. The advice doesn’t carry over completely, but I do think standing out is easier when following unconventional paths.

I also liked idea of being very aware of who the stakeholders in a project are. In academia that would be:

  1. yourself
  2. your coauthors
  3. your supervisor and others like fellow PhD students that you regularly talk with about the state of the project and that keep track of its progress
  4. everybody else

And I think the important thing is not to expect things from people from the wrong group.

And then there’s the issue of when you tell who about some good new idea. On the one hand, you want feedback. But if everybody knows your great new idea, then maybe they’ll go for it first. People tend to remember good ideas, but not who came up with them. And after a while, they think they came up with it themselves.

They write about this:

“If you find a secret, you face a choice: Do you tell anyone? Or do you keep it to yourself? […] 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. In practice, there’s always a golden mean between telling nobody and telling everybody – and that’s a company.” (p105)

How radical to say: “Whoever you need to, and no more.” It goes against my nature. When I think I’ve figured something out I have a strong urge to tell everybody. But maybe it makes sense to pause, reflect on the idea first and to let the world know about it when the analysis is done and the story is ready to be told.

But then again, academics depend on their reputation and blatant stealing of ideas is not so frequent. And the process of telling people might even establish ownership. After all, start-ups can make you rich, but research offers insights.