Founders should launch an MVP as soon as possible and iterate their way to success…right? Wrong, according to billionaire Peter Thiel.
Get the blog before anyone else…subscribe!
The controversial venture capitalist and co-founder of PayPal lays out a very different view in his book Zero to One. As I headed off on vacation last week, I dug into this classic.
Thiel is fundamentally opposed to the Lean Startup framework. Iterating on a minimum viable product (MVP) would never have produced the iPhone, Thiel notes.
Instead, we should create a fundamental innovation. Our new product should be 10x better than alternatives.
And forget about big markets. Thiel’s approach is to completely dominate a small market, then branch out.
“No sector will ever be so important that merely participating in it will be enough to build a great company.”
Peter Thiel
I find Thiel’s approach compelling. Total domination of a small market is a stronger indicator of product-market fit than a tiny slice of a big one.
A monopoly, even in a small area, means you have pricing power. This avoids a race to the bottom with margins headed to zero.
From that strong position, we can branch out to adjacent markets. For example, PayPal was able to move from enabling eBay payments for top sellers to sending money for any reason.
Thiel also includes a great trick for investors: ask founders what they pay themselves.
A reasonable salary of no more than $150,000 ($194,000 in current dollars) strongly correlates with success. This is one of the clearest patterns Thiel has observed from investing in hundreds of startups including Facebook.
I’m going to steal this one! It may lead to some awkward silences on Zoom, but ya gotta break some eggs to make an omelette.
I found Thiel’s take on entrepreneurship refreshing. Zero to One turns the standard startup playbook on its head, and it makes a lot of sense!
I’m going to look more closely at companies dominating an initial small market. And if I ask you your salary, blame Peter.
What do you think of Zero to One? Leave a comment at the bottom and let me know!
Glad to be back!
More on tech:
Seedscout: Where Underestimated Founders Win
Why I Just Invested in Rilla, the Killer App for Outside Sales
Seeing Through SBF: How One VC Found the Truth
Get the blog before anyone else…subscribe!
If you found this post interesting, please share it on Twitter/Reddit/etc. This helps more people find the blog!
Save Money on Stuff I Use:
This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.
More on Fundrise in this post.
If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!
I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!
I wrote a detailed review of Misfits here.
Use this link to sign up and you’ll save $15 on your first order.
Photo: “Peter Thiel” by jdlasica is licensed under CC BY 2.0.
Tremendous 
5 thoughts on “Zero to One”