Zero to One — Peter Thiel and Blake Masters

Zero to One: Notes on Startups, or How to Build the Future is out and you, like everyone, should read it; the book is of course about startups but its deeper themes are philosophical in nature: how we should think about and relate to the world. The writing is elegant and clear without having a distinctive style that can be easily labeled by calling attention to itself. It is Robertson Davies’s plain style, used well here.

Those who have already read Blake Masters’s CS 183 classnotes—I have—may be disappointed, since they form the core of the book. Nonetheless those notes have been cleaned up, organized, and updated with more recent examples. The thrust Zero to One is also beautiful and optimistic: the future is important, it can be shaped and improved, and individual choices matter. In believing those three things, and especially the second two, Thiel and Masters are swimming upstream against much of contemporary culture.

zero to oneOthers can no doubt comment on the technical aspects of the book, but I will note that much of what Thiel and Masters write sounds like an artists’ manifesto: “The act of creation is singular, as is the moment of creation, and the result is something fresh and strange.” I very rarely read about business as “strange,” and yet the word is apt: all things are strange before they become domesticated by time and ubiquity. Artists usually focus directly on creating new things, but Zero to One describes “how to build companies that create new things.” More people extend the reach of what a single individual can do, but though Thiel has “noticed many patterns [. . .] this book offers no formula for success.” There is none, because innovation is by definition strange and new. He is trying to “help my students see beyond the tracks laid down by academic specialties to the broader future that is theirs to create.”

Academia has many problems and he notices them; I don’t think he uses this as a specific example, but one issue is treating school like a job or primary occupation. It shouldn’t in most cases be. It should be a day job that enables and ideally complements the other things one does. Teachers and professors rarely inculcate this attitude, however, because they themselves have been selected by the school system and have bought into its prejudices and cultures. Charter schools are important for many reasons, one being that they give an opportunity to create new schooling cultures. Montessori is specifically attempting to do that, and it is striking how many successful tech guys went through Montessori schools.

They note that “The business version of our contrarian question is: what valuable company is nobody building?” This question is harder than it looks” (23). The novelists’ version is, “What valuable novel is nobody writing?” One challenge, of course, is that different people have different values for “valuable:” I find most “thrillers” to be boring and un-thrilling, and most thriller readers probably find literary fiction the same.

This could be a description of most narrative fiction: “Our ancestors lived in static, zero-sum societies where success meant seizing things from others. They created new sources of wealth only rarely, and in the long run they could never create enough to save the average person from an extremely hard life.” Romance, the driver of so much fiction, is usually zero-sum: if the protagonist wins the guy or girl, no one else can; if the rival wins the guy or girl, no one else can, while in the real world there are a de facto infinite number of good guys or girls, provided the protagonist—that is, you—are willing to find and attract them. There are an infinite number of jobs, too, and one person getting a job doesn’t prevent someone else from getting another, or making another. Much narrative fiction taps into the zero-sum dynamic. Maybe it shouldn’t, or should more often explicitly question that dynamic.

Thiel and Masters are writing about everything, though they write specifically about startups. They discuss the nature of mass delusion (“Usually, it’s considered weird to be a 40-year-old graduate student. Usually, it’s considered insane to start a half-dozen companies at once. But int he late ’90s, people could believe that this was a winning combination”) and the psychology of founders (“Of the six people who started PayPal, four had built bombs in high school” and “We alternately worship and despise technology founders just as we do celebrities”); there is a hint of a Paglian reading of myth here, and such readings are too rare in a de-mythologized, de-ritualized society. There is more of the journey of the mythic hero in tech startups than is commonly supposed.

Psychology and cultural criticism have a long border; Thiel and Masters write that “competition is an ideology—the ideology—that pervades our society and distorts our thinking” (35). The opposite of competition, which may be something like cooperation or stasis, could be even worse: static societies and companies do not appear to do well or even exist in a world of competitive societies. But I don’t think Thiel and Masters are going in this direction: they are rather reminding us that it is useful to remember that we don’t live in a zero-sum world, largely because of technology and specialization. Most of human existence probably was zero sum, however, and that may explain some psychological quirks that aren’t terribly adaptive in contemporary information and industrial societies.

Competitive ideology has another problem too: it encourages us to compete with everyone, all the time. Picking good competitors is probably almost as important as picking good friends. Most competitive arenas are pointless. People often fight for control, and against other people like them:

Consider the opening line from Romeo and Juliet: “Two houses, both alike in dignity.” The two houses are alike, yet they hate each other. They grow even more similar as the feud escalates. Eventually, they lose sight of why they started fighting in the first place.

I’ve noticed this continually among professors, often specialists in the same area, who are from the outside identical and yet bash each other over minor differences. People more generally seem to seek fights for the sake of fighting, and without realizing that direct fighting is usually a terrible way to change minds—as has been known for decades. It’s often better to not respond to critics and instead to make something new. As Thiel and Masters write: “Rivalry causes us to overemphasize old opportunities and slavishly copy what has worked in the past.” One can see this at an individual level or even a national level: think of the petro-states that exist as they do primarily because they can sell oil to innovation states.

I mentioned psychology already; here is another passage on that theme that also applies to artists, who are often skilled at ignoring or repudiating group beliefs / delusions:

The hazards of imitative competition may partially explain why individuals with an Asperger’s-like social ineptitude seem to be at an advantage in Silicon Valley today. If you’re less sensitive to social cues, you’re less likely to do the same thing as everyone else around you. If you’re interested in making things or programming computers, you’ll be less afraid to pursue those activities single-mindedly and thereby become incredibly good at them. Then when you apply your skills, you’re a little less likely than others to give up your own convictions: this can save you from getting caught up in crowds competing for obvious prizes.

“Making things:” properly read, Zero to One is a recipe book for makers across disciplines. And “getting caught up in crowds competing for obvious prizes:” I remember talking about college sexual adventures with a friend who went to an Ivy-League school and who lamented that so many of the girls were, in his view though not in his words, neurotic achievement-obsessed basket cases. Maybe he misunderstood what those girls were seeking, but maybe he chose the wrong environment for that part of life.

Making things happens at large and small scales. Though we are still somewhat good at making things happen at small scales—as, say, the iPhone shows, or many Kickstarter projects show—we have become less ambitious and too obsessed with vetoes on large projects. Launching the Innovation Renaissance discusses this; so too does Thiel, in a cultural-political context: In the 1950s, people welcome big plans and asked whether they would work. Today, a grant plan coming from a schoolteacher would be dismissed as crankery, and a long-range vision coming from anyone more powerful would be derided as hubris.” We are collectively unable to even muster the political will to build denser cities and reasonable public transportation systems, let alone next-generation nuclear plants and systems for getting cheaply into space. This is a dark problem too rarely discussed by anyone.

It is also a tremendous and tremendously dangerous problem: “Without new technology to relieve competitive pressures, stagnation is likely to erupt into conflict. In case of conflict on a global scale, stagnation collapses into extinction.” There is a direct, underappreciated link between novelty, innovation, and survival. Artist and scientists are arguably at the forefront of ideas, though not always good ideas. Still, there is a brilliant statement at the end, which I’ve read more often in books targeted at novelists:

Only by seeing our world anew, as fresh and strange as it was to the ancients who saw it first, can we both re-create it and preserve it for the future.

This is not an ordinary book about “business.” It is a book about everything, as the best books always are.

Almost every human endeavor is also about relationships, whether we want it to be or not:

The lawyers I worked with ran a valuable business, and they were impressive individuals one by one. But the relationships between them were oddly thin. They spent all day together, but few of them seemed to have much to say to each other outside the office. Why work with a group of people who don’t even like each other? Many seem to think it’s a sacrifice necessary for making money. But taking a merely professional view of the workplace, in which free agents check in and out on a transactional basis, is worse than cold: it’s not even rational. Since time is your most valuable asset, it’s odd to spend it working with people who don’t envision any long-term future together. If you can’t count durable relationships among the fruits of your time at work, you haven’t invested your time well—even in purely financial terms.

This is again a good description of academia, and it’s also a restatement of the Coase theorem, which I wrote about in similar terms at the link. In most life domains a purely transactional model makes everyone poorer in the ways that count.

Thiel and Masters note that in school “Students who don’t learn best by sitting still at a desk are made to feel somehow inferior, while children who end up defining their identities in terms of this weirdly contrived academic parallel reality.” If you’re awake and paying attention to the school system, it’s hard not to notice its many bizarre perversities—and its problems harm not only the low achieving students but also the high achieving students. Although I spent years being a dumbass, I mostly got tracked to the high-achieving parts of school, and as an adult discussions with others who were stuck on the high-achieving track involve the ways the value system of that track warps those on it. But no one or almost no one tells students that at the time, and parents, teachers, and administrators are in on the conspiracy. Maybe that’s why so many Silicon Valley bigwigs want their kids in Montessori or similar schools.

Moreover, the prestige / rivalry system reinforces a zero-sum mindset, at least for those who buy in, as Thiel did (and only barley escaped):

Higher education is the place where people who had big plans in high school get stuck in fierce rivalries with equally smart peers over conventional careers like management consulting and investment banking. For the privilege of being turned into conformists, students (or their families) pay hundreds of thousands of dollars in skyrocketing tuition that continues to outpace inflation. Why are we doing this to ourselves?

I wonder if Thiel and Masters have read Excellent Sheep yet. Deresiewicz has similarly scalding views, though he comes from a different vantage point and throws some pointless, ill-formed bombs at startup culture. Thiel and Masters, however, ask the deep questions, and give major structural advice that one rarely hears from professors: “You should focus relentlessly on something you’re good at doing, but before that you must think hard about whether it will be valuable in the future.” I have focused relentlessly on writing better novels, but so far it has not proven valuable in a financial sense. If it weren’t for other ways of monetizing my skills, I would be doing something else, and probably not even writing this post.

Let me return, for a moment, to relationships, since your friends and surroundings count, as Tolkien knew and many others know: “it’s hard to develop new things in big organizations, and it’s even harder to do it by yourself. Bureaucratic hierarchies move slowly, and entrenched interests shy away from risks.” This is another, accurate, critique of academia, and a reminder to attend to our environment. Thiel does say that “a lone genius might create a classic work of art or literature, but he could never create an entire industry.” Even the lone-genius model appears less true than is often imagined: reaching into the biographies of famous artists tends to reveal an ecosystem of friends, rivals, mentors, and helpers. Hemingway famously derided creative writing classes, but he spent much of his early working life showing drafts of his work to Gertrude Stein and Sherwood Anderson. Few of us succeed fully in art or business without helpers along the way: hence, perhaps, the Joseph Campbell model that calls for such helpers in The Hero With a Thousand Faces. Even in myth the hero does not succeed alone: Frodo and Aragorn need Gandalf. Luke Skywalker needs Han and Obi-Wan. In His Dark Materials Lyra finds an array of helpers.

There are sections I think wrong, like the one on page 78 when Thiel and Masters criticize contemporary Silicon Valley buzzwords, which may reflect generations of learning about startups and the startup environment. Thiel and Masters say that “Secrets about people are relatively underappreciated,” while the opposite is true: we call secrets about people “gossip,” and most narrative art is relentlessly focused on personality, competitive, and “secrets” about people that almost always turn out to be about sex, money, and death. The supposed “secrets” that people hold tend to be more uniform than not. That pattern has persisted in Western art for millennia: the ultimate “secret” at the heart of Oedipus the King (first written circa 400 BC) and Game of Thrones is the same. The only human secret that matters is that one shouldn’t be surprised by human secrets.

These are quibbles about an otherwise great book. Great books do not have to be long. This one isn’t. They have to pack a lot of ideas in the space they h ave. This one does.

To reiterate the first paragraph of this post, you need to read this book. The less you think you need to read it, the more you do. It is in some ways similar to Rework, another anti-conventional-business business book written by nerds. Zero to One is a tremendously important book; although I admire and appreciate trivial books, particularly because most books including my own are, find one that is important—which does not mean “pompous” or “serious”—matters. You should read it. Your friends should read it. Its ideas should be common currency, readily known whether accepted or rejected. It is possible that the future of the world depends on Zero to One finding the right person at the right time, which is true of few other books.

The physical book is itself nicely made; though the binding appears to be glue rather than thread, the paper quality is high, and much higher than most books in its class and most contemporary books, period. The physical book reflects their emphasis on long-term thinking, as too few physical books do. One can read publishers’s opinions on their own works in the ways they choose to manufacture books. Those opinions do not appear to be high. If publishers have a low opinion of their own products, what should investors think?

Here is a good Fortune profile of Thiel. And

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