Book Review: Zero To One

BOOK REVIEW OF ZERO TO ONE: NOTES ON STARTUPS, OR HOW TO BUILD THE FUTURE BY PETER THIEL

When we get inspired by Bill Gates and build another five companies like Microsoft then we go from 1 to n. But when we create something unique that did not exist before us are going from Zero to One. This book is all about inspiring us to think about grand ideas and not for those who are looking to merely tinker. Unsolved problems are hotbeds of opportunity. Every moment in business happens only once. Conventional education leads to conventional choices. So his Thiel Fellowship program funds smart people who are under 20, to forgo their college education and start their own companies.

Peter Thiel is a billionaire entrepreneur (he started Paypal in 1998 as a way to create an alternative to the dollar), turned venture capitalist turned author taught a class on entrepreneurship at Stanford. He was the first outside investor in Facebook. He studied philosophy at Stanford University before going on to Stanford Law School, and working in a law firm in New York and then as a derivatives trader on Wall Street.

The book starts by asking Thiel’s favorite interview question, “What important truth do very few people agree with you on?” This book is about asking you to think, “What valuable company is no one building?” If the company we are thinking of will show diminishing rate of return, our idea is not original enough. An original idea (like LinkedIn, says Thiel) will give progressively higher rate of returns. All the “zero to one” ideas like Facebook follow four rules.

1. They are bold ideas and not about taking baby steps and making incremental progress.
2. The founder has a clear plan. A wrong plan is better than no plan. See how you can leverage technology.
3. Try to create a small monopoly. That is where profits lie. But never declare yourself as one.
4. Product is important but so is Sales. Nerds often do not get this when they come up with a great product – someone has to sell it.

There is no such thing as luck – it is all about skills and a great team. A lone genius cannot create a startup. He quotes Jack Dorsey, the founder of Twitter who said, “Success is never accidental”. A founder must have a long term view. Steve Jobs designed Apple’s future with a series of ground breaking new products every few years. That’s where the Power Law kicks in. Those who can think of a Zero to One idea will create monopolies and leave pennies for those who will be inspired to follow. That’s a strong warning to all those who imitate Steve Job’s arrogance without having his vision.

Thiel has seven questions that he thinks every start-up must answer:

1. Can you create breakthrough technology that is at least 10x better?
2. Is now the right time to start your business?
3. Are you starting with a big share of a small market? Think monopoly.
4. Do you have the right team?
5. Do you have a way to not just create but to deliver your product?
6. Will your market position be defensible 10 or 20 years into the future?
7. Have you identified a unique opportunity that others don’t see?

Thiel has strong opinions on everything – even how we should dress (hint: don’t wear suits ever!). He is a contrarian and is unafraid of offending you by challenging your world view.

The book certainly inspired me to abandon incremental thinking. This book should be read by everyone who wants to be an entrepreneur. You cannot think short term. Thiel may know a thing or two about success. The PayPal core team members went on to start Yammer, LinkedIn, YouTube and Yelp. In that sense the book will become a handbook that entrepreneurs will read in order to really ask whether their idea really is going to be a “Zero to One” idea just like this book.

Review Summary

Zero to One is a small and intellectually engaging book.  It is an essential read for anyone planning to build a successful and sustainable innovative technology company.

Positively defined, a startup is the largest group of people we can convince of a plan to build a different future.

This is a self-help book for entrepreneurs, bursting with bromides and sunny confidence about the future that only start-ups can build. But much more than that, it's also a lucid and profound articulation of capitalism and success in the 21st century economy.

So it's surprising in a wonderful way just how simple Zero to One feels. Barely 200 pages long, and well lit by clear prose and pithy aphorisms, Thiel is brilliant at addressing his audience, entrepreneurs on the road to success. Thiel’s book is meant to inspire entrepreneurs, but it is also serves as an inspiration for its genre. 

Methods of Job Evaluation

Job-evaluation methods are of two categories:-

a) Analytical Methods

Point Ranking Methods
Factor Comparison Method

b) Non-analytical Methods

Ranking Method
Job-grading Method

Non-analytical Methods

Ranking and job-classification methods come under this category because they make no use of detailed job factors. Each job is treated as a whole in determining its relative ranking.

Ranking Method

This is the simplest, the most inexpensive and the most expensive method of evaluation. The evaluation committee assesses the worth of each job on the basis of its title or on its contents, if the latter are available. But the job is not broken down into elements or factors. Each job is compared with others and its place is determined.

The method has several drawbacks. Job evaluation may be subjective as the jobs are not broken into factors. It is hard to measure whole jobs.

Job-grading Method

As in the ranking method, the job-grading method (or job-classification method) does not call for a detailed or quantitative analysis of job factors. It is based on the job as a whole.The difference between the two is that in the ranking method, there is no yardstick for evaluation, while in the classification method, there is such an yardstick in the form of job classes or grades.

Under the classification method, the number of grades is first decided upon, and the factors corresponding to these grades are then determined. Facts about jobs are collected and are matched with the grades which have been established.

The essential requirement of the job-grading method is to frame grade descriptions to cover discernible differences in degree of skill, responsibility and other job characteristics. Job grades are arranged in the order of their importance in the form of a schedule. The lowest grade may cover jobs requiring greater physical work under close supervision, but carrying little responsibility. Each succeeding grade reflects a higher level of skill and responsibility, with less and less supervision.

The advantages of the job-classification method include its simplicity and inexpensiveness. Secondly, in organizations where number of jobs is small, this method yields satisfactory results.

The disadvantages of the method are:

(i) job grade descriptions are vague and are not quantified;

(ii) difficulty in convincing employees about the inclusion of a job in a particular grade because of vagueness of grade descriptions; and

(iii) more job classification schedules need to be prepared because the same schedule cannot be used for all types of jobs.

Analytical Methods

These include the point-ranking method and the factor-comparison method

Point-Ranking Method

The system starts with the selection of job factors, construction of degrees for each factor, and assignment of points to each degree. Different factors are selected for different jobs with accompanying differences in degrees an points. The National Electrical Manufacturer’s Association (NEMA), USA, has given the factors, degrees and points for hourly rated.

The range of score and grades is also predetermined-for example, from 210 to 230 points, the
5th grade; 231 to 251 points, the 6th grade; and so forth. A given job is placed in a particular grade, depending on the number of points it scores.

The advantages of point system are:

1. A job is split into a number of factors. The worth of each job is determined on the basis of its factors and not by considering the job as a whole.

2. The procedure adopted is systematic and can easily be explained to the employees.

3. The method is simple to understand and easy to administer.

At least two defects are noticed in the point system. First, employees may disagree with the points allotted and the factors and their degrees identified. Second, serious doubts are expressed about the range of points allotted and matching them with the job grades. For example, a score range of 238 to 249 is grade seven and the next range of 250 to 271 is grade six. A variation of one point makes all the difference.

Factor-Comparison Method

The factor-comparison method is yet another approach for job evaluation in the analytical group. Under this method, one begins with the selection of factors, usually five of them: mental requirements, skill requirements, physical exertion, responsibility, and job conditions. These factors are assumed to be constant for all the jobs. Each factor is ranked individually with other jobs.

For example, all the jobs may be compared first by the factor ‘mental requirements’. Then the skills factor, physical requirements, responsibility, and working conditions are ranked. Thus, a job may rank near the top in skills but low in physical requirements. Then total point values are then assigned to each factor. The worth of a job is then obtained by adding together all the point values.

An advantage of the factor-comparison methods that jobs of unlike nature – for example, manual, clerical and supervisory – may be evaluated with same set of factors. But the method is complicated and expensive.