Summary

Startups should think first principles, seeking out fields with secrets and 0→1 disruptive innovations rather than 1→n sustaining innovations to escape competition and monopolize as a reward. The founding moments of a company are critical so create a strong company culture and work to ensure no misalignment arises. Sell your values and vision to employees, investors, media, and customers. Building a successful startup requires passion, dedication, and the willingness to take risks and make mistakes along the way.

“The most contrarian thinking of all is not to oppose the crowd, but to think for yourself”

“A business with a good definite plan will always be underrated in a world where people see the world as random”

“The opportunity to do irreplaceable work on a unique problem alongside great people”

Key Takeaways

• 0→1 (technology, vertical, disruptive) vs 1→n (globalization, horizontal, sustaining)
• All markets are either a perfect competition or monopoly
  • Reward for innovation: patents, monopoly
  • Think first principles, escape competition
• Reasons for thinking all secrets are found:
  • Incrementalism, risk aversion, complacency, flatness
  • Seek out fields with secrets and be secretive
• Founding moments are critical
  • Create a strong company culture
  • Work to ensure no misalignment
• Sell to employees, investors, media, customers

Notes

1: The challenge of the future

• “What important truth do very few people agree with you on?”
  • Technology more important than globalization
• Eg. “most people believe in X, but the truth is the opposite of X”
• 1→n: globalization, horizontal progress
• 0→1: technology, vertical + intensives progress
• Startup: “the largest group of people you can convince of a plan to build a different future”

2: Party like it’s 1999

• Bubble: disproven old view
  • Dot com: eg. page views
• False dogma from ↑
  1. Incremental > grand visions
  2. Stay lean (unplanned)
  3. Improve on competition (existing customer)
  4. Product > sales
• “The most contrarian thinking of all is not to oppose the crowd, but to think for yourself”

3: All happy companies are different

• Perfect competition or monopoly
  • Airlines vs Google profit margins
• Universal need to describe market in ways that benefit company - thus, both sides are downplayed
• In a static world, a monopolist is just a rent collector
• Patents, monopolies: reward for innovation
• Monopoly is the product of every successful business

4: The ideology of competition

• School prepares you for convention
• Competition is often compared to war
• Think first principles, not beating competition
• 0→1: escape competition via monopoly

5: Last mover advantage

• “The value of a business today is the sum of all the money it will make in the future”
• Discounted cash flows
• Company advantages:
  • Proprietary technology (10x better)
  • Network effects
  • Economies of scale (SaaS)
  • Branding
• Monopolize a small niche and scale up
• Disruption (challenging, established companies, or ideas) is a dangerous game

6: You are not a lottery ticket

• Definite/indefinite optimists/pessimists
• Definite pessimism: China
• Indefinite optimism: dominates modern US (PE)
• Biotech indefinite, tech definite
• “A business with a good definite plan will always be underrated in a world where people see the world as random”

7: Follow the money

• Pareto principle: 80/20 rule
• Power law of VC investing
• Only invest in companies with 100x return potential
• VC: 0.2% GDP, 11% private sector jobs, 21% of GDP in earnings

8: Secrets

• Fundamentalism: conservatism
• Reasons for thinking all secrets are found:
  • Incrementalism: academia quantity > quality
  • Risk aversion: risk of lonely and wrong
  • Complacency: middle class content
  • Flatness: too many educated people to still have secrets
• Seek out fields with secrets
  • eg. can’t major in college
• Be secretive with your idea

9: Foundations

• First moments critical (big bang, constitution)
• Ownership (shares), possession (operators), control (board)
• Risks of misalignment:
  • Big board (5+)
  • Part-time workers
  • Unfair compensation
  • Careless equity distribution
  • Not always “founding”

10: The mechanics of mafia

• Treat early employees like best friends
• Unique perk: the mission, problem to solve
• “The opportunity to do irreplaceable work on a unique problem alongside great people”
• Early employees should all be “similar”
• Be a cult

11: If you build it, will they come?

• Literally everything is sales, but there’s a systematic effort to hide it
  • Fame, politics, business, etc.
• Can sell bad product but good products won’t sell themselves
• Be intentional about business model, sales
• Advertising, viral marketing
• Sell to employees, investors, media, customers

12: Man and machine

• “Computers are compliments for humans, not substitutes”
• Human in the loop systems
• AGI: “worry for the 22nd century”

13: Seeing green

• Big green energy market → lots of competition → small share, bad
• Social good = majority opinion
• Can’t just ride big wave, always need uncommon insight (niche market)
  • Eg. Tesla started as niche

14: The founders paradox

• Need to be tolerant of quirky founders
• Founders need irrationality

Conclusion

• World’s limited resources will always result in competition, spurring innovation
• AGI, the singularity