Zero to One

This week we started to read the book “Zero to one” and summarized the first 3 chapters.

Hope you enjoy reading this and we advise you to read the entire book!

Chapter 1 – The Challenge Of The Future

  • Progress can take two forms, horizontal and extensive.
    • Horizontal: Expanding what already exists. (Making 100 typewriters).
    • Vertical: Building something nobody else ever built. (Making a typewriter with a word processor).
  • At a macro level, horizontal progress is globalization, vertical progress is technology.
  • Most people believe globalization (horizontal progress) will define the future, but technology (vertical progress) is what’s really important.
  • New technology tends to come from Startups.
    • Big enterprises shy away from risk.
    • A person alone doesn’t have the power to create an industry.
    • A Startup is the largest group of people you can convince of a plan to build a different future.

 

Chapter 2 – Party Like It’s 19999

  • Companies exist to make money, not to lose it.
    • This should be obvious but there have been times where people ignore all the rules.
    • Investors accepted page views as a more authoritative financial metric than profit and they lost money.
    • Conventional beliefs only ever come to appear arbitrary and wrong in restrospect.
  • Four dogmatic lessons from the bubble:
    • Make incremental advances.
    • Stay lean and flexible.
    • Improve on the competition.
    • Focus on product, not sales.
  • Even though most business follow those principles, the opposite principles are probably more correct:
    • It is better to risk boldness than triviality.
    • A bad plan is better than no plan.
    • Competitive markets destroy profits.
    • Sales matters just as much as product.
  • Ask yourself how much of what you know about business is shaped by mistaken reactions to past mistakes.

 

Chapter 3 – All Happy Companies Are Different

  • Creating a lot of value is not enough, you also need to capture a lot of that value.
    • S Airline companies, in 2012, brought in $160 billion.
    • Google, in 2012, brought in $50 billion.
    • Having a profit margin of 21% makes google worth more than three times more than every U.S airline combined.
    • This difference is due to Perfect Competition vs Monopoly.
  • Perfect Competition:
    • Every firm offers an undifferentiated product.
    • No firm has market power, so they all sell at market price.
    • In the long run, no company makes an economic profit.
  • Monopoly:
    • Firm owns it’s market, so it sets it’s own prices.
    • It comes from eliminating rivals, securing a license from the state or progressive innovation.
    • Google is a good example of a monopoly.
  • In the real world, every business is successful to the extent that it does something others cannot.
  • Monopoly is the condition of every successful business.
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