Review: Zero to One by Peter Thiel with Blake Masters

Steve Blank and Eric Ries have done great work in providing engineers with a way to test their product ideas in the real world with real people. They have provided processes and systems with built in, all-important, feedback loops.

They made widespread the concept of the minimum viable product (MVP.) They formulated a process where a product in its most basic workable is shown to the world at large and note is made of the response. These notes can either or endorse or refute the product creator’s work and vision and suitable action is taken. The the product loops back to the MVP state again and the process. It is a methodical and useful way to ensure that a business creates a product that people want.

While the Lean Startup movement has provided a core set of practical tools to the startup there still remains a plethora of questions that also need answering. The most important being, what constitutes a good idea for a product or service that is worth pursuing for profit?

A good place to start looking, if not for a direct answer but an intelligent way to think about the subject, is in Peter Thiel’s newly published book written in conjunction with Blake Masters, “Zero to One.” It refers to the idea that, “Doing what we already know how to do takes the world from 1 to n, adding more of something familiar. But every time we create something new, we go from 0 to 1. The act of creation is singular, as is the moment of creation, and the result is something fresh and strange.”

He goes on to say a page or so later, “…by creating new technologies, we rewrite the plan of the world.” And then declares in the next paragraph, “Zero to One is about how to build companies to create new things.”

While a lot of Steve Blank’s work is formulaic, and usefully so, Peter Thiel prefers to think about business from the aspect of first principles. The future that we create is grounded in the work of today. To make that future a peaceful and prosperous one we need new technology which in turn requires new approaches. Peter Thiel’s aim is to provide an, “..exercise in thinking. Because that is what a startup has to do: question received ideas and rethink business from scratch.”

That is an ambitious goal in itself. Thinking is hard and thinking originally is very hard. In fact we only have to look around us to see that thinking is so hard that most people avoid it at all costs.

To set the scene he describes the factors that led to the Dot-Com bubble of the late nineties. As CEO of PayPal during that period he had a ringside seat as the drama unfolded. He says that there were four major lessons that entrepreneurs seem to have derived from the experiences of those dramatic times.

1.) Make incremental advances
2.) Stay lean and flexible
3.) Improve on competition
4.) Focus on product, not sales

All of these ideas seem highly sensible and lie at the heart of many a startup’s strategy for going to market. However, Peter Thiel overturns these assumptions. He replaces these four general points of business strategy with some of his own somewhat contrarian ones:

1.) It is better to risk boldness than triviality
2.) A bad plan is better than no plan
3.) Competitive markets destroy profits
4.) Sales matters just as much as product.

In rejecting the lessons learned from history, the same lessons that have built in Silicon Valley one of the most powerful centres of wealth creation the world has ever known, he puts forward a very coherent, consistent and challenging alternative idea. He is adamant that, “To build the next generation of companies, we must abandon the dogmas created after the crash.”

So what is wrong with most of the companies being started or built today? Lack of differentiation caused by lack of original thought is his answer.

Commodity businesses have always had it hard. You set a price and a competitor with the same or similar product can undercut you. If your product is not differentiated enough then you have no choice but to undercut them in turn. It soon becomes a race to the bottom where profits are foregone for the sake of market share. The deciding factors in such a scenario are deeper pockets and greater business efficiency. The result is invariably a mediocre, at best, product.

Traditionally, economists regard the ideal market place is at its most efficient when governed by the forces of perfect competition. Peter Thiel points out that this is a fallacy and that a company that operates in a market that is in perfect competition is a market where no one makes any money at all.

The solution, therefore, is not to copy anyone else but to think for yourself and have faith in the originality of your own ideas. Use your uniqueness to your advantage. Create your own market and become a monopoly.

Peter Thiel’s assertion that the only way to make real money is to have a monopoly of a given market is a challenging idea. We have laws against monopolies and no customer likes to have only one choice of a service provider. However, if you want to make money being in effect the dominant provider of a given service or product is the only tenable and financially worthwhile way of operating.

If you take his point that real change and real growth comes from original thinking made manifest in new technologies then that original thinking constitutes the creation of a natural monopoly. At least for a certain amount of time. Which brings us to the idea of durability.

In what may be an interesting explanation as to why companies like Amazon are barely profitable The authors write that, “For a company to be valuable it must grow and endure.” And that while growth is easy to measure, durability isn’t. They are not fans of, “measurement mania,” and they believe that management time and energy should be focused on building a monopoly by wise use of brand, scale, network effect and technology.

To do this a company must start small and “dominate a large share of its market.” A company then grows by sequencing its growth to grabbing bigger shares of larger markets. Contrast this line of thinking to the current belief in startup circles that a that the ability to scale quickly is somehow a precursor for success.

They go on to be quite specific in that, “The perfect market for a startup is a small group of particular people concentrated together and served by few or no competitors.” The huge advantage is that once you have found the business whose customers meets that criteria then you have the opportunity to create your own future, right or wrong. You can avoid being taken down by competitors undercutting you or being dictated to by the bigger players stomping around in the sandpit you share with them.

A little after halfway through the book we come to, “‘Thiel’s Law’; a startup messed up at its foundation cannot be fixed.” As a founder of
Founder’s Fund
, Peter Thiel has had the opportunity to review many startups from an investment perspective. When he studies the teams, (he is not an advocate of sole proprietorship because it limits what kind of company you can build,) he looks for how well the founders know each other and how well they work together. He places great value on how easily complementary skills and personalities mesh.

He then goes on to discuss the legal and financial aspects of a startup to which an entrepreneur should pay special attention. For example, “Recruiting is a core competency for any company, It should never be outsourced.” A particularly valuable rule that he had at PayPal was that he made every employee responsible for just one thing. It had two benefits. It made it easy for him to evaluate an employees performance and that, “…defining roles reduced conflict.”

The authors then go on to argue that humans and computers are separate categories and are not interchangeable. They ask us to change the question surrounding this problem, how can we use computers to replace people with the much more practical question, “How can computers help humans solve hard problems?”

This is a book that is all about questions. But the answers are only something that you, as an individual, can provide. The questions are a tool to give you access to thinking more clearly about a problem as opposed to providing the certitude of a right or wrong answer.

Peter and Blake have posed seven questions that every business must answer. I suggest that the opportunity to understand the thinking behind the formulation of these questions and the opportunity to answer them yourself is reason enough for you purchase the book.

1.) The Engineering Question
2.) The Timing Question
3.) The Monopoly Question
4.) The People Question
5.) The Distribution Question
6.) The Durability Question
7.) The Secret Question

There is much more to read and learn in this book. It is fairly short but unlike most business books it is dense with useful ways to think about business and startups in particular. Staying true to his promise at the beginning, he uses questions to help us access his ideas and in doing so having us think for ourselves.

I would recommend this book to anyone thinking of going out on their own. The questions that the authors pose are challenging but they are designed to elicit answers that are uniquely yours. They help provide a path that leads to the building of uniquely differentiated products and understandings of what constitutes a successful enterprise.

The Opening and Naming of the Hartnett Enterprise Acceleration Centre

The Hartnett Enterprise Acceleration Centre was named and opened yesterday at the Limerick Institute of Technology (LIT). John Hartnett, the President of the Irish Technology Leadership Group and whom the building was named after was present at the event to receive this honour from his alma mater.

Following below are excerpts from the speech he gave to a gathering of some 300 people including the Minister of Finance Michael Noonan, the outgoing Mayoress of Limerick Marie Byrne and Dr. Maria Hinfelaar President of the LIT amongst others.

After opening remarks where Minister Michael Noonan, other dignitaries and the audience were thanked for taking the time and trouble to attend John Hartnett made the following comments;

“I came to LIT in the early eighties and access to education has been the most critical thing that has created not just my success but in starting my career off in a big way. It took a number of decades to get there but the really big start was from the LIT.

I hope the partnership that we are creating today, from my Silicon Valley perspective, will create another rung on the ladder for Irish Entrepreneurs.

I want to give you some key stats about Silicon Valley where I live today. It is about 45 miles north/south and about 10 miles east/west…It is very much the epicentre of technology.

The top technology companies in the world are headquartered there and that is not lightly said. Companies like; Apple, Intel, Cisco, Facebook, Twitter. All the big companies that you know and heard of are all there.

The combined market capitalization of Silicon Valley companies is 2 trillion dollars. For a small little location it has completely outshone every other location in the world. There are more than 700 VCs that operate in Silicon Valley.

It is the number one destination in the world for capital for young entrepreneurs. 40% of all investment in the United States has gone into Silicon Valley. That was 8 billion dollars last year and that was considered a bad year.

There are countries that have done a tremendous job of cracking the code and really accessing Silicon Valley. I would point to Israel as what Israel has done is focused very heavily on innovation, focused very heavily on access to capital in Silicon and the movement of investment from Silicon Valley into Israel.

Today the measurement of success is a public company on NASDAQ. Israel has 130 companies that there today which is a tremendous achievement. That is more than the entire continent of Europe. Ireland has about 3 or 4.

The big challenge for us…is that success isn’t being sold for 20, 30 or 40 million dollars. Success is going public. Success is about being multi-billion dollar company. Success is creating thousands of jobs that are going to stay here for a long, long time…

I have been in touch with over 400 Irish companies over the last couple of years. I have been very close to many universities both north and south of the border. I have experienced quality in terms of technology, in terms of the entrepreneurship here in Ireland. There is no question Minister, that Ireland can change the game. We just need to point in the right direction and stop looking back. Stop feeling bad about the past because we can’t do anything about it.

It’s all about the future.

In my view the future will be about innovation. In my view the future for our children will be what we did today about going after innovation. If Silicon Valley can do it why can’t we do it.

The secret ingredient is no secret.

  • The secret is that it has the number one university in the world for innovation — Stanford University.
  • It is the number one destination for customers. Those companies, the Apples, the Intels, are all there. That is where you are going to trade. It is a massive market place.
  • Probably the biggest one, which doesn’t recognised, is venture capital. Access to money is so important for young companies and right now in Ireland today access to capital is tough.

    Our relationship will hopefully create a gateway to that capital. Not just to our fund but to the syndication of our funds in Silicon Valley and help drive that investment into Irish companies.

  • The fourth ingredient is about attitude. It’s about vision. It’s about reaching big and it’s about going for it.

It’s about not criticizing failure. Many companies are going to fail. We shouldn’t get upset about the fact that Irish companies are going to fail at some point along the way. But we shouldn’t shoot down failure. Failure is what drives success.

It’s not good enough to be a small company. It is only good enough to be billion dollar company.

The leading nations are investing to drive this forward. We are probably underinvesting in innovation today compared to Scandinavian countries and countries like Israel. Israel invests between 4 and 5% of its GDP — We probably invest between 1.5 to 2%

We have a very well recognised education system…But we can’t be complacent. We are not in the top 5 or top 10 in Europe from an education perspective. We need our universities to be in the top 5 and that has to be our goal.

The investment here today in these facilities paves the way for these young people but that is the start of the journey. We need to make sure that both from a government and a private perspective that we are focused creating those multi-billion dollar companies.

We should be measuring the number of NASDAQ quoted companies that are produced from Ireland…

All we need is one $300Bn company and we will be well on the road but it takes some time do that. But I have every confidence that we can do that from an Ireland perspective.

We have the talent and I think with this initiative today, in terms what LIT are doing, is really taking leadership in terms of education, in driving entrepreneurship and really driving forward to our future which will be about innovation and technology.”

President Obama visits Silicon Valley

President Obama recently made a two-day visit to Silicon Valley. The aim of the trip was to promote technological development with a view to supporting and improving the US economy. At a private dinner, President Obama met with the heads of some of the leading technology companies based in Silicon Valley.

According to White House Press Secretary Jay Carney, the conversation centred on ways to work to invest in innovaton and promote private sector job growth.

“The president specifically discussed his proposals to invest in research and development and expand incentives for companies to grow and hire, along with his goal of doubling exports over five years to support millions of American jobs.”

In addition, “The group also discussed the importance of new investments in education.”

President Obama has already promised to fund tax credits for research and development, and has plans to allocate $18 billion dollars for wireless broadband infrastructure across the country.

The Irish Innovation Center (IIC) has over 20 start-ups operating from its premises in San Jose, California. They support plans to give immigrants preferential visas if they bring in capital and start up a company that creates jobs for Americans.

They are referring to initiatives like the Startup Visa Act which was introduced by Senators John Kerry and Richard Lugar in February 2010 and is awaiting approval. In essence, it allows for a foreign national to obtain a visa that would allow them to reside and work in America if they can raise a certain amount of money from a venture capital firm owned by a US citizen.

John Hartnett, President and Founder of the Irish Technology Group (ITLG) says, “Our competition is every other city in the world, and leading in education and leading in supporting that young innovator that is coming to Silicon Valley to set up their company and be successful and become the next Google or the next Facebook is what we want to make happen.”

To increase the chances of making that happen, for Irish businesses in particular, the ITLG wants to get the US Government to create “start up incentives” for seed funding and the creation of employment grants to be made available for Irish startups in America. They would also like to see more support for the IIC.

In a previous interview with the Technology Voice, John explained why it was so important for entrepreneurs, especially Irish entrepreneurs, to have a presence in Silicon Valley, “Three reasons to come to Silicon Valley are access to customers, access to capital, access to talent. If you want to understand what is going to shape your company in the future, it is your people, your ability to get customers, and your ability to get funded, and that’s all sitting here.”

With the President of the United States taking a personal interest in technological innovation and growth, combined with upcoming changes in legislation like those proposed by Senator John Kerry and Senator Richard Luger, the future does seem to look more promising for those who are willing to make a go of it in Silicon Valley.

Using the Arduino: Turning Thinkers into Doers

The Arduino is a physical computer based on a microcontroller board that can be directly programmed from a regular computer using a USB cable and the Arduino development environment. It can sense and control the world around it and is enabling thousands and thousands of users worldwide to build almost anything they dream of, from a simply blinking LED to a plant that twitters when it needs water. This open-source electronics platform is giving individuals the ability to have control over things by accessing technology in a way that was never thought possible.

A previous article, Arduino: A Big Revolution in a Small Package, introduced and discussed the microcontroller, its accessibility, and the value of the huge community surrounding it. Projects that are constantly emerging from this huge online community show that the real potential of the Arduino lies in the notion that physical computers can be used to improve the quality of everyday life, from novelty tasks like using a wii nunchuck to control an espresso machine, to useful energy saving solutions such as a wireless electricity monitor.

The Arduino enables even complete beginners with no prior electronics or programming knowledge to hack, make, build and customise objects and environments to make things work better for themselves and others in their daily lives. Whether you want to program your television to turn on when you arrive home in the evening or remotely activate your home heating, it can allow you to do this. By making DIY projects like this easier than ever the Arduino has paved the way for a wave of makers and hobbyists to add interactivity to everyday objects and environments, simplifying or adding an element of fun to everyday tasks.

I was introduced to Arduino at college when doing a Masters in Interactive Media. My first project involved learning some basic soldering skills and creating a very basic circuit using a potentiometer to control an LED. I have since gotten an Arduino starter kit which comes with tutorials and everything you need for the projects like sensors, motors, buttons, switches and LEDs. There are also really useful online tutorials.

In jogo I used an Arduino to control an LED array which I built to act as a playhead that indicates the sequence of the notes playing in the sixteen steps of the concentric circles. This was left out of the final project for other reasons.

I had previously learned some Java and Actionscript so I already had a grasp of object-orientated programming which meant I didn’t find it to be a steep learning curve for me. Even so, one of the strengths of the Arduino system is the massive community that surrounds the project. One of the benefits of this community is having a massive library of examples and tutorials to learn from. Someone, somewhere, has more than likely done something similar to what you plan to do. For some projects you want to create you may not even have to start writing code from scratch.

With the Arduino, individuals, rather than businesses and institutions, can now make intelligent tools customised for their own particular needs. From DIY home alarm systems, to a robot that reads and speaks RSS feeds. The power is now in the hands of everyday people to have control over things in a way they only ever imagined was possible. Everyday objects and environments are becoming more and more embedded with computational power.

The technology of the Arduino and the community that surrounds it enables people to be doers, not just thinkers. Rather than sitting back and letting the technology that surrounds us have all the control, people are now using Arduino as a tool through which they can sense, control and automate things around them.

All that is required is an Arduino, a computer and your imagination. Access to the online community of hackers and makers would greatly assist DIY-ers of all skill levels. Inspiration and help can be found on the Arduino-Tutorials page, the Arduino Playground, Makezine and Instructables.

The possibilities are endless for amateur and expert enthusiasts to use Arduino to improve aspects of their daily lives or simply make things more fun. So whether you chose to make your sitting room furniture re-arrange itself according to your mood or remotely control your microwave to cook your porridge while you’re still in bed, you are only limited by your imagination.

From my own perspective the real benefit of the Arduino is that it is an accessible platform that allows me as an artist and designer to add interactivity to my work. Currently I am using Arduino to build sound based interactive pieces that aim to encourage playful and social interaction among both adults and children. My first project on this theme, jogo, was developed using a web camera. While this works perfectly, it is unfortunately restricted to being used in environments with controlled lighting. To overcome this I plan to use the Arduino to make a hardware version of this in the near future.

The pictures in the text are from an Arduino project that Emma and Loraine Clarke contributed to Tweak.
You can visit Emma at her website or follow her on twitter: @legolady

The Call Of Nature


Connemara, County Galway.

Many of us live a life of information overload, and we all need a break now and then from our computers, our e-mails and our online social networks. Unlike the poor folk living remotely in the countryside with intermittent connections (that were featured in Susan’s article), we would like to get to decide when we take ourselves off the grid.

In this New York Times article “Outdoors And Out Of Reach, Studying The Brain“, five scientists disconnected themselves from the Internet, or as we like to think of it these days, civilisation.

They are five different characters, and it is not much of a surprise that they reacted to their field trip/experiment in five different ways. Apart from this being an entertaining account, I don’t think I am spoiling the ending when I tell you it concludes with the idea that getting away from it all every now and then is good for you.

But a subtheme in the article is very interesting: “Why don’t brains adapt to the heavy stimulation, turning us into ever-stronger multitaskers?”

We are well practiced with computers, dealing with e-mails, managing ourselves so we are always in a position to give a ‘timely response’ via our smart phones or from a laptop in a cafe. But it is stressful, and unlike so many more activities like playing the piano, or speaking a foreign language, we don’t seem to get better at it the more we do it. Faster maybe, but not really better. Once you have the hang of forming a tweet, there isn’t much in the way of advanced work to do.

Could it be that our interactions with computers are turning us into over-worked robots? With playing a piano or speaking another language, or joining in with a great many recreational games, there is a learning component inherent in the activity. Putting in the effort results in greater proficiency, no matter how flat the learning curve.

I would imagine for you, just like me, all the requests for action that come through the screen every day – “When is this?”, “Where is that?”, “What time will…?”, “Can you..?”, ”Would you be interested…” – are very much of a similar nature in their daily repetitiveness and are dealt with in a correspondingly similar way. This is the fabric of our connected lives, and there is great benefit in how we form our communications to make our life easier, but there is a robotic element to it as well.

Going off the grid once a week, taking ourselves away from the online world and reminding ourselves of our immediate world would – if the NYT article is anything to go by – be a good thing, and it might just save us from being slaves to the machine.

One piece of irony in the article was the discussion about how scientists are spending more effort on learning how we as humans focus. I say ironic because as the scientists began to relax themselves and relax into their surroundings, they began to see more and hear more, and exhibited a greater awareness of themselves as being alive and on the planet. Now that is being focused – everything else is just a distraction.

Should Journalists Learn Programming?


Thanks to Mark Luckie at 10000words.net

It is a great infographic but it is also a great question, not only for journalists but for anyone who would not normally consider learning how to program as something suitable or worthwhile for them to put time and effort into.

With increasingly sophisticated interfaces which hide the guts of an operating system away from the user becoming the norm and interactions reduced to pressing and swiping a screen there is barely a need to know anything about how a given computer or smartphone really works.

So what arguments exist for taking on the additional and sometimes arduous chore of learning to program a computer?

We’ll let you answer that in the comments section.

An alternative approach would be to look at why you shouldn’t learn to program.

Well, first of all programming is hard: It can be but learning to programme can be done in small bite-size chunks. There are some fantastic manuals out there and a lot of thought has gone into how best to allow newbies get their feet wet without drowning them at the get-go.

There are so many languages where would one start?: Most programmers have a preferred language they like to work with. But I would recommend HTML. Simply because it is the one you are most likely to come across on discussion boards and blogs etc. Usually, a blank dialog box with a bunch of funny symbols along the top is a big clue that you can enter your text and be able to tidy it up or lay it out using HTML. You can learn most of the commands over a weekend and it is amazing how far you can go with it before you will feel the need for something more sophisticated.

More time at the computer: Ah, well, you have me there.

Would I be worse off if I learned a little programming know-how?: Not as facetious as it first sounds. The conventional idea that a little knowledge can be a dangerous thing holds true in progamming as elsewhere. However, with even a little programming knowledge an invaluable understanding can be gleaned as to what it really takes to write good code for any kind of project.

That alone might make it worth the effort.

Personally, I never got past the “crying at the keyboard” stage.

Stuff We Use That Isn’t Designed For Social Media: The Peri-Personal Space

Research by Marco Iacoboni, Professor of Psychiatry and Biobehavioral Sciences in UCLA (and written up in his book Mirroring People: The New Science of How We Connect with Others) suggests that the tools we use such as forks and knives are not just implements that we merely just manipulate in some objectified manner. His research suggests that tools are mapped by our brains in such a way that they become extensions of ourselves.

Not only do we use knives and forks to move and cut our food, we also use them to assess the quality and texture of our food as well. Every tool or implement that we learn to use with some degree of mastery eventually becomes an extension of ourselves. This happens because the brain does not stop mapping our body at the outer layer of the skin. It also maps the immediate environment beyond. This idea has some amazing implications for the way that we interact with the world.

Through enculturation we have the habit of thinking of ourselves as in here and everything else as out there. Professor Iacoboni’s research is showing that this concept may be wrong. It seems our brains handle the world in a ‘hereness’ (my term) space that is proximal to our bodies. He refers to this relationship between us and the world as a “being-amidst” space. All of our interactions with the world, although processed in the brain, are represented to us in this space. It is a space where our feelings live alongside our thoughts and emotions. All of them are moving around and interacting with each taking precedence in our attention from time to time.

It is kind of wild but it’s really not that long ago that we all believed the Sun orbited the Earth. This area of awareness and influence is called the peri-personal space, and this research could have some very definite implications for our daily lives, particularly in the design of the tools that we use.

The social part of social media is very human and natural to us, but the media in the form of the tools it uses, primarily the computer terminal and mobile phone, is pre-existing technology that we have adapted to our needs. The materials and processes may have advanced geometrically, and the processing and storage has progressed exponentially, but the tools we use to interact with them, the qwerty keyboards, mice and touchscreens are refinements and variations on a theme.

If what Dr. Iacoboni’s findings show are true, and there is no reason to doubt or reject them, then we may have to look at the design of terminals and smartphones in a whole new way. That means that terminals and smartphones are no longer thought of as items out there outside ourselves but become, through the means of the mirror neurons inside our brains and the subsequent engineering inspired by these new ideas, avenues through which our brains can connect to other brains more efficiently.

In this context design is every bit as important as engineering. The ultimate goal is complete transparency, e.g. to be able to communicate at a distance with the same fullness of experience that we can communicate with someone sitting or standing in front of us. We know that talking to someone on the phone is far more tiring then having the same conversation while present with that person. Talking to someone on the phone while driving is more dangerous than drinking and driving, but paradoxically there is no real danger in talking with the same person about the same thing in the same car. Somehow in some way the mobile phone requires us to communicate in a highly effortful and non-natural way.

With this new knowledge coming from the cutting edge of neuroscience, we can look again at the fundamental design criteria of phones and computers, and perhaps come up with something new and wonderful that will work with us the way we want to work. We can ask how we can make new communications tools that work more naturally with our brains, making it easier for our brains to turn new interfaces into an extension of ourselves that will in turn determine the level of transparency between individuals.

Brace yourselves, it’s going to be a bumpy ride.