Peter Thiel, Zero to One via Reading The Markets
By now you’re probably saturated with all the publicity surrounding Peter Thiel’s book Zero to One (Crown Business, 2014). If you haven’t already read the book or a dozen reviews (or seen Thiel on Squawk Box), you might want to take a look at Shane Parrish’s “Eight Things I Learned from Peter Thiel’s Zero to One.”
Here I’m going to zero in on a single point that Thiel makes with regard to diversification, one that I think merits some reflection. He writes: “You can expect the future to take a definite form or you can treat it as hazily uncertain. If you treat the future as something definite, it makes sense to understand it in advance and to work to shape it. But if you expect an indefinite future ruled by randomness, you’ll give up on trying to master it.” (p. 51)
Finance treats the future as indefinite. In fact, “Finance epitomizes indefinite thinking because it’s the only way to make money when you have no idea how to create wealth. … [T]he fundamental tenet is that the market is random; you can’t know anything specific or substantive; diversification becomes supremely important.” (p. 57)
Dov Gertzulin's DG Capital is having a strong year. According to a copy of the hedge fund's letter to investors of its DG Value Partners Class C strategy, the fund is up 36.4% of the year to the end of June, after a performance of 12.8% in the second quarter. The Class C strategy is Read More
For venture capitalists, however, diversification is fundamentally flawed; “this ‘spray and pray’ approach usually produces an entire portfolio of flops, with no hits at all. This is because venture returns don’t follow a normal distribution overall. Rather, they follow a power law: a small handful of companies radically outperform all others. If you focus on diversification instead of single-minded pursuit of the very few companies that can become overwhelmingly valuable, you’ll miss those rare companies in the first place.” (p. 67)
Full article via Reading The Markets – more below
Peter Thiel’s: Zero to One – Description
Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel
If you want to build a better future, you must believe in secrets.
The great secret of our time is that there are still uncharted frontiers to explore and new inventions to create. In Zero to One, legendary entrepreneur and investor Peter Thiel shows how we can find singular ways to create those new things.
Thiel begins with the contrarian premise that we live in an age of technological stagnation, even if we’re too distracted by shiny mobile devices to notice. Information technology has improved rapidly, but there is no reason why progress should be limited to computers or Silicon Valley. Progress can be achieved in any industry or area of business. It comes from the most important skill that every leader must master: learning to think for yourself.
Doing what someone else already knows how to do takes the world from 1 to n, adding more of something familiar. But when you do something new, you go from 0 to 1. The next Bill Gates will not build an operating system. The next Larry Page or Sergey Brin won’t make a search engine. Tomorrow’s champions will not win by competing ruthlessly in today’s marketplace. They will escape competition altogether, because their businesses will be unique.
Zero to One presents at once an optimistic view of the future of progress in America and a new way of thinking about innovation: it starts by learning to ask the questions that lead you to find value in unexpected places.
Peter Thiel’s: Zero to One – Review
“Crisply written, rational and practical, Zero to One should be read not just by aspiring entrepreneurs but by anyone seeking a thoughtful alternative to the current pervasive gloom about the prospects for the world.” – The Economist
“This book delivers completely new and refreshing ideas on how to create value in the world.” – Mark Zuckerberg, CEO of Facebook
“Peter Thiel has built multiple breakthrough companies, and Zero to One shows how.” – Elon Musk, CEO of SpaceX and Tesla
“Zero to One is the first book any working or aspiring entrepreneur must read—period.” – Marc Andreessen, co-creator of the world’s first web browser, co-founder of Netscape, and venture capitalist at Andreessen Horowitz
“Zero to One is an important handbook to relentless improvement for big companies and beginning entrepreneurs alike. Read it, accept Peter’s challenge, and build a business beyond expectations.” – Jeff Immelt, Chairman and CEO, GE
“When a risk taker writes a book, read it. In the case of Peter Thiel, read it twice. Or, to be safe, three times. This is a classic.” – Nassim Nicholas Taleb, author of Fooled by Randomness and The Black Swan
“Thiel has drawn upon his wide-ranging and idiosyncratic readings in philosophy, history, economics, anthropology, and culture to become perhaps America’s leading public intellectual today”– Fortune
“Peter Thiel, in addition to being an accomplished entrepreneur and investor, is also one of the leading public intellectuals of our time. Read this book to get your first glimpse of how and why that is true.” – Tyler Cowen, New York Times best-selling author of Average is Over and Professor of Economics at George Mason University
“The first and last business book anyone needs to read; a one in a world of zeroes.” – Neal Stephenson, New York Times best-selling author of Snow Crash, the Baroque Cycle, and Cryptonomicon
“Forceful and pungent in its treatment of conventional orthodoxies—a solid starting point for readers thinking about building a business.” -Kirkus Reviews
About the Author
Peter Thiel is an entrepreneur and investor. He started PayPal in 1998, led it as CEO, and took it public in 2002, defining a new era of fast and secure online commerce. In 2004 he made the first outside investment in Facebook, where he serves as a director. The same year he launched Palantir Technologies, a software company that harnesses computers to empower human analysts in fields like national security and global finance. He has provided early funding for LinkedIn, Yelp, and dozens of successful technology startups, many run by former colleagues who have been dubbed the “PayPal Mafia.” He is a partner at Founders Fund, a Silicon Valley venture capital firm that has funded companies like SpaceX and Airbnb. He started the Thiel Fellowship, which ignited a national debate by encouraging young people to put learning before schooling, and he leads the Thiel Foundation, which works to advance technological progress and long- term thinking about the future.
Blake Masters was a student at Stanford Law School in 2012 when his detailed notes on Peter’s class “Computer Science 183: Startup” became an internet sensation. He went on to co-found Judicata, a legal research technology startup.