In this chest-thumping book, author Peter Thiel comes off as a brilliant young man with a tendency toward exaggeration. Indeed, everything about him seems exaggerated: his businesses successes (founder of PayPal and Palantir), his net worth ($1.5 billion and counting), his educational credits (Stanford BA in philosophy, JD in law), his political views (avowedly libertarian), his energy level (off the charts), his self-confidence (not a doubt in sight), his vision for technology (human longevity, “seasteading” communities, eventual takeover by intelligent machines).

And now this book.

Let me assure you that Zero to One is worth reading, even if you’re not engaged in the world of startups and venture capital. It’s worth reading in the same way a triple espresso is worth drinking: it makes you feel superhuman, at least for the moment. You can almost hear the caffeine coursing through your veins as you absorb the ideas.

You might want to read the book on two levels: both as a business book and as a political manifesto. And because the book is a hybrid, you may need to work a little to separate the baby from the bath water.

Thiel’s first point is that creating a game-changing company means going from zero to one—from nothing to something, instead of going from something to a slightly better something. What a zero-to-one company does is lay claim to an uninhabited stretch of market space in order to create a monopoly. A monopoly, in Thiel’s vocabulary, is not the bad kind we associate with bullies. It’s the good kind that opens up valuable market territory by doing something new.

Is he simply using the word monopoly to provoke us? Maybe, but it’s an effective way to get our attention so he can deliver the book’s main point, which is simply this: Businesses succeed better when they differentiate rather than compete. Direct competition drains value as companies beat each other up. Differentiation creates value as companies charge more for desirable products and services that customers can’t get anywhere else. It’s the same principle that forms the basis of brand strategy. We’ve already seen many books on the subject, including Positioning in 1981, by Jack Trout and Al Ries, and even classical writings on strategy by Sun Tzu and Carl von Clausewitz.

Why play dress-up with old ideas? So Thiel can lash on his peg leg and black eye patch and make room for further piratical assertions.

Consider the following:

“Creative monopolists” give customers more choices by adding entirely new categories of abundance. The history of progress is the history of new monopolies replacing incumbents. “Every business is successful exactly to the extent that it does something others cannot.” Monopoly, therefore, is not a pathology but a condition of success.

While “every monopoly is unique,” he adds, they share these four attributes: “proprietary technology, network effects, economies of scale, and branding.” Without these four, any business will be the equivalent of a family restaurant, where the kids have to wash dishes to keep the place running in the black.

He advises us to “err on the side of starting too small.” The perfect place to start is where there’s a small concentration of people served by few or no competitors. From there you can scale it up, as long as you have the advantages of proprietary technology (your secret sauce) and network effects (the tendency of a service to become more valuable as more people use it).

Whatever you do, don’t “disrupt” a market, he warns. Disruption has been devalued to “a self-congratulatory buzzword for anything posing as something trendy and new.” Disruptive companies in Silicon Valley often pick fights they can’t win.

Also in Silicon Valley, “would-be entrepreneurs are told that nothing can be known in advance; we’re supposed to listen to what customers say they want make nothing more than a ‘minimum viable product,’ and iterate our way to success.” He says that Apple succeeded by doing the exact opposite.

He encourages would-be entrepreneurs to ask this question: “What valuable company is nobody building?” Any good answer to this question must necessarily harbor a secret. It can be a secret of nature or secret of human nature, but in both places there are always hidden truths to be discovered—if we only look in a certain way. When you share your secret, you turn others into co-conspirators.

With contrarian flair he asserts that the less money a startup pays its CEO, the better it will do. “In no case should a CEO of an early-stage, venture-backed startup receive more than $150,000 per year in salary.” High pay incentivizes him to defend the status quo instead of working aggressively to find and fix problems.

“The most important task in business—the creation of new value—cannot be reduced to a formula and applied by professionals.” He observes that most founders are contradictions, bigger-than-life characters who can “make authoritative decisions, inspire strong personal loyalty, and plan ahead for decades.” He cites Richard Branson, Howard Hughes, Bill Gates, and Steve Jobs, and tosses in pop icons such as Elvis, Lady Gaga, Michael Jackson, and Britney Spears.

Finally, he examines a range of scenarios for the future of humanity, borrowed from philosopher Nick Bostrom. The most common four are: 1) recurrent collapse, a never-ending oscillation between prosperity and ruin; 2) a plateau, the belief that the rest of the world will catch up to the richest countries, and then we’ll stay at that level; 3) extinction, in which our technology will bring humanity to a cataclysmic end; and 4) takeoff, the idea espoused by transhumanists, in which humans increasingly blend with machines to create a world of complexity and abundance that we can’t even imagine today. Clearly, Thiel is in this camp, although he’s careful not to say it.

This is a fascinating collection of thoughts, including some surprising truths and more than a few exaggerations. So which part of the book is the baby, and which is the bath water?

Let’s start with monopolies. Do they really serve society better than price-busting competitors? Sure, as long as they unleash creativity and generate broad-based wealth. When they mature into self-perpetuating bullies (such as Microsoft, and increasingly Google, Apple, and Amazon) they tend to block other innovators using any means at their disposal.

Next, does every business really succeed exactly to the extent that it does something different? Not quite. First of all, it’s possible to launch a product that’s different but not compelling. Think of Pets.com, Apple Newton, or Clairol Touch-of-Yogurt Shampoo. Second, monopoly status doesn’t always encourage broad success. Monopoly becomes pathology when we create rules that favor a handful of “haves” and in the process hollow out the middle class, as we’re doing now.

He notes that every monopoly is unique, sharing only “proprietary technology, network effects, economies of scale, and branding.” This is one of Thiel’s truest observations. Strong companies are those that start with a unique market position; weak companies are those that fail to differentiate, believing the world only wants more instead of different.

Erring on the side of starting too small is good advice, too, but what about “Don’t disrupt”? He laments that the concept of disruption has degenerated into anything posing as trendy and new. Granted. But wouldn’t it be better to simply reject the popular definition? He could then reaffirm Clay Christensen’s original epiphany in The Innovator’s Solution—the observation that established products can be upended by cheaper or inferior solutions that don’t at first appear to be threats, then later grow into established products themselves. Christensen was the one who first mapped the road to Monopolyville. Couldn’t Thiel give him the credit?

In a sweeping generalization, he claims that Silicon Valley engineers are expected to “listen to what customers say they want” and give it to them. Really? I’ve worked there 35 years and have rarely heard this, except from a few old-school marketers. Even the designers at Apple start with a “minimum viable product” and iterate their way to success. They just do it before they go to market instead of after, so their products seem to spring fully formed from the brow of Tim Cook or Jony Ives.

Thiel has said that one of the book’s most valuable contributions is the notion that a monopoly is based on a secret. This is actually a great way to think about it. An interesting fact about these types of secrets is that they tend to stay secrets long after you tell everyone. If an idea is good enough, goes the saying, you’ll have to ram it down people’s throats. Think about the Aeron chair, the Prius, and even PayPal. None of these businesses launched themselves.

Another of Thiel’s rules is that the CEO of a startup should never receive more than $150,000 in salary. Nice and concrete. It’s too bad more CEOs of incumbent monopolies couldn’t set a similar example, as Jobs did with his annual salary of $1. What message does a seven- or eight-figure salary send to the employee whose innovative ideas are consistently labeled “too risky?”

Finally, are successful monopolists always contradictory characters? Not from where I sit. Warren Buffet, Bill Gates, and Jeff Bezos don’t strike me as particularly contradictory, although I’m sure they’re more driven than they might appear. It could be that Peter Thiel himself is a walking contradiction, and therefore wants to create some positive context for it. He delights in courting controversy, starting at Stanford when he attacked various sacred cows such as political correctness and hate-speech laws in his newspaper The Stanford Review, and now by writing a book that appears to defend monopolists.

Despite its exaggerations, pirated ideas, and libertarian swagger—or maybe because of them—Zero to One makes for a lively read. It contains a number of refreshing insights and personal truths that you won’t get from other books on inventing the next big thing. Just keep the baby and throw out the bath water.

A better title for this book would have been "Six ideas Peter Thiel wants to put out there" but that admittedly sounds less catchy than "Zero to One"

Two of the ideas are HUGE and the rest are filler. The first infuriated me and the second inspired me. The remaining four ideas were not exactly news to me because I once founded and ran a startup. There's also a couple rants, one against biotechnology and one against green tech, which to my ears sounded tribal.

After the ideas and the rants comes some rather embarrassing stuff that probably should not have made it into print. For example "we never invest in entrepreneurs who turn up for the interview in a suit" or "four of the founders of PayPal had built bombs as children." Memo to Peter Thiel: you are successful despite your prejudice against people who don't share your sartorial taste, and your partners made it to adulthood despite having been poorly supervised as children.

Idea number one is that "Monopolies are Good"

Not just for the monopolist (that would hardly have been a contribution) but also for everybody else. The general idea is that competition hurts profits and the lack of profits leads firms to an existential battle which does not allow them the scope to innovate. Monopolies are good because they have the power and scope to bring innovation to everybody. So Bill Gates brought the computer to every home. He was not beaten by a better provider of software, he was superseded by a shift in technology toward powerful mobile devices, tablets and the cloud, all of which, in turn, were motivated by other entrepreneurs' desire to obtain monopoly profits. So Steve Jobs dominated many of these arenas for long enough to enjoy monopoly profits and other people will some day take this all further. Even the government is in on the act, Peter Thiel claims, or else it would not be granting patents to inventors or freedom from competition from generic drugs to the pharmaceutical companies that first develop new medications.

Erm, where do I start? My mom taught me that "necessity is the mother of invention:" GM did not develop the Volt till it was up against the wall, Archimedes discovered how to screw water upwards during the Roman siege of Syracuse, the Germans developed jet propulsion, the swept wing and the rocket we later sent to the moon when they had pretty much already lost WWII. Intel gave us the messed-up Pentium when it was as close to a monopoly as it will ever be, Steve Jobs gave us the Newton when he was feeling comfortable, Ford gave us the Edsel when profits were still huge, Coke gave us New Coke when its only true competition came from water; Peter Thiel has 99% of human history against him on this one.

Now, I will be the last to contest that Pericles' Athens gave us the Parthenon when he were sitting on half of Greece's treasure, that the Medici sponsored some fantastic art when they were at their apogee or that Peter Thiel could make some fantastic contributions to philosophy in the years to come, but that's beside the point. Pericles and the Medici both came to an end I would not wish upon Peter Thiel, let's put it that way. Bottom line, he's hanging with far too many courtesans who are telling him what he wants to hear and too many fellow "job creators" and he needs to get out more.

The really painful thing is that Economics deals with all these issues, and Peter Thiel should read some Economics. Many fields of endeavour, for starters, relate to limited markets. Example: the size of the market for flat bread in New York State. Meeting in the McDonalds car park with the heads of the other three major bakeries that make flat bread to fix the price of flat bread should be illegal, period. Buying out the other three makers of flat bread so you can regulate the price by yourself should also be illegal. Provision of mattresses across the North American continent springs to mind: A US king size mattress is twice the price of a UK king size mattress and it only has 3 inches extra on each side and I'll leave that one right there. I can see how an ocean and different sizes benefit the mattress industry in the US, but I really don't see how Americans will one day benefit from paying double for their mattresses. Dunno, maybe they will discover a different way to sleep.

And then we have the cases where, as the author says, it's clear that you need to incentivize people to innovate (drugs spring to mind, where the US has a lead) and that's where patents come in. Again, though, it's crystal clear that there is a limit to how long these monopolies should last. And it was crystal clear to everybody with a modicum of common sense that both Intel and Microsoft were not helping the world along when they used dirty tricks to hurt AMD and Netscape.

All that said, monopolies are fantastic for you if you can set them up, and the four pieces of advice on how to set up a monopoly sound pretty sensible: 1. Proprietary Technology 2. Network Effects 3. Economies of Scale and 4. Brand. Duly noted, and well worth remembering. Most important piece of advice: start with a small monopoly you know you can get (example: launch Facebook among your Harvard classmates, launch Paypal among the 20,000 eBay power users) and take things from there.

The number two idea is that you need a Plan. Things do not just work out if you put together optimism, good people, hard work, capital and buy a lottery ticket. The author takes us on a (rather gratuitous) trip from Plato and Aristotle to Nozick and Rawls via Epicurus, Lucretius, Hegel and Marx to discuss when optimism is and isn't warranted and the bottom line is that you're only allowed to be an optimist if you have "definite optimism" based on a specific Design (my capital D) for a business. Peter Thiel takes a massive swipe at the Malcolm Gladwells of the world who overemphasize chance, serendipity and fate with facile arguments about the similarity in Steve Jobs' and Bill Gates' birthdates.

Bottom line, fortune smiles on those who have a design. After the fact they might look lucky, but only then. Thiel considers Steve Jobs to have been a designer, first and foremost. In his words "The greatest thing Jobs designed was his business. Apple imagined and executed definite multi-year plans to create new products and distribute them effectively."

I LOVED this. Loved it, loved it, loved it. Please somebody email this thought to Mariana Mazzucato and her tribe of nihilists.

The third idea is that our world is best described by the extremes rather than what happens in the middle. It's the Nassim Nicholas Taleb idea, and he duly appears on the back cover to endorse the book. The relevant insight here is that when you invest in startups, like the author does, the performance of your entire fund is a function of your one best investment; the rest of your investments, even if they kinda do OK, are neither here nor there, deserve none of your time and get none of it if you're doing your job right. The lesson if you are involved in a startup is "what are the chances that this venture will be the one?" This is not a novel idea. For the best book on the subject I'd swerve around NNT's work and turn to Benoit Mandelbrot's masterpiece, "The (Mis)behaviour of Markets."

The fourth idea is no more original, but Thiel puts it well: "there are many more secrets left to find, but they will yield only to relentless searchers." A company that's based on having solved a hard problem, either a "secret of nature" or a "secret about people" is going to have a much better chance of succeeding than one that adds a twist to an already existing business model. That said, the author is quick to mention that some entrepreneurs (for example Richard Branson) do very well from doing exactly that. It's just that this is not his type of company.

The fifth idea is you need to pick your partners i.e. your investors, your fellow managers and your (ideally 3) directors very carefully in order to make sure you all want the same thing out of the company (and it had better not be immediate rewards). As a former entrepreneur, I can vouch for the fact that this is a "good problem to have." For my series 1 I saw 42 potential investors and chose the 2 who were prepared to give me money, I hired as managers and engineers best guys I could find and I had no say regarding the idiot my investors put on my board. But if you can afford to follow Peter Thiel's advice, it's not controversial. And neither is "idea 5.5" that the people who work at a startup will belong to a cult, not to an army of consultants. Outside of a bubble environment that's precisely who will join anyway. You won't get any consultant types banging on your door, unless they are putting together their CV to get into B-school.

The sixth idea is that marketing is extremely important. If you build it they won't come. You need to sell it. True. But not all startups have the funding to sell it, so it's not a total disaster if it somehow does sell itself. But point taken.

The closing chapter is a vomit-inducing hagiography of founders. The question is posed: are founders different because they founded a firm or did they found a firm because they are different. Answer: nobody cares. For the record, I think a successful entrepreneur is a guy who does not know how to give up. That's what they all have in common. But once they have their first billion and don't need to run their ideas by anyone else to get them funded they very often go do something stupid (dunno, like go mine asteroids) with exactly the same fervour they previously applied to the sensible endeavour that made them rich. The more grounded ones keep their further investments close to home and direct their creativity toward giving lectures and writing books. Peter Thiel, fortunately for himself, falls in the second category.

 The first time I read the book, I didn't find it extremely insightful or cohesive. But the second time around it made a whole lot more sense. It's like all these connections started firing up. It's truly a great book with contrarian thinking and insights that make you pause. This video highlights some of these key concepts and hopefully will help you make the connections the first time around. It's part of a larger effort to create a completely-free library of compelling books in a handcrafted video format - check it out at bookvideoclub.com and enjoy!

The author is a master entrepreneur and investor but as a writer I think he falls flat. I found myself skimming through the book to get to the juicier bits and even so there was really nothing substantial beyond the summaries I had read in others' book reviews. Most misleadlingly the book bills itself as a handbook on how to build the next great startup. Of course this is an impossible thing to do - if it was possible for any book to do this, that book would be the most valuable in the world. So not surprisingly it falls flat on this count and simply gives lists of some characteristics which can be observed in great startups. If you read any of the aforementioned book reviews, you probably got the gist of it already.