- Engineering: can you create a breakthrough technology rather than incremental improvements? A business needs 10x technological improvement to have real monopolistic advantage
- Timing: is now the right time to start your particular business? Keep in mind: entering a slow moving market can be a good strategy, if and only if you have a definite and realistic plan to take it over.
- Monopoly: are you starting with a big share of a small market? A business should always start with a very niche market. The trap to avoid here is exaggerating your own uniqueness: Monopolies exaggerate their competition competitive businesses exaggerate themselves. If you run a solar company that owns 10% of US solar energy market, it sounds cool. You are 1% of the global solar energy market though, and 0.02% of renewable energy market. This is not a market you can dominate.
- People: do you have the right team? Create-a-strong-culture-by-choosing-people-who-work-well-together-and-love-the-company-mission. If the CEO walks around with suit and tie, it’s a red flag. There’s nothing wrong about a CEO who can sell, but a CEO who looks like a salesman is probably bad at sales and worse at tech.
- Distribution: do you have a way to deliver your product? You-need-a-great-distribution-plan-or-your-company-will-fail.
- Durability: will your market position be defensible 10 years into the future? You should be the last mover. Ask what will the world look like 10 years from now, and how does your company fit in.
- Secret: have you identified a unique opportunity that others don’t see?
- Zero to One, Peter Thiel
Links to this note
Zero to One: Notes on Startups
Aim for 0 to 1 improvements - The dot-com bubble made people cautious of innovation and big thinking - Competition is usually bad for a business - Monopolies exaggerate their...