Zero to One

Last week I went to hear local entrepreneur Marcus Whitney give a Q&A on founding business ventures. As regular readers of this blog know, I've been in and out of the startup world over the past decade and had a lot of fun with the energy of people who set out to build their own companies. I first enountered Marcus when I was new to Nashville back in 2011 when he spoke at Barcamp. Since then I've seen him around town - coffee shops, hackathons, and the like - but I hadn't heard him speak in a while.

"What important truth do very few people agree with you on?"
- Peter Thiel

This month I've also been reading through Peter Thiel's Zero to One - basically his Stanford class notes on building startups. Since he's built a couple billion dollar ones and invested in several others he seems to know a thing or two on the subject. The book is quite engaging and forces the reader to ask some very hard questions about themselves and their business ideas.

So there I am, socializing after Whitney's talk with friend and former coworker Conlan; we're talking about the new jobs we both recently started and the side projects we're working on. Conlan was telling me about the game he was developing with some friends and said they were "struggling going from zero to one". That's when I realized just how pervasive Thiel's book has become.

Whitney emphasized again and again that night the best tool for market validation was conversation. And not just conversations with anybody, but people with three very specific characteristics:

1. Decision making power to purchase your product
2. A time horizon to purchase in the near future
3. A need for your product

The mental payoff from creation often leads creators to overvalue their creations and an important check on that is outside feedback. The entreprenuer needs to ask themselves Who are the ten people I need to talk to? and then go do it right now. Most people don't leverage their network very well.

"A lot of entreprenuership is managing your mental health."
- Marcus Whitney

Toward the end of Thiel's book, he summarizes with a series of seven questions to ask about any business covering engineering, timing, monopoly, people, distribution, durability and secrets. Thiel claims that a successful business needs to answer every one of them and answer them well.

Thiel, perhaps, sets his standards a little too high. There are a lot of very successful small business owners that go from 1 to n as Thiel puts it. They take something that exists and make it better. Or they provide a quality service that people need. Until technology solves all our problems (riiight), there will be opportunities beyond the "zero to one" land of unicorns and billion dollar IPOs. The rivalry between Lyft and Uber has gotten much press lately, as their revenue exceeds $1 billion and $2 billion respectively. But, as Whitney reminded us with a smile the other night, they are still losing money. 75% of venture capital gets invested in San Francisco, Boston and New York. Not being in one of those places, the rules are a little different. Businesses are still built one customer at a time and you'd better make sure the cost of acquiring that customer doesn't exceed their lifetime value to your business.

Zero to One is still worth a read, though, because the humbleness to ask themselves hard questions is the hallmark of many successful people and something we should all cultivate in ourselves. SEMPER INTEROGAT OMNIA