Zero to One. This book has a subtitle below it that says: "Notes on Startups, or How to Build the Future". It is said that competition cannot bring about new creation. And controlling a market completely is the root of new creation. This book titled "From Zero to One," is a best-selling business book that originated from Silicon Valley. The founder and author of this book is Mr. Peter Thiel, a renowned entrepreneur from Silicon Valley. He co-founded PayPal in 1998 and later sold it to eBay for a price of $1.5 billion in 2002.
Later, he became an investor in the business and finance sector, having been the first to invest in the company Facebook, spending only $50 million. Now, his shares are worth more than $30 billion. This book tells us that in traditional business, the model for a successful enterprise is to go from 1 to n. This means following the model of previous successful businesses that have already achieved success, expanding their influence and market share through competition.
In the technology sector, the business model for an innovative startup goes from nothing to something. This means that probably no one has ever done this before, because this is something new. Therefore, entrepreneurs must create their own business model, create their own market. To achieve this goal, one must avoid competition, and sometimes there are no competitors in the market because it's new. The problem is the market itself. The market is your competitor.
This book has made us see many things in this world in a broader way. This book tells us about three important points. First, competition is not the root of new creation. Second, a successful innovative business must capture a large share of the market. When you stand at the top of your field, you can say you have achieved success. But that success is only temporary. Third, to maintain the number one position in your field, you must think outside the box and go against the majority.
Let's explain the first point. Entrepreneurs must remember that competition is not the root of new creation. We all know that in mature markets, there is a lot of competition. And this is also the nature of doing business. The market you all see today is the result of intense competition. Without competition, the prices of products and services offered to you in the market would not be as reasonable as they are today. But the author of this book, Mr. Peter Thiel, believes that competition brings more harm than good. Why does he say this?
When we talk about it, it's quite interesting. The reason he thinks this way is because he has gone through many things in business, work, and life. It is full of competition everywhere. For example, we have all gone through exams. In any country, it's the same. The creation of exams is to be a standard for measuring students' abilities. This exam is full of competition. Since we were young, we were taught to study hard, get high scores in exams, and try to beat others, and so on.
Everyone is full of pressure. And after you get to university, you have to take exams in every subject, every field, every university as well. You have to try to maintain a good score and take exams for different certificates to have a chance to enter the job market. In this context, people don't really see the talent, passion, and special personal abilities of each individual. The fact that they use exams as a standard to determine a person's ability is not entirely correct. And the higher the educational institution, the tougher the exams, the more difficult, which makes students and university students feel more pressure.
And students who study better and better understand that they have high abilities because they get high scores in exams. They spend more and more time studying lessons to get high scores. They are afraid of losing to others, and they pay a lot of attention to this point, rather than honing their personal talents or sometimes rejecting many good opportunities in their lives. You have probably seen many successful entrepreneurs and people in the world, such as Mark Zuckerberg, Bill Gates, and so on, who dropped out of their studies to pursue their own dreams.
However, this is just the personal view of the author on the education system. We also do not encourage all of you not to pay attention to exams. But he just wants to remind us that exams and competition cause us to lose opportunities for new creation. If you think that exams are a standard for determining a person's intelligence and ability, you are wrong. You will miss the opportunity to find yourself and your abilities and talents within yourself.
Peter Thiel, when he was young, also fell into this way of thinking. In life and studies, he focused only on competition. He was a good student and passed the entrance exam to the prestigious Stanford Law School in the United States. After he graduated, he took the exam to become a clerk in the Supreme Court. He got a very good score but failed the interview. He was very sad and disappointed with this result. But later, he thought back and said, "It's a good thing I failed the exam. If not, I would probably have become a salaried government clerk by now."
There would be no PayPal in this world. Likewise, Jack Ma, the founder of Alibaba, was also rejected many times when he applied to be a policeman, applied to study at Harvard, and so on. He was rejected because they thought he was not capable, because he failed the exams. You all know the rest of the story. Now, Alibaba is the largest online marketplace in the world.
To sum up, Peter Thiel, the author of this book, has come to understand that competition can kill new creation and make people forget to think about honing their talents and abilities. Of course, Peter Thiel's claim is not just a summary of his own experiences. As a successful entrepreneur and investor, he has also encountered many stories and always understands that competition is not really conducive to new creation.
Competition makes us focus and direct our attention to our competitors. And we don't think about self-development, how to make ourselves better and more developed than before. Speaking of competition in the technology sector, we take two companies to talk about, which are Microsoft and Google. When Microsoft released the Windows operating system, Google also released Chrome OS to compete with Microsoft. Later, Microsoft created a search engine called Bing to compete for the market share of Google's search engine.
Microsoft has Internet Explorer, and Google also released Google Chrome. It directly fought against Internet Explorer. Microsoft Office tablets were also attacked by Google Nexus. So, these two companies compete with each other. What is the final result? The result is that they lost to a new company, which is Steve Jobs' Apple company. In 2011, the value of Microsoft and Google was tens of times higher than Apple's. But by 2013, Apple's value was up to $500 billion. While the combined value of Microsoft and Google was only $460 billion.
When we only look at competition, you will lose your senses, you will not see new opportunities. Or it can be said that new people can have the opportunity to come in and take your market share. And the result is something you wouldn't expect. What's even more dangerous is that competition will make us think only about the things we've been through and not look forward to prepare ourselves to seize opportunities in the future.
In the electronics industry, for example, nowadays all smartphones look almost the same. Apple researched and created fingerprint scanning technology to unlock phones and put it on the iPhone 5s in 2013. Samsung did the same. You have fingerprint scanning technology, I also have fingerprint scanning technology. You have face scanning technology, others can do it too. You have a triple-camera, the other side also releases a triple-camera. They keep competing on the same old things and don't think about creating something new.
You might think, "So what should I do? If I don't do what they do and compete with them, they have it and I don't, I will surely lose to them." At that point, everything will be too late. You will surely be forgotten by your customers. But you need to know that this kind of imitative competition not only lacks new creation, but also loses your own unique characteristics. In Silicon Valley, there is a strange thing happening. Many computer technicians who have a mental illness called Asperger's syndrome are very successful in that region.
What is Asperger's syndrome? This type of illness can be said to be a disease where one is afraid to go outside. It is similar to the type of person who is an introvert, who likes to be alone and doesn't like to socialize much. Why do these types of people easily become successful in Silicon Valley? The reason is that they don't like to follow the environment and the people around them. They like to work alone, they focus only on their own work, and they don't care much about the outside social world.
And as a result, they achieve good results, especially in the IT field. And work that requires high creative thinking, such as writing programs, requires this type of person even more. As for ordinary people, they are always influenced by external sources. They only think about competition in society, work, and business. They are always afraid of being inferior to others, and as a result, you will lose your own identity. You don't see what you really need.
Not only that, competition will make you lose your focus. Those who have watched NBA basketball probably know the famous arena in the United States that cost over $18 million to build, which is called Oracle Arena. And this arena is named so because it is fully sponsored by the Oracle corporation. Oracle is a company that creates computer programs for other large companies in Redwood City, United States. It was founded in 1977. It can be said to be a big company in the region.
Recently, it is planning to submit a proposal to buy the TikTok company in the United States as well. What they want to raise at this point is that there are many small companies that want to compete and attack the Oracle company. But Oracle doesn't care. They just do their own thing. You do what you do, you say what you say. Some people raise their voices and say that their competitor is Oracle. And they themselves are the largest company in Redwood City as well.
Doing this does not receive praise from users. If you don't do it well, you might get defamatory words that affect the company as well. This is why they say that focusing too much on competition makes people confused and forget to think about self-development. Above, we have already said that Peter Thiel himself is also a person who has failed in the field of entrepreneurship. He has experienced quite a bit of hardship regarding competition in his field.
In 1999, he created the company PayPal. And at the same time, Elon Musk, the founder of the electric car manufacturing company Tesla Motors, at that time created X.com, which is a company that provides online payment services, similar to PayPal. These two companies were life-or-death competitors at that time. To win market share from their competitors, PayPal employees had to work extra hours up to 100 hours per week. But they did not focus on the efficiency of their work. Instead, they spent a lot of time thinking of ways to defeat their competitors.
There was one PayPal employee who was so desperate that he made a bomb, brought it to a meeting, and told his colleagues that he was thinking of a way to destroy the X.com work team. When you are crazy about competition, you can do anything. It's very dangerous. Later, Peter Thiel rethought this and came to sit down together with Elon Musk to discuss how to end this business war, so that both sides could grow.
Later, they saw PayPal merge with X.com, with Peter Thiel as the CEO of X.com, replacing Elon Musk. And later, it was renamed to PayPal again until today. That's why in the end, they saw the brilliant success of the PayPal company, until it went public with successful shares in 2002 and was sold to eBay in 2015. Many researchers and economists have views that are contrary to the views of the author of this book.
They think that only competition can lead to new creation. But Peter Thiel does not think so. He thinks that this way of thinking is the root of the problem. The origin comes from some physicists in the 19th century who had researched the universe, the cosmos, such as the worlds in the solar system, which have a relationship with each other, thus creating a balance. And those scholars also took this physical model to draw a theory in business as well.
There must be competition to create a price balance in the market. In fact, we cannot think like that. The problem is that in economics, the flow of goods and money in the market is volatile and very fast. It is completely different from other worlds that have been stable until today, which is the result of changes over thousands of years. We cannot take this physical model and apply it as a theory in the economic field.
On the market, the companies that succeed are actually the companies that dare to create new things, providing real value to users. It is not obtained through competition. What they can do is something that other companies cannot do. Or it can be said that the company has made a journey from 0 to 1, making something that does not exist become something that exists. But it is not about doing something that others have already done and then coming to compete for the market share of the previous person to achieve success.
Competition is a journey from 1 to n. It can be said that it is a competition with each other forever, without end. This is not the nature of business. The above is the first point that we raise, that competition has no good results. And below this, we come to the second point. A successful innovative business must achieve a leading position in the market. This is the real secret in promoting their company to go from zero to success.
As mentioned, through competition, you cannot achieve success. And you also cannot reach the final goal in doing business. So what should entrepreneurs and business owners do? Peter Thiel will tell you about this point. Let's take an example. The airline company American Airlines, every year, has to transport millions of passengers. This service creates a market value of tens of billions of dollars every year.
In 2012, the average price of a plane ticket was $178. But the profit that the airline company made from one passenger was only $0.37. But if we talk about a technology company, Google, in 2012, its market value was only over $50 billion. If we compare it to the airline company, it is much smaller. But the profit that Google gets from the usage of one person is up to 21%.
This percentage of profit is 100 times more than the airline company's. Why is it like this? Why does Google dare to profit so much? In economic language, they divide this matter into two different levels. The first level is to be in competition. And the second level, you are the sole leader, becoming number one in your field. We take the first level to talk about. Economists have said that a market that has competition with each other already will receive a balance when there is a suitable demand.
In this situation, among the many players in the market, there is no one who is more prominent than the others. You all have about the same abilities. The market share also has no one who controls more than others. They are always pulling against each other. They sell similar products, provide services that are not much different from each other. The price of those products is determined by the market. If you sell at a high price, make too much profit, soon there will be a new person coming to compete, taking away your target customers.
And when there is an oversupply, the demand remains the same, the price of the product will fall. This is the nature of the free market economy. When the competition becomes more and more intense, some companies are willing to take a loss to maintain their position in the market. Some other companies decide to close their doors because they cannot withstand the competition. At that time, the survivors are the ones who are more stable or have more capital and can stand on their own in the market.
But those who can stand on their own cannot profit too much. If not, there will be new people coming to compete again. The profit is just enough for the market to accept, and the stable price is called the market equilibrium price. The fact that we can control the market by ourselves, we will have the opportunity to raise prices and have our own unique market. No competitors, no one who has a product or service similar to ours. Then you will receive many benefits in your field.
But in economic terms, to become number one in any field, you have to be able to defeat all competitors. Or they can get a special license from the government, such as a license to produce a certain product or provide a certain service that others cannot have. Only his company alone can do it. But in this context, there is another way, which is to use a new creation method, taking one step at a time to get the market share for oneself organically.
As in the example above, Google is a company that has monopolized over other companies, controlling a lot of market share in its field through the creation of many new services and products. From the 21st century onwards, Google has surpassed Microsoft and Yahoo. In the field of information search, it can be said to be number one, as you already know. Google has collected a lot of information and algorithms in searching for information and data on the internet, creating an ecosystem, little by little, until it has a huge size up to today.
It's not by chance, and it's not from competition. You must be wondering why being the leader in Google's market, why Google itself doesn't admit it. Google never says that it is the largest information search platform on the internet in the world. In fact, the real number one never calls themselves number one. They say that they are number two. But I dare say that if Google calls itself the second biggest company in this field, probably no one dares to say that they are number one, not even Microsoft's Bing or Yahoo or Baidu.
The fact that they position themselves like this is because they don't want anyone to know that they are the leader in any field. Because it's very dangerous. To receive long-term profits and stability, they will surely hide it. For example, if you say that Google leads in the information search sector, capturing up to 68% of the total market share, Google will surely respond that "No, 90% of our revenue comes from advertising." And if you compare it to the advertising market in the world, we have a market share of only 3.4%.
We are not the leader in this field. But what if we think that Google is a technology company? Because they have created many electronic products such as self-driving cars, Google smartphones, Google Pixel, Google Nexus, and so on. Google will surely deny that they are the leader in this field either, because the market share in this field they get is only 0.24%. Therefore, the one who is truly strong never calls themselves better than others or the leader. Because they don't want to have problems or attacks from outside.
Therefore, they will divert your attention, making you not realize that they are the leader in any field. On the contrary, those who are not leading companies often advertise heavily that they are the leading company to get attention and trust from users. But in fact, whether they are a leader or not is not up to them to say. It is the market that determines it. For example, someone opens an Indian restaurant in Phnom Penh.
They put up a sign advertising that: "We are the largest and leading Indian restaurant in Phnom Penh." It sounds good, but not many people believe it. And customers also know. It's probably just him. And whether he is a leader or not, there must be fierce competition in the market. But this seems to have none. There is only him opening the shop by himself, and it's not wrong, he is probably the leader. Why do all of us, as entrepreneurs, want our company to be the leader in its own field?
Because the one who stands at number one receives a lot of benefits. Coca-Cola leads in the soft drink industry. The iPhone leads in the smartphone industry. Even if the iPhone's price is sky-high, there are still people taking money out of their pockets, queuing up to buy it. Just like Google, which is the leader in this field, they don't have to worry about competitors taking their market share from others. They only focus on their work team and the development of their products to be even better.
Every day, they look for ways to create new products to provide surprises to customers. The slogan of Google, "Don't be evil," means "don't do evil deeds." What does it mean? We can say that it is a very good branding for the Google company. It wants to show the ethics in doing business and human morality, that it will absolutely not commit evil deeds. This is a very good culture of the Google company. It shows that the leader, after having a lot of profit, eating well, and sleeping soundly, they have a lot of time to do other things, to put it nicely.
But if you are in a situation where there is fierce competition, you will not be able to receive these benefits. In competition, you only receive profits or wins in the short term. Therefore, you have to think of strategies every day. For example, you are a restaurant owner. To cope with the competition in the market, you have to control the cost of raw materials well, cut expenses, cut staff, and you can't sell too expensive either. These are all things that you have to think about.
If you make delicious food that has a fragrant taste, you have to spend a lot. And if you want to have a lot of customers, you have to sell at a cheap, reasonable price. You will not profit much from this business. You think of cutting some unnecessary expenses. Things that you can use people to replace, you don't dare to spend on investing in buying machines to replace human labor, and the work efficiency is not as good as theirs either. You tell me, in business, there is such a fierce competition. If you don't try hard, you will be beaten by them.
Another example is about two companies, the New York Times news agency and the Twitter mobile application. Both of these companies have thousands of employees. They are both companies that provide important, up-to-date news. In 2013, Twitter went public with an IPO, with a value of $4 billion. This value is 13 times the value of the New York Times, which was founded nearly 170 years ago.
It should also be noted that one year before Twitter went public with its IPO, which was in 2012, the New York Times news agency had an annual profit of up to $133 million, while Twitter was a loss-making company. You must be wondering why a company that is losing money can go public. I would like to explain briefly. An IPO is the public offering of a company's shares. You all can buy and sell the shares of that company at any time through the stock market.
In Cambodia, there is also a stock market where the public can buy shares of state and private companies, such as the Water Authority, Sihanoukville Autonomous Port, and Acleda Bank, for example. For the company owner or entrepreneur, going public can be said to be a final goal, or it can be said to be a new beginning that shows the success of the institution and a new business. Going back to Twitter, why do investors flock to invest in a company that is losing money?
Because they see the cash flow of those new technology companies. You have seen the successful examples of large technology companies, such as Amazon, PayPal, Uber, and so on. They were all loss-making companies before going public. Speaking of Twitter, investors see that Twitter will be the leader in the news industry in the next 10 years. And they know that traditional news, such as the New York Times, is really at a time when it is outdated.
Technology companies and traditional companies have one thing in common. I think you all probably see it. Most technology companies have been losing money since they were founded. But they still get a very high stock valuation. A company that can stand in the market, has sufficient cash flow, and maintains its operations for 5 to 6 years, can be said to be a valuable company and has stability. But if another company with similar strength and capital comes to compete, you will probably have to cut your market share and give it to them.
And it can affect your company's revenue as well. Restaurants, entertainment clubs, hotels, and so on, all have risks in competition. Today you might have a lot of revenue, but it doesn't mean that tomorrow will still be like this. Because there will be new people entering to compete for your market share at all times. This is what they call the journey from 1 to n. It means that there is no end in sight. You have to work hard and move forward continuously, you can't stop.
If you stop, you will be replaced at any time. But in the technology sector, when you create a product that has a good value, it is easy to make you become the leader in that field. Because they have a lot of data and grow fast. This is the quality of a technology company. You see that the companies that have an IPO are mostly technology companies. Some companies have only been founded for 2 or 3 years and have already had an IPO. Such as the PayPal company of the author of this book.
Therefore, traditional companies have to focus on short-term profits, while technology companies have to look at their long-term vision. Not only do they need growth, but they also need sustainable growth in the long run. Therefore, if competition can be avoided, it should be avoided. The second important point, I would like to end here. We move on to the third point. But the question is, how can we achieve it? Because it is not an easy matter.
To maintain the number one position in a field, the author has raised several points below. First, the product. Second, the network. Third, the size. Fourth, the branding. Let's listen to each point one by one. First, we talk about the product. It means that your product must be many times better than the products that are already on the market. And your product, service, and business model must not be easy for them to copy.
Like the algorithm of Google's search engine, the online information search is fast, up to displaying more than 38 million results in a fraction of a second for you, according to what you need. This kind of technology, no other company can do it at this time, except for Google. How good is considered good? Your product must be at least 10 times better than the products that are already on the market. Then you can be the leader in a field.
There are many buzzwords in the market that talk about penetrating a new market. They tell you to look for and see the problems or loopholes that exist in the market. Then create a solution to solve those problems. Then you will succeed. But Peter Thiel thinks that this way of thinking is not entirely correct. Being a little better than them cannot make you become the leader in your field.
You have to develop yourself to be at least 10 times better than what is already on the market. Take something good and create a completely new thing. Don't do what they do. Do something that is not on the market. For example, before the author created the PayPal company, the American people bought things on the internet and had to pay for them by using a cashier's check, which we call a "sack". It took 7 to 10 days to get the money into the bank account.
After PayPal came along, buyers only needed to fill in a little information and could buy things. Sellers also got the money immediately. You can see that it's not just 10 times better, it's hundreds or thousands of times better. It would be strange if it wasn't successful. You all know that Steve Jobs, the founder of Apple, was fired by the board of directors from Apple in 1985. Later, he was invited back.
And after he came back to the company, the first thing he did was to cut down on messy, unnecessary products. He only kept two or three items. He only kept products that were 10 times better than others. The second point is the network. You have to expand your network. You have to make it so that more and more people use one product. For example, Facebook. Registering a Facebook account is very important. And now it is indispensable.
Because you need to use it to create connections with people around you. There is a special point here. If you want to create a large network, you have to make it so that more and more people use it. What is the first step? You have to find a point of entry into the market. If we talk about Facebook, Mark Zuckerberg created it only for use within Harvard University. Later, he let students in other universities use it, and it spread throughout the United States and the world.
At this time, Facebook users have more than 2 billion people around the world. The third point is about size. After you find a small point where you can enter the market, the next point is that you need to know how to expand it. So how do you expand it? You can expand to products or services that are similar or related to the first product that you created. Let's look back at Amazon in the past two decades.
After they sold books that became famous throughout the United States, they created other products such as selling CDs, selling movie cassettes, and so on, until now Amazon is a very large online marketplace that has millions of items. But you should be careful about this point. If the point that you choose to enter the market first does not allow you to expand your market in the future, then you will probably fail. For example, eBay. eBay is an online buying and selling platform similar to Amazon, but it started from an auction website.
The target customers of eBay are not many, and the market is also very small. Because auction items are not very popular. Most of them are things like coins, second-hand goods, and collectibles. Not long after starting, eBay captured the entire market for itself and became a big player in this field. But it was difficult for eBay to expand. The initial start determined the fate of eBay, how far it could go. That's why eBay has been chasing Amazon and has not been able to catch up in the e-commerce sector.
Therefore, before entering a market, you must think carefully about how you will expand it in the future. But some entrepreneurs or businesses cannot expand their business because of their own business model. If you are a restaurant owner, you sell very well, you have a lot of customers. You will probably have to expand your branches. But thinking about expanding branches, you have to choose a new location, find a chef, find more staff, and spend in all directions.
The more you expand, the more your capital costs increase accordingly. But if it's the computer program of Microsoft, for example, the engineering team creates it only once, and they can sell it forever. After creating it, what's left is selling and marketing. Every sale is all profit. Because there are no raw material costs. In this business model, it doesn't have to be a technology company.
Companies in the food industry can also take the successful examples of others to study as a model. Such as the Starbucks company and the business franchise of KFC, for example. The last point that can make your company be the leader is branding. If we talk about brand, we cannot overlook the Apple company. The simple and attractive design, the ease of use, and the clear definition of the target audience are what allowed them to brand so well.
There are many companies that have spent a lot of budget to advertise, open branches, use sophisticated raw materials, and sometimes even steal the design of the Apple company. But they cannot win over the loyal customers of Apple. Why is that? Because besides the very good design of Apple, they have a strong supporting technology and another ecosystem, such as the App Store and iTunes. Millions of program developers are creating iPhone applications for the Apple company.
And those people are not the developers of the Apple company. It's different from the developers of Nokia's Ovi Store in the past, who used their own staff to create applications. Therefore, the brand of the Apple company is an important stamp that makes their products stick in the minds of users. The four points above are a summary of product, network, size, and brand, which are the four pillars in supporting a business to become a leader in its field. And it is also the secret in promoting a new business from zero to one.