Full transcript
0:06in uh teaching entrepreneurship or
0:08writing about entrepreneurship uh it's
0:10it's there's a big challenge in it
0:12because I think there is uh no single
0:14formula as you could tell from the last
0:16few speakers it's it's always a very
0:18very different story um and I think
0:20every moment in the history of business
0:22every moment in the history of
0:23Technology happens only once the next uh
0:26Mark Zuckerberg will not be building a
0:28social networking site the next Larry
0:30Page will not be building a search
0:31engine the next Bill Gates will not be
0:33building an operating system company if
0:36you're copying these people in some
0:38sense you're not learning from them um
0:41and and this is why I think there is no
0:43science to business uh science starts
0:46with the number two it starts with
0:48things that are repeatable and uh you
0:50know experimentally verifiable in one
0:52way or another whereas I think um uh you
0:55know um every great company is one of a
0:58kind and and the question how do you get
1:00from 0 to one um and and so the starting
1:03point from my book 0 to1 is that is this
1:06sort of anti- formulaic approach it's to
1:08take this uh question of Singularity and
1:11uniqueness uh very um as as the central
1:14question um and I try to get at it
1:16through a variety of sort of contrarian
1:18questions um what great business is
1:21nobody building tell me something that's
1:23true that nobody agrees with you on
1:25these are often quite hard questions to
1:27answer because we think it's hard to
1:29come with some new truth or it's it
1:31often requires courage because you often
1:33have to go against conventional wisdom
1:34in one way or another um I want to maybe
1:37share uh two or three of these uh
1:39contrarian truths that I believe that
1:42people um generally don't understand
1:45that and I have my book 0 to1 uh is a
1:47whole set of these things things that I
1:49believe to be true that most people do
1:51not agree with me on uh first uh first
1:54big truth that comes right out of this
1:57uh this idea of uh of uh unique
1:59businesses
2:00I think that um all if you're a founder
2:03or entrepreneur what you want to aim for
2:06is Monopoly you want to aim to build a
2:08company that is oneof a kind uh and that
2:11it's so far um differentiated from the
2:14competition that it's not even competing
2:17um and um and I think this is the
2:19conventional wisdom is always that
2:20capitalism and competition are somehow
2:23synonyms I believe they're antonyms a
2:25capitalist is someone who's in the
2:26business of accumulating capital a world
2:29of perfect compet comptition is a world
2:31where all the profits are competed away
2:33if you want to compete like crazy um
2:36then you should just open a restaurant
2:37in
2:38Chicago um and um and uh and I think the
2:43the great companies like uh Google sort
2:45of the Paradigm example I use has had no
2:47serious competition in search since 2002
2:50when it definitively distanced itself
2:52from Yahoo and Microsoft and as a result
2:54it's been generating enormous cash flows
2:57for the last 12 years um I I sort of get
3:00at this uh you know I think I think that
3:02uh I think there are sort of two
3:03different reasons this Monopoly and
3:05competition idea is not understood one
3:08is somewhat intellectual because the
3:10people who have monopolies don't talk
3:12about it they pretend not to have
3:13monopolies for reasons that I will leave
3:15to your
3:16imagination um and uh the people who
3:19don't have monopolies um pretend to have
3:22something unique about their business
3:24because uh otherwise nobody would invest
3:26or give them any money and so um and the
3:28way you do this is if you have a
3:30monopoly like Google you will pretend
3:32that you in a much much larger market so
3:35you will never as Google talk about the
3:37search business and say we have a 66%
3:39share of the search Market uh and we're
3:42much more dominant than Microsoft ever
3:43was with the operating system Market in
3:45the 1990s you will instead um say that
3:49we are a technology company and
3:50technology is this vast space where
3:52we're competing with apple on iPhones
3:54and we're competing with Facebook on
3:55social and we're you know going to build
3:57a self-driving cars and we're competing
3:59with all the car companies in Detroit
4:01and there's just competition everywhere
4:02and so it sort of gets obscured by
4:04making the market uh um appear to be
4:07bigger than it really is and then
4:09conversely if you uh were to listen to
4:11my talk today and run out of here and
4:13decide you had to start a restaurant
4:15immediately um and you were you would um
4:18and you talk to various investors and
4:20they'd say well I don't want to invest
4:21in a restaurant because I know they all
4:23go out of business I will lose all my
4:24money um you will tell them some
4:26idiosyncratic story where this is a
4:28one-of-a-kind restaurant it's completely
4:31uh unique and very different from all
4:33the others is the only um British
4:36nepales Fusion Cuisine within um um in
4:40in um downtown
4:42Chicago um and so there's sort of this
4:45fictional story that gets told the other
4:47way and so I think that um because of
4:49these uh um distortions that people tell
4:52about their businesses um I think this
4:54uh this Monopoly question ends up being
4:57very very underappreciated and uh and
4:59and sort of underweighted um as a
5:01variable intellectually but I think
5:03there's also sort of a second reason
5:05that this is not understood that well uh
5:08you know I I sort of uh you know the
5:10opening line of Anna kenina is that all
5:12happy families are alike all unhappy
5:15families are unhappy in their own
5:17special way uh and I think the opposite
5:20is true of business I think all happy
5:21companies are different because they
5:23came up they figured out some way to
5:26radically differentiate themselves and
5:27escape from competition all unhappy
5:30companies are alike because they fail to
5:33escape the essential sameness that is
5:35competition uh the chapter in my book
5:37entitled all happy companies are
5:39different got excerted by The Wall
5:41Street Journal and they retitled it um a
5:44little bit more provocatively with a
5:45title uh competition is for
5:48losers and um and the and and the reason
5:51this is such a uh provocative title is
5:54because we always think that the losers
5:56are the people who can't compete
5:58effectively enough the losers are the
6:00people who are slow on the swim team in
6:02high school the losers are the people
6:04whose grades or test scores aren't quite
6:06good enough to get into the the right
6:08universities or something like that and
6:10so the idea that somehow competition
6:13itself um um is something that we are
6:16perversely attracted to um is is is is
6:19is very counterintuitive and yet I want
6:21to suggest that uh that uh there is
6:24always this uh incredible pull that
6:26competition has on us uh the sort of the
6:29aut graphical anecdote in my book um
6:31when I was a teenager in my 20s and the
6:33advice I'd given my younger self was
6:35incredibly um driven by these sort of
6:38competitive Dynamics my e8th grade
6:40Junior High School yearbook one of my
6:41friends said I know you're going to make
6:43it into Stanford in in four years and I
6:45sure enough I got into Stanford four
6:47years later uh then went to Stanford Law
6:49School uh and then ended up at a big Law
6:52Firm on on on Wall Street uh it was one
6:54of those places where from the outside
6:56everybody was trying to get in on the
6:58inside everybody was trying to get out
7:00when um when when I when I left after 7
7:03months and 3 days um one of the one of
7:08the people down the hall from me uh told
7:10me it was reassuring to see me leave he
7:12had no idea it was possible to escape
7:13from Alcatraz um and of course all all
7:16you had to do was go out the front door
7:19but but it was it was psychologically
7:21hard for people to do this because um
7:24their identity was so wrapped up in the
7:26competitions they had won the people
7:28they had beaten along along the way that
7:30they could not even imagine doing
7:32anything different and and so I think
7:33this is and this is why I think
7:35competition is always this very
7:36two-edged thing uh when you compete
7:38ferociously you will get better at that
7:41which you're competing on but you will
7:43always narrow your focus to beating the
7:45people around you and uh and it often
7:47comes at this very high price of uh
7:50losing sight of what is U more important
7:52or perhaps more valuable um and so I you
7:56know I think there's this uh this very
7:58strange phenomenon in Silicon Valley
8:01where uh where a lot of the most uh
8:03talented uh start startups a lot of the
8:06great startups seem to be run by people
8:08who are suffering from a mild form of
8:10Aspergers and I think I think we need to
8:13always turn this fact around and uh view
8:16this as an indictment of our whole
8:18society because what does it say about
8:20our society when anyone who does not
8:22suffer from Asbergers who is socially
8:25well adapted will be talked out of all
8:27of their original creative
8:29ideas before they are even fully formed
8:32who will sense this is a little bit too
8:33weird that's a little bit strange that
8:36sounds a little bit crazy people are
8:37looking at me in a weird way um and I
8:39think this is uh this is something that
8:41we must all uh realize is is sort of a
8:43deeply endemic problem they've done
8:45these studies at Harvard Business School
8:47which I think you can often think of the
8:48business school student as a profile in
8:51anti- Asbergers they're sort of very
8:52extroverted often have no real
8:55convictions um and um and um and you
8:59have sort of a hot house environment in
9:01which you put all these people for two
9:02years and at the uh at the end of the
9:05two-year process they've all sort of
9:07talked to each other and they've
9:08concluded they should all try to catch
9:09the last wave and it's invariably a
9:11pretty bad idea in 1989 they all wanted
9:13to work for Michael milin just a year or
9:15two before he went to jail um you know
9:18they were never interested in Tech or
9:19Silicon Valley except for 99 2000 when
9:21they timed the bubble implosion
9:24perfectly um and then sort of 2005 to 07
9:27it was all housing and private equity
9:29and and things like that um and um and
9:32it's it's easy in some ways to to make
9:34fun of people in business school or
9:36people who are sort of conventionally
9:38tracked but I think we we should
9:40recognize that we're all very prone to
9:42this you know um already in the time of
9:44Shakespeare the word ape meant both
9:46primate and to imitate and there is
9:48something very deep in human nature that
9:50is imitative it's how it's has a lot of
9:53good things it's how language gets
9:54learned by kids it's how culture gets
9:56transmitted in our society uh but it
9:58also can lead to sort of a lot of insane
10:01Behavior it can lead to The Madness of
10:02crowds to Bubbles to to sort of mass
10:05delusions of one sort or another and um
10:08and I think it can um uh and I think
10:10it's you know advertising we always
10:12think of we always tell ourselves that
10:13we're not that uh prone to this and I
10:15think that's something I'd encourage all
10:17of us to rethink you know we always
10:18think of advertising as something that
10:20just afflicts other people that never
10:22afflicts ourselves um I think this is
10:24very far from the case and so uh and so
10:27the Monopoly competition is not just
10:29this intellectual failure it's also this
10:31thing where um you have a tiny door
10:34where everyone's trying to rush through
10:36uh and there may be around the corner a
10:38vast and a Secret Gate that no one's
10:41taking and you should always find the
10:43secret path and and and go ahead and
10:45take that two other quick uh thoughts on
10:49two other quick ideas on things that I
10:50believe to be true that most people um
10:53don't agree with me on uh I think there
10:55are many answers to this question what
10:57is true that people don't agree with on
10:59um and most and most of us actually
11:02don't think there are that many answers
11:04left uh we think that all these answers
11:06have been discovered and I sort of give
11:07a trichotomy in my book of conventions
11:10which are truths everybody already knows
11:12the other end there are Mysteries which
11:14are truths that we can't uh figure that
11:16nobody in this world can figure out and
11:18there are things that are in between
11:20that are hard it takes a lot of work but
11:22if you apply yourself you could figure
11:23those out and I call those secrets and I
11:25think there are many uh Secrets left now
11:28there's certain areas where it's not
11:29that promising to look so you know if
11:31you were growing up in the 17th or 18th
11:33century there were some empty spaces on
11:35the map and you could become an Explorer
11:37and discover some more secrets about
11:38geography or in the 19th century there
11:41were still some empty spaces left on the
11:43periodic table of elements and you could
11:44go into chemistry and discover some some
11:47uh things in in basic chemistry and so I
11:49think geography basic chemistry these
11:52are areas that have been fully explored
11:54these are areas where you're not going
11:55to find any secrets these are not
11:57promising areas where you will discover
11:59a new truth that no one else uh knows or
12:02uh and that can become the basis for um
12:05a great Insight or or a great business
12:08um but I think most areas are not like
12:10this um uh and I think that um there are
12:12many directions we can go in where the
12:14frontier is still uh surprisingly close
12:18uh there certainly has been an enormous
12:20amount of of uh um ideas and businesses
12:24that have been discovered in this it
12:26space for the last 40 years and uh
12:29there's no reason to think that's going
12:30to stop uh around computers internet
12:32mobile internet software there are um
12:35many things people find the ideas are
12:37often uh they always seem shockingly
12:40simple in retrospect they're they're
12:42pretty hard Exane you know when we came
12:44up at PayPal with combining email with
12:47money um you know that was a secret it
12:49was not an easy thing to to figure out
12:52no one else in the world had figured it
12:53out um but it was you know far from
12:56impossible to do uh and you know once we
12:58came up with the idea we thought it's
12:59you know it's amazing no one's thought
13:01of this yet we have to really execute
13:03fast before uh before anyone uh catches
13:05up and and um and so I think there are
13:07many things uh there are many Secrets uh
13:10like this that are left to be discovered
13:12uh and we see this with all the new
13:13businesses that emerge in these areas I
13:15I'm I actually think that we should uh
13:18um try to find some in a number of other
13:19areas uh so I think that everything from
13:22biotech to um space Technologies uh all
13:26sorts of other areas of Technology um I
13:29think have been somewhat underexplored
13:31in recent decades and that it would be U
13:33it would be good if the uh cone of
13:35progress were not just this narrow cone
13:37around uh computers and the world of
13:39bits but we're expanded uh to include
13:42the world of atoms in in many uh many
13:44other ways so second idea is there are
13:46many many Secrets uh left for us to
13:49discover third um third idea that I'll
13:52I'll end on uh and this is uh the basic
13:55dichotomy in my book I think I think for
13:57us to have a successful 21st century
14:00we're going to have to have uh both
14:02globalization and technological
14:04innovation and I think these are two
14:06very different modes of progress um um
14:09and people often use these words
14:10interchangeably and I think that's
14:11always a big mistake I draw
14:13globalization always on an
14:15xaxis I describe it as copying things
14:18that work um going from one to n um
14:21horizontal or extensive growth uh China
14:24is the Paradigm of globalization today
14:27and uh to First approximation what China
14:30needs to do in the next 20 years is just
14:32copy everything that's working in the
14:34west you can maybe skip a few steps but
14:35if it executes against that the people
14:37in China will be uh much better off in
14:39the decades
14:40ahead and then I always draw technology
14:43on the Y AIS I describe it as vertical
14:45or intensive growth um doing new things
14:48going from zero to one um and um and and
14:53we can sort of see this big difference
14:55between globalization and Technology if
14:56we think about the history of the last
14:58200 years years there have been periods
15:00of globalization there have been periods
15:02of Technology the 19th century was a
15:04period of both from 1815 to 1914 you had
15:08tremendous uh uh technological progress
15:11and tremendous amounts of globalization
15:13taking
15:14place after 1914 um you know with world
15:17wars communism all sorts of other uh
15:20events um globalization uh sort of went
15:23in Reverse um the world became a much
15:25more disunited much more fragmented sort
15:28of a place
15:29um but technology continued to go at a
15:32ferocious pace and I would argue since
15:34maybe about 1971 when Kissinger went to
15:36China uh and uh globalization uh
15:39restarted it began uh in at a ferocious
15:42rate the last 40 plus years uh
15:45technology has been going a little bit
15:46more slowly where it's been as I already
15:48said a narrow focus on computers and a
15:51little bit less of other things for the
15:52last century unlike the 19th century has
15:55been a period where we first had um lots
15:57of Technology but no globalization and
16:00we've now had a more recent period where
16:02we've had lots of globalization but um
16:05only limited technological progress and
16:07this change is reflected in a very
16:09different way in which we talk about
16:10today's world in the um in the 1950s or
16:141960s we would have described the world
16:16as being divided between the first world
16:19and the third world the first world was
16:22that part of the world that saw uh
16:24Relentless accelerating technological
16:27progress the third world was is that
16:29part of the world that was uh
16:30permanently stuck permanently screwed up
16:33in one way or another um so no
16:35globalization but lots of technology
16:38today we would uh divide the world into
16:39the developed and developing nations the
16:42developing nations are those that are
16:44copying the developed world uh and um
16:47and so this develop developing dichotomy
16:49is a PR globalization dichotomy um it's
16:53sort of a Convergence Theory of History
16:54where the entire world will become more
16:56and more homogeneous as globalization
16:58continues a pace but it is also
17:01implicitly an anti-technological
17:03dichotomy because when we say that we're
17:05living in the developed world we are
17:07implicitly saying that we're living in
17:09that part of the world where nothing new
17:11is going to be done where things are
17:12finished they're complete um and we can
17:15expect uh Decades of uh stagnation and
17:18sclerosis and the younger generation
17:21should expect to have a lower living
17:23standard than their parents and uh we
17:25have sort of this rather Bleak view of
17:26the future and I think we should not
17:27accept that sort of a label we should
17:30not accept this idea that we're living
17:31in the developed world and so I will I
17:33will end by saying that I think we
17:35should always return to the very
17:37contrarian question um how can we go
17:40about developing the developed world
17:43thank you very much