## Highlights For a company to be valuable it must grow and endure, but many entrepreneurs focus only on short-term growth. They have an excuse: growth is easy to measure, but durability isn’t. Those who succumb to measurement mania obsess about weekly active user statistics, monthly revenue targets, and quarterly earnings reports. However, you can hit those numbers and still overlook deeper, harder-to-measure problems that threaten the durability of your business. — location: 618 ^ref-17106 --- If you focus on near-term growth above all else, you miss the most important question you should be asking: will this business still be around a decade from now? Numbers alone won’t tell you the answer; instead you must think critically about the qualitative characteristics of your business. — location: 627 ^ref-23210 --- Proprietary technology is the most substantive advantage a company can have because it makes your product difficult or impossible to replicate. — location: 635 ^ref-7254 --- Network effects make a product more useful as more people use it. For example, if all your friends are on Facebook, it makes sense for you to join Facebook, too. — location: 661 ^ref-31540 --- A monopoly business gets stronger as it gets bigger: the fixed costs of creating a product (engineering, management, office space) can be spread out over ever greater quantities of sales. Software startups can enjoy especially dramatic economies of scale because the marginal cost of producing another copy of the product is close to zero. — location: 673 ^ref-8074 --- A company has a monopoly on its own brand by definition, so creating a strong brand is a powerful way to claim a monopoly. Today’s strongest tech brand is Apple: — location: 684 ^ref-892 --- Every startup is small at the start. Every monopoly dominates a large share of its market. Therefore, every startup should start with a very small market. Always err on the side of starting too small. The reason is simple: it’s easier to dominate a small market than a large one. If you think your initial market might be too big, it almost certainly is. — location: 708 ^ref-51993 --- The perfect target market for a startup is a small group of particular people concentrated together and served by few or no competitors. — location: 718 ^ref-61648 --- if your company can be summed up by its opposition to already existing firms, it can’t be completely new and it’s probably not going to become a monopoly. — location: 753 ^ref-36858 --- As you craft a plan to expand to adjacent markets, don’t disrupt: avoid competition as much as possible. — location: 764 ^ref-43726 --- What really matters is generating cash flows in the future, so being the first mover doesn’t do you any good if someone else comes along and unseats you. It’s much better to be the last mover—that is, to make the last great development in a specific market and enjoy years or even decades of monopoly profits. The way to do that is to dominate a small niche and scale up from there, toward your ambitious long-term vision. — location: 767 ^ref-31526 --- In philosophy, politics, and business, too, arguing over process has become a way to endlessly defer making concrete plans for a better future. — location: 962 ^ref-28350 --- Leanness is a methodology, not a goal. Making small changes to things that already exist might lead you to a local maximum, but it won’t help you find the global maximum. You could build the best version of an app that lets people order toilet paper from their iPhone. But iteration without a bold plan won’t take you from 0 to 1. A company is the strangest place of all for an indefinite optimist: why should you expect your own business to succeed without a plan to make it happen? Darwinism may be a fine theory in other contexts, but in startups, intelligent design works best. — location: 1022 ^ref-61570 --- Forget “minimum viable products”—ever since he started Apple in 1976, Jobs saw that you can change the world through careful planning, not by listening to focus group feedback or copying others’ successes. — location: 1032 ^ref-43304 --- A startup is the largest endeavor over which you can have definite mastery. You can have agency not just over your own life, but over a small and important part of the world. It begins by rejecting the unjust tyranny of Chance. You are not a lottery ticket. — location: 1053 ^ref-19470 --- In 1906, economist Vilfredo Pareto discovered what became the “Pareto principle,” or the 80-20 rule, when he noticed that 20% of the people owned 80% of the land in Italy—a phenomenon that he found just as natural as the fact that 20% of the peapods in his garden produced 80% of the peas — location: 1070 ^ref-8648 --- Why has so much of our society come to believe that there are no hard secrets left? — location: 1232 ^ref-303 --- First is incrementalism. From an early age, we are taught that the right way to do things is to proceed one very small step at a time, day by day, grade by grade. If you overachieve and end up learning something that’s not on the test, you won’t receive credit for it. But in exchange for doing exactly what’s asked of you (and for doing it just a bit better than your peers), you’ll get an A. — location: 1240 ^ref-36158 --- In practice, there’s always a golden mean between telling nobody and telling everybody—and that’s a company. The best entrepreneurs know this: every great business is built around a secret that’s hidden from the outside. — location: 1358 ^ref-62840 --- “Thiel’s law”: a startup messed up at its foundation cannot be fixed. — location: 1378 ^ref-32059 --- A board of three is ideal. Your board should never exceed five people, unless your company is publicly held. (Government regulations effectively mandate that public companies have larger boards—the average is nine members.) By far the worst you can do is to make your board extra large. When unsavvy observers see a nonprofit organization with dozens of people on its board, they think: “Look how many great people are committed to this organization! It must be extremely well run.” Actually, a huge board will exercise no effective oversight at all; it merely provides cover for whatever microdictator actually runs the organization. If you want that kind of free rein from your board, blow it up to giant size. If you want an effective board, keep it small. — location: 1447 ^ref-44883 --- “Company culture” doesn’t exist apart from the company itself: no company has a culture; every company is a culture. A startup is a team of people on a mission, and a good culture is just what that looks like on the inside. — location: 1519 ^ref-31012 --- We didn’t assemble a mafia by sorting through résumés and simply hiring the most talented people. I had seen the mixed results of that approach firsthand when I worked at a New York law firm. The lawyers I worked with ran a valuable business, and they were impressive individuals one by one. But the relationships between them were oddly thin. They spent all day together, but few of them seemed to have much to say to each other outside the office. Why work with a group of people who don’t even like each other? Many seem to think it’s a sacrifice necessary for making money. — location: 1532 ^ref-53704 --- Recruiting is a core competency for any company. It should never be outsourced. You need people who are not just skilled on paper but who will work together cohesively after they’re hired. — location: 1544 ^ref-27011 --- From the outside, everyone in your company should be different in the same way. — location: 1566 ^ref-2607 --- On the inside, every individual should be sharply distinguished by her work. — location: 1580 ^ref-39534 --- The best thing I did as a manager at PayPal was to make every person in the company responsible for doing just one thing. Every employee’s one thing was unique, and everyone knew I would evaluate him only on that one thing. — location: 1585 ^ref-47144 --- The best startups might be considered slightly less extreme kinds of cults. The biggest difference is that cults tend to be fanatically wrong about something important. People at a successful startup are fanatically right about something those outside it have missed. — location: 1605 ^ref-30034 --- EVEN THOUGH SALES is everywhere, most people underrate its importance. Silicon Valley underrates it more than most. — location: 1615 ^ref-4114 --- we share the same bias the A Ship and C Ship people had: salespeople and other “middlemen” supposedly get in the way, and distribution should flow magically from the creation of a good product. — location: 1624 ^ref-14042 --- In engineering disciplines, a solution either works or it fails. You can evaluate someone else’s work with relative ease, as surface appearances don’t matter much. Sales is the opposite: an orchestrated campaign to change surface appearances without changing the underlying reality. This strikes engineers as trivial if not fundamentally dishonest. — location: 1637 ^ref-7892 --- people overestimate the relative difficulty of science and engineering, because the challenges of those fields are obvious. What nerds miss is that it takes hard work to make sales look easy. — location: 1641 ^ref-37557 --- If you’ve invented something new but you haven’t invented an effective way to sell it, you have a bad business—no matter how good the product. — location: 1666 ^ref-64351 --- Superior sales and distribution by itself can create a monopoly, even with no product differentiation. The converse is not true. — location: 1668 ^ref-56055 --- One of these methods is likely to be far more powerful than every other for any given business: distribution follows a power law of its own. This is counterintuitive for most entrepreneurs, who assume that more is more. — location: 1771 ^ref-11172 --- poor sales rather than bad product is the most common cause of failure. If you can get just one distribution channel to work, you have a great business. — location: 1774 ^ref-28589 --- computers are complements for humans, not substitutes. The most valuable businesses of coming decades will be built by entrepreneurs who seek to empower people rather than try to make them obsolete. — location: 1815 ^ref-12154 --- the most valuable companies in the future won’t ask what problems can be solved with computers alone. Instead, they’ll ask: how can computers help humans solve hard problems? — location: 1927 ^ref-18172 --- 1. The Engineering Question Can you create breakthrough technology instead of incremental improvements? 2. The Timing Question Is now the right time to start your particular business? 3. The Monopoly Question Are you starting with a big share of a small market? 4. The People Question Do you have the right team? 5. The Distribution Question Do you have a way to not just create but deliver your product? 6. The Durability Question Will your market position be defensible 10 and 20 years into the future? 7. The Secret Question Have you identified a unique opportunity that others don’t see? — location: 1967 ^ref-41042 --- Whatever is good enough to receive applause from all audiences can only be conventional, like the general idea of green energy. — location: 2113 ^ref-38858 --- Doing something different is what’s truly good for society—and it’s also what allows a business to profit by monopolizing a new market. The best projects are likely to be overlooked, not trumpeted by a crowd; the best problems to work on are often the ones nobody else even tries to solve. — location: 2117 ^ref-39116 ---