It is not every day that we hear news like ‘Amazon reached a trillion-dollar market valuation following Apple’. News like these always piqued curiosity in me to understand how these companies work. In an attempt to do so, I recently read two books — and here I am sharing what I learned from them. After the books, I have a better picture of the world we live in and much appreciation for the entrepreneurs who made it happen.
Swipe to Unlock:
Authored by product managers at the big four (Google, Microsoft, and Facebook), this book is a decent introduction to the technology that governs our lives and its underlying business strategy. You will find answers to questions like ‘Why did a Wall Street trader drill through the Allegheny Mountains to build a fiber optic cable?’ and ‘Why did Google make Android, Maps and Search free’. You get more answers to essential questions like why your new phone comes installed with Junk Apps and why prices on Amazon change every 10 minutes.
Like the above, the book has chapters starting with Why’s and How’s and covers the software technologies that propel the world forward (Google Search, Cloud computing, Big Data, Recommendations on Spotify) and the hardware that powered them(Operating Systems, Internet). The best thing about the book is how it gives real examples of companies to address the compelling theory. It also gives a basic overview of App Economics (How do apps make money if they are free) and Business Motives (like why Facebook acquired WhatsApp).
It addresses the ever-present problem of cybersecurity and touches upon the compendium of policies and regulations to govern these exponentially growing businesses. As we know from Mark Zuckerberg’s trial by the Senate, the law has a long way to go in understanding technology. The book proceeds to the trends going forward — Self Driving Cars and Robots that will steal our Jobs. The authors end the book by a question — ‘Could Amazon be the first Trillion Dollar Company’ — the answer to which we know now — It could not be the first as Apple gained that status, but it did reach the valuation.
Overall — A good read if you are a newbie in technology and want to understand tech and business at the same place.
While the first book helps in understanding why companies do what they do, the following book empowers oneself to ask ‘How can I do it’? The answer according to the author is ‘Zero to One’. This book is a first-hand account of a successful entrepreneur and venture capitalist Peter Thiel, co-founder of Paypal and Palantir, an investor in Facebook, SpaceX and LinkedIn.
He implores one to ask ‘What valuable business is no one building?’. He then asserts that intensive progress happens when you go from zero to one — creating something new. He calls it technology.
This book gives a first-hand account of someone who cruised through the dot-com crash of 2000 and emerged as a winner. Based on his experience, he gives lessons on business thinking, modifying the dogma lessons in the Silicon valley post-crash—
- It is better to risk boldness than triviality — He says it's better to have a grand vision than making only incremental advances
- A bad plan is better than no plan — Staying lean and flexible should equate to not having a plan
- Competition markets destroy profits — It’s good to create a new market than trying to compete in already existing ones
- Sales matter as much as products — Though the product is good enough, it still needs to sell
He proceeds to explain perfect competition and monopoly. By monopoly, he refers to companies like Google. He claims capitalism and competition are opposites and to create and capture value, one shouldn't build an undifferentiated commodity business. He defines the value of a business is its ability to generate cash flows in the future. He provides the characteristics of monopolies as:
- Proprietary Technology — It must be at least 10x better than its closest substitutes. eg Google’s Page Rank algorithm
- Network effects — Facebook’s growth was through leveraging this
- Economies of Scale — Software startups should be able to scale seamlessly, eg. Twitter scaled according to the number of users
- Branding — Who else than Apple to prove this.
To build a monopoly, he gives the following theories supported by examples
- Start small, create and dominate a niche market
- Then gradually expand into adjacent broader markets
- Don’t disrupt: Avoid competition as much as possible
- Have the last mover advantage by making the last great development in the market
Then he explains about venture capital, the importance of a good team, hiring the right people and the indubitable need for sales.
The best part of the book is he gives seven questions any entrepreneur with an idea must answer before attempting to create a business — broadly as Engineering, Timing, Monopoly, People, Distribution, Durability, and Secret question. Reading the book is the best way to understand how he derived these questions and why it is important to answer every one of them.
Overall — A recommended read for everyone who aims to understand world dominating startups and venture capital from a person who has achieved in both.
Best quotes from the book:
‘The most contrarian thing of all is not to oppose the crowd but to think for yourself’
‘In order to be happy, every individual needs to have goals whose attainment requires effort, and needs to succeed in attaining at least some of his goals” — Kaczynski
Finally, quoting the person who inspired the authors behind these books,
Source : https://medium.com/swlh/swipe-to-unlock-from-zero-to-one-lessons-from-two-books-4d110da44f88