So… When cars made their appearance, many, many car makers competed. Only a few survived – but, ultimately, everyone got a car.
Margin note in book Zero to One, Randy Mayeux
So, Peter Thiel is a font of observations and wisdom. I have now finished reading Zero to One, my selection for the November First Friday Book Synopsis. I like the book… and, among other things, I think it helps me think about why some companies are making it big, and others fade away seemingly quickly.
In his chapter on the industry “Cleantech” (Seeing Green), he talks a lot about the failures. And there have been some whoppers. But, as I read the chapter, I remember reading something years ago (my apology – can’t remember the source) about the scramble to make it in the early days of automobiles. There is no doubt that a lot of people and companies did not make it in that scramble. But the industry did pretty well – we truly became a car culture.
So, I guess I could argue that “many failed companies” is normal; predictable – in industry after industry.
But, it would be better to succeed than fail. So, how do you keep from failing?
Peter Thiel lists seven questions that “every business must answer.” He says that if a company does not have good answers to at least six of these seven questions, the company has little chance of making it to success. These are good questions. Here they are, from the book:
- The Engineering Question — Can you create breakthrough technology instead of incremental improvements?
- The Timing Question — Is now the right time to start your particular business?
- The Monopoly Question — Are you starting with a big share of a small market?
- The People Question — Do you have the right team?
- The Distribution Question — Do you have a way to not just create but deliver your product?
- The Durability Question — Will your market position be defensible 10 and 20 years into the future?
- The Secret Question — Have you identified a unique opportunity that others don’t see?’
And, here’s a fun and revealing observation. When a company is connected in any way to technology, Mr. Thiel rejects any leader who dresses in a suit and tie. Engineers need to be at the top of any technology company, and you can tell an engineer by their attire – jeans and t-shirt, says Mr. Thiel. (He has a revealing drawing of (failed) Solyndra CEO Brian Harrison, in a suit and tie, and Tesla Motors CEO Elon Musk, in a t-shirt that reads OCCUPY MARS).
So, take a good look at these seven questions. They definitely seem to be valuable and important questions to answer..
(I’m looking forward to presenting my synopsis of Zero to One at the November 7 First Friday Book Synopsis. If you’re in Dallas that morning, come join us. Register here).