No one can predict the future exactly, but we know two things: it's going to be different, and it must be rooted in today's world

• Horizontal progress -- Globalization
  In a world of scarse resources, globalization without technoloty is unsustainable.
• Vertal progress -- Technology

The business version of our contrarian question is: what valuable company is nobody building?
Creating value is not enough- you also need to capture some of the value you create.

Ruthless People
A monopoly like Google is different. Since it doesn't have to worry about competing with anyone, it has wider latitiude to care about its workers, its products, and its impact on the wider world
[Hmmm..., dunno about that one]
In perfect competition, a business is so focues on today's margins that it can't possibly plna for a long term future.

But really it's competition, not business, that is like war: allegedly necessary, supposedly valiant, but ultimately destructive.

"Victory awaits him who has everything in order-- luck, people call it"- Roald Amundsen

A startup is the largest endeavor over which you can have definite mastery.

The power law-- so named because exponential equations describe severely unequal distribution-- is the law of the universe.

Contrarian thinking doesn't make sense unless the world still has secrets left to give up.

• A startup messed up at its foundation cannot be fixed
• Beginnings are special. They are qualitatively different fromall that comes afterward.
• Bad decisions made early on- if you choose the wrong partner or hire the wrong people, for example- are very hard to correct later.

Founding Patrimony

• Choosing a co-founder is like getting maried.
• Founders should share a prehistory before they start a company together- otherwise they're just rollin the dice

Ownership, Possession, and Control

• You need good people who get along, but you also need a structure to help keep everyone aligned for the long term
• Ownership: Who legally owns a company's equity?
• Possesion: Who actially runs the company on a day-to-day basis?
• Control: Who formally governs the comapny's affairs?
• Distributing these function among different people makes sense, but it also multiplies opportunities for misalignment
• Big corporation do better than the DMV, but they're still prone to misalignment, especially between ownership and possesion
• Early-stage startups are small enough that founders usually have both ownership and possesion. Most conflicts in a startup erupt between ownership and control- that is, between founders and investors on the board.
• A board of three is ideal. Your board should never exceed five people, unless your company is publicly traded,

On the bus or off the bus

• As a general rule, everyone you involve iin your company should be involved full-time
• Anyone who doesn't own stock options or draw a regular salary from your company is fundamentally misaligned
• At the margin, they'll be biased to claim value in the near term, not help ou create more in the future

Cash is not king

• A company does better the less it pays the CEO
• In no case should a CEO of an early-stage venture backed startup receive more than $150k per year in salary
• Low CEO pay also sets the standard for everyone else
• If a CEO doesn't set an example by taking the lowest salary in the company, he can do the same thing by drawing the highest salary. So long as that figure is still modest, it sets an effective ceiling on cash compensation.
• High cash compensation teaches workers to claim value from the company as it already exists instead of investing their time to create new value in the future

Vested Interests

• Anyone who prefers owning a part of your company to being paid in cash reveals a preference for the long term and a commitment to increasing your company's value in the future.

Extending the founding

• Only at the very start do you have the opportunity to set the rules that will align people toward the creation of value in the future
• Foundings last as long as a company is creating new things, and ends when creation stops.

No companyt 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.

But taking a merely professional view of the workplace, in which free agents check in and out on a transactional basis, is worse than cold; it's not even rational. ... If you can't count durable relationships among the fruits of your time at work, you haven't invested your time well

Recruiting Conspirators

• Recruiting is a core competency for any company
• Why would someone join your company as its 20th engineer when she could go work for Google for more money and more prestige?
  Bad answers:
  • Your stock options will be worth more here than elsewhere
  • You'll get to work with the smartest people in the world
  • You can help solve the world's most challenging problems
  becaue these answers don't make yuo stand out
  The only good answers are specific to your company: answers about your mission and answers about your team
• Don't fight the perk war

What's Under Silicon Valley's Hoodies?

• From the outside, everyone in you company should be different in the same way
• Max Levchin, my co-founder at PayPal, says that startups should make their early staff as personally similar as possible *
• For the company to work, it didn't matter what people looked like or which country they came from, but we needed every new hire to be equally obsessed.

Do One thing

• On the inside, every idividual should be sharply distinguished by her work
• Job assignments aren't just about the relationships between workers and tasks; they're also about relationships between employees.
• Defining roles reduced conflict. Most fights inside a company happen when colleagues compete for the same responsibilities

Of Cults and Consultants

• Entrepeneurs should take culture of extreme dedication seriously.
• 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

* - thoughts/feelings on this one

• First it sounds likely to create an insular and myopic point of view, but as a small startup this books argues that you should be hyper focused on a small market, so maybe that isn't as much of a hinderance
• But a small homogeneous initial cohort seems likely to me to continue growing in a homogenoeus way. When do you stop recruiting for similar "early staff" and start considering people who might be different from you?

We underestimate the importance of distribution.
Customers will not come just because you build it. You have to make that happen, and it's harder than it looks

Nerds vs Salesmen

• US sales industry is a $450 billion annually
• When they hear that 3.2 million Americans work in sales, seasoned executives will suspect the number is low, but engineers may sigh in bewilderment.
• Adevertising matters because it works
• But advertising doesn't exist to make you buy a product right away; it exists to embed subtle impressions that will drive sales later.
• Nerds are used to transparency... Sales is the opposite; an orchestrated campaign to change surface appearances without changing the underlying reality.

Sales Is Hidden

• Sales works best when hidden, this explains why almost everyone whose job involves distribution - whether they're in sales, marketing or advertising - has a job title that ahs nothing to do with those things.... none of us wants to be reminded when we're being sold.
• The most fundametal reason that even businesspeople underestimate the importance of sales is the systemic effort to hide it at every level of every field in a world secretly driven by it.
• 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

How To Sell A Product

• Two metrics set the limits for effective distrubution
  • Total net profit that you earn on average over the course of your relationship with a customer (Customer Lifetime Value- CLV) must exceed
  • the amount you spend to acquire a new customer (Customer Acquisition Cost- CAC)
• Complex Sales - $1,000,000+
  • Complex sales works best when you don't have "salesmen"... At that price point buyers want to talk to the CEO, not the VP of Sales
  • Business with complex sales models succeed if you achieve 50% to 100% yeer-over-year growht over the course of a decade
• Personal Sales - $10,000 - $100,000
  • The challenge here isn't how to make any particular sale, but how to establish a process by which a sales team of modest size can move the product to a wide audience
• Distibution Doldrums
  • dead zone between personal sales and traditional advertising (no salespeople required)
  • The product needs a personal sales effort, but at that price point, you simply don't have the resources to send an actual person to talk to every prospective customer. This is why so many small and medium-sized businesses don't use tools that bigger firms take for granted... distribution is the hidden bottleneck
• Marketing and Advertising
  • Marketing and advertising work for relatively low priced products that have mass appeal but lack any method for viral distribution
  • Advertising can work for startups, too, but only when your customer acquisition cost and customer lifetime value make every other distribution channel uneconomical.
• Viral Marketting
  • A product is viral if its core functionality encourages users to invite their friends to become users too
  • cheap and fast
  • If every new user leads to more than one additional user, you can achieve a chain reaction of exponentail growth
  • Whoever is first to dominate the most importatn segment of a market with viral potential will be the last mover in the whole market
• The Power Law of Distribution
  • poor sales rather than bad products is the most common cause of failure. If you can get just one distribution channel to work, you have a great business.
• Selling to Non-Customers
  • You must also sell your company to employees and investors
  • you should never assume that people will admire your company without a public relations strategy

• Technology Means Complementarity
  • Properly understood, technology is the one way for us to escape competition in a globalizing world. As computers become more and more powerful, they won't become substitues for humans, they'll be complements.
• Complementary businesses
  • Palantir combines people bias of CIA with data bias of NSA
  • Linked in does this for recruiters
• The Ideology of Computer Science
  • We have let ourselves become enchanted with big data only because we exoticize technology
  • Instead ask: how can computers help humans solve hard problems

• The Engineering Question: Can you create breakthrough technology instead of incremental growth?
• 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 havce 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?

• ... strange way in which the companies that create new technology often resemble feudal monarchies rather that organizations that are supposedly more "modern". A unique founder can make authoritative decisions, inspire strong personal loyalty, and plan ahead for decades. Paradoxically, impersonal bureaucracies staffed by trained professionals can last longer than any lifetime, but they usually act with short time horizons.
• Founders are important not because they are the only ones whose work has value, but rather because a great founder can bring out the best work from everybody at his company

... when you add competition to consume scare resources, it's hard to see how a global plateau could last indefinitely. Without new technology to relieve competitive pressures, stagnation is likely to erupt into conflict.

Our task is to find singular ways to create the new things that will make the future not just different, but better - to go from 0 to 1. The essential first step is to think for yourself.