Make incremental advances, stay lean and flexible, improve on the competition, and focus on product, not sales

All happy companies are different: each one earns a monopoly by solving a unique problem. All failed companies are the same: they failed to escape competition

Progress can take one of two forms:

Horizontal or extensive progress means copying things that work

Vertical or intensive progress means doing new things

The single word for vertical, 0 to 1 progress is technology

A new company's most important strength is new thinking: even more important than nimbleness, small size affords space to think

Question received ideas and rethink business from scratch

The first step to thinking clearly is to question what we think we know about the past

Big lessons from the dot-com crash

Make incremental advances

Anyone who claims to be able to do something great is suspect, and anyone who wants to change the world should be more humble. Small, incremental steps are the only safe path forward

Stay lean and flexible

All companies must be "lean," which is code for "unplanned." You should not know what your business will do; planning is arrogant and inflexible. Instead you should try things out, "iterate," and treat entrepreneurship as agnostic experimentation

Improve on the competition

Build your company by improving on recognizable products already offered by successful competitors

Focus on product, not sales

If your product requires advertising or salespeople to sell it, it's not good enough

The opposite principles are probably correct

It is better to risk boldness than triviality

A bad plan is better than no plan

Competitive markets destroy profits

Sales matters just as much as product

The most contrarian thing of all is not to oppose the crowd but to think for yourself

What valuable company is nobody building?

Creating value is not enough—you also need to capture some of the value you create

By 'monopoly,'' we mean the kind of company that's so good at what it does that no other firm can offer a close substitute

Capitalism and competition are opposites

Only one thing can allow a business to transcend the daily brute struggle for survival: monopoly profits

All happy companies are different: each one earns a monopoly by solving a unique problem. All failed companies are the same: they failed to escape competition

Competition is an ideology that pervades our society and distorts our thinking

Great business is defined by its ability to generate cash flows in the future

The value of a business today is the sum of all the money it will make in the future

For a company to be valuable it must grow and endure

Will this business still be around a decade from now?

Proprietary technology is the most substantive advantage a company can have because it makes your product difficult or impossible to replicate

As a good rule of thumb, proprietary technology must be at least 10 times better than its closest substitute in some important dimension to lead to real monopolistic advantage

The clearest way to make a 10x improvement is to invent something completely nnew

Once you're 10x better, you escape competition

Network effects make a product more useful as more people use it

Network effects can be powerful, but you'll never reap them unless your product is valuable to its very first users

A good startup should have the potential for great scale built into its first design

Choose your market carefully and expand deliberately

Every startup should start with a very small market

It's easier to dominate a small market than a large one

Avoid competition as much as possible

Moving first is a tactic, not a goal. What really matters is generating cash flows in the future

To succeed, "you must study the endgame before everything else"

Success results from a "patchwork of lucky breaks and arbitrary advantages"

"Victory awaits him who has everything in order—luck, people call it"

Prior generations believed in making their own luck by working hard

Instead of pursuing many-sided mediocrity and calling it "well-roundedness," a definite person determines the one best thing to do and then does it

Europeans just react to events as they happen and hope things don't get worse

In startups, intelligent design works best

Every great entrepreneur is first and foremost a designer

You can change the world through careful planning, not by listening to focus group feedback or copying others' successes

Long-term planning is often undervalued by our indefinite short-term world

A business with a good definite plan will always be underrated in a world where people see the future as random

You are not a lottery ticket

Money makes money. "For whoever has will be given more, and they will have an abundance. Whoever does not have, even what they have will be taken from them"

Never underestimate exponential growth

The biggest secret in venture capital is that the best investment in a successful fund equals or outperforms the entire rest of the fund combined

Only invest in companies that have the potential to return the value of the entire fund

Because rule number one is so restrictive, there can't be any other rules

You should only focus relentlessly on something you're good at doing, but before that you must think hard about whether it will be valuable in the future

To say that there are no secrets left today would mean that we live in a society with no hidden injustices

There are many more secrets left to find, but they will yield only to relentless searchers

Secrets about people are things that people don't know about themselves or things they hide because they don't want others to know

What secret is nature not telling you? What secrets are people not telling you?

What are people not allowed to talk about? What is forbidden or taboo?

Every great business is built around a secret that's hidden from the outside. A great company is a conspiracy to change the world; when you share your secret, the recipient becomes a fellow conspirator

A board of three is ideal. Your board should never exceed five people, unless your company is publicly help

Part-time employees don't work. Even working remotely should be avoided, misalignment can creep in whenever colleagues aren't together full-time, in the same place, every day

A company does better the less it pays the CEO

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

Founding: lasts as long as company is creating new things, and it ends when creation stops

What would the ideal company culture look like? Employees should love their work

You can't accomplish anything meaningful by hiring an interior decorator to beautify your office

No company has a culture; every company is a culture

If you can't count durable relationships among the fruits of your time at work you haven't invested your time well

You'll attract the employees you need if you can explain why your mission is compelling: not why it's important in general, but why you're doing something important that no one else is going to get done

Promise what no others can: the opportunity to do irreplaceable work on a unique problem alongside great people

Everyone at your company should be different in the same way—a tribe of like-minded people fiercely devoted to the company's mission

Startups must work quietly and efficiently in order to survive, and that's easier to do when everyone shares an understanding of the world

On the inside, every individual should be sharply distinguished by her work

Make every person in the company responsible for doing just one thing

Defining roles reduced conflict

Advertising matters because it works

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

The total net profit that you earn on average over the course of your relationship with a customer must exceed the amount you spend on average to acquire a new customer

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

The press can help attract investors and employees

Look around. If you don't see any sales people, you're the salesperson

Seven question that every business must answer:

Can you create breakthrough technology instead of incremental improvements?

Is now the right time to start your particular business?

Are you starting with a big share of a small market?

Do you have the right team?

Do you have a way to not just create but deliver your product?

Will your market position be defensible 10 and 20 years into the future?

Have you identified a unique opportunity that others don't see?

Blanket rule: pass on any company whose founders dressed up for pitch meetings

Every entrepreneur should plan to be the last mover in her particular market

What will the world look like 10 and 20 years from now, and how will my business fit in?

Great companies have secrets: specific reasons for success that other people don't see

Doing something different is what's truly good for society

The single greatest danger for a founder is to become so certain of his own myth that he loses his mind

Our task today 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. Only by seeing our world anew, as fresh and strange as it was to the ancients who saw it first, can we both re-create it and preserve it for the future