Summary of ‘Zero to One’, Chapter 8: Secrets
Summary: Every valuable business is founded on a secret. Today, most people don’t believe in secrets, for many cultural reasons. But secrets do exist: each change in the world, such as a financial bubble, a new mathematical proof, or a new big company, reveals a secret. There are many more secrets to be discovered, but you will only discover them if you believe they exist, and if you know where to look. Look where others aren’t looking! Everyone looks for secrets about nature; try looking for secrets about people instead. Everyone looks for secrets in the educational syllabus; try looking outside that. When you find a secret, tell only who you need to - and those people are a company.
A valuable business is founded on a secret: something hard to do (but still doable). The Pythagorean theorem is no longer a secret, so it won’t give you an edge. The world has secrets to give up; discover them with contrarian thinking.
There are three kinds of truth: easy, hard, and impossible.
Ted Kaczynski, the Unabomber, wrote a 35,000-word manifesto. In it, he argued that people require hard goals in order to be happy, but all goals left in the world are either easy or impossible. Kaczynski wanted to fix this by destroying knowledge and technology. He’s not so far from today’s hipsters, with their vintage cameras and vinyl.
All fundamentalists think this way. Religions: there are easy Biblical truths and there are the impossible mysteries of God, but in the middle lies only heresy. Environmentalism: protecting the environment is an easy truth, but how Nature works is an impossible mystery. Finance: current stock values are easy, but future stock values are an impossible mystery.
Why do we believe there are no hard secrets left? One reason is geography: a world map today shows no remaining secrets. Additionally, there are four social reasons:
- Incrementalism: schools rewards learning the known facts, not discovering new ones. University measures success in publications and citations, not in long-term impact.
- Risk aversion: finding secrets is a lonely task.
- Complacency: those with the free time to find secrets don’t really need to: their lives are comfortable.
- Flatness: “if it were possible to discover something new, wouldn’t someone ... have found it already?”
Evidence: today, you can’t start a cult. In the 1970s, you could (Communist Party, Hare Krishnas).
The world according to convention
If you believe there are no secrets, then you believe there is no injustice, and that financial bubbles are impossible.
Hewlett-Packard shows what happens when a company stops believing in secrets. Through innovation in the 1990s, HP grew from $9B to $135B, But in early 2000s, HP’s board was conquered by a factions led by Patricia Dunn, arguing that the board was not competent to identify new technologies, and should instead just be a watchman over the company. As a result, by 2012, HP had plunged back to $23B.
The case for secrets
Pierre de Fermat’s “last theorem”, conjectured in 1637, remained unproven after 358 years of mathematicians studying it. Shouldn’t this show that it’s unprovable? No! Andrew Wiles finally proved the conjecture in 1993, after 8 years of work. To succeed, he had to believe in secrets.
There are many more secrets to be found. Not just marginal gains - we could cure cancer, even cure aging. But these secrets will yield only to relentless searchers.
Airbnb is an example: we all had space we weren’t using, and we all wanted space when travelling; Airbnb saw supply and demand where others saw nothing.
How to find secrets
There are two kinds of secret: secrets about nature, and secrets about people.
Secrets of nature can seem more important: we give authority to physicists and engineers. Secrets about people are under-appreciated. Consider, what is taboo?
“Competition and capitalism are opposites.” This truth is one of nature and people. You can find it by studying the market (nature), or you can find it by studying what people can’t say.
Look where others aren’t looking. Schooling applies a predictable bias: look to important topics outside the syllabus. Example: nutrition. It’s important to everyone, but (for some reason) sits outside mainstream academia.
What to do with secrets
If you find a secret, should you tell anyone? You should tell whoever you need to, and no more. That golden mean is a company, a collection of people built around a secret.