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Thiel's Zero to One - reflections on potential payments game-changers

Recently I read Peter Thiel's Zero to One: Notes on Startups, or How to Build the Future. It's a must read for change makers (not only for startup founders) even if we do not agree with all the extreme ideas he shares. Here I share some key ideas which may be relevant for the future of Payments business. 

Secrets, moving from Zero to One, 10X improvements, Last mover advantage: 

'We wanted flying cars, instead we got 140 characters', famously said Thiel. The point is technological progress and long term thinking has slowed down in recent times and most are just trying to build a product with incremental improvement. Another mobile wallet, another loyalty engine, another card product with some better features. One bold statement of this book is 'If you want to build a better future, you must believe in secrets.' You must find out a secret which helps you build a product at least 10X better than the incumbent product available in the market (which he calls a transition from Zero to One rather than One to n).Without an order of magnitude improvement you can't expect mass adoption - this is the problem why mobile wallets have not gained mass adoption in US (at least till ApplePay which may change this game). He also thinks first mover advantage is over hyped, generally we see 'last mover' advantage like Facebook or ApplePay where the winning product is not the first one in the market but a uniquely designed product with best user experience.  

Ruling an under-served market and creating network effects (monopoly):

Thiel believes in creative monopoly - new products that benefits everybody and generates sustainable profits for the creator. In his word, 'Competition means no profits for anybody, no meaningful differentiation, and a struggle for survival.' Case in point-mobile credit card readers - with so many players like squareup, PayPal, NetSecure, Intuit we clearly see imitative competition does not work. So the way to go is to start small with an under-served market and create monopoly (think mPesa rather than another valley based mobile wallet start-up). Another recent example of creating successful network effect is UK based Paym - with successful partnerships with banks and other ecosystem providers they have created a uniquely designed product which has received mass acceptance.

Design thinking, you are not a lottery ticket:

Long-term planning is undervalued in an indefinite short-term world. Apple created multi-year plans for designing and promoting beautifully designed products without experimenting with multiple 'minimum viable products', getting market validation and trying random things -the rest is history. Thiel thinks we need a culture change for making better future - instead of diversifying your resources and hoping/praying for a lottery win we should all design our lives, our companies, our products.

As I told before you may not agree to all his ideas but if you are trying to make some epoch-making changes you need extreme ideas. And success is not always luck - think PayPal, Facebook, Palantir...  

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