Zero to One - ||
      (Party like it’s 1999)

In this chapter Peter Andreas Thiel is making us to know all about the ups and downs of the market. And what all the investors learned from their experiences. It is obvious that market goes on with many ups and downs but sometimes the crashes become so high which investors can never forget.

" Madness is rare in individuals— but in groups , parties , nations and ages it is the rule", Nietzsche wrote ( before he went mad ).

The truth of the market is , companies are build to make money not to lose it. We all know it. But in 1990s situations were different. Investors already knew that their money is going to sink but still they invested. And when in future it really happened they couldn’t believe that something like this was also possible. The last 18 months of 1990s decade’s end were not forgettable. This time period shocked the investors totally.

In starting years of 1990s , there was nothing . 1992 through the end of 1994 was a time of general malaise. Jobs were flowing to Mexico. The circumstances of America were not good. Internet was also not so user friendly so that there it could be used commercially. Silicon Valley felt sluggish. 

Peter Thiel says when he went to Stanford university in 1985, he saw there that they give so much value to economics , not to computer science. Even if someone used to talk about computer science that was stupid for them . They used to think that technical field is a stupid thing.

But the internet changed all this. In 1993 November, when the Mosaic browser was officially released, people started using internet. Mosaic became Netscape, which released its Navigator browser in late 1994. And when it released then in 12 months it became so popular that the use of this browser increased from 20% to 80% . Within five months, Netscape stock had shot up from  $28 to $174 per share. On the other hand other companies started booming too. 

Yahoo went public in April 1996 with an $848 million valuation. Amazon followed suit in May 1997 at $438 million. By spring of 1998 , each company’s stock had more than quadrupled. There was craze in whole market for e-commercial companies. But there was warning also that this is not being right . 

While in the another phase of world , there was crisis in economy . The East Asian financial crises hit in July 1997. Crony capitalism and massive foreign dept. brought Thai, Indonesia and South Korean economies to their knees. American investors were very scared that time about the world economy. There were many tries done till 1998 to fix the things but nothing was being fixed . In 1999 January euro was launched, it’s value was higher than dollar as it rose to $1.19 on its first day of trading but within two years it’s value sank and reached $0.83. The old economy couldn’t handle the challenges of Globalization. Something big was needed to handle the situation. From September 1998 to March 2000, the Dot-com mania insanity took place. 

There was money everywhere. Every week numbers of startups used to take place in the market . The insanity was this much high that I saw a 40 years ( grad student) was running six different companies in 1999. People started leaving well paying jobs and staring there own companies. There was a craze if you have ".com" after your name then it doubles your value overnight. 

In December 1998 , PayPal was started . When Peter Thiel was running PayPal in 1999, he was scared . There everyone else was starting company, everyday there was a new startup . 

The mission of the PayPal founders was to launch a new currency to replace the dollar but that time it was a bad idea. But people used to believe emails so they decided to start email payments . And it worked well by the fall of 1999. But PayPal needed at least a million of customers to grow . But growth was slow and expenses were high . Advertisement was ineffective to justify the cost. Banks were not supporting too. So PayPal decided to pay customers for sign up. They gave new customers $10 for joining and gave them $10 more very time they referred a friend . This became a very good idea for customer’s growth. But PayPal needed money to work in a proper manner and to be successful. Then they decided to take a small fee on customer’s transactions. On February 16,2000, Wall Street journal ran a story lauding their viral growth and suggesting that PayPal was worth $500 million. When PayPal raised $100 million the next month , their lead investor too Journal’s back of the envelope valuation as authoritative. Between March 2000 and the summer of the same year, PayPal obtained 5 million new clients; prior to that, it had 1 million. The business was going great. PayPal's name and usage were spreading around the world faster and faster.

In March 2000 the values were very high but these values started falling by the middle of April. This made people to learn that this market , anything is possible here . Entrepreneurs who stuck with Silicon Valley learned four big lessons from dot - com crash that still guide business thinking today —

        1. Make incremental advances.

2. Stay lean and flexible.

3. Improve on the competition.

4. Focus on product, not sales.

Small incremental steps are the only safe path forward. Entrepreneurs should treat entrepreneurship as agnostic experimentation. Start with an already existing customer , so you can build your company by improving recognisable products already offered by successful competitors. The only sustainable growth is vital growth. 

Those who ignore these lessons are presumed to invite the crash of 2000. And yet the opposite principles are probably more correct :

1. It is better to risk boldness than triviality.

2. A bad plan is better than no plan .

3. Competitive markets destroy profits .

4. Sales matters just as much as product.

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

To be continued...

For reading 1st Part Click Here

Stay safe. Think new. Work for that.

— Bani Singh.

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