Hey everyone,
Welcome to my finance blog! I’m Schuyler Christopher, and I want to share with you some insights from the book Zero to One by Peter Thiel. It’s an incredibly insightful book about the secrets of building a business—and along the way, Thiel shares some valuable lessons about how to think about and manage money. It’s not rocket science, but it can be harder than you think.
A central message of Zero to One is that “No one is crazy,” but we make financial decisions we regret. One of the biggest reasons why we do this is because we’re not as rational as we think we are. It turns out our decisions are heavily influenced by our individual experiences, biases, and emotions.
Take the story of Ronald Read, the American janitor who died in 2014 leaving behind more than $8 million. He never went to college and never worked for a fancy company. He worked at a gas station for 25 years, swept floors for 17 years, and chopped firewood for fun. No one knew he was a millionaire.
What’s the difference between Read and Fuscone? Read was patient and frugal. Fuscone was greedy and leveraged. The differences were in their psychology, not their intelligence.
We’re taught that wealth is about assets—stuff we can see and touch. A fancy car. A big house. Expensive jewelry. But the book reminds us that “Wealth is what you don’t see.”
So how do you become wealthy? It doesn’t require a huge income, but it does require a high savings rate. If you want to increase your savings rate, the most powerful tool is to “raise your humility.”
How do you keep yourself from blowing through all the money you’ve managed to amass? The book argues that “the only way to stay wealthy is some combination of frugality and paranoia.”
Think about it this way:
A high savings rate means we can weather the storms that inevitably arise and stay in the game long enough to reap the benefits of compounding.
It’s easy to get caught up in the news, which is full of stories about doom and gloom—and to think that we have to anticipate and avoid every single bad thing that could possibly happen to us. But “Things that have never happened before happen all the time.”
It’s a wild world out there. But these big surprises have impacted our finances in ways that were almost impossible to foresee. The truth is that we don’t have a lot of historical data to draw from; many important financial innovations—like the Roth IRA or even index funds—were invented within the last 50 years. That’s not enough history to guide us.
We’re all taught to defer to experts: teachers, doctors, lawyers, financial
So what do we do? The book emphasizes “room for error,” which is the
ability to endure a range of potential outcomes.
Think about it: It’s fine to bet that the stock market will go up, but you can’t bet
the farm. You need to be comfortable with a range of potential results.
A high savings rate means you can withstand market fluctuations and stay
in the game long enough for compounding to work.
Saving more, especially when your income is high, means living below your
means and building a cushion that can help you weather unexpected expenses.
Cash in the bank gives you flexibility and the option to wait for better
opportunities.
A barbelled personality—optimistic about the future but paranoid about
what could go wrong—is an antidote to both foolish optimism and crippling
pessimism.
We all have blind spots, and we’re not very good at knowing what they are.
The book uses an interesting analogy : Imagine an alien sent to Earth to study our
economy. He lands on Times Square on New Year’s Eve 2007, and then again in
Everything looks the same to him. The city is bustling. People are happy. The
economy looks good.
Then he looks at the numbers. The economy collapsed in 2008. Stock markets
plunged. Unemployment soared.
The alien is shocked. He couldn’t see what had changed. But the only thing that
changed was the story people were telling themselves about the economy.
The same thing happens when we make investment decisions. We want to
believe things will go well. So we tell ourselves stories to confirm that belief. We
ignore the risks, or dismiss them. But those stories can be just as destructive as
the ones that make us panic.
So what should we do? The book has a simple but powerful suggestion: *“Be
careful who you praise and admire. Be careful who you look down upon and wish to
avoid becoming.”*
And *“Don’t assume that 100% of outcomes can be attributed to effort and
decisions.”*
Everyone makes mistakes. Everyone experiences bad luck. Everyone faces
unforeseen circumstances.
But most of us, when it comes to money, don’t want to accept the role of
chance in our lives. We’d rather believe that we have control, and that we’re more
rational than we are. That’s why it’s so hard to find financial independence.
When we can’t accept the reality of luck, we end up making the wrong
decisions, at the worst possible time.
If you want to be successful in business or investing, you’ll have to reject the
notion that everything is a matter of chance. You are not a lottery ticket.
You can control your future, but to do so, you’ll have to make some choices, take
some risks, and stick to your convictions—even when everything around you seems
to be going crazy.
Zero to One also argues that we need to look for secrets. That means
searching for new things to create—not simply copying what has worked in the
past.
These are secrets. And when you find a secret, you have the power to change
the world.
One of the most powerful takeaways from the book is to remind you that you
are not a mindless consumer.
You can decide how you want to use your money. And you can take control of
your financial destiny.
Take the first step today.
It’s time to awaken your financial genius.
17 (Comments)
Kiss Laura Product Designer
I highly recommend [real estate agent's name] as a professional and knowledgeable real estate agent. They provided valuable guidance throughout the selling process, demonstrating excellent communication skills and a proactive approach to marketing my property...
Kristin Wastson Cloud Software and Network Engineer
I highly recommend [real estate agent's name] as a professional and knowledgeable real estate agent. They provided valuable guidance throughout the selling process, demonstrating excellent communication skills and a proactive approach to marketing my property...