0, 1, and ∞ (Infinity): The Only Three Numbers That Matter to Entrepreneurs and Astronomers
A surprising connection between exploring the universe and entrepreneurial negotiation
Only three numbers matter across the entirety of the universe: zero, one, and infinity. These same 3 numbers also drive every startup negotiation, so they are vital for startup entrepreneurs to understand.
Black Holes: From Zero to One, then onto Infinity
ZERO: The idea of a star so incredibly massive that its gravity would prevent light from escaping was proposed as far back as 1784 by John Michell. It took 150 years before physicist Karl Schwarzchild worked out the detailed math in 1916 to characterize how black holes would behave, but we still didn’t know if they were real or just a mathematical curiosity. In this “zero” phase, everything is speculation.
ONE: Then we found one and exactly one black hole - a major step forward. With the advent of adaptive optics in the last 30 years, we were finally able to “see” that there is a massive black hole in the center of our own Milky Way galaxy. By using technology to remove the distorting effect of Earth’s atmosphere, we could see clearly the very center of our galaxy where dozens of stars whip around an invisible object with perfect precision. Check out our past blog post on the incredible search for black holes and how it led to the Nobel Prize in 2020.
INFINITY: Soon we found a second, then a third, and now we know that black holes are everywhere! There is now strong evidence that they are at the center of virtually ALL large galaxies. We’ve moved from wondering if any are out there (0), to spotting our own galaxy’s black hole (1), to now knowing that the number of black holes is infinite! In 2019, we even used the Event Horizon Telescope to produce the first-ever image of a black hole.
This same Zero-One-Infinity rule also applies to exoplanets – planets outside our own Solar System. It was only as recently as 1992 that we shifted from zero to one by detecting the first exoplanet ever. Over time, by using incredibly innovative techniques (e.g., detecting a star’s wobble due to the pull of its orbiting exoplanet(s) by watching for a small Doppler shift in the starlight), we have now detected and characterized thousands of exoplanets. Through the NASA Kepler mission and other work, we now have good evidence that there are 100 billion+ exoplanets in our Milky Way Galaxy, and approximately 20% of them are Earth-like (the right temperature for liquid water)!
Startup Negotiations: Breaking through the “Barrier of One”
There are many different ways that startups go from “zero to one” (ex. finding their first customer) and “one to many/infinity” (ex. building repeatability in the sales process to scale to hundreds of customers). But the most apt comparison is in the context of startups raising capital:
ZERO: In the startup world, zero is the land of imagination. If an entrepreneur is fundraising and has zero term sheets (a formal expression of investment interest from a VC), they have nothing. This is a tricky place to be for a startup entrepreneur, as everything is speculation with no grounding in reality. An entrepreneur can state boldly the investment terms they seek, but it all remains wishful thinking when they are in the land of zero.
ONE: As soon as an entrepreneur receives that first term sheet from a VC, the game changes. This initial term sheet serves as an anchor and backup plan while providing the confidence to play the fundraising game more aggressively and search for more term sheets. What were imagined investment terms are suddenly solidified and locked in. Negotiations change from “I want” to “Can we adjust”. But if an entrepreneur remains at only one term sheet, they have very little negotiating power.
INFINITY: The final shift occurs when a startup gets their second term sheet. Any subsequent term sheets after #2 have little further impact on negotiating power – it’s term sheet #2 that solidifies an entrepreneur’s power in the fundraise. By breaking through the “barrier of one”, a startup suddenly has bargaining and negotiating power. VCs move from controlling a 1:1 purchase to being a bidder in an opaque entrepreneur-controlled auction. It doesn’t matter what the number is - if it’s more than one, it might as well be infinity.
When applied to startups, the Zero-One-Infinity rule isn’t only relevant to venture financing; it’s also applicable when negotiating in hiring, business development, customers, and acquisition. The minute you have options, suddenly you have power.
Much like scientists looking for black holes or signs of life across the universe, breaking through the “barrier of one” gives startups the confidence, faith, and the screening criteria they need to continue their hunt towards infinity.
*Thanks to Kishore Patra for astronomy help with this post.
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Ubiquity Ventures — led by Sunil Nagaraj — is a seed-stage venture capital firm focused on startups solving real-world physical problems with "software beyond the screen", often using smart hardware or machine learning.
This was beautifully written. I enjoyed reading it!
I really enjoy reading the blackhole analogy. A great post!