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Monopoly

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Peter Thiel suggests to avoid competition. You need monopoly to make large profits, which enable to you experiment and make something truly new. It is hard to do anything but survive in a high-competition industry, since the competition squashes everyone's incomes down until they are barely making a salary. This is way cafe and restaurant business sucks, unless you're doing something unique enough that it is a monopoly in some way.

In life, he suggests that this is like everyone competing for the same, obvious prizes, see Value of Shortcuts.

Monopolies tend to have some of the following characteristics:

Network effects

Paradoxically, then, network effects businesses must start with especially small markets. Facebook started with just Harvard students—Mark Zuckerberg's first product was designed to get all his classmates signed up, not to attract all people of Earth. This is why successful network businesses rarely get started by MBA types: the initial markets are so small that they often don't even appear to be business opportunities at all.

This makes it easier to saturate your initial niche. See Small Niche Startups.

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Last modified 2019-08-16 Fri 16:27. Contact max@maxjmartin.com