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Thiel's quote from the article "You create a monopoly when you invent something new". What he means is that when you compete in an existing competition with kn

by gretch 3y ago

Thiel's quote from the article "You create a monopoly when you invent something new". What he means is that when you compete in an existing competition with known competitors, you only have a chance of winning. Example - if I started an airline tomorrow I have to win customers over from United, AA, Southwest etc. Instead, if you start a business that no one has ever done before, you get to be a monopoly by default. E.g. Wright brothers once had a monopoly on manned flight. Competition is for losers means that you should not war with entrenched incumbents - even if they are terrible businesses that are not innovative, you can't win (as they say the winner of a knife fight dies in the ambulance).

maxlamb 3y ago
I don't see that quote anywhere. Did Thiel actually say that? I thought the main gist of his book Zero to One is you want to create a monopoly but inventing something new doesn't necessarily lead to monopoly. You need the other moats he talks about: network effects, brand recognition, etc.
- svnt 3y ago
  You’ve identified the difference between a monopoly and an enduring monopoly. A monopoly exists as soon as you invent (and sell) something new. But the moats enable the monopoly to have more longevity, which increases its anticipated value, which is what VCs sell. Side note: the word new is doing a lot of nuanced work here.
  - maxlamb 3y ago
    I guess the word "monopoly" is not super precise but the gist of the definition seem to imply otherwise. "a single seller or producer that excludes competition from providing the same product". If any competition can provide the same product as soon as they learn about it, it's not a monopoly. Monopoly implies the inability of competitors to enter the market at all.
    - svnt 3y ago
      Yes, that’s the play on (or expansion of) definitions that he is making. The dictionary gives you a moment in time, but if a monopoly had a lifecycle, what is the earliest thing you can call a monopoly? Even at the earliest stage it technically excludes competition because they don’t know about it yet, and there is inertia in them constructing and making the same offering. Not a great barrier, but really not very far removed from the concept of a trade secret.
- gretch 3y ago
  The parent comment linked an article. In that article is an embedded video. It’s one of the first few things thiel says after thanking the interviewer.
pyrale 3y ago
> Thiel's quote from the article "You create a monopoly when you invent something new". I guess the issue is that, at some point, SV venture capitalists got more money than creativity. Some of that money went into stupid products like a juice machine, some of it went into companies that were dedicated to killing the competition rather than create a new market. Ultimately, the "competition sucks" part outlived the rest of the article.
AndrewKemendo 3y ago
I derive the function driving this behavior in my third proposition [1]: “ “Finders keepers” has been a consistent natural law of property inheritance, formally codified as “res nullius” or “nobody’s thing” by the Romans. …It follows then that the corollary in capital based markets of “Capturing value” (Market Share) in a “Growing market” (Resource abundance) environment, becomes the ethically acceptable way to produce goods or acquire property. …Therefore across all modern competitive frameworks, Economic, Ecological or Political, “first mover advantage” is assumed, and Monopolization of a resource, or a market, rather than cooperation, becomes the optimal organizational behavior. “Creating Markets/Value” becomes an optimized resource acquisition strategy, as monopolization of production is most efficient when the market “Creator” controls access to the new market from the outset, minimizing appropriation costs. “Investment capital” is used to generate these new markets at a sufficient scale, while the relative abundance of capital for the “house” will allow the creators to impede competitors from the start, thus ensuring a maximum return on investment. Power law guarantees that existing resource hoards will forever seek returns and accumulate more into increasingly fallow pools of capital. Unrestrained “Free” competition, a reinterpretation of “might makes right,” then must represent the dogma behind forever growth.” [1] https://kemendo.com/Myth-of-Scarcity.html https://kemendo.com/Myth-of-Scarcity.html
danaris 3y ago
> you only have a chance of winning I think the problem here is the definition of "winning". In a sane and healthy society/economy, an entrepreneur would define "winning" as "being able to make a comfortable living off of what I create". In Silicon Valley, "winning" is almost always defined as "owning the market, being able to dictate terms to other entrants and to users, and making so much money there's no possible way you could spend it in one lifetime." This is horribly toxic to the overall culture and economy.
- gretch 3y ago
  If you think you have a solution that is the best, and it's much better than what exists, shouldn't you strive to let everyone access it? For example, most people would agree that Uber is much better than the legacy taxi industry (I personally was ripped off many times in old school yellow taxis). Why would Uber make just enough rides so that Uber employees can buy food? Their system is much better and I'm very glad they have tried to spread it to as much of the world as possible. (they have problems for sure, but old school cabs have a ridiculous amount of rider and driver abuse)
  - danaris 3y ago
    "Get everyone access to my solution" != "force everyone to use my solution." Even if your solution is objectively the best one, we don't give people monopolies based on that, for a variety of very good reasons.
    - gretch 3y ago
      Interesting. I don’t think I’ve ever been forced to used to a single product in my whole life (blessed to live in a good country I suppose). I don’t think we’re talking about the same thing.

by gretch 3y ago

maxlamb 3y ago

I don't see that quote anywhere. Did Thiel actually say that? I thought the main gist of his book Zero to One is you want to create a monopoly but inventing something new doesn't necessarily lead to monopoly. You need the other moats he talks about: network effects, brand recognition, etc.

svnt 3y ago
You’ve identified the difference between a monopoly and an enduring monopoly. A monopoly exists as soon as you invent (and sell) something new. But the moats enable the monopoly to have more longevity, which increases its anticipated value, which is what VCs sell. Side note: the word new is doing a lot of nuanced work here.
- maxlamb 3y ago
  I guess the word "monopoly" is not super precise but the gist of the definition seem to imply otherwise. "a single seller or producer that excludes competition from providing the same product". If any competition can provide the same product as soon as they learn about it, it's not a monopoly. Monopoly implies the inability of competitors to enter the market at all.
  - svnt 3y ago
    Yes, that’s the play on (or expansion of) definitions that he is making. The dictionary gives you a moment in time, but if a monopoly had a lifecycle, what is the earliest thing you can call a monopoly? Even at the earliest stage it technically excludes competition because they don’t know about it yet, and there is inertia in them constructing and making the same offering. Not a great barrier, but really not very far removed from the concept of a trade secret.
gretch 3y ago
The parent comment linked an article. In that article is an embedded video. It’s one of the first few things thiel says after thanking the interviewer.

pyrale 3y ago

> Thiel's quote from the article "You create a monopoly when you invent something new". I guess the issue is that, at some point, SV venture capitalists got more money than creativity. Some of that money went into stupid products like a juice machine, some of it went into companies that were dedicated to killing the competition rather than create a new market. Ultimately, the "competition sucks" part outlived the rest of the article.

AndrewKemendo 3y ago

I derive the function driving this behavior in my third proposition [1]: “ “Finders keepers” has been a consistent natural law of property inheritance, formally codified as “res nullius” or “nobody’s thing” by the Romans. …It follows then that the corollary in capital based markets of “Capturing value” (Market Share) in a “Growing market” (Resource abundance) environment, becomes the ethically acceptable way to produce goods or acquire property. …Therefore across all modern competitive frameworks, Economic, Ecological or Political, “first mover advantage” is assumed, and Monopolization of a resource, or a market, rather than cooperation, becomes the optimal organizational behavior. “Creating Markets/Value” becomes an optimized resource acquisition strategy, as monopolization of production is most efficient when the market “Creator” controls access to the new market from the outset, minimizing appropriation costs. “Investment capital” is used to generate these new markets at a sufficient scale, while the relative abundance of capital for the “house” will allow the creators to impede competitors from the start, thus ensuring a maximum return on investment. Power law guarantees that existing resource hoards will forever seek returns and accumulate more into increasingly fallow pools of capital. Unrestrained “Free” competition, a reinterpretation of “might makes right,” then must represent the dogma behind forever growth.” [1] https://kemendo.com/Myth-of-Scarcity.html https://kemendo.com/Myth-of-Scarcity.html

danaris 3y ago

> you only have a chance of winning I think the problem here is the definition of "winning". In a sane and healthy society/economy, an entrepreneur would define "winning" as "being able to make a comfortable living off of what I create". In Silicon Valley, "winning" is almost always defined as "owning the market, being able to dictate terms to other entrants and to users, and making so much money there's no possible way you could spend it in one lifetime." This is horribly toxic to the overall culture and economy.

gretch 3y ago
If you think you have a solution that is the best, and it's much better than what exists, shouldn't you strive to let everyone access it? For example, most people would agree that Uber is much better than the legacy taxi industry (I personally was ripped off many times in old school yellow taxis). Why would Uber make just enough rides so that Uber employees can buy food? Their system is much better and I'm very glad they have tried to spread it to as much of the world as possible. (they have problems for sure, but old school cabs have a ridiculous amount of rider and driver abuse)
- danaris 3y ago
  "Get everyone access to my solution" != "force everyone to use my solution." Even if your solution is objectively the best one, we don't give people monopolies based on that, for a variety of very good reasons.
  - gretch 3y ago
    Interesting. I don’t think I’ve ever been forced to used to a single product in my whole life (blessed to live in a good country I suppose). I don’t think we’re talking about the same thing.