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"Thiel argues, we often shouldn’t seek to be really good competitors. We should seek to be really good monopolists." A better way to put this is to say that th
by spodek 15y ago
"Thiel argues, we often shouldn’t seek to be really good competitors. We should seek to be really good monopolists."
A better way to put this is to say that the starting point of competitive strategy is to start with a sustainable competitive advantage. "Competition Demystified" by value investing guru Bruce Greenwald covers this point in its first chapter (available free on Google Books -- http://books.google.com/books?id=NZYuAyW8M-sC&printsec=frontcover&source=gbs_atb#v=onepage&q&f=false http://books.google.com/books?id=NZYuAyW8M-sC&printsec=f... and summarized by me in a series on political strategy, where the concept also applies -- http://joshuaspodek.com/north-korea-strategy-primer-strategy http://joshuaspodek.com/north-korea-strategy-primer-strategy and with an important diagram here -- http://joshuaspodek.com/the-first-step-in-strategy http://joshuaspodek.com/the-first-step-in-strategy)
Finding a sustainable competitive advantage doesn't require creativity, so Brooks's essay went astray at that point. But having a sustainable competitive advantage gives you the local monopoly he alludes to that allows you to avoid competing and, in business, charge higher margins without getting stuck competing on price and efficiency.
I highly recommend "Competition Demystified" to understand strategy.
- adgar 15y ago> sustainable competitive advantage I think this is what so many commenters struggle with when it comes to "the bubble" so many of us speak of now. We see so many companies' births and deaths without ever having seen a clear "sustainable competitive advantage" and wonder why these companies existed in the first place.
- ryannielsen 15y agoWell, from one perspective, each of these failed companies could have been testing their own "sustainable competitive advantage" thesis. A thesis that turned out to be incorrect. After all, you don't know your sustainable competitive advantage really is in fact sustainable and and a competitive advantage until you win. (e.g. Google. They were just another search company, and one that could have failed like so many others.) From another perspective, each of these companies is wandering through, as the author puts it, the "wildernesses nobody knows" looking for opportunities and either didn't find one or weren't able to grow that opportunity quickly enough. Some say we're in a bubble. Others say we aren't. Frankly, I don't give a damn. I just see that there's tons of innovation being funded. Some innovations may be evolutionary, others may be revolutionary. Funny thing is: you often don't know what will be evolutionary or revolutionary until you try. I'm glad many people are trying.
- adgar 15y agoI'm sorry, I feel I came across as making a broader point than I was. Probably because of the "birth and death" bit which really isn't what I meant to focus on. I'm talking about a few specific examples that are astonishingly easy to clone yet are being assigned enormous value. Groupon is what I was thinking of especially, but I didn't want to "name names"... which is probably why I came across as making a broad point. Dropbox is now being challenged in this way, and many have been talking a lot about their sustainable competitive advantage since the whole Steve Jobs "feature" quote. Instagram. I wasn't making a direct comment about tech startups in general, many of which are carving out real markets they want to crush.