6 ms·

“Competition is for losers” - A talk from Peter Thiel hosted by Y combinator (https://youtu.be/3Fx5Q8xGU8k?si=3anUMopHSJ4nKk2R https://youtu.be/3Fx5Q8xGU8k?si=3

“Competition is for losers” - A talk from Peter Thiel hosted by Y combinator (https://youtu.be/3Fx5Q8xGU8k?si=3anUMopHSJ4nKk2R https://youtu.be/3Fx5Q8xGU8k?si=3anUMopHSJ4nKk2R) Timestamp 13:50: “If you’re a startup, and you want to get to a monopoly, start with a really small market and you take over that whole market and then you find ways to expand that market in concentric circles” Last I checked Zuckerberg is doing precisely what Thiel taught him to and has done it with preternatural skill. This is the standard for how you’re expected to act as a technology “leader” - which the majority of VC backed unicorn goal founders (like every FAANG founder) have been executing since day zero.

badgersnake 2y ago
It sounds like you’re saying the only way Y combinator makes money is when it’s illegal. So let’s RICO them then I guess.
- tlb 2y ago
  By itself, becoming a monopoly can be legal & ethical. But once you have a monopoly, you're not allowed to do certain things like buying competitors for the purpose of crushing them.
  - deeThrow94 2y ago
    I think the ethics of private enterprise is far from sorted long, long before getting to market-manipulation. Particularly in the US, where you're essentially obligated to take peoples' money at any cost.
  - Juliate 2y ago
    What verifiable existing/attempting monopoly today is ethical?
    - tlb 2y ago
      They are about as ethical as non-monopoly businesses. Which is to say that some are bad and most are OK. I guess some people think all business is unethical, but for those people monopolies don't change the sign.
      - Juliate 2y ago
        > They are about as ethical as non-monopoly businesses. No, my point/thesis is that, whatever non-monopolies can be, a monopoly is de-facto unethical. If there is a legitimate reason that there's a monopolistic control over something, it then _has to_ become a public service, in the general interest. And there is no actual existing monopoly today that could serve as a counter-example to that thesis.
dimal 2y ago
It goes deeper than that. All publicly traded corporations are morally obligated by the Friedman Doctrine [0] to do stuff like this. If something returns value for shareholders (and monopolies do) then a CEO must do it. This is how the whole system is supposed to work. Of course, there's no reason that capitalism must to work this way, but this is the toxic form of capitalism that we've unwittingly chosen. Thiel just gave a playbook for implementing this in the tech space. [0] https://en.wikipedia.org/wiki/Friedman_doctrine https://en.wikipedia.org/wiki/Friedman_doctrine
- closewith 2y ago
  It may be an obligation, but it's certainly not a moral one.
  - p_l 2y ago
    It's something untrue that people are told to believe - but it's in no way a real obligation, and isn't part of any fiduciary duty - it's just Friedman philosophying and selling it
    - dazed_confused 2y ago
      Exactly! Unfortunately people lap it up as some ground truth when it is a dude providing a theory and as you said “selling it”
  - deleted 2y ago
    [deleted]
- jampekka 2y ago
  > Of course, there's no reason that capitalism must to work this way There kinda is. Capital is allocated to where it makes most profits, and most profits go to companies maximizing shareholder value. In aggregate this makes the profit maximizing companies more likely to survive. Sure this can be perhaps mitigated by e.g. legislating other duties to companies, but I'd say it's very hard even in theory, let alone in practice, to have capitalism without lopsided profit maximization.
diego_moita 2y ago
That is also one of his core arguments on his book "Zero to One". To be fair, he is not the only one to think like that. Every "captain of industry" needs to be paranoid against competition. It is a basic survival instinct. Just look how much Steve Jobs freaked out about Android and Windows. Or how Alfred Sloan bought or merged every possible competitor. Or the history of Nabisco, the steel industry, Microsoft, AT&T, etc
- arlcode 2y ago
  And that's not a bad instinct which (in a perfect world) drives innovation and lowers prices for customers. But that only works if the competition can not be simply bought out which requires effective anti trust laws before they get so big that "nobody" can compete. I firmly believe that it's better to prevent a company from growing too big than breaking it up after the fact. Almost everybody profits from smooth and constant enforcement.
Xelbair 2y ago
Sure, but in non-digital markets we had a term for most common growth hacking tactics for attaining that niche monopoly. Dumping. Operating on loss for years, just burning money to capture a market and then jack up prices and make competition unfeasible. Which is illegal in most cases when it comes to physical goods. of course it depends on the region you're in - it is extremely illegal with sky high fines in my country for example. Having the attitude to reach that goal is fine, but the goal itself(monopoly over segment of a market) should be impossible to reach. Whenever it happens markets get distorted to the detriment of all customers. The whole point of capitalism is to put stress onto system for self-improvement - you need to produce better good, make it more efficient and cheaper, and find perfect balance between price and performance - to run economy as efficiently as possible while basically 'crowdsourcing' resource allocation computation over every market participant. As soon as that stress is gone, you're back to Guilds system where nothing is dictated by market forces, just at whim of current entity in power.
- yujzgzc 2y ago
  The analogy with dumping is interesting. In the software world, near-zero marginal costs make it much harder to determine, but I guess the same concept does exist.
- amelius 2y ago
  If companies are like processes then we need an OOM-killer for monopolies.
- Digit-Al 2y ago
  I remember many (many) years ago I used to frequent a small independent video rental shop. Then, one day a Blockbuster opened next door (and when I say next door, I do mean literally next door) offering a larger range of videos to rent and much cheaper prices. Within about three months the independent had gone out of business and shut down, at which point the Blockbuster jacked their prices up to what the independent had been charging. It was incredibly blatant and I felt sorry for the poor guy that had been running the independent business.
balls187 2y ago
Defensibility is pretty much one of the first topics raised by every investor, and thus ingrained into every founder: What is our moat? (e.g. how do we ensure no one else gets into our space until we're ready to choke out their air supply).
- 52-6F-62 2y ago
  The word that is not used often to describe their worldview is the most accurate: medieval. It isn’t just jargon. They are building castles against perceived enemies and everyone is an enemy. They are striving to be the Normans taking England, embedding themselves in every realm, region, barony, and parish, rewriting the rules in the name of progress either by woo or by force, and eliminating the natives. Up go the walls, round go the moats, and out point the guns. The last startup I worked at was primarily concerned with loyalty above most else. Loyalty to what?
rvz 2y ago
> Last I checked Zuckerberg is doing precisely what Thiel taught him to and has done it with preternatural skill. ...and the teachings from Bill Gates and Steve Jobs' mentorship. > This is the standard for how you’re expected to act as a technology “leader” - which the majority of VC backed unicorn goal founders (like every FAANG founder) have been executing since day zero. Except knowing how to deal with the time when anti-trust regulators are knocking on your door. The stark difference between why Microsoft isn't being broken up vs Meta Platforms.
xyst 2y ago
Thiel is such a disgusting person. People like him, greedy fucking capitalists, are the reason the world is slowly burning down. All of this so he and his other billionaire friends can turn society into “network states” (privatized entities/corporate towns).
scyzoryk_xyz 2y ago
You're correct, this has been the prevailing culture in tech. This is the playbook. But this isn't a good excuse. Players gonna play - we want them to play to win as hard as they can. But when we have safety guardrails and boundaries like antitrust, they're not supposed to just break through them. Was he 'taught' by Thiel is that a thing that happened?
Gud 2y ago
According to? What do they bring to the table? A dystopian future, greed and destruction. They are not my leaders. I look to individuals like Bill Joy, Linus Thorvalds and Theo de Raadt. People who roll up their sleeves and build amazing things. Parasites like Zuckerberg and Thiel can go to hell for all I care.
- navane 2y ago
  They are going there, but they have to build it first, here among us.
- t3783783jf 2y ago
  You remind me of this interview with Alan Kay: https://futureofcoding.org/notes/alan-kay-lunch.html https://futureofcoding.org/notes/alan-kay-lunch.html In the piece the notion that what we need to solve our problems is more people like Joy, Torvalds and de Raadt and less people like Zuckerberg, Gates, and Bezos is gently alluded to, and I think it's a powerful point. I'd nearly go on and suggest things like Tools for Conviviality, or some Cory Doctorow stuff. But in any case it's a lovely interview, maybe it's a good enough start.

badgersnake 2y ago

It sounds like you’re saying the only way Y combinator makes money is when it’s illegal. So let’s RICO them then I guess.

tlb 2y ago
By itself, becoming a monopoly can be legal & ethical. But once you have a monopoly, you're not allowed to do certain things like buying competitors for the purpose of crushing them.
- deeThrow94 2y ago
  I think the ethics of private enterprise is far from sorted long, long before getting to market-manipulation. Particularly in the US, where you're essentially obligated to take peoples' money at any cost.
- Juliate 2y ago
  What verifiable existing/attempting monopoly today is ethical?
  - tlb 2y ago
    They are about as ethical as non-monopoly businesses. Which is to say that some are bad and most are OK. I guess some people think all business is unethical, but for those people monopolies don't change the sign.
    - Juliate 2y ago
      > They are about as ethical as non-monopoly businesses. No, my point/thesis is that, whatever non-monopolies can be, a monopoly is de-facto unethical. If there is a legitimate reason that there's a monopolistic control over something, it then _has to_ become a public service, in the general interest. And there is no actual existing monopoly today that could serve as a counter-example to that thesis.

dimal 2y ago

It goes deeper than that. All publicly traded corporations are morally obligated by the Friedman Doctrine [0] to do stuff like this. If something returns value for shareholders (and monopolies do) then a CEO must do it. This is how the whole system is supposed to work. Of course, there's no reason that capitalism must to work this way, but this is the toxic form of capitalism that we've unwittingly chosen. Thiel just gave a playbook for implementing this in the tech space. [0] https://en.wikipedia.org/wiki/Friedman_doctrine https://en.wikipedia.org/wiki/Friedman_doctrine

closewith 2y ago
It may be an obligation, but it's certainly not a moral one.
- p_l 2y ago
  It's something untrue that people are told to believe - but it's in no way a real obligation, and isn't part of any fiduciary duty - it's just Friedman philosophying and selling it
  - dazed_confused 2y ago
    Exactly! Unfortunately people lap it up as some ground truth when it is a dude providing a theory and as you said “selling it”
- deleted 2y ago
  [deleted]
jampekka 2y ago
> Of course, there's no reason that capitalism must to work this way There kinda is. Capital is allocated to where it makes most profits, and most profits go to companies maximizing shareholder value. In aggregate this makes the profit maximizing companies more likely to survive. Sure this can be perhaps mitigated by e.g. legislating other duties to companies, but I'd say it's very hard even in theory, let alone in practice, to have capitalism without lopsided profit maximization.

diego_moita 2y ago

That is also one of his core arguments on his book "Zero to One". To be fair, he is not the only one to think like that. Every "captain of industry" needs to be paranoid against competition. It is a basic survival instinct. Just look how much Steve Jobs freaked out about Android and Windows. Or how Alfred Sloan bought or merged every possible competitor. Or the history of Nabisco, the steel industry, Microsoft, AT&T, etc

arlcode 2y ago
And that's not a bad instinct which (in a perfect world) drives innovation and lowers prices for customers. But that only works if the competition can not be simply bought out which requires effective anti trust laws before they get so big that "nobody" can compete. I firmly believe that it's better to prevent a company from growing too big than breaking it up after the fact. Almost everybody profits from smooth and constant enforcement.

Xelbair 2y ago

Sure, but in non-digital markets we had a term for most common growth hacking tactics for attaining that niche monopoly. Dumping. Operating on loss for years, just burning money to capture a market and then jack up prices and make competition unfeasible. Which is illegal in most cases when it comes to physical goods. of course it depends on the region you're in - it is extremely illegal with sky high fines in my country for example. Having the attitude to reach that goal is fine, but the goal itself(monopoly over segment of a market) should be impossible to reach. Whenever it happens markets get distorted to the detriment of all customers. The whole point of capitalism is to put stress onto system for self-improvement - you need to produce better good, make it more efficient and cheaper, and find perfect balance between price and performance - to run economy as efficiently as possible while basically 'crowdsourcing' resource allocation computation over every market participant. As soon as that stress is gone, you're back to Guilds system where nothing is dictated by market forces, just at whim of current entity in power.

yujzgzc 2y ago
The analogy with dumping is interesting. In the software world, near-zero marginal costs make it much harder to determine, but I guess the same concept does exist.
amelius 2y ago
If companies are like processes then we need an OOM-killer for monopolies.
Digit-Al 2y ago
I remember many (many) years ago I used to frequent a small independent video rental shop. Then, one day a Blockbuster opened next door (and when I say next door, I do mean literally next door) offering a larger range of videos to rent and much cheaper prices. Within about three months the independent had gone out of business and shut down, at which point the Blockbuster jacked their prices up to what the independent had been charging. It was incredibly blatant and I felt sorry for the poor guy that had been running the independent business.

balls187 2y ago

Defensibility is pretty much one of the first topics raised by every investor, and thus ingrained into every founder: What is our moat? (e.g. how do we ensure no one else gets into our space until we're ready to choke out their air supply).

52-6F-62 2y ago
The word that is not used often to describe their worldview is the most accurate: medieval. It isn’t just jargon. They are building castles against perceived enemies and everyone is an enemy. They are striving to be the Normans taking England, embedding themselves in every realm, region, barony, and parish, rewriting the rules in the name of progress either by woo or by force, and eliminating the natives. Up go the walls, round go the moats, and out point the guns. The last startup I worked at was primarily concerned with loyalty above most else. Loyalty to what?

rvz 2y ago

> Last I checked Zuckerberg is doing precisely what Thiel taught him to and has done it with preternatural skill. ...and the teachings from Bill Gates and Steve Jobs' mentorship. > This is the standard for how you’re expected to act as a technology “leader” - which the majority of VC backed unicorn goal founders (like every FAANG founder) have been executing since day zero. Except knowing how to deal with the time when anti-trust regulators are knocking on your door. The stark difference between why Microsoft isn't being broken up vs Meta Platforms.

xyst 2y ago

Thiel is such a disgusting person. People like him, greedy fucking capitalists, are the reason the world is slowly burning down. All of this so he and his other billionaire friends can turn society into “network states” (privatized entities/corporate towns).

scyzoryk_xyz 2y ago

You're correct, this has been the prevailing culture in tech. This is the playbook. But this isn't a good excuse. Players gonna play - we want them to play to win as hard as they can. But when we have safety guardrails and boundaries like antitrust, they're not supposed to just break through them. Was he 'taught' by Thiel is that a thing that happened?

Gud 2y ago

According to? What do they bring to the table? A dystopian future, greed and destruction. They are not my leaders. I look to individuals like Bill Joy, Linus Thorvalds and Theo de Raadt. People who roll up their sleeves and build amazing things. Parasites like Zuckerberg and Thiel can go to hell for all I care.

navane 2y ago
They are going there, but they have to build it first, here among us.
t3783783jf 2y ago
You remind me of this interview with Alan Kay: https://futureofcoding.org/notes/alan-kay-lunch.html https://futureofcoding.org/notes/alan-kay-lunch.html In the piece the notion that what we need to solve our problems is more people like Joy, Torvalds and de Raadt and less people like Zuckerberg, Gates, and Bezos is gently alluded to, and I think it's a powerful point. I'd nearly go on and suggest things like Tools for Conviviality, or some Cory Doctorow stuff. But in any case it's a lovely interview, maybe it's a good enough start.