“Monopoly is the condition of every successful business.”
– Peter Thiel
So we’ve discussed the importance of mindset in order to get rich. Now we discuss the basics of startups and how to make sure yours would be successful.
Peter Thiel is a member of the so-called Paypal Mafia. They (together with Elon Musk), profited heavily from the PayPal sale and re-invested their money in other businesses. Elon went on to make new companies like Tesla and SpaceX while Peter became an angel investor for several companies including Facebook. Peter became a billionaire in the process. He was also an early investor for SpaceX, AirBnB, LinkedIn, Yep and Spotify. This book discusses his business philosophy.
Here the 4 lessons from the book:
1) Vertical Progress Instead of Horizontal Progress
Progress takes a bit longer than you would want it to happen in some industries. This is called horizontal progress. Peter Thiel tells us that real leaps and bounds on innovation will produce the best result for your success. This is called vertical progress. If you have plans to change the world, this is the path to take. The ones who have the courage to go against the trend will make the best innovations and will ultimately change the world.
2) A Monopoly is the Way to Go
Contrary to capitalism maxims, monopolies are actually good (in ideal cases). Monopolies are there not because there aren’t any other alternatives. In fact, there are. It’s just that these businesses just have so good products and or services that most people don’t bother trying out others. Think of it like Google. Their search engine is just so good that most people just use Google for everything.
Or think of a company when you’re trying to buy a book. The first company you might have in mind is Amazon. They sell at dirt-cheap prices plus Amazon gives out discounts every now and then. Let’s not forget about same-day delivery too! Is there any other company that can do that?
After opting for an innovative company, a good businessman should make his/her product so good that customers can’t live without it. They’re willing to buy from a monopoly.
3) Choose a Niche and then Expand
Niches offer a safe haven against bigger companies. Keep improving your product and offer bigger and bigger selection and end up as a monopoly. Think of it like Amazon. Amazon started only as an online bookseller but ended up trying to sell everything. Now Amazon offers storage and streaming services for the masses. Jeff Bezos turned Amazon from a simple niche to a sell everything store!
Also, check out Apple that started out with Macs. It branched out with music players and then took a leap into mobile phones. Now their selling all kinds of devices and are rumored to be developing a car.
Once you get known for quality and when customers trust your brand, it’s time to try out new forms of products and/or services!
4) Founders Need a Great Vision to Take Their Business from Zero to One.
Monopolies never happen overnight. You can’t get there unless you have a visionary leader. Think of it as Steve Jobs and Apple. Steve was so focused on design, ease of use, and innovation that people always bought the latest Apple product because it kept getting better and better on its next iteration. This also happened with Thiel’s PayPal when it ended up as the choice for online payments.
Think Big.
We might have focused on tech companies here but each of the concepts can be applied in most businesses. It can be on food. Think of McDonald’s fastfood genius. It’s not the best-tasting food but it’s definitely fast and consistent quality and that is their core competence.
If you’re struggling to think of a way to expand or innovate your concept product or service, tell us in the comments section and we’ll try to help you come up with something!
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