Lecture 5 - Competition is for Losers (Peter Thiel)

Peter Thiel, founder of Paypal and Palantir, discusses business strategy and monopoly theory in "Competition is For Losers".

[falmanna]

the summary of zero to one book, really worth watching especially if you didn't read the book.

[neerajsoni]

Still as fresh and valuable today. Who else is watching this in 2024, I hope people still appreciate this lecture series and are equally amazed to see how these great insight from big entrepreneurs is available to everyone for free.

[suriMusiq]

This one is a gem of a lecture. Needed to watch it twice, to take home 10% of the lecture with the speed at which Peter thinks and speaks!

[mrbinspire]

I re-visit this lecture over and over again as I'm building my startup. So much gold each time. One of the best vids on the internet for startup success 💯💰

[usernametakentekken]

The scientists' work is their reward Mr. Thiel. For a man of your intelligence, it's amazing how dense you are to the possibility that value can be measured in units other than currency!

[rick-]

Funny that this presentation has started in a "small market" (Stanford students) and led to a bigger market (Zero to One-Buyers) - nice Peter ;)

[gerardoromero]

Very clear explanation. Totally agree. World rishest people think in the same way. They build o buy monopolies and then they fill they pockets. The only way to get ahead in business is to be different. People will tell you are crazy to do different things, you will be crazy but but you willl not be stupid.

[nickbrownco]

If you haven't read Zero to One, then get the book. It's a deep elaboration on this lecture. It's discussion of the success of 1950s America (from an innovation standpoint) is fascinating.

[JuanDavidPastasRivera]

Incredible talk, very honest, critic, and complete in his perceptions.

[PurnaBiswaOfficial]

"Don't always go through the tiny little door that everyone's try to rush through. May go around the corner and go through the vast gate no one's taking" - Peter Thiel. Loved this line from the lecture.

[yassineanaddam]

This is the most powerful lecture of the series.

[panda]

Can’t believe this lecture was 9 years ago. Still relevant today. Btw, the first dude is Sam Altman of OpenAI.

[patriceken]

00:21 single idee fixe, monopoly, wants always avoid competition 00:55 capturing value, simple formula, A business creates X dollars of value and captures Y % 03:44 perfect competition, econ 1, profit margin, revenue, market capitalization 04:35 monopoly 05:37 lies 07:02 narratives 07:57 restaurants 09:30 intersection 10:15 the opposite lie 11:30 technology company, global consumer technology 12:40 narrow market, cash 13:37 how to build monopoly, small market 15:34 PayPal, eBay 17:01 cleantech, massive market 18:41 characteristics of monopoly, 10 times better, in some order of magnitude 24:00 growth, durability 28:05 history of innovation 37:03 psychology of the competition, losers 42:26 questions, what's the narrative of the market

[SunnyFly]

Google was 5th search company. Apple was 6th smart phone company, Facebook was 4 social network company. Amazon was 100th book store company. Microsoft was 10th software company... they all started like that. They didn't invented their own markets that were small at the beginning, they were better than competitors. That's it. That's the secret. What this guy is talking about?

[tarunommadan]

Thank you Peter, thank you Y combinator for making this happen.

[Haz]

Peter: "Scientist believe we live in a just world in which they will be rewarded for their inventions by society....this is probably the fundamental delusion of scientists in our society"

Crowd: *laughter*

Peter: *dead fucking serious*

[spaccraf]

“A society grows great when old men plant trees in whose shade they shall never sit." ~ perhaps this is true of scientists and artists. We cannot all be business people and obsessed with profit.

[ShaneKercheval]

(Also posted to the discussion forum on the class website (specifically, the discussion forum for this lecture), join in the discussion if you can!)

There is some excellent advice and information here. I found some of the points to be a little jarring with some of my pre-concieved ideas on competition, which is not to say I think I’m right, but rather I think it is an interesting discussion. It is difficult to disagree with someone with such extensive experience.

If I had to boil down one of the main messages of the lecture, it would be at about 19:40 where Peter says: “All happy companies are different because they are doing something very unique. All unhappy companies are alike because they fail to escape the essential sameness that is competition.”

1) The assumption being made is that competition = “sameness”. I don’t think that is the point of competition. IMO, competition is about delivering value that is different than competitors. So competition is most definitely about being different, not the same. Competition *can* give you a way to validate that your idea is actually appealing to others, *but* with the assumption that you have a different philosophy (than the competition) which means offering a product for people who identify with your philosophy or your way of doing things (Apple vs. Microsoft, MySpace vs. Facebook, Tesla vs. Every-other-electric-car (or every other car), Simple vs. every-other-bank, Betterment vs. Every-other-brokerage, Basecamp vs. every-other-PM-tool, etc.). Certainly all of these companies have a lot competition, but I don’t think that is bad. That is, I don’t think these guys are losers :) That is to say, using competition as validation is not the same as doing something only because someone else does it.

2) If companies only attempted to do things that haven’t been done before we’d probably all have the same number of “things”, gadgets, etc. available to us, they would just cost a lot more and not be as good (quality, features, aesthetics, etc.). This is why competition is good (at least for the consumer).

3) One example used was that “The next Mark Zuckerberg won’t build a social network.”... but that’s assuming that Facebook is as good as social media will ever get, and there is no room for improvement/disruption. Well… maybe, but I think, for example, that society is constantly redefining how we want/need to communicate. I can’t imagine that in 50 years from now, Facebook (as we know it today) is still the primary means of social media. Perhaps Facebook adapts to change, or perhaps a new company/idea disrupts the market…

4) I don’t think there will ever be a “Last Mover”. Or perhaps, maybe I just hope there isn’t! It’s almost depressing to think of these big companies as being “last movers”. Surely they will be disrupted. If I had to name a caveat, there is a strong case for Google.. They seem to do “everything” right as far as their vision, research dedication, etc.. But I imagine the same thing was being said about AT&T/Bell Labs in the mid 20th century…

This is related to the quote (said to have been from) Charles H. Duell (Commissioner of US patent office in 1899): “Everything that can be invented has been invented.”

To Peter’s credit he did mention “10, 15, 20 years” as a potential time period, but I’m not sure I would call it “Last Mover” if that is the expected time-period, which is relatively short. Amazon has been around almost 20 years, Paypal about 15. I think these companies have potential to be around for a while, but would think it is pre-mature to dub them as “last movers”.

5) I believe the approach of only doing things that you think as being potential "last movers", while not inherently bad, is a potential way to pass up many opportunities. Again, perhaps Betterment doesn't expect to take over the online brokerage industry, but rather, they have a philosophy that they believe in, and think other people believe in. They aren't losers for entering a space with intense competition, but they are passionate about their trading philosophy, and are excited to be able to help others even though they (assumedly) don't believe that everyone who trades online will be interested in their offering. I bet they are still a "happy company", knowing that they will never monopolize online trading.

Again, great information, but here are some different thoughts on competition.

[Anza_]

@41:23 Peter is an absolute thinker - focused on what’s truly important, not one who obsesses about insignificant relative differences. Excellent German heritage!

[davidporterrealestate]

Another great lecture, I'm loving this series on a Friday afternoon