A CBP | #14 | A Monopoly Should Have These 4 Characteristics

As I mentioned in an earlier post, I am (slowly) reading Zero to One. There are so many helpful and applicable nuggets in this book. I highly recommend it if you’re generally interested in startups or considering starting your own business.

Because I’ve been slacking in consistently blogging – shocker – I’m going to use the remaining half of my Challenging Blog Project posts to talk about how Peter Thiel’s insights relate to my side project.

From Chapter 5:
“Every monopoly is unique, but they usually share some combination of the following characteristics: proprietary technology, network effects, economies of scale, and branding…

Proprietary Technology:
As a good rule of thumb, proprietary technology must be at least 10 times better than its closest substitute in some important dimension to lead to a real monopolistic advantage.

Network Effects:
Network effects can be powerful, but you’ll never reap them unless your product is valuable to its very first users when the network is necessarily small…This is why successful network businesses rarely get started by MBA types: the initial markets are so small that they often don’t even appear to be business opportunities at all.

Economies of Scale:
A monopoly business gets stronger as it gets bigger: the fixed costs of creating a product (engineering, management, office space) can be spread out over ever greater quantities of sales. A good startup should have the potential for great scale built into its first design.

A company has a monopoly on its own brand by definition, so creating a strong brand is a powerful way to claim a monopoly.”

I can’t predict if my side project will become a monopoly. Seeing into the future isn’t one of my special powers. However, I intend on planning and strategizing so well that the chances of becoming one are in my favor.

Stay tuned as I continue to spill Peter Thiel’s beans…


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