Lecture 5 - Competition is for Losers (Peter Thiel)
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- เผยแพร่เมื่อ 6 ต.ค. 2014
- Lecture Transcript: tech.genius.com/Peter-thiel-le...
Peter Thiel, founder of Paypal and Palantir, discusses business strategy and monopoly theory in "Competition is For Losers".
See the slides and readings at startupclass.samaltman.com/courses/lec05/
Discuss this lecture: startupclass.co/courses/how-t...
This video is under Creative Commons license: creativecommons.org/licenses/b...
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.
Totally agree with you. Btw in India where are you from?
you must check out Jensen Huang and Brian Chesky's talk (view from the top if I am not wrong). Incredible insight
Can you send me the link of that talk please ? Not sure I've found the one you're talking about, thanks man ! @@bherusinghkitawat9933
@@bherusinghkitawat9933 mumbai
yes bro lagta hai indians hi dekh rahe hai
the summary of zero to one book, really worth watching especially if you didn't read the book.
Sam Altman cameo for the intro.
He was the lecturer
At the time of this video Sam was the president of Y-combinator
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?
This is exactly what he talks about at 48th minute. They weren’t the first to the market, but outcompeted the existing players, and became successful precisely because they became monopolies
He is basically contradicting himself.
For Google, it was their search which was in Thiel’s terminology 10X better and to some extent network effect. Of course, Google just didn’t sit on it and kept improving the services.
I think you are shifting the causal chain here. They competed and then became dominant @@Optimistas777
I think his point is that you should aim to create a start-up that is the 1st in the market (that creates the market). And that this will give you a much better chance of success.
Zero to one in 50 minutes :)
A lecture worth a million dollars
*billion
If you can capture the value
It has just risen to a trillion
Peter Thiel is a damned right-wing libertarian who supports US far rightists.
Did you make a million dollars?
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*
this happens in every video I've seen of him talking lmao
What can you do as a scientist without funding?
this is so fucking true and sad; and also the reason me, as a poor as dirt scientist, am watching this.
You fucking nailed it.
He was rewarded with leaving a legacy and positive ripple effect from the moment of his invention(s). I don't think Einstein would be too bothered now about not being buried with the potential cash he could have made, nor do I believe that was his goal.
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
Can’t believe this lecture was 9 years ago. Still relevant today. Btw, the first dude is Sam Altman of OpenAI.
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 💯💰
What startup buddy?
this whole class has incredible signal to noise
lol you take advice from a closeted gay neo nazi hahahaha
And how is it going?
How it going man??
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.
Peter Thiel is a damned right-wing libertarian who supports US far rightists.
@41:23 Peter is an absolute thinker - focused on what’s truly important, not one who obsesses about insignificant relative differences. Excellent German heritage!
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!
Peter Thiel is a damned right-wing libertarian who supports US far rightists.
U just listen slow
True, I watched it at 2x and still understood and captured everything of value. Clearly not everyone can learn at the same pace. @@bychyke9581
“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.
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.
Palantir is far from being the biggest data analatycs company, Clarium capital is definitely not the biggest capital investment company, Paypal even while being acquired by ebay is still not the overlord of payment processes. I guess my man was right about one thing. People and companies will lie to you about what it is they are doing and how exactly they are doing it. GRAIN of salt.
Glad someone is picking up on the cracks in this guys lecture.
Funny that this presentation has started in a "small market" (Stanford students) and led to a bigger market (Zero to One-Buyers) - nice Peter ;)
Incredible talk, very honest, critic, and complete in his perceptions.
Peter Thiel is a damned right-wing libertarian who supports US far rightists.
Another great lecture, I'm loving this series on a Friday afternoon
This is the most powerful lecture of the series.
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!
he was explining how the world works, he diddnt said scientist didn't deserve milions and billions for theyr contributions, but understanding how societies frameworks works allows you to find ways to create a better and more just world, for people that actually move humanity forward and not for leeches and parasites
i think as money is an interchange of value between parts in our current society, peter highlights how its curious that scientists that contribute with huuuge value dont usually get much reward in that sense
The premise of the lecture was about money. It’s literally the formula he starts with at the beginning of the video.
Looks like he touched a raw nerve..
@@alvarodefrancisco3882 All this highlights a problem with the free market system. Peter is basically confirming all of Marx's criticisms of capitalism where value is decoupled from price.
Thank you Peter, thank you Y combinator for making this happen.
Incredible and insightful lecture. Well delivered.
Thank you very much for this nice conversation, Peter.
Beautiful thoughts and delivery.
Only thing I might offer on the topic of "being the last mover;" those companies were "last" because they were sooooooo good that they scared anyone else from entering the space.
Wow, no words how valuable it is!
Thank you, Pieter,that was valuable, especially in the end
Extremely insightful lecture here
The idea about 'The last breakthrough' is so inspiring
Lecture worth millions of dollars! Truly insightful perspective. Surely gonna change the way I look at opportunities!
itna valuable content he...bhai sahab maza aa gaya💯❤
Fantastic lecture.
On "Competition as validation",
in terms of personal development, if competition is for losers, then what is for winners? Identifying what's more important and valuable to oneself and pursue and specialize in it?
First time seeing this, profound lecture
Learned something. Great talk.
the best video about start up
Interesting perspective for sure.
Big fan of the channel.
I feel like he redeems his speech by identifying a key takeaway here - that crowds are sometimes very very wrong, and that not all value is rewarded with money. Or rather, not all ways of giving our or creating value is good for getting a cut of that value.
Amazing talk.
Love how he mentions he doesn't know how branding works.
especially considering he's wearing a palantir jacket
Thats a smart intelligent man. One of a kind!
very good insight.
Love the analogy "Minnow in a vast ocean."
"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.
it only sounds nice. Doesn't mean jackshit. This dude is an arts major lol
@@Artaxerxes.Right? Fun little analogy. Meanwhile the barrier to the big gate is either extreme luck, or extreme intelligence and innovation
I don’t know why people think this is something new or profound. He’s not the first to say or discuss or show this.
Gem of an Information on internet👍
I will revisit this lecture in about a year. I think I am sort of not capable enough today to fully grasp this deeply.
(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.
Hey, great points! You should join this discussion group as well: facebook.com/groups/892683214087254/
Peter is making a distinction between evolution and infighting. Companies that capture a fragment of the evolution happening to our civilization end up being very valuable. Companies that move into an already existing area with superficial differences are quite silly (just like the silly combination of movies or "every-other-electric-car"). You come up with quantum of improvement or you capture an previously unknown value. But either way the companies succeed. Silly companies fail.
I think the "last mover" is a fair term. I see it as a "last mover in a category" thing more than a "end of history" type deal. Microsoft was the "last mover" in desktop OSs (90s to 2000s), Google was the "last mover" in search. The thing is that a time came when search was no longer everything. Something like what happened with Microsoft. Still one of the biggest companies in the world, they're big in cloud, they've had penetration in a lot of places, just that their last mover status is relegated to "legacy" stuff.
Google and Apple seem like they became the "last movers" duopoly on mobile (the 2010s). And I think they'll remain the "last movers in mobile" until the "next big thing" arrives, where they'll probably still be around, where mobile will still be a thing, but there will be a gap for someone new to come for that "last mover status" in the "next big thing". But that still won't take away their "last mover in mobile" status
@@pranavshyam9725 I agree. That's exactly why companies like Google and Facebook have achieved remarkable success. Their ability to develop "proprietary technologies" has been the cornerstone of their success. As Peter mentioned, Google's page-ranking system brought about a transformation in search engine algorithms, while Facebook's use of real people's identities revolutionized the landscape of social networking. By creating and maintaining control over these proprietary technologies, these companies have established themselves as the tech monopolies that dominate the industry today.
This is very valuable. No colleges tell you this (although it is happening in a college class 😅)
Brilliant, brilliant, brilliant
so good.. thank you so much!
Here to give my yearly tribute.
Finished, thanks
00:21 single idee fixe, monopoly, wants always avoid competition 00:55 A business creates X dollars of value and captures Y % 03:46 profit margin, revenue, market capitalization
sharp dude, sharp focus. #sharp
What a great lecture !!!
"The something of somewhere is generally the nothing of nowhere."
Would have loved it if it was condesed to 10 minutes. I found it drawn out. Was still worth listening
Wow! What an incredible genius! Thank you.
Still can’t believe this is out here, for free.
"The opening line in Anna Karenina that all happy families are alike. All unhappy families are unhappy in their own special way. And the opposite is true in business, where all happy companies are different because they're doing something very uniquely, where as all unhappy companies are alike." WOW .
Yes! I hate competing with people or competition. I never participate in any competition that my worth is being measure with other people. But I only focus on working hard to achieve the financial success I want. I have a goal and want to fully focus in achieving it.😅
@29:45 I think he underestimates the motivation from the 'quest for knowledge' in scientists ....The real scientists out there do not want to become millionaires ... the real scientists do not want any recognition ... they become scientists because of their undying zest for the pursuit of knowledge ....
bullshit.
@@azferatu9173We play status games with our peers, it just so happens, that most (if not all) scientific communities view profit as an idicator of superficiality - “if you are rich, if you walk around in nice suits, you are not a real scientist” this viewpoint then feeds back into the system, and students who then become masters and professors actually internalize this belief. Most “successful” people want success, it just so happens, that in the scientific community, being rich is equal to not reaching your full potential as a scientist. Hope you understand the topic a bit better now.
@@nbla8692 Whilst this may be the attitude amongst most academics, the fact that the Bayh-doyle act (the law that says that researchers using public funds can patent their inventions) has become such a key motivator for research and has been replicated throughout the world, indicates that most researchers are also motivated by profit and not just the allure of credit.
Just look at some of the most important researchers in the last decade, the first thing Jennifer Doudna did after discovering CRISPr was start 2 companies. Same goes for Geoffrey Hinton.
44:35 - He definitely did not read the lean startup, he has observed brilliantly how it has actually been applied as apposed to what it describes to do.
The lecture is an abridged version of the book "Zero to One", www.amazon.com/Zero-One-Notes-Start-Future-ebook/dp/B00J6YBOFQ/
What was the last question? I can't hear/understand it..
sam altman introduces peter thiel, nice
Does anyone know where to find the "anti-aspergers" study he mentions at the end(~48:00).
Peter has advanced level of coolness. Thanks for sharing this!
EN
The Importance of Building Monopolies and the Distorted Perception of Competition in Business: A Summary of Lecture 5 - Competition is for Losers by Peter Thiel
📚 Peter Thiel discusses the importance of creating a monopoly in business and the lies that people tell about their businesses.
00:39
Peter Thiel believes that when starting a company, aiming for a monopoly and avoiding competition is crucial.
00:39
To create a valuable company, it must create X dollars of value for the world and capture Y% of X.
01:12
The US airline industry is larger than the search industry in terms of revenue, but Google is more valuable due to higher profit margins.
02:06
Perfect competition is easy to model and efficient in a static world, but it often leads to low profitability.
03:46
There are two kinds of businesses: perfectly competitive and monopolies, with little in between.
05:17
Companies with monopolies often pretend to be in intense competition to avoid government regulation.
05:55
🤥 The lies people tell about their businesses distort the market, with non-monopolies pretending to have monopolies and monopolies pretending to have small markets.
06:46
Non-monopolies describe their market as super small, while monopolies describe it as super big.
06:46
Examples include restaurants claiming to be the only one in a specific niche market and Google describing itself as an advertising, technology, or search company depending on the context.
08:02
The lies people tell about their businesses create a distorted perception of the market and can affect regulatory decisions.
12:20
📈 Startups should focus on small markets and gradually expand to build a monopoly.
12:56
Successful companies in Silicon Valley start with small markets and expand.
12:56
Building a monopoly involves starting with a small market and taking over the whole market.
13:50
Many successful companies started with markets that were initially undervalued.
15:28
Clean tech companies failed by starting with massive markets and facing intense competition.
17:03
Being a one-of-a-kind company in a small ecosystem is more advantageous than being one of many competitors in a large market.
17:52
Large markets often mean more competition and less value for startups.
18:09
💡 The key to building a successful monopoly business is to target small markets, have proprietary technology, create network effects, leverage economies of scale, and establish a lasting presence in the industry.
18:19
Target small markets that others overlook
18:19
Have proprietary technology that is an order of magnitude better than the competition
20:05
Utilize network effects to create value
21:16
Leverage economies of scale to gain a monopoly-like advantage
21:46
Branding can also create real value
21:54
Being the last mover in a category can lead to long-term success
23:00
💡 The value of a business is largely determined by cash flows in the future, and durability is often undervalued compared to growth rates in Silicon Valley.
24:03
Three quarters of the value of tech companies come from cash flows in the future.
24:03
Durability is undervalued in Silicon Valley compared to growth rates.
24:12
Monopoly characteristics like proprietary technology and network effects are important, but their longevity is crucial.
25:09
Breakthroughs in technology need to be able to maintain their position and continuously improve to stay ahead of competitors.
26:20
Being the last mover in a market can be advantageous for a business.
27:22
Scientists and inventors often do not get rewarded financially for their innovations.
29:08
💡 The history of science and technology shows that capturing value is rare, with most industries not making money. However, vertically integrated monopolies and software have been successful in creating value and capturing market share.
29:59
Most industries in science and technology have not captured much value, with many sectors not making any money.
29:59
Success cases in creating value and making money are rare.
31:00
Vertically integrated monopolies and complex coordination have been valuable in the second industrial revolution.
32:08
Software has low marginal costs and fast adoption rates, making it a powerful industry.
34:27
Rationalizations about scientists not being motivated by money may obscure the importance of creating and capturing value.
35:13
🧠 Competition is often overvalued and can lead to irrational behavior and distorted perceptions of value.
35:53
The software industry's vast fortunes have led to the misconception that it is the most valuable industry in the world.
35:53
The structure of industries and the capture of value from innovation vary greatly.
36:27
Competition is not always a reliable indicator of value.
37:02
Competition can be detrimental when it leads to mimetic behavior and the pursuit of crowded fields.
38:10
Intense competition in academia and other fields may be driven by the need to maintain differentiation in the face of small objective differences.
39:30
The perception of competition as a validation tool can lead to irrational behavior and distorted priorities.
40:33
💡 Competition can cause individuals to lose sight of what is truly valuable, leading to a focus on beating others rather than asking bigger questions.
41:36
Competition makes individuals better by comparing themselves with others.
41:36
However, this focus on competition often comes at the expense of questioning what is truly important and valuable.
41:52
Instead of always following the crowd, consider taking a different path that others may not be taking.
42:01
When evaluating an idea, focus on the actual market and its potential rather than the narrative surrounding it.
42:30
Monopolies can have advantages such as network effects, proprietary technology, economies of scale, and brand.
43:11
Lean start-up methodology and iteration may not always lead to truly innovative and differentiated companies.
44:55
📚 Facebook was not the first social networking site, but it was the first to have real identity.
47:19
Reed Hoffman started a social networking site called Social Net in 1997.
47:19
Facebook was the first social networking site to have real identity.
47:44
People often lump all social networking sites together and don't consider Facebook as the first.
47:51
There are studies on people who go to business school and tend to make wrong decisions.
48:30
Competition is seen as validation and it is difficult to avoid.
49:18
Advertising affects all of us and we should work to overcome its influence
// Great Lecture +1
I am just wondering, if it's not about being the last, but about "the idea", didn't die out at some point... Or get popular.
1. Ensuring that I am rewarding creators that actually create "some" values.
2. Creators, like me, get recognition... (but not necessarily, money)
So, I am feeling like you are telling Pandora's Box.
What should I do best as a customer?
So much more insightful than the crap shown at my company.
That was good.
The introduction was by opening founder - wow
00:03 There are only two types of businesses: perfectly competitive and monopolies.
06:03 Monopolies and non-monopolies both lie about their market size to differentiate themselves.
11:44 Successful companies start with small markets and expand.
17:23 To build a successful monopoly business, focus on small markets and have a proprietary technology that is an order of magnitude better than the next best thing.
22:26 In Silicon Valley, durability is undervalued compared to growth rates.
27:27 Most scientific and technological innovations do not result in financial rewards for their inventors.
33:01 Vertical integration is key to technological progress
38:10 Competition can be problematic and lead to loss of focus on what's truly important.
42:51 Great companies differentiate themselves with quantum improvements, not just iteration.
47:42 Facebook was the first social networking site to get real identity.
is the y% of x the epitome , why its y combinator naming convention
I'm watching this lecture series for the first time and what really surprises me is that this obviously wasn't a business level class (ie all the presenter jabs at business majors)... yet last time I checked, a "startup" is still a business is it not? There was a reason Zuckerberg stepped down as CEO at fb... because he knew it wasn't in the best interests of the "business"... No one ever seems to bring that up? Facebook would not be anywhere near the valuation it is today with the "business" individuals (aka Sheryl Sandberg)
found the business major lol
The name of the game is this one.
Be the best.
This is man is a God.
no way, the guy doing the intro was sam altman
Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel has been very influential.
Thanks ChatGPT, very cool
It is an interesting talk. We don't know if some of these markets will actually expand so the value is captured by somone willing to bet that an industry will be there in five years. Still, the idea of monopolies makes me uncomfortable.
50 minutes of Zero to One !
8:36 im done 😂
And my dumbass thought this lecture was about cooperation instead of competition, not war
Billion dollar lecture! 🔥🔥🙌🏼🙌🏼
Bloody wow! Thanks!
Peter,sir I admire you as my GOD FATHER
Power can not be left to chance much less fairness a level playing field and actual competition.
Irony is that the next big thing was searching for the next big thing.
Isn't this blue/red ocean theory?
+Play's Zone It is! Spot on bitch.
amazing book by the way
first time heard claps at the end of class......42:02
41:00
Impressive academic crime right there. Packed probably close to a semester into 40 minutes without garbling core idea
"if people at twitter make billions of dollars it must be that twitter is worth far more than anything Einstein did" (36:12) I understand he's supposedly exposing a faulty rationalization, but who the hell even thinks like that? It sounds like Thiel is trying to talk himself into not believing it. lol
Is it really inconceivable to him that *some* people may dedicate their lives to R&D (like studying cancer, or clean energy) without the intention of making money? He does have a point in that scientists often have no (significant) pecuniary outcome from their breakthroughs, but he goes way beyond that. "The fundamental delusion that scientists tend to suffer from" is that they "live in a just universe that will reward them for their inventions". Jesus, that's just wrong in so many levels.
Also, please don't be sorry for Einstein (30:22). He could have probably earned a lot of money if he wanted to. Instead, he was more interested in unifying physics, advocating for world peace and living a comfortable life.
I don't know how I got to this talk anyway... I was watching a series on how to start a Startup.
I took it as he's highlighting how absurd the situation is and that the audience should do well to avoid it by using what he talks about in the rest of the presentation.
An nuclear programs :)
23:00
This is what Warren mean when he talks about investing in companies with durable competitive advantage
Typo-Thiel from now on. ;-)