Zero to One (by Peter Thiel) Summary - Chapter 3

The following is a summary of Zero to One: Notes on Startups or How to Build the Future. I do not claim to own any of the book's original work, the following is simply a bulleted summarization with a few direct quotes. All copyrights and trademarks belong to their respective owners. Chapter 3 - All Happy Companies are Different:
    • Creating value is not good enough
      • You also have to capture some of the value too
    • Perfect competition is considered ideal by basic economics
      • Markets achieve equilibrium when producer supply meets market demand
      • All competitors ell nearly the same things
      • Market sets the price of all competitors items
 
  • In the long run, “no company makes an economic profit”
 
    • Opposite of of perfect competition: monopoly
      • A monopoly completely owns its market
        • So, it can set its own prices
      • Produces the quantity and price combination to maximize profits
      • Thiel specifies by monopoly, he means “the kind of company that’s so good at what it does that no other firm can offer a close substitute
    • If you want to create and capture long lasting value, don’t build an undifferentiated commodity business”
    • Companies tell lies:
      • Companies that are monopolies try to conceal the fact
      • Companies that have competition try to say they are in a league of their own
    • Ruthlessness:
      • Companies not earning monopoly money have to be ruthless to survive
        • They can only focus on money
        • They can only pay minimum wage, etc.
        • Only focuses on day-to-day operations
      • Monopoly companies can focus on other things since they have cash to spare
        • Can focus on long term plans
        • Ability to take ethics and morality seriously
          • This is very important to me
 
  • “money is either an important thing or it is everything”
 
  • Monopoly Capitalism:
    • Creative monopolies give customers more choices
    • Powerful engines to make society better
    • Government awards monopolies (patents) but also hunts them down (antitrust)
    • “Monopolies drive progress because of the promise of years of profits means incentive to innovate”
  If you've liked this summary, I highly recommend you get the full book here: Zero to One: Notes on Startups, or How to Build the Future < Previous Chapter | Overview | Next Chapter > - Alec Kriebel