Peter Thiel at MIT on ‘Developing the Developed World’
A quick note here: I had the chance to see Peter Thiel speak at MIT at an event covering his new book, Zero to One. Thiel spoke on a number of themes regarding the book, specifically industries he sees as growth opportunities in the future, areas that have yet to experience massive technological disruptions, and the role small, high-growth companies should play in the future. I’ll spare any kind of book review as those are readily available by people more qualified than me. Rather, I will share the one insight I took away from Thiel.
One of my classmates asked Thiel a question on what advice he might give to aspiring entrepreneurs in the audience, many of which came to MIT Sloan to equip themselves with the skills to take an idea to market. As the question was being asked, I could see a little smirk developing on Thiel’s face. Earlier in the discussion, Thiel unequivocally stated that he thought some kinds of graduate school training, like business, is so unnecessary to starting a company that he wondered why many of us in the audience even decided to pursue such an endeavor. He referenced this perspective when responding to the student. But rather than being purely dismissive, Thiel pointed out that one consideration aspiring entrepreneurs should always keep in mind is to search for and pursue commercial opportunities where one can achieve monopolistic power. His point was, despite whatever personal interest might exist with a potential opportunity, the area where an entrepreneur can achieve market dominance is where competition does not yet exist or is low enough where one can become a market leader quickly. It was initially odd to hear this since, as a consumer, monopolistic companies usually mean higher prices, less desire to improve product quality, and shoddy customer service.
But as an entrepreneur, it makes perfect sense: identify an unclaimed profit pool and capture as much of it as possible. In my past work advising brands on capturing profits, my approach focuses on answer two questions:
- What kinds of customers exist in this category based on their potential affinity for your product (i.e. segments)?
- What reasons would they use your product (i.e. need states/uses cases)?
If you can approximate some idea of spend across these consumers and need states, that data might provide directional information on where to focus and to whom to focus on. For example, crowded spaces like on-demand delivery apps or enterprise messaging apps are probably not the spaces a new entrant will be successful without an insanely compelling and differentiated value proposition. But new areas and categories we haven’t even begun to explore yet and when those needs can be met, it’s a sprint for any entrepreneur to reach monopolistic power as Thiel recommends.