Startups Need to Monopolize to Succeed

Peter Thiel's Zero to One: Notes on Startups, or How to Build the Future is a different kind of startup book giving what others would see as contrarian advise.

Peter, who co-founded PayPal and invested in Facebook and other successful startups, explains that contrary to popular belief, you should not aim to compete in an industry, but instead look to monopolize. When you try to compete, even by improving what already exists, you drive down profits for everyone. However if you come up with something new—what he calls zero to one—you have a monopoly, which not only allows you to determine prices and therefore margin, but also has more of a shelf life.

The second "contrarian" thing Peter suggests is that unless you can come up with a monopoly, you're better off joining one rather than starting your own business. As he explains, having 100% equity of a business that will either fail or just break even is less valuable than having a small equity stake of a company like Google. 

At a time when every other book seems to suggest that jobs are dying and that you have to be your own boss to have any future, I find Peter's contrarian recommendation a refreshing—and realistic—change. 

Yes, we want more rights as employees and even an equity stake so we're building a better future, but that does not mean that everyone and their brother should start a business. As someone who has tried this twice, I can tell you it's hard and that not everyone will be cut out for it. 

So if you have a great idea, first evaluate if it's a zero-to-one monopoly or not. If it is, start small, prove the concept, and then scale. If it's not, look for a monopoly to join and stay open to new ideas. Who knows, the next one may be your chance at a monopoly.

Have you tried to start your own business? Was it a monopoly? 

Invisible Persuasion as a Leadership Tool

You've heard that it's easier to catch more flies with honey than vinegar, right? Nina DiSesa, in her book Seducing the Boys Club: Uncensored Tactics from a Woman at the Top, shows how to apply similar tactics to getting ahead in business.

Nina worked her way up in the very male-dominated world of advertising, often as one of the first female creative directors at a firm. She learned to do this with what she calls S&M: seduction and manipulation, which is also called "invisible persuasion" in the advertising world.

Basically, if you make people feel good about themselves or show them that something is in their best interest, they'll go along with you. If you like them and make them look good, they'll start to like you. My husband called this "enlightened self interest."

Nina stresses that S&M should only be used for the good, as in making the man a better person and the company a better place. For example, when she started working at a company where no one got along, she'd only share the good that was relayed and even exaggerate it to get people to be more inclined to think well of each other and work together. Over time she taught macho men to show emotion and be more collaborative by practicing this herself and by showing them how it made them better as a team.

Nina shares all of this, along with many funny asides, making reading about her trials and tribulations both amusing and inspiring. Her lessons on how to protect the male ego while persuading them to do things your way, how to convert the testosterone-driven boys to be loyal followers, and how to do all of this while balancing innately feminine leadership traits while not being a pushover are something any ambitious woman should read and learn from.

And although I'm not sure that I'm either skilled or brave enough to pull off S&M quite how Nina does it, I now recognize that both humor and even the occasional flattery are leadership skills when used to help one's team through difficult situations. 

Have you ever used persuasion at work? How did you use it, for what cause, and did it work?

Beware Burnout

With more people juggling jobs plus side hustle plus family, burning out is something that you or someone you know of may be facing.

Since we all have different reserves, it's hard to know how long you or someone can keep going without enough rest and recharging. 

But if you find yourself—
  • always tired, depressed, cranky, negative, or lethargic 
  • resenting things and people you usually appreciate
  • not having energy for the very things that recharge you
  • regretting ever starting your side hustle
...then chances are you're at or nearing burnout.

None of the above is clinical and you would know best if you're nearing the point of diminishing returns, but if you or someone you know are, there's one of two choices:
  1. ignore the signs, burnout, and then be useless until you recover;
  2. heed the signs and put rest and recharge back into your life, eliminating something else instead.
Obviously option two is what I'd recommend. That requires looking at everything you spend your time on and finding one or two things that can go, so that you have time for yourself. It may be the side hustle, at least for the time being, if it's taking more time and energy than you have to give it at that point. Or it could be an extra book club or activity you don't have to be doing and instead can get extra sleep. Only you can decide what should stay and what can go, but do decide before it's too late.

Do you rest and recharge on a regular basis? 

Never Go It Alone

I read Do More Faster: Techstars Lessons to Accelerate Your Startup by David Cohen and Brad Feld a while ago and loved it. 

Techstars is a startup accelerator that provides mentoring to its entrepreneurs and this book is a compilation of lessons learned, in the words of the founders, mentors, and others involved in their world. These lessons are organized into topics like Ideas and Vision, People, Product, Execution, and many others. And given that they're told from the perspective of those who have learned these lessons firsthand, with commentary by David and Brad to give them more context, it's a quick, enjoyable, and informative read.

I couldn't do all the many lessons justice, but the one that I have learned personally and therefore stuck out is to not go it alone.

Entrepreneurship is hard. Doing it alone and having to be responsible for everything makes it nearly impossible to succeed. The authors explain that they have rarely seen a sole founder able to make it work and always recommend he at least get one or two partners. It's a lot easier to share the work, the lessons, the feedback, and the support.

I have now tried two of my own "startups" and to all intents and purposes, did them both alone. I executed the second better, cared much more about the idea, and pivoted a few times. I now understand why the second didn't take and don't know whether having a partner would have made a difference or not, but I can say that if I ever again feel compelled to work on another idea, I will first talk about it broadly and try to get a partner.

If the feedback is good and if I can get someone else convinced enough to join me, great; if not, than I'm better off going no further with the idea anyhow. As David and Brad explained, many startups pivot or start over with new ideas while in the program, which they're fine with since they tend to back the people, not the idea, at that stage.

Lucky for me I'm now working for,
a great startup that not only has three great co-founders but that has just been accepted into the Techstars 2016 Austin class. Although I won't be there in person, I look forward to learning lots secondhand.

Have you tried doing something really hard on your own? How was the experience?