"Video Lecture _ Lecture 5 Competition is for Losers"

https://www.youtube.com/watch?v=5_0dVHMpJlo

  In this blog post, I'm going to discuss main ideas of lecture 5 on topic "Competitions are for Losers" by  Peter Thiel, who was the founder of PayPal, Palantir, and Founders Fund and has invested in most of the tech companies in Silicon Valley.

 First of all the lecturer asks several questions about the basic idea: How do you go about creating value? What makes a business valuable? After which he suggested a formula to capture company value, how to capture Y percent of X. Due to the formula you’re going understand how your company creates dollars or how it creates a value for the world. But before it, you should get a good idea of how the entire competition could influence your business. So, let's see some advantages and disadvantages of this:

Advantages: Easy to model, efficient in an aesthetic world, politically salable.

Disadvantages: Psychologically unhealthy, Irrelevant in a dynamic world, Preempts question of the vale.

  There are some principal tricks that companies tell. For example, a monopoly company may call their business as a combination of different markets, saying that the market is large and there’s plenty of competition. However, non-monopoly organizations may say the opposite, representing their business as small and the only type in the market. So the main question is how you can construct a monopoly. Hence, there are several aspects of a monopoly:

•  Proprietary technology
• Network effect
•  Economies of scaling
• Branding

  The first principal, which is predictable that in the beginning, you’ll want to have smaller markets. The main reason is that they are easier to manage and control than larger ones. Moving on, you’ll have the advantage and ability to take over a whole market/business and expand it. Therefore, having a unique business also gives you an advantage as the stocks offered may be things that haven’t been done yet. Practically all successful companies in the Silicon Valley started with the idea of starting a small business and expanding. The induction is that their value comes from the growth rate. Restrictive technology is complex, as areas of innovative tech can be at risk of being excelled by someone else. In this case, you have to create something much better than what already exists. It is beneficial for users but difficult for creators as constantly changing/built programs, may occur to be better and replace your product. Back to the history of innovation, there are two varieties of innovation that are listed below:

Technological Innovation which concentrates on different kinds of technology in the last 150-200 years.

·         When people reason these types of innovation; they often drop the “x” and “y” variables which can be valuable innovations.

·         While creating X amount of dollars in value, you have to capture the Y percent of X.

Science Innovation which we have lived for centuries of innovation in science.

·         In this illustration, scientists never make money because Y is almost always 0% in science.

·         Regularly, scientists will make an invention in technology or innovation but will not make any money off of it

 Consequently, competition isn’t a method of validation. It’s a blind spot psychologically as well as intellectually, as it gets people wrapped up in the idea of winning rather than being better. This may occur as a burden which will make people forget what’s truly important and valuable.