https://www.youtube.com/watch?v=3Fx5Q8xGU8k
Key take aways
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Create X dollar of value for the world and capture Y% dollar of value for yourself X and Y are independent variables
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Google - relatively smaller market but profit margins are great. Accumulates so much cash year or year- Airlines - large market but profit margin are shit. Companies go bankrupt often in that market
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Companies are either operating in perfect competition or in monopolies. Nowhere in between. Avoid markets where you have a lot of competition- The last mover advantage: Proprietary technology needs to be 10X of the closest substitute
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Gain monopoly and maintain monopoly in that market segment as it grows in size- ability to have durability in a sector is more important than growth rate since the bulk of the revenue is really really far in the future
- As a startup it is important you want to start in markets that are so small it has almost no value and people don't notice. - It becomes really easy to saturate the market to establish a brand- You want to be a one of a kind company in that small market versus a company in a very large market with lots of competitors it is hard to differentiate
- You want to figure out how to expand that market after you have saturated it- Monopoly characteristics Software - Google, Facebook, Amazon Economics of scale- Network effects
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Vertically integrated complex monopolies - Tesla, SpaceX, Standard Oil Very capital intensive to build- Very complex coordination- Not easy to convince investors to fund to build
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Avoid the psychological blindspot where you think competition is a form of validation While competition gets you better at doing something- Too much competition is not profitable
- Other thoughts Skeptical about lean startup methodology- By the time you figure everything out the competition has came. There is always a risk element to going into unknown terrain- Asperger syndrome people who have high conviction and uneasily swayed very introverted- versus Harvard people who are super-extroverted and low level conviction