Are monopolies good? Peter Thiel's hypothesis

If this mailer does not render correctly, please enable images or view online   Advertise Unsubscribe

Invite Friends CEO Picks - The most popular editorials that have stood the test of time! Are monopolies good? Peter Thiel's hypothesis Peter Thiel (of Paypal founding and Facebook investment fame) has argued in his book, 'From Zero to One' that only monopolies like Google can afford the long-term focus and cash drain required to really invest in innovation. He adds that competition causes companies to rush towards mediocrity, as they try to outprice each other or only incrementally improve offerings. In this article, the New York Times makes a similar case. It's interesting that a democratic platform like the internet is creating 'winner-takes-all' companies like Google, Facebook and Amazon. Many of these companies have managed to create network effects (more people joining Facebook makes it more valuable to existing users, so they don't move elsewhere) to become monopolies. Now, the good thing is that they are very aware that the pace of new technology is such that they could get wiped out unless they invest their excess cash in tomorrow's technologies and do it faster and better than the next startup that could upend them (case studies include Nokia and Blackberry). So, in effect, unlike the monopolies of the past which were created through control of licenses and natural resources, tech monopolies are monopolies due to consumer choice and consumers will choose whatever's best for them. However, the above theory is not without its critics. Here is a list of problems with the theory that monopolies are good and that competition is for losers.

Full video of Peter Thiel's Stanford class 'Competition is for Losers' here

� �

A new model for democracy? So, you have an idea to fix a problem in your city? Maybe, it's potholes, or a cleanliness drive, or a project that reduces pollution. What if, you could put this up on a site and attract funding for it and solve it on your own. That's precisely what a bunch of social designers in Finland did with Brickstarter a few years ago. Imagine if this idea could be further extended, where instead of your local government allocating tax money, ordinary citizens could identify problems, suggest solutions and then allocate their tax dollars towards the projects they identify with the most! True democracy in action? The government knows exactly what the people want, at all times, and plays more of an enabler role. Such a radical new way of looking at democracy is what author Steven Johnson suggests in his book - Future Perfect. Today's technology does provide us the opportunity to experiment with new forms of community development. This is especially critical in large developing nations, where top-down planning often runs into vested interests.