[AndrewKemendo]

“Competition is for losers” - A talk from Peter Thiel hosted by Y combinator (https://youtu.be/3Fx5Q8xGU8k?si=3anUMopHSJ4nKk2R)

Timestamp 13:50: “If you’re a startup, and you want to get to a monopoly, start with a really small market and you take over that whole market and then you find ways to expand that market in concentric circles”

Last I checked Zuckerberg is doing precisely what Thiel taught him to and has done it with preternatural skill.

This is the standard for how you’re expected to act as a technology “leader” - which the majority of VC backed unicorn goal founders (like every FAANG founder) have been executing since day zero.

[Gud]

According to? What do they bring to the table? A dystopian future, greed and destruction. They are not my leaders.

I look to individuals like Bill Joy, Linus Thorvalds and Theo de Raadt. People who roll up their sleeves and build amazing things.

Parasites like Zuckerberg and Thiel can go to hell for all I care.

[t3783783jf]

You remind me of this interview with Alan Kay:

https://futureofcoding.org/notes/alan-kay-lunch.html

In the piece the notion that what we need to solve our problems is more people like Joy, Torvalds and de Raadt and less people like Zuckerberg, Gates, and Bezos is gently alluded to, and I think it's a powerful point.

I'd nearly go on and suggest things like Tools for Conviviality, or some Cory Doctorow stuff. But in any case it's a lovely interview, maybe it's a good enough start.

[navane]

They are going there, but they have to build it first, here among us.

[balls187]

Defensibility is pretty much one of the first topics raised by every investor, and thus ingrained into every founder: What is our moat? (e.g. how do we ensure no one else gets into our space until we're ready to choke out their air supply).

[52-6F-62]

The word that is not used often to describe their worldview is the most accurate: medieval.

It isn’t just jargon. They are building castles against perceived enemies and everyone is an enemy. They are striving to be the Normans taking England, embedding themselves in every realm, region, barony, and parish, rewriting the rules in the name of progress either by woo or by force, and eliminating the natives. Up go the walls, round go the moats, and out point the guns.

The last startup I worked at was primarily concerned with loyalty above most else. Loyalty to what?

[Xelbair]

Sure, but in non-digital markets we had a term for most common growth hacking tactics for attaining that niche monopoly.

Dumping. Operating on loss for years, just burning money to capture a market and then jack up prices and make competition unfeasible.

Which is illegal in most cases when it comes to physical goods. of course it depends on the region you're in - it is extremely illegal with sky high fines in my country for example.

Having the attitude to reach that goal is fine, but the goal itself(monopoly over segment of a market) should be impossible to reach. Whenever it happens markets get distorted to the detriment of all customers.

The whole point of capitalism is to put stress onto system for self-improvement - you need to produce better good, make it more efficient and cheaper, and find perfect balance between price and performance - to run economy as efficiently as possible while basically 'crowdsourcing' resource allocation computation over every market participant.

As soon as that stress is gone, you're back to Guilds system where nothing is dictated by market forces, just at whim of current entity in power.

[Digit-Al]

I remember many (many) years ago I used to frequent a small independent video rental shop. Then, one day a Blockbuster opened next door (and when I say next door, I do mean literally next door) offering a larger range of videos to rent and much cheaper prices. Within about three months the independent had gone out of business and shut down, at which point the Blockbuster jacked their prices up to what the independent had been charging.

It was incredibly blatant and I felt sorry for the poor guy that had been running the independent business.

[amelius]

If companies are like processes then we need an OOM-killer for monopolies.

[yujzgzc]

The analogy with dumping is interesting. In the software world, near-zero marginal costs make it much harder to determine, but I guess the same concept does exist.

[diego_moita]

That is also one of his core arguments on his book "Zero to One".

To be fair, he is not the only one to think like that. Every "captain of industry" needs to be paranoid against competition. It is a basic survival instinct. Just look how much Steve Jobs freaked out about Android and Windows. Or how Alfred Sloan bought or merged every possible competitor. Or the history of Nabisco, the steel industry, Microsoft, AT&T, etc

[Vespasian]

And that's not a bad instinct which (in a perfect world) drives innovation and lowers prices for customers.

But that only works if the competition can not be simply bought out which requires effective anti trust laws before they get so big that "nobody" can compete.

I firmly believe that it's better to prevent a company from growing too big than breaking it up after the fact.

Almost everybody profits from smooth and constant enforcement.

[rvz]

> Last I checked Zuckerberg is doing precisely what Thiel taught him to and has done it with preternatural skill.

...and the teachings from Bill Gates and Steve Jobs' mentorship.

> This is the standard for how you’re expected to act as a technology “leader” - which the majority of VC backed unicorn goal founders (like every FAANG founder) have been executing since day zero.

Except knowing how to deal with the time when anti-trust regulators are knocking on your door.

The stark difference between why Microsoft isn't being broken up vs Meta Platforms.

[badgersnake]

It sounds like you’re saying the only way Y combinator makes money is when it’s illegal.

So let’s RICO them then I guess.

[tlb]

By itself, becoming a monopoly can be legal & ethical.

But once you have a monopoly, you're not allowed to do certain things like buying competitors for the purpose of crushing them.

[deeThrow94]

I think the ethics of private enterprise is far from sorted long, long before getting to market-manipulation. Particularly in the US, where you're essentially obligated to take peoples' money at any cost.

[Juliate]

What verifiable existing/attempting monopoly today is ethical?

[tlb]

They are about as ethical as non-monopoly businesses. Which is to say that some are bad and most are OK.

I guess some people think all business is unethical, but for those people monopolies don't change the sign.

[Juliate]

> They are about as ethical as non-monopoly businesses.

No, my point/thesis is that, whatever non-monopolies can be, a monopoly is de-facto unethical.

If there is a legitimate reason that there's a monopolistic control over something, it then _has to_ become a public service, in the general interest.

And there is no actual existing monopoly today that could serve as a counter-example to that thesis.

[scyzoryk_xyz]

You're correct, this has been the prevailing culture in tech. This is the playbook.

But this isn't a good excuse. Players gonna play - we want them to play to win as hard as they can. But when we have safety guardrails and boundaries like antitrust, they're not supposed to just break through them.

Was he 'taught' by Thiel is that a thing that happened?

[xyst]

Thiel is such a disgusting person. People like him, greedy fucking capitalists, are the reason the world is slowly burning down.

All of this so he and his other billionaire friends can turn society into “network states” (privatized entities/corporate towns).

[dimal]

It goes deeper than that. All publicly traded corporations are morally obligated by the Friedman Doctrine [0] to do stuff like this. If something returns value for shareholders (and monopolies do) then a CEO must do it. This is how the whole system is supposed to work. Of course, there's no reason that capitalism must to work this way, but this is the toxic form of capitalism that we've unwittingly chosen. Thiel just gave a playbook for implementing this in the tech space.

[0] https://en.wikipedia.org/wiki/Friedman_doctrine

[mattbuilds]

That is not a moral obligation, it is in fact the opposite. It is a lie that people tell themselves and the world to allow themselves to make immoral decisions for their own benefit.

I’m not saying running a company is easy and I know that many gray areas exist in the decision making. I do think companies can exist, profit, and be a net good for the world. However, we need to remove the notion that the duty to shareholder profits is a moral duty. It’s a cowards way out of having to make actual difficult choices. It’s one of those things that sounds great exactly because it allows you do horrible things with no responsibility. It creates a system where you offload the effort and weight of your decisions. As long as you’re are acting in the interest of shareholders, you are in the clear. That’s a dangerous concept and the opposite of morality.

[shoeb00m]

It is the fiduciary duty of the CEO to do what’s in the best interest of shareholders.

In a working system it should be the governments responsibility to limit what a company can do

[mattbuilds]

According to your logic, a CEO should attempt to destabilize and influence the government's responsibility so they can maximize shareholder value. And guess what, that is exactly what happens in reality. You can't just simplify reality into rules like this because it leads to people using those rules as an excuse to skirt responsibility and make actual difficult decisions.

[AndrewKemendo]

Correct and this is why regulatory capture is the phase after market capture, to transition into legal monopoly.

[hgomersall]

In the best interest of the shareholders might reasonably interpreted as, say, not destroying the biosphere. Fiduciary duty is certainly not "maximise profits whatever the consequences".

[dazed_confused]

I would recommend reading about the Friedman Doctrine and the time period where it came about. It is only a theory and not necessarily a good one.

[heresie-dabord]

Unless Saint Friedman got his "doctrine" from some higher power, it's just the oligarchy's first commandment.

In the first line of GP's reference in Wikipedia:

"The Friedman doctrine, also called shareholder theory, is a normative theory of business ethics advanced by economist Milton Friedman that holds that the social responsibility of business is to increase its profits."

[closewith]

It may be an obligation, but it's certainly not a moral one.

[p_l]

It's something untrue that people are told to believe - but it's in no way a real obligation, and isn't part of any fiduciary duty - it's just Friedman philosophying and selling it

[dazed_confused]

Exactly! Unfortunately people lap it up as some ground truth when it is a dude providing a theory and as you said “selling it”

[hobs]

Nobody is obligated to do this, its just that they say they are so they can extract the most amount of money from any situation and blame some vague principal. Plenty of companies leave money on the table because its terrible for everyone.

[JKCalhoun]

> All publicly traded corporations are morally obligated by the Friedman Doctrine to do stuff like this.

That's a strange way to put it. As though it is the Right and Good way to run a company — and also as though the Board's/CEO's hands are somehow tied.

[nailer]

But they are. You may consider it be terrible. There’s a good argument for that, the original Ford versus Dodge case we started by allegations from Dodge that Ford paying its workers more was not in the interest of Ford’s shareholders. But there is no rational reason to pretend the obligation doesn’t exist.

[JKCalhoun]

If I'm reading this correct, there is no law that says they have to do this, but they have to do this.

[nailer]

The law says they have to do this. See https://en.m.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.

[JKCalhoun]

Apparently, from my research, it's not the law.

There's fiduciary "duty", but not law. Judge's apparently give wide berth to management to decide what, perhaps long term, is going to be profitable.

[Juliate]

> If something returns value for shareholders (and monopolies do) then a CEO must do it. This is how the whole system is supposed to work.

Disagree. Shareholders are not the all and everything of a company. Neither they, neither the company exist in a void.

> Of course, there's no reason that capitalism must to work this way, but

How is that not a contradiction with the above?

[dimal]

> Shareholders are not the all and everything of a company.

I agree with you. But what you or I think doesn't matter.

> This is how the whole system is supposed to work.

My point is that our current form of capitalism is designed to work this way, but there's no requirement that capitalism must work this way. This is just the toxic form of market economy that we ended up with.

[Juliate]

> But what you or I think doesn't matter.

1/ It does (because, it's false to say that "a CEO must do this or that" - or that's not a chief, a CEO, just an algorithm).

2/ it's less a matter of opinion than a matter of observing facts: shareholders are not the all and everything of a company. But my perspective may be that, being French, we have a history of having demonstrated the reality of this in actual actions, that USAmericans haven't yet.

[jampekka]

> Of course, there's no reason that capitalism must to work this way

There kinda is. Capital is allocated to where it makes most profits, and most profits go to companies maximizing shareholder value. In aggregate this makes the profit maximizing companies more likely to survive.

Sure this can be perhaps mitigated by e.g. legislating other duties to companies, but I'd say it's very hard even in theory, let alone in practice, to have capitalism without lopsided profit maximization.

[sgc]

> Capital is allocated to where it makes most profits

We have worked ourselves into this frenzy over the past several hundred years, but especially over the past 25. We even describe it like you did, as an axiom or a law. But human action is people doing things, and modern economics masks unbridled greed as rules of 'science'.

It is enough to make a good living doing something worthwhile. There is no need to constantly seek highest returns. Nobility in action is possible. Capital does nothing, people do things with capital. Better choices are possible. All is not lost.

And of course, roughly 30% of all modern work-related activity is government. That part of our societal activity should be focused on creating guide rails to make sure that people do not pursue modern economic theory in the real world, but actually work to do good things.

[realo]

So... Capitalism is bad for the people , communism is bad for the people.

What _is_ good for the people? Canada?

[deeThrow94]

Man, more people should read Schumpeter. Capitalism is really good for rapid growth. The second the profit motive negatively affects the quality of the product or efficiency of its production a company should be nationalized to prevent the profit motive from destroying part of our economy (the actually-useful part, that is, not investors or shareholders or dividends).

[Juliate]

But rapid growth is not necessarily _good_. Cancer is rapid growth.

[Rzor]

That's exactly the point of his follow-up.

[lud_lite]

Technology ironically. The stuff Peter talks about where Y=0. The covid vaccine inventors for example.

Other Y=0 things are people giving their lives for the greater good and basic rights. Geneva convention. Rights for black people, rights for women.

Infact the world runs on Y=0 stuff.

[mk_chan]

Not sure why OP is getting downvoted. Going the premise of the cited doctrine, it follows precisely that even doing illegal things are acceptable as long as there is net gain until the expected future.

OP doesn’t even claim this is the one true doctrine or anything of the sort.

[p_l]

People are gaslighted to think Friedman's Doctrine is a legal or moral obligation, because it makes money for capitalists.

But in fact, in USA there's even a SCOTUS ruling that says it is a bogus idea