Comment by loup-vaillant | Hacker News Reader

Comment by loup-vaillant | Hacker News Reader

> Progress comes from monopoly, not competition.

Okay, that was a surprise. I get the idea that one should work on new things, that merely trying to out-compete is counter-productive (competition is a zero-sum game after all).

On the other hand, some benefits may only come when there's enough players that compete with each other. Take Virtual Reality, for instance. There's the Occulus Rift, Now Sony is working on it, there was valve… at one point, there will be enough player to make a market for low-latency, low-persistence, high-frequency, ridiculous-resolution flat panels. The smartphone industry pushed in that direction of course, but the limit of what's useful for this industry is clearly not enough for VR. Anyway, with this new market, VR will improve as a whole. Without the competition that is currently forming, I think those miraculous flat panels wouldn't come out as fast as they will. That said, those folks are still working on something new…

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Now that I think of it, maybe he was talking about maximizing one's marginal impact? Like, let the Occulus people work on their Rift alone, and try and work on something different. Even if that slows the VR revolution down, we may now have two revolutions. Hmm…

Seems like an odd theory on the heels of three counter examples. Bill Gates didn't create the first OS, Larry and Sergey didn't create the search engine, and Mark Zuckerberg didn't build the first social network.

exactly. given that, if you want to be the next Bill Gates or Larry & Sergey or Mark Zuckerberg then you should focus on spotting some new but already existing invention and crate a competitor that is just slightly better then the original.

Yes, but most people don't know that. They started using computers on Windows, their first social network account was on Facebook, and their first Internet search was performed on Google. Therefore, even if the examples are not technically accurate, they are still extremely effective at getting Thiel's point across.

But any point where the strongest examples aren't "technically true" and therefore rely on a common misconception is a pretty weak argument. Either Thiel's point is weak, or he means something else.

I suspect he means doing those things (search engine, OS, social network) in a way no one else had.

There are two forces at work there. First is that without being granted a monopoly by force, only really smart people manage to monopolize an industry (think Google).

The benefit monopolies offer is not just that they’re good investments, but that they concentrate wealth in the hands of someone smart enough to monopolize something. Wealth tends towards entropy, so brief concentrations of it are a beautiful thing. And while markets are great at optimizing the last .1% increase in efficiently for a known process, they suck at paradigm shifts—unless there’s someone really smart with enough money to singlehandedly shift that paradigm. Google’s near monopoly on search has probably hastened the arrival of self-driving cars by a few years, saving numerous lives. Score one for monopolies! Even my least favorite monopoly, USG, has deployed money in interesting and otherwise infeasible projects, such as landing on the moon and defeating the USSR.[1]

Second is integration and incentive structure.

One simple robust solution to the innovation problem would seem to be manic monopolists: one aggressively-profit-maximizing firm per industry. Such a firm would internalize the entire innovation problem within that industry, all the way from designers to suppliers to producers to customers – it would have full incentives to encourage all of those parties to put nearly the right amount and type of efforts into innovation.[2]

[1] http://oddblots.tumblr.com/post/85817835358/stoptheslowlane-...

[2] http://www.overcomingbias.com/2014/04/rah-manic-monopolists....

Yeah, very smart people are exactly who we want driving innovation. Just like how Thomas Edison and his monopolizing Edison Trust brought American electrical systems into the future by embracing AC power, instead of clinging to clearly inferior DC power for as long as possible.

</sarcasm>

If you expect monopolies to drive innovation, you're going to be disappointed. A monopoly doesn't promote paradigm shifts or destructive innovation. In fact, historically speaking, monopolies often take drastic steps to ruthlessly crush any such innovation.

In your second link, at least Robin acknowledges that, historically, there is no reason to expect monopolies to behave as described. Actually, the idea of a "manic monopolist" is fairly interesting. But, if a corporation already controls an industry, how do we incentivize it to take risks by promoting rapid innovation in that industry?

Yeah, I dont want smart people driving innovation. I want everyone to have the freedom to create and live their lives free and unhindered by the threat of violence, the encroachment of propaganda, or economic bullying- even if the bully is able to rationalize his actions.

This idea of giving all the smartest people the money is interesting- in the way that eugenics was interesting.

You can't know how the world would look if Google didn't have a monopoly, but instead there would be more competition. For example, advertising would plausibly cost less, which would mean that a million companies would have less expenses, and therefore more money to invest.

In AdWords, which is 90%+ of Google's revenue, advertising prices that advertisers pay are set by advertisers, not by Google.

If you look at competition as a form of mimicry, then yes, true innovation is almost impossible.

On the opposite end is the Blue Ocean Strategy. There's no competition because it's essentially a new product or service - an innovation. And that business is in a monopolistic position.

The creation of a monopoly has always resulted in a great impact on the world (possibly because the world wouldn't accept a monopoly that didn't do great things). What that monopoly ends up doing with its power/resources is an entirely different matter.

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