Imagine if Mark Zuckerberg would have heard this advice and been convinced that there was no point in competing with MySpace..
Nor when he expanded that out over numerous other Ivys and Stanford, then additional selective universities.
It wasn't until he'd created an existing, high-quality, attractive userbase, of interest to both advertisers and the general public, that he was competing with MySpace.
Sometimes the monopoly is in where you define your market.
Amazon took a similar tack, first going after book sales (an excellent market for online commerce), then a broader set of markets.
They competed by innovating but that doesn't change the fact that they had to compete.
See Ha-Joon Chang's Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism for more on this.
"Chang blasts holes in the “World I s Flat” orthodoxy of T homas Friedman and other liberal economists who argue that only unfettered capitalism and wide-open international trade can lift struggling nations out of poverty. On the contrary, Chang shows, todays economic superpowers—from the U .S. to Britain to his native Korea—all attained prosperity by shameless protectionism and government intervention in industry."
http://www.powells.com/biblio/2-9781596915985-8
Similar principles can be applied in business.
Do you have a reference?
You probably confuse a market leader of a nascent market with a monopoly. MySpace was popular, but even at its peak it was 1/10 or less of the size of Facebook.
Say there's a new product category, for example "pet-rock social sites".
The first site PetRockSter on the market gets 1M account. A second site, PetrockSpace arrives, totally obscures the first site, and gets 20M people.
Then a third one cames (PetrockBook), and everybody you know starts getting "pet-rock social sites", to the point that half the population or more is now using that third website.
Technically the first and second time were "monopolies" in their time. But they only had 100% of a very small niche market, before it matured, that is they had like 100% but of a small percentage of the whole population that would eventually get a social pet rock account.
You are only a legit monopoly (with all the power that entails) if a) you have a huge share of a market and b) that market is not blowing up and expanding at a fast rate. E.g the way Microsoft has a near monopoly on desktop OSes.