Creative Monopolists

David Brooks

David Brooks writes about Peter Thiel: The Creative Monopoly. He writes:

One of his core points is that we tend to confuse capitalism with competition. We tend to think that whoever competes best comes out ahead. In the race to be more competitive, we sometimes confuse what is hard with what is valuable. The intensity of competition becomes a proxy for value.

In fact, Thiel argues, we often shouldn’t seek to be really good competitors. We should seek to be really good monopolists. Instead of being slightly better than everybody else in a crowded and established field, it’s often more valuable to create a new market and totally dominate it. The profit margins are much bigger, and the value to society is often bigger, too.

Interesting point. I have heard some of Peter Thiel’s arguments, and they make sense.

However, I think it’s useful to separate the practicality with the theoretical–and by this, I mean that you somehow have to play the game. My  hesitation in embracing Thiel’s views entirely is that it probably didn’t hurt that he has a BA and JD from Stanford–it’s easier to form a new market if you’ve got capital and connections behind you. It’s not fair, but people judge other people based upon their poofy college connections or other connections. I do respect Thiel for backing up his words with his $100,000 prizes for students to drop out of college, but again, winning such a prize is an association–it’s almost similar to getting a degree. It’s hard to break from the grid entirely and still succeed. I don’t know that I would recommend doing so, even if you’re just as smart as the dork who spent hundreds of thousands for his degrees.

Otherwise, I agree with Thiel. Hey, Russell Simmons broke free and did something similar when he started Def Jam. If you can start and master a new field, that’s the best place to be. The margins are huge when you’re the only player, and it often helps society more.

3 thoughts on “Creative Monopolists

  1. I agree with Peter Thiel’s views on the state of higher education:

    Thiel believes that education is the next bubble in the U.S. economy. He has compared university administrators to subprime-mortgage brokers, and called debt-saddled graduates the last indentured workers in the developed world, unable to free themselves even through bankruptcy. Nowhere is the blind complacency of the establishment more evident than in its bovine attitude toward academic degrees: as long as my child goes to the right schools, upward mobility will continue. A university education has become a very expensive insurance policy—proof, Thiel argues, that true innovation has stalled. In the midst of economic stagnation, education has become a status game, “purely positional and extremely decoupled” from the question of its benefit to the individual and society.

  2. However, I think it’s useful to separate the practicality with the theoretical–and by this, I mean that you somehow have to play the game. My hesitation in embracing Thiel’s views entirely is that it probably didn’t hurt that he has a BA and JD from Stanford–it’s easier to form a new market if you’ve got capital and connections behind you. It’s not fair, but people judge other people based upon their poofy college connections or other connections.

    To an average working stiff with a deadening job, money problems, family to support, etc, this stuff about creative monopoly may seem like pie-in-the-sky nonsense that applies only to people like Peter Thiel.

    But if you go back 10,000 years ago, when humanity was living a hunter-gatherer existence and you told them that there was going to be a time when people would be engaged in activities other than constantly searching for food, you would be regarded with disbelief.

    There is some stuff that “has to happen in the middle” though, some kind of a revolution that frees people from mere “jobs” so that pursue more creative and innovative endeavors that also provide more value to society.

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