Competition, we normally think about it as a good thing right? Especially within the economy, it’s good for businesses to compete with each other. But have you ever wondered about how profitable restaurants, martial-arts schools, and car-repair shops really are, are they really raking in the dough or merely surviving?
Without digging into the numbers, clearly there are companies in the previously mentioned categories that make profits, but these are areas where there is immense competition within the industries, it typically doesn’t allow for any business owner to dominate and reap massive profits. This is not necessarily a bad thing, but it means owners will be under constant pressure to squeeze out profits and cash to continue operating as opposed to being able to dominate a market. This might be good for the people dining at restaurants, getting their cars serviced, and signing up for a class, but according to Thiel, it is not desirable as an entrepreneur.
This is some advice from Peter Thiels – escape competition. Thiel writes about how entrepreneurs looking to create financially successful, lasting companies, need to avoid the fierce competition within the traditional marketplace, and innovate into a new space.
Thiel points to the modern day giants like Google, Amazon, and Paypal to demonstrate that these companies truly entered and dominated a new space, and innovating in these new spaces gave them room to create, get beyond the competition, and reap astronomical profits.
Thiel encourages entrepreneurs to solve problems that have not already been solved. Discover the answer to mysteries that have not already been found. Once we identify a new solution or discovery, then we have the potential to act with enormous upside and escape the competition.