Tag: Thiel

6/17/12 “The Creative Monopoly”

Good day, team.

A few months ago, David Brooks wrote a very interesting article for the New York Times, “The Creative Monopoly.” For today’s challenge, I’d like to share a few paragraphs from that article in which he writes about the differences between competition and capitalism and how we often confuse the two.

“As a young man, Peter Thiel competed to get into Stanford. Then he competed to get into Stanford Law School. Then he competed to become a clerk for a federal judge. Thiel won all those competitions. But then he competed to get a Supreme Court clerkship.

Thiel lost that one. So, instead of being a clerk, he went out and founded PayPal. Then he became an early investor in Facebook and many other celebrated technology firms. Somebody later asked him, ‘So, aren’t you glad you didn’t get that Supreme Court clerkship?’

The question got Thiel thinking. His thoughts are now incorporated into a course he is teaching in the Stanford Computer Science Department. 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.

Now to be clear, when Thiel is talking about a ‘monopoly,’ he isn’t talking about the illegal eliminate-your-rivals kind. He’s talking about doing something so creative that you establish a distinct market, niche and identity. You’ve established a creative monopoly, and everybody has to come to you if they want that service, at least for a time.”

His lecture points to a provocative possibility: that the competitive spirit capitalism engenders can sometimes inhibit the creativity it requires.

Think about the traits that creative people possess. They don’t follow the crowds; they seek out the blank spots on the map. Creative people wander through faraway and forgotten traditions and then integrate marginal perspectives back to the mainstream. Instead of being fastest around the tracks everybody knows, creative people move adaptively through wildernesses nobody knows.

Now think about competitive environments that confront the most fortunate people today and how it undermines the creative mind-sets.

First, students have to jump through ever-more-demanding, preassigned academic hoops. Instead of developing a passion for one subject, they’re rewarded for becoming professional students, getting better grades across all subjects regardless of their intrinsic interests. Instead of wandering across strange domains, they have to prudentially apportion their time, making productive use of each hour.

Then they move into a ranking system in which the most competitive college, program and employment opportunity is deemed to be the best. There is a status funnel pointing to the most competitive colleges and banks and companies, regardless of their appropriateness.

Then they move into businesses in which the main point is to beat the competition, in which the competitive juices take control and gradually obliterate others goals. … Competition [trumps] value-creation. In this and other ways, the competitive arena undermines innovation.”

All of this got me thinking about the importance of not worrying about what the other guy is doing, but instead, using that energy to create something new or a niche in your market that no one else has inhabited yet.

I am reminded of my first job working for MCI in Washington, D.C. At that time, AT&T had the monopoly on all phone service in the U.S. It also owned the company that made the telephones. Jack Goeken, the founder and Bill McGowan, the CEO of MCI, intended to create a microwave phone service for trucking companies between St. Louis and Chicago so the truckers could communicate far more effectively for a fraction of the cost. Everyone thought they were crazy. No one in the U.S. other than AT&T, was in the phone business. When MCI’s telecommunications system was finally up and running, the Wall Street Journal interviewed Bill and asked him how he could possibly think he could compete with AT&T. His response was, “I’m not competing with AT&T. I’m creating a completely different kind of telecommunications service, of which, in 10 years, MCI will only be one of many players.”

How prophetic his comments were. I remember that our mantra at MCI wasn’t, “We’re going to beat AT&T;” it was, “We’re creating a brand new way to communicate.” The latter statement was much more motivating for us.

This week, ask yourself if you’re competing or creating. Are you spending more time thinking about how to beat out your co-workers for the next promotion or creating new and different ways to work with your fellow team members? Maybe you’re thinking of creating something in your life that has nothing to do with your job. How about finding ways to nurture that creativity by spending time coming up with new ideas?

Maybe your job is to study what the competition is doing to give you an advantage. How about thinking about what your competition is not doing? Is there space in your market to create a niche no one else has thought of yet? Some companies have “idea rooms” where employees can go to for a week and do nothing but draw, paint, write and so on to come up with new product ideas, creative organizational structures and innovative services. How about giving yourself free license to spend time creating something new?

As Brooks writes in his article,

“We live in a culture that nurtures competitive skills. And they are necessary: discipline, rigor and reliability. But it’s probably a good idea to try to supplement them with the skills of the creative monopolist: alertness, independence and the ability to reclaim forgotten traditions.”

Have a good week!


Kathleen Doyle-White

Pathfinders Coaching

(503) 296-9249

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