Peter Thiel on the type of company more startup founders should build

Thiel first emphasizes his belief that when starting a company, you should always ask:

“Can this company become a monopoly?”

He then lists three of the most common types of monopolies:

1. Super fast distribution on a very thin product (e.g. Twitter)

2. A technological advantage that is continually built upon with iterative improvement and compounds over time (e.g. SaaS software)

3. A truly brilliant breakthrough (e.g. Bitcoin)

But he argues that there’s a different monopoly category that’s continually overlooked:

“A different modality for innovation that we do very little of and we don’t even recognize as an important category is what I would describe as ‘Complex Coordination,’ where you take a lot of different pieces and the challenge is to coordinate them into something new.”

Thiel continues:

“This is the thing that’s maybe 180 degrees antithetical to the Lean Startup ethos. It’s complicated. You have to put all the pieces together in just the right way. I think this is on some level what really drove Apple as an innovative company in the last decade… What was new about the iPhone? There was no single component that was new. It was just that you put all of these things together in just the right way… and once you built it, it was actually super hard for people to replicate. You had an advantage for many years.”

He points to Tesla and SpaceX as more recent examples.

“There’s no component to the Tesla that’s actually that new. It’s just that you put all of the pieces together. You re-engineered the whole distributor network. It was this complex coordination that made it work. There’s like this lost art of accounting where you figure out how much things cost and add them all together. And Elon has discovered this lost art of accounting which no other people practice.”

Full video: General Assembly “Zero to One: A Discussion with Peter Thiel” (Feb 2015)