Summary of ‘Zero to One’, Chapter 4: The ideology of competition

Summary: Our educational system and career ladders encourage and celebrate competition. We think of competition as good, and the foundation of business. Actually, competition is destructive and distracting. Foolish companies imitate each other and compete. Wise companies either diverge into new space, or merge into a monopoly.

“Creative monopoly” is good. People believe competition is good, but this is ideology. Our education system quantifies success and encourages competition. It gets worse in higher education, and even worse in careers (think management consulting). I myself competed as a law student, almost reaching the top. I failed to get my prestigious clerkship, but in hindsight this was great. Such careers pay comfortably, but the opportunity costs are enormous: what else could you be doing?

We compare business to war, but it’s only competition which is like war. It’s destructive. We fight because we are similar, not because we are different; we should strive to keep difference. Microsoft and Google became similar (Bing Search, Google Docs), and competed among themselves while Apple took over. Rivalry causes pointless imitation. Maybe this is why Aspergers people are successful: they don’t feel the need to imitate and compete. Competition can hide a bubble: Pets.com competed with PetStore.com, but actually the “online pet store” market was stupid. Larry Ellison of Oracle loves competing, and accumulates personal enemies at other DB companies, who compete with him in immature ways. At PayPal, we competed with Elon Musk’s X.com, but in Feb 2000 we negotiated a merger, which was great. Where you do have to fight, fight hard; otherwise, try not to fight at all.

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