From 0 to 1: unlocking the secrets of business and the future

Chapter 8 Competitive Consciousness
A creative monopoly is a new product that benefits the public and brings long-term profits to the creator.Competition means no profit for everyone, no substantive product differentiation, and a struggle to survive.But why do people believe that competition is a healthy state?The answer is that competition is not just an economic concept, nor is it just a nuisance that individuals and businesses have to deal with in the marketplace.What matters is that competition is an idea — an idea that pervades our entire society and distorts our thinking.We preach competition, we internalize the need for competition, we promulgate its laws; the result is that while the competition is getting more and more intense, we actually get less and less, and we trap ourselves in the competition.

It's a simple truth, but we've all learned to ignore it.Our educational system both drives us to compete and reflects our obsession with competition.Grades themselves are an accurate measure of each student's competitiveness, and students with the highest scores receive both status and certificates.We use the same methods to teach young people the same content, regardless of individual talents and preferences.The student who can't sit still at his desk all the time feels inferior to his environment; the kid who excels on tests and assignments ends up finding himself in the weird world of academia that has no connection to the real world. position.

The higher the level of higher education, the more serious this phenomenon is.Top students confidently "walk to the top" until the competition is too high to swallow their dreams.Higher education is a dilemma, where students with grand plans for their future in high school end up competing with their intellectually equal peers in traditional careers such as business management consulting and investment banking.Students (or parents) are paying hundreds of thousands of dollars for the privilege of transforming themselves into conformists, and tuition continues to soar, continuing to outpace inflation.Why do we do this to ourselves?

How I wish I had thought this way when I was young.My path followed a pattern, as a friend predicted in my eighth-grade yearbook: In four years I'd be a sophomore at Stanford.After finishing college step by step, I was admitted to Stanford Law School, where I worked harder and pursued greater success.

Every law student has a clear goal - to get the highest grades.Because every year, only a dozen or so students stand out from tens of thousands of students to become clerks of the Supreme Court.After a year of working on a federal appeals court, I finally got an interview for a clerkship with Judges Kennedy and Scalia.The interview went well and the victory was in sight.I thought, it would be great if I could be a clerk, and I would not have to worry about it for the rest of my life.But it turned out that I failed.At that time, I was devastated and depressed.

In 2004, after starting and selling PayPal, I ran into an old friend from law school who had helped me put together my application for that failed interview.We haven't been in touch for nearly 10 years.Instead of "How are you" or "Long time no see", the first thing he said was "How are you?" Instead, he grinned and asked me, "Peter, are you glad you didn't compete for the clerk?" Looking at the later development trend, we all know that if I win that competition that year, my life will change in a bad direction.If I really stayed in the Supreme Court, I might only be able to take testimony and draft other people's business agreements in my life, but I would not have the opportunity to create new things by myself.It's hard to say how big the difference is between the two paths, it can only be said that the opportunity cost is really high.It's like all Rhodes Scholars who have received Rhodes Scholarships have been full of expectations for the future.

War and Peace

Professors downplay the cutthroat competition in academia, and managers like to compare the business world to a battlefield.MBAs carry the works of Clausewitz (German military theorist and military historian) and Sun Tzu with them.The metaphorical usage of war has penetrated into everyday business language, such as the sales force (force) we build with the help of headhunters (headhunters), so that we can capture (captive) the market and make a fortune (makekilling). (The original meaning of the English in brackets is related to war.)
Why do people have to compete?The answers given by Marx and Shakespeare help us understand the causes of almost every kind of conflict.According to Marx, people struggle because of differences.The proletariat and the bourgeoisie struggle because of very different views and goals (from different material circumstances).The greater the difference, the greater the conflict.

For Shakespeare, on the contrary, all strugglers are more or less alike.Since there was nothing to fight, it was not clear why they fought. "Romeo and Juliet" begins by saying: "Two families, equally dignified and dignified." The two families are similar, but they are hostile to each other.As the conflict escalates, they become even more alike.Until the end, they themselves forgot the cause of the initial conflict.

In the business world at least, Shakespeare's theory is superior.Inside the company, people keep an eye on their opponents in order to get promoted.And companies keep an eye on competitors in order to gain market share.In all the drama of human conflict, people tend to lose sight of what really matters and focus only on their rivals.

Let's put Shakespeare's interpretation to the test in the real world.Based on "Romeo and Juliet", we make up another story "Gates and Schmidt".The Montagues (Romeo's surname) are Microsoft, and the Capulets (Juliet's surname) are Google.The two families, each run by two computer elites, are bound to clash because of their similarities.

Like all tragic stories, this conflict, in retrospect, seems inevitable, but it was totally avoidable.The two families came from very different fields, with the Montagues developing operating systems and office applications, and the Capulets developing search engines.What do they have to argue about?
There are obviously many things to contend with.As start-ups, the two families have developed independently and do not want to cause trouble.But as their careers grew, they began to focus on each other.Montague was always thinking of Capulet, and Capulet was always watching Montagu.what's the result?The result is that Microsoft's Windows system meets Google's ChromeOS, Bing meets Google Search, Explorer and Chrome browsers go head-to-head, Office and Docs compete, and Microsoft's Surface tablet and Google's Nexus Tablet Competitive.

Just as the battle between the two ended up sacrificing the children of the two, the result of the competition between Microsoft and Google is: Apple emerged and overwhelmed their advantages. In January 2013, Apple’s market capitalization was $1 billion, while Google and Microsoft’s combined was $5000 billion.Just three years ago, both Microsoft and Google were worth far more than Apple.It can be seen that competition is a high-cost business.

Competition causes us to overemphasize past opportunities and to repeat past patterns.Take the recent explosion in mobile credit card readers, for example. In October 2010, a start-up called Square unveiled a white, square, tiny product that allowed people to swipe and read their credit card information with an iPhone.It was the first payment solution designed specifically for mobile phones, and imitators quickly emerged.A Canadian company called NetSecure has launched its own half-moon card reader. Intuit Group has added cylinders to the geometry wars. In March 10, PayPal, a subsidiary of eBay, followed suit and released its own card reader, which was triangular in shape--it was a "heavy blow" to Square (meaning "square")!Three sides is much simpler than four sides.This Shakespearean saga seems to have to wait until all the shapes have been imitated.

The dangers of copycat competition may explain why people with conditions like Asperger's syndrome, which has social impairments, are now more dominant in Silicon Valley.These people are less sensitive to social dynamics and therefore less likely to follow suit.If you are interested in invention and computer programming, you have the courage to devote yourself to it and eventually become an elite in these fields.When you put your skills into practice, you are less likely to give up your beliefs: this can save you from the competition for fame and fortune.

Competition makes people hallucinate, and it is futile to grasp some "opportunities" that do not exist.The "opportunity" that arose in the crazy '90s was online pet stores.It's a war of Pets.com, PetStore.com, Petopia.com, and a host of others.They deal in similar products, and each company wants to beat the competition; the tactical question is often asked: Who can set a competitive price for a chewy dog ​​toy?Who Can Come Up With the Best 'Super Bowl' Ad Idea?These companies are ignoring the more important question - should they set foot in the online pet supply market?Winning is certainly better than losing, but if the battle isn't worth fighting, everyone involved loses.Ultimately, Pets.com went bankrupt after the dot-com boom ended, and the $3 million investment evaporated.

In addition to giving the illusion, competition is also distracting.Consider the Shakespearean conflict between Larry Ellison and Tom Siebel.Larry Ellison is the founder and CEO of Oracle Corporation. Tom Siebel was a senior salesman at Oracle before he founded Siebel Systems in 1993 and was a follower of Larry Ellison.Ellison was furious at Siebel's betrayal, and Siebel didn't want to remain in the shadow of his former boss.Both men are tough Chicagoans who like business and don't want to lose money.Because of the similarity, their hatred is getting deeper and deeper.Ellison and Siebel were tearing each other down in the late '90s.Ellison once took a truckload of ice cream sandwiches to Siebel's head office, trying to buy off Siebel's employees.The package of the sandwich reads: "Summer is coming, join Oracle and grow your career and your life!"

Oddly enough, Oracle continues to make enemies on purpose.Ellison's theory is that it's always good to have an enemy, as long as he's threatening enough to motivate employees without destabilizing the business. In 1996, a small database company named Informix erected a notice board next to the Oracle headquarters in Redwood Beach, provocatively proclaiming - Attention: Dinosaurs passing by!Allison was extremely excited when he saw it.Another Informa sign stands on North-South Highway 101, and it says - You just passed Redwood Beach, and so did we.

Oracle responded with a billboard suggesting that Informix's software was slower than a snail.Informix CEO Phil White decided to take the attack personally.When White learned that Ellison advocated Japanese samurai culture, he erected another billboard with the Oracle logo on it and a broken samurai sword next to it.The ad was really not aimed at Oracle, let alone consumers, but purely a personal attack on Ellison.But White may have worried too much about the competition: While he was busy putting up signs, a financial scandal erupted within Informa, and White himself was in prison for securities fraud.

If you can't beat your opponent, unite with your opponent. In 1998 I co-founded Confinit with Max Levchin.When we launched PayPal in late 1999, Elon Musk's X.com company followed in our footsteps: Our company's office building is on University Street in Palo Alto, across the street from X.com. 4 blocks, but its products are very similar to ours.By late 1999, we were in an all-out war. Many PayPal employees put in 100-hour weeks.Undoubtedly, the results were less than ideal, because our focus was not on objective productivity, but on beating X.com.One of our company's engineers even designed a bomb for this purpose; at one meeting he showed a schematic diagram of the bomb, and the cool-headed man put a stop to the plan, saying that he was severely sleep-deprived.

But in February 2000, Elon and I were far more frightened by the rapidly inflating tech bubble than I was with each other: We hadn't even come to a conclusion yet, and this financial conflict was taking us down together.So in early March we met at a coffee shop the same distance from both businesses - and a 2:3 merger was born.Dealing with post-merger competition is no simple matter, but time has shown that even this problem is a good one.As a collective, we survived the dot-com bubble and built a successful business.

Sometimes you have to go into battle.When the need arises, you not only have to fight, but you also have to win. There is no middle choice: either the wind and the drizzle moisten everything silently, or the storm will make a quick decision.

This advice may be difficult to follow, because pride and honor will get in the way.So Hamlet says:

Relying on his great courage and the ambition of destiny, regardless of the danger of the unexpected,
Fighting with flesh and blood to challenge fate, death and crisis.

It's all for a tiny piece of land!
True greatness is not just willing to fight for great events,
Instead, he is willing to strive for a piece of glory for the trivial.

For Hamlet, greatness is fighting for trivial reasons: everyone fights for important things; but true heroes value their personal honor more, and fight to the death even when things don't.This distorted logic is human nature, but it is fatal when used in business.If you can see that competition is not value-enhancing but destructive, then you are more sane than most.In the next chapter, we will discuss how to build a monopoly business with a clear mind.

(End of this chapter)