Quote
of
the
day
by
Pete
Thiel.
PayPal
fou de
Pete
Thiel
co t adicted
the
well-k ow
busi ess
lesso
that
bei g
the
fi st
move
i
a
secto
has
its
ow
adva tage
a d
suggested
that
it
is
highly
ove ated
a d
a
t ap.
Because
fi st-move s
ca
become
u seated
by
a
ew
e t a t
a d
he
suppo ted
his
theo y
by
citi g
how
Mic osoft
emai ed
the
last
ope ati g
system
fo
a
lo g
time,
Google
the
last
sea ch
e gi e
fo
a
lo g
time
a d
eithe
fi st
move .
Thiel
p ese ted
this
idea
o
seve al
occasio s:
i
his
speeches
a d
books,
a d
said,
‘
move
adva tage
is
a
t ap;
it’s
much
bette
to
be
the
last
move ‘
While
sta ti g
ea ly
might
ge e ate
tempo a y
buzz,
it
a ely
c eates
lasti g
value,
he
believes.
What
actually
matte s
i
busi ess
is
ot
who
e te s
the
a e a
fi st,
but
who
stays
the e
last.
I
Thiel’s
view,
the
ultimate
goal
of
a y
ambitious
sta tup
is
ot
to
be
a
pio ee ,
but
to
become
the
last
move
i
its
catego y
—
the
compa y
that
makes
the
fi al
majo
b eakth ough
a d
secu es
a
u assailable
mo opoly
fo
decades
to
come.
What
is
fi st-move
adva tage?
The
co ve tio al
wisdom
i
Silico
Valley
has
lo g
celeb ated
the
fi st-move
adva tage.
Busi ess
schools
a d
sta tup
i cubato s
f eque tly
teach
that
getti g
to
a
ma ket
fi st
allows
a
compa y
to
captu e
b a d
ecog itio ,
secu e
ea ly
custome s,
a d
set
the
sta da ds
fo
a
e ti e
i dust y.
Thiel
ejects
this
p emise
as
a
da ge ous
dist actio .
Bei g
fi st,
he
poi ts
out,
ofte
mea s
abso bi g
massive
esea ch
a d
developme t
costs,
educati g
a
skeptical
co sume
base,
a d
maki g
c itical
st ategic
mistakes
that
late
competito s
ca
a alyze
a d
avoid
fo
f ee.
A
fi st
move
clea s
the
path,
but
a
fast
followe
with
a
bette
busi ess
model
usually
captu es
the
ewa ds.To
illust ate
this
poi t,
Thiel
poi ts
to
the
histo y
of
the
tech ology
i dust y,
which
is
litte ed
with
the
fo gotte
emai s
of
fi st
move s.
Netscape
was
the
fi st
mode
web
b owse ,
but
I te et
Explo e
a d
Google
Ch ome
eve tually
wiped
it
out.
Myspace
a d
F ie dste
we e
the
fi st
majo
social
etwo ks,
but
Facebook
displaced
them
e ti ely.
AltaVista
a d
Yahoo
we e
the
ea ly
leade s
i
web
sea ch,
but
Google
edefi ed
the
catego y
with
a
fa
supe io
algo ithm.
I
each
case,
the
fi st
move
did
the
ha d
labo
of
p ovi g
that
a
ma ket
existed,
o ly
to
be
ove take
by
a
late
e t a t
that
executed
bette ,
scaled
faste ,
a d
built
a
vastly
supe io
p oduct.Thiel
a gues
that
a
compa y’s
t ue
eco omic
value
esides
e ti ely
i
its
futu e
cash
flows.
If
a
sta tup
ge e ates
imp essive
eve ues
fo
five
yea s
but
gets
dis upted
a d
e ased
by
a
competito
i
yea
six,
its
lo g-te m
value
is
ema kably
low.
Co ve sely,
if
a
compa y
ca
achieve
domi a ce
a d
mai tai
it
fo
twe ty
o
thi ty
yea s
without
bei g
displaced,
its
value
becomes
almost
immeasu able.
This
is
why
bei g
the
last
move
is
so
c itical.
A
last
move
e te s
a
ma ket,
makes
the
defi itive
tech ical
o
ope atio al
leap,
builds
deep
competitive
moats,
a d
pe ma e tly
shuts
out
futu e
competito s.
How
to
be
a
last-move ?
Thiel
outli es
a
specific,
step-by-step
f amewo k
that
u s
cou te
to
sta da d
g owth
st ategies.Fi st,
sta tups
should
avoid
ta geti g
massive,
b oadly
defi ed
ma kets
f om
day
o e.
Whe
a
fou de
claims
they
a e
goi g
to
captu e
just
o e
pe ce t
of
a
hu d ed-billio -dolla
ma ket,
Thiel
sees
a
majo
ed
flag.
La ge
ma kets
mea
fie ce
competitio ,
slim
p ofit
ma gi s,
a d
co sta t
p ice
wa s
that
bu
th ough
capital.
I stead,
a
sta tup
should
aim
to
domi ate
a
ve y
small,
tightly
defi ed
iche
whe e
it
ca
quickly
captu e
eighty
o
i ety
pe ce t
ma ket
sha e.PayPal
did
ot
sta t
by
t yi g
to
evolutio ize
global
payme ts
fo
eve yo e.
It
focused
exclusively
o
a
ti y
subset
of
use s:
high-volume
powe
selle s
o
eBay
who
despe ately
eeded
a
faste
way
to
p ocess
payme ts.
By
solvi g
that
specific
p oblem
bette
tha
a yo e
else,
PayPal
captu ed
that
small
iche
completely.
O ly
afte
domi ati g
eBay
payme ts
did
the
compa y
expa d
i to
b oade
fi a cial
se vices.
Simila ly,
Facebook
did
ot
lau ch
as
a
global
etwo k
fo
billio s
of
people.
It
lau ched
exclusively
fo
Ha va d
u de g aduate
stude ts.
O ce
Ma k
Zucke be g
achieved
ea -total
adoptio
withi
that
si gle
campus,
he
expa ded
to
othe
Ivy
League
schools,
the
to
all
u ive sities,
a d
fi ally
to
the
ge e al
public.Seco d,
to
e su e
that
o
latecome
ca
displace
you
o ce
you
domi ate
a
iche,
Thiel
emphasizes
the
eed
to
build
du able
eco omic
moats.
The
most
powe ful
of
these
is
p op ieta y
tech ology.
A
compa y’s
co e
tech ology
must
be
at
least
te
times
bette
tha
its
closest
substitute
to
c eate
a
t ue
last-move
adva tage.
A
imp oveme t
of
te
pe ce t
o
twe ty
pe ce t
is
easily
copied
o
bypassed,
but
a
te fold
imp oveme t
makes
the
competitio
obsolete.
Google’s
ea ly
sea ch
algo ithm
was
ot
just
slightly
bette
tha
Yahoo’s;
it
was
o de s
of
mag itude
faste
a d
mo e
accu ate,
maki g
it
ea ly
impossible
fo
use s
to
switch
back.Ultimately,
Thiel’s
philosophy
o
the
last
move
is
a
challe ge
to
how
fou de s
thi k
about
competitio
a d
i ovatio .
Bei g
fi st
might
gai
headli es,
but
bei g
last
builds
a
empi e.
The
eal
wi e s
i
busi ess
a e
ot
the
speed
demo s
who
sp i t
out
of
the
gate,
but
the
st ategists
who
desig
a
p oduct
so
complete,
so
domi a t,
a d
so
ha d
to
eplicate
that
o
o e
eve
eeds
to
build
a
bette
ve sio
agai .
