What’s the best way to manage competition?

Peter Thiel (Co-Founder & Partner at Founders Fund)
Peter Thiel’s CS183: Startup – Class 12 Notes…

When people are myopically focused on fighting, they lose sight of everything else. They begin to look very much like their enemy. The skinny kid bulks up. He becomes the bully, which of course is exactly what he had always hated. A working theory is thus that you must choose your enemies well, since you’ll soon become just like them.

Peter Thiel (Co-Founder & Partner at Founders Fund)
Peter Thiel’s CS183: Startup – Class 12 Notes…

People become obsessed with their competitors. Companies converge on similarity. They grind each other down through increased competition. And everyone loses sight of the bigger picture.

Peter Thiel (Co-Founder & Partner at Founders Fund)
Peter Thiel’s CS183: Startup – Class 12 Notes…

you want wars to be short. Let that process go on too long and you’ll lose yourself in it. So your strategy must be shock and awe. You have to win very quickly. But since very often it’s not possible to ensure a quick victory, your primary job is to figure out ways not to have war happen at all.

Reid Hoffman (Partner & Co-Founder at Greylock Partners)
Peter Thiel’s CS183: Startup – Class 12 Notes…

Competition affects you on the customer front, hiring front, and financing and BD fronts—on all of them.

Reid Hoffman (Partner & Co-Founder at Greylock Partners)
Peter Thiel’s CS183: Startup – Class 12 Notes…

Difficult competition with no edge makes for a war of attrition. People may get sucked in to ruthlessly competitive situations by the allure of the pot of gold to be had.

Reid Hoffman (Partner & Co-Founder at Greylock Partners)
Peter Thiel’s CS183: Startup – Class 12 Notes…

You have to have some sort of competitive edge. Is it speed? Momentum? Network effects? It could be a lot of things. But you must think through it, because people will come after you as soon as you uncover value.

Reid Hoffman (Partner & Co-Founder at Greylock Partners)
Peter Thiel’s CS183: Startup – Class 12 Notes…

You can’t just go into full war mode. You have to strategize as to how to avoid competition and external competition. That will take you far. But competition is inevitable. Even if you build good thing with network effects, people aren’t always smart. They’ll try to compete with you anyways, even if that’s a bad idea. So you have to strategize about how to deal with the forces of competition, too, both internally within the company and externally… (read more)