How to make your startup a monopoly?

Monopolies are often depicted as colossal behemoths looming over their opponents. They don’t start off that way, of course: establishing a successful monopoly takes time. This is especially true when it comes to profits: a start-up can take years to break even. However, even if the company does not produce profits right away, it might still be valuable because value is established by the profits it will make over the course of its existence.

PayPal is a good example: it wasn’t profitable in 2001, and when the author estimated the company’s value at the time, he discovered that the majority of it came from profits predicted to arrive more than 10 years later!

The lesson here is that you can’t expect to be the best in your industry right away; you must be willing to stay for the long haul. That is what will make you successful. So, how can you turn your new business into a profitable monopoly?

You should begin modest and gradually expand. To begin, realize that you do not need to be the best in every business; only in yours. As a result, it’s critical to define your market as precisely as possible. That will make it easy for you to take control of the game. You can move on to the next, larger market once you’ve established a monopoly in this specialty.

Jeff Bezos, the creator of Amazon, set out with the objective of becoming the world’s largest online retailer from the outset, but he started small, selling only books. Amazon only expanded to other categories like CDs and videos after conquering the book industry, and then to other products. So, contrary to popular belief, Amazon’s success did not occur suddenly.

To succeed in the long run, any business must build a firm foundation. So, when you’re just starting out on the long path of creating a business, the first few days are critical. Finding the proper people is the first and most important component of this foundation. Because start-ups are typically relatively tiny, each member of the team plays a vital role.

As a result, before investing in a company, the author examines not just the abilities and vision of the people involved, but also their personal relationships. He’s witnessed firsthand the damage that shaky personal bonds can cause to a team. Prior to co-founding PayPal with Luke Nosek, the author had invested in a company that Nosek had launched with a stranger. Their personal conflicts eventually brought the entire effort to a halt, along with the author’s investment.

Another important aspect of a solid foundation is balancing the various interests of the numerous firm owners. After all, the interests of the founders and investors may be diametrically opposed, but the company should not be harmed as a result.

For example, the company’s founders may want to take their time developing their products, whereas the board of directors normally wants to make money as soon as feasible. While these objectives aren’t always mutually exclusive, they can sometimes lead to conflict, so it’s critical to establish a method for resolving such disagreements early on.

Everyone collaborates successfully. The perks you provide your employees, such as a pool table and a Coke machine, aren’t what define company culture; it’s the relationships that individuals have.

When most people think of “salesperson,” they see a man in a shabby suit going door to door selling vacuum cleaners: not exactly a positive image. However, in business, sales are a must. Many people, particularly technology enthusiasts, would prefer to concentrate on product innovation, yet innovative items are meaningless unless they are sold. And there isn’t a thing on the planet that people will buy until you sell it.

You’ll need good distribution to sell your product efficiently. This comprises not only your sales channels, but also the time and effort required to offer your products. To get the most out of your distribution, think about the potential of each client before deciding how much effort you’re willing to put into making the sale.

For example, the author, Peter Thiel, co-founded Palantir, a data analytics firm where a single closed sale may bring in millions of dollars. Because clients spending such large sums demand a certain level of personal participation from the seller’s executives, the CEO must personally handle the sale.

In another industry, where single sales agreements only result in a few hundred thousand dollars, the CEO’s time would be better spent elsewhere. The CEO, on the other hand, would still require a strong sales force to represent the company.

Using sales methods is another way to improve your distribution. Many of us despise salesmen because we equate selling with manipulation, which no one enjoys. While some overt manipulation techniques may not work in sales, there are other strategies that will work on anyone – and you should use them to your advantage.

Consider Tom Sawyer from Mark Twain’s great books: he was such a skilled salesman that when he was assigned to paint a fence, he convinced other kids to pay him for the privilege of performing his labor. Do you believe there aren’t any more outstanding, inventive salespeople like Tom Sawyer today?

In Silicon Valley, an investment bubble peaked between 2005 and 2009. Clean technology, or cleantech, was the underlying industry, which covers products and services that encourage things like the sustainable use of natural resources and the utilization of renewable energy sources.

Thousands of businesses had been founded in the industry, with more than $50 billion in funding. Unfortunately, many companies have failed since then, taking the money with them. So, what went wrong? They just failed to study and comprehend the market opportunity.

To avoid this, every business should ask seven key questions about the market and its own operations. Can you generate a true technological breakthrough, as an engineer? Cleantech businesses didn’t realize that in order to compete with existing energy companies, they required technology that was ten times better than theirs, not simply marginally better.

Will you start with a significant stake of a small market, like in Monopoly? Cleantech businesses were part of the trillion-dollar energy industry, which meant fierce rivalry for even the smallest market share. A smaller market with a decent chance of quickly establishing a monopoly is a much better bet.

Is it the appropriate time for you to launch your business? Some cleantech firms believed the industry was on the verge of a time of rapid, exponential advancements in solar-panel technology, for example, and that this would allow them to thrive. Clean technology, on the other hand, has progressed slowly and linearly.

The People Question: Will your team be able to take advantage of this opportunity? Non-technical executives who had no understanding how to produce amazing products were frequently in charge of cleantech enterprises. The Distribution Issue: How will your product be delivered to customers? Many cleantech startups, such as Better Place, an electric vehicle start-up, claimed that their technology was so brilliant that they didn’t need suitable distribution channels. It filed into bankruptcy after spending $800 million of investors’ money and selling only 1,000 automobiles.

The Durability Question: Will you be able to maintain your market share in 10 or twenty years? When Chinese businesses began producing similar items at a far lower cost, many solar-technology companies were taken aback. This should have been foreseen right from the start.

Do you see a one-of-a-kind opportunity that others have overlooked? Cleantech, everyone agreed at the time, was going to be massive. True success companies, on the other hand, have a secret: they identify opportunities that others don’t. Tesla, like most innovative organizations, has answers to practically all of these important questions, but most cleantech companies have none. This is why they were unable to succeed.

What does a typical start-up founder look like, in your opinion? Founders, especially those of successful businesses, are known for being a little odd. Almost every successful creator is slightly unique, whether they’ve been that way since birth or have become that way to copy past great founders.

This kind of uniqueness is crucial because founders do more than just start a business: they give it a vision. And this contribution is critical; regardless of how well-developed a company’s management methods are, it must have a vision to pursue. Consider Steve Jobs’ 1997 comeback to Apple. He’d been driven out of Apple more than a decade before, and in 2001, he introduced the iPod, which analysts dismissed as nothing more than a neat gizmo for Mac users.

The actual brilliance of Jobs’ idea was shown when Apple released the iPhone and iPad, launching a family of Apple’s “post-PC gadgets” differentiated by their clean design and unique functionality. By pursuing a well-thought-out plan based on his vision, Jobs had effectively made Apple the most valuable corporation on the planet. As this success story demonstrates, even a powerful organization requires the originality and vision of its creator to perform at the best level.

The success of a startup is not a question of chance. You can follow whatever future you desire as long as you’re willing to defy established norms. Then, if you’ve established a monopoly by being better than everyone else at something, success will come naturally.

As a result, focus on dominating one niche at a time. Don’t go too broad too soon after you’ve uncovered the unusual idea for your startup. Find a narrow niche in which you can outperform all of your competition. You can later extend to other marketplaces once you’ve established a monopoly there.

Check out my related post: What makes a startup successful?

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Interesting reads:

https://www.goodreads.com/book/show/18050143-zero-to-one