Part 6: The Myth of Being First and the “Last Mover” Strategy
In the business world, there is a famous cliché that says: “Always strive to be the first!” This is known as the First Mover Advantage. People believe that if they enter a market before anyone else, they will automatically win. However, in chapter five, Peter Thiel completely shatters this belief, stating: Being first is completely worthless if someone else comes along and takes your place. The true goal is to be the “Last Mover.”
What does it mean to be the last mover? It means finding a market, building an exceptional product, and dominating that market so flawlessly that no one else can even dream of entering it after you. Yahoo was among the first search engines, but Google was the “last” great search engine the world ever needed. MySpace was the first social network, but Facebook became the last and ultimate conqueror of that game.
“Being first is a tactic, but surviving until the end of the game is a strategy. It is much better to be the last mover—that is, to make the last great development in a specific market and enjoy years of monopoly profits.”
The Four Pillars of an Unrivaled Empire (Monopoly Characteristics)
But how can we build a company that no one can compete with? Peter Thiel explains that every powerful, monopolistic company possesses at least one (or a combination) of the following four characteristics:
1. Proprietary Technology:
Your product must be at least “10 times better” than your closest competitor. If you are only slightly better, people won’t notice the difference and won’t switch to you. Google’s search algorithm was 10 times faster and more accurate than its rivals at the time. In its early days, Amazon had 10 times more book inventory than the largest physical bookstores.
2. Network Effects:
This happens when your product becomes more valuable as more people use it. If you are the only person in the world with WhatsApp, the app is completely useless to you! But as your friends join, it becomes invaluable. The golden rule here is that businesses relying on network effects must start in very small markets. Facebook didn’t try to conquer the world on day one; it was built exclusively for Harvard University students.
3. Economies of Scale:
An ideal business should be able to grow larger without its costs increasing at the same rate. In a service business (like a hair salon), if your customers double, you must hire more staff and rent more space, which drives up costs. But in software businesses, producing another copy of your product for a new user costs practically zero. Software is the ultimate example of economies of scale.
4. Branding:
Building a powerful brand is a monopoly in itself. Apple is the best example of this. Their minimalist design, premium materials, high pricing, and flawless user experience have built a brand so strong that even if other companies create a phone with the exact same specs, they can never take Apple’s place in the consumer’s mind.
📌 How Do We Build These Four Pillars in Our Business?
To have excellent proprietary technology (the rule of being 10x better), you don’t necessarily need to invent complex space tech. Having an e-commerce website that loads significantly faster than your competitors, or a mobile application that processes purchases seamlessly and without errors (bugs) in the shortest possible time, acts exactly like proprietary technology for your customers.
On the other hand, to build a brand, you must constantly be in front of your customers’ eyes. Ranking on the first page of Google (powerful SEO) and maintaining a highly professional, engaging page on social networks are the cornerstones of your digital branding. If you want to make your digital storefront at least 10 times better than your competitors and lay the architecture for massive growth (economies of scale), this is exactly the expertise of the Stinoment engineering team. To receive a free consultation with the management of Mr. Hamed Asghari, visit our client support section today.
The Strategy to Conquer the World: Start with a Small Pond!
The biggest mistake startups make is trying to conquer the entire world on day one. Peter Thiel has a golden rule: Always start with a very small and specific market (a Niche Market). A market where a small group of people exists, but they desperately need your product.
Amazon didn’t claim to be the “world’s largest everything store” on day one. Jeff Bezos focused all his energy on one specific market: selling books online! Once he completely monopolized the book market (became the last mover), he moved on to CDs, then electronics, and eventually engulfed the entire world. If you enter a massive market on day one, you will be crushed under the feet of the market giants.
💡 Note from Hamed Asghari (CEO of Stinoment)
The “10x Rule” discussed in this chapter is, in my opinion, the master key to survival in the ruthless global market. I have seen time and time again in consulting sessions with entrepreneurs that they build a product that is only 10% to 20% better or cheaper than their competitor, expecting users to abandon their current system and switch to them. This is an illusion!
People naturally resist change (what we call “Switching Cost”). If your product is only slightly better, the user prefers to stay in their comfort zone. But when you are 10 times faster, 10 times easier, or 10 times more beautiful, the user’s resistance breaks. This is exactly why companies with software-based “economies of scale” can change the world; because developing a phenomenal software update for one million users costs exactly the same as developing it for just one user.
Furthermore, focusing on a “Niche Market” takes immense courage. Managers are often afraid that by choosing a small target market, they will miss out on the big clients. They fail to realize that monopolies start exactly in those tiny ponds. You must first become the king of a village before you can ever hope to be the emperor of a continent.