"You don't want to be the first mover. You want to be the last mover—the one who captures the market forever." — Peter Thiel
Is being "First" really an advantage?
We often hear about the "First Mover Advantage." But look at history.
• Netscape was the first web browser. (Dead).
• Yahoo was the first search giant. (Faded).
• Friendster was the first social network. (Gone).
Being first is dangerous. You make the mistakes, and others learn from you. In Part 4 of our Zero to One series, we discuss the Last Mover Advantage. The goal is not to start first, but to build a business so strong (a Monopoly) that no one can ever replace you.
1. The Last Mover Advantage
Peter Thiel argues that the value of a business is the sum of all its future cash flows.
Most startups grow fast but die young (Groupon). A Monopoly grows and stays.
The Definition:
A "Last Mover" is a company that makes the last great development in a specific market and enjoys years or decades of monopoly profits.
Google is likely the last search engine. Microsoft Word is the last word processor. Once you achieve this, you print money.
2. How to Make Your Monopoly Durable?
To be the Last Mover, you need to build a moat. As we touched upon in Part 2, there are 4 main pillars. Here is how to execute them:
1. Proprietary Technology (The 10x Rule)
Your tech must be 10x better than the closest substitute.
• If you create a payment app that is 10% faster than Google Pay, no one will switch.
• If you create a cure for baldness (10x better than wigs), everyone will switch.
Strategy: Don't make marginal improvements. Make radical breakthroughs.
2. Network Effects (Start Small)
This is the most powerful moat. But it has a paradox: Network effects are useless when the network is small.
If only one person has a fax machine, it is useless.
Strategy: You must target a tiny group first. Facebook didn't start for "The World." It started for "Harvard Students." It reached 60% market share in 2 weeks. Then it expanded.
3. Economies of Scale
Your costs should go down as you get bigger.
• Service Business (Bad Scale): To serve more clients, you need to hire more people. Costs go up.
• Software Business (Good Scale): Twitter doesn't need to double its staff to double its users.
Strategy: Build a business with high fixed costs (product development) but low marginal costs (selling copies).
4. Branding
A brand is a monopoly on a "feeling."
You can clone the code of an iPhone, but you cannot clone the feeling of buying an Apple product. Branding is the final layer of defense.
3. The Strategy: Start Small and Monopolize
This is the most critical advice in the book.
The Mistake: Most founders say, "The market is $100 Billion. If we get just 1%, we are rich."
The Reality: You will get 0%. A giant market means giant competitors.
The Correct Strategy:
1. Pick a tiny market (a niche) that no one cares about.
2. Dominate it completely (80-90% market share).
3. Once you own the niche, slowly expand to adjacent markets.
Example: Amazon
Jeff Bezos didn't start "The Everything Store." He started with Books. Books are easy to ship and non-perishable. He monopolized the online book market first. Only then did he move to CDs, then Electronics, and then Everything.
4. Real-Life Examples (Indian Context)
Zerodha: The Tech Monopoly
Nithin Kamath didn't start by advertising on TV. He started by targeting "Active Traders" who hated high brokerage fees.
• Proprietary Tech: A platform that didn't crash.
• Economies of Scale: Technology allowed him to serve millions with a small team.
• Last Mover: He wasn't the first broker, but he might be the last major disruption in the broking space.
Amul: The Brand Monopoly
Amul started as a cooperative in Anand, Gujarat. They solved a specific problem for milk farmers in one district.
They dominated that niche. Then they expanded to Gujarat. Then India. Now, "The Taste of India" is a brand monopoly. You cannot compete with Amul Butter; you can only be the second choice.
Key Takeaways
- Be the Last Mover: Don't rush to be first. Rush to build a moat so deep that no one can follow you.
- Start Small: It is easier to dominate a small market than to compete in a large one. Be a big fish in a small pond.
- Don't Disrupt (Yet): Don't announce you are "disrupting" the industry. That invites attack. Dominate quietly first.
- Durability > Growth: Growth is easy to measure (Revenue). Durability is hard to measure (will you be here in 10 years?). Focus on durability.
Frequently Asked Questions (FAQ)
Q1: What if my market is too small?
A: A monopoly in a small market is valuable. A competitor in a huge market is worthless. If the market is too small, you can always expand after you dominate it (like Amazon did).
Q2: Can a service business (Agency/Consulting) scale?
A: It is difficult. Service businesses rely on people (Labor Leverage), which has low economies of scale. To scale, you must "Productize" your service (turn it into a course, software, or standard process).
Q3: How do I know if I have a monopoly?
A: If you can raise your prices without losing customers, you have a monopoly. If you have to ask "What is the competitor charging?", you are in competition.
Up next: Part 5 – The Ideology of a Startup (Don't Hire Consultants).
📚 Credit & Disclaimer:
This post is a summary based on the bestseller "Zero to One" by Peter Thiel. Content is for educational purposes only.
Comments: