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Tuesday, February 24, 2015

Zero-to-One: Post #4--Value

Value and Companies. Key entrepreneurial question: What valuable company is nobody building? Need to create AND capture value. In a highly competitive market, no company does well because value gets commoditized. But a unique monopoly (like Google) can set its own price. Google went from Zero to One in 2000. Entrepreneur Lesson: “If you want to create and capture lasting value, don’t build an undifferentiated, commoditizable business.” Monopoly makes successful businesses. If you get wrapped up in competition, you lose. Competition is an outdated ideology—starting with school where competition “beats their dreams out of them.” Competition pushes us down a conformist track. Monopolies have several things in common: 1. Proprietary technology (hard to replicate); 2. Network effects (the more the merrier); 3. Economy of scale (leverage reduces costs); and, 4. A strong brand (people pay a premium for brand).

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