Startup mindset: The best ideology of competition

Source: Google image

There is big confusion in entrepreneurs on this topic (competition). So let me clear my stand.

• Creative monopoly means new products that benefit everybody and sustainable profits for the creator.
• Competition means no profits for anybody, no meaningful differentiation, and a struggle for survival.

So why do people believe that competition is healthy? The answer is that competition is not just an
economic concept or a simple inconvenience that individuals and companies must deal with in the
marketplace.

More than anything else, competition is an ideology—the ideology—that pervades our
society and distorts our thinking. We preach competition, internalize its necessity, and enact its
commandments; and as a result, we trap ourselves within it—even though the more we compete, the
less we gain.

This is a simple truth, but we’ve all been trained to ignore it. Our educational system both drives
and reflects our obsession with competition. Grades themselves allow precise measurement of each
student’s competitiveness; pupils with the highest marks receive status and credentials.

We teach every young person the same subjects in mostly the same ways, irrespective of individual talents and preferences.

Students who don’t learn best by sitting still at a desk are made to feel somehow inferior, while children who excel on conventional measures like tests and assignments end up defining their identities in terms of this weirdly contrived academic parallel reality.

And it gets worse as students ascend to higher levels of the tournament. Elite students climb
confidently until they reach a level of competition sufficiently intense to beat their dreams out of them.

Higher education is the place where people who had big plans in high school get stuck in fierce
rivalries with equally smart peers over conventional careers like management consulting and
investment banking. For the privilege of being turned into conformists, students (or their families) pay hundreds of thousands of dollars in skyrocketing tuition that continues to outpace inflation.


WAR & PEACE
Professors downplay the cutthroat culture of academia, but managers never tire of comparing business to war. MBA students carry around copies of Clausewitz and Sun Tzu.

War metaphors invade our everyday business language: we use headhunters to build up a sales force that will enable us to take a captive market and make a killing. But really it’s competition, not business, that is like war: allegedly necessary, supposedly valiant, but ultimately destructive.

Why do people compete with each other? Marx and Shakespeare provide two models for
understanding almost every kind of conflict.

"People fight because they are different. The proletariat fights the bourgeoisie
because they have completely different ideas and goals. The greater the differences, the greater the conflict." According to Marx, 

To Shakespeare,

 "All combatants look more or less alike. It’s not at all clear why they
should be fighting since they have nothing to fight about."

Inside a firm, people become obsessed with their competitors for career advancement. Then the firms themselves become obsessed with their competitors in the marketplace. Amid all the human drama, people lose sight of what matters and focus on their rivals instead.

Let’s test the Shakespearean model in the real world. Imagine a production called Gates and
Schmidt, MS vs Google

As with all good tragedy, the conflict seems inevitable only in retrospect. In fact, it was entirely
avoidable. They came from very different places. MS built operating systems and office applications. Google wrote a search engine.

What was there to fight about?

Lots, apparently. As a startup, each clan had been content to leave the other alone and prosper
independently.

But as they grew, they began to focus on each other. The result? Windows vs. Chrome OS, Bing vs. Google Search, Explorer vs. Chrome, Office vs. Docs, and Surface vs. Nexus.

Apple came along and overtook them all. In January 2013, Apple’s market capitalization
was $500 billion, while Google and Microsoft combined were worth $467 billion. Just three years
before, Microsoft and Google were each more valuable than Apple.

War is a costly business. Rivalry causes us to overemphasize old opportunities and slavishly copy what has worked in the past.


The hazards of imitative competition may partially explain why individuals with an Asperger’slike
social ineptitude seem to be at an advantage in Silicon Valley today. If you’re less sensitive to
social cues, you’re less likely to do the same things as everyone else around you.

If you’re interested in making things or programming computers, you’ll be less afraid to pursue those activities singlemindedly and thereby become incredibly good at them. Then when you apply your skills, you’re a little less likely than others to give up your own convictions: this can save you from getting caught up in crowds competing for obvious prizes.

Other times, a rivalry is just weird and distracting. Consider the Shakespearean conflict between
Larry Ellison, co-founder and CEO of Oracle, and Tom Siebel, a top salesman at Oracle and
Ellison’s protégé before he went on to found Siebel Systems in 1993.

Ellison was livid at what he thought was Siebel’s betrayal. Siebel hated being in the shadow of his former boss. The two men were basically identical—hard-charging Chicagoans who loved to sell and hated to lose—so their hatred ran deep. Ellison and Siebel spent the second half of the ’90s trying to sabotage each other.

At one point, Ellison sent truckloads of ice cream sandwiches to Siebel’s headquarters to try to convince Siebel employees to jump ship. The copy on the wrappers? “Summer is near. Oracle is here. To brighten your day and your career.”

Strangely, Oracle intentionally accumulated enemies. Ellison’s theory was that it’s always good to
have an enemy, so long as it was large enough to appear threatening (and thus motivational to
employees) but not so large as to actually threaten the company.

So Ellison was probably thrilled when in 1996 a small database company called Informix put up a billboard near Oracle’s Redwood Shores headquarters that read: CAUTION: DINOSAUR CROSSING.

Another Informix billboard on northbound Highway "YOU’VE JUST PASSED REDWOOD SHORES. SO DID WE."

Oracle shot back with a billboard that implied that Informix’s software was slower than snails.

Then Informix CEO Phil White decided to make things personal. When White learned that Larry
Ellison enjoyed Japanese samurai culture, he commissioned a new billboard depicting the Oracle
logo along with a broken samurai sword.

The ad wasn’t even really aimed at Oracle as an entity, let alone the consuming public; it was a personal attack on Ellison. But perhaps White spent a little too much time worrying about the competition: while he was busy creating billboards, Informix imploded in a massive accounting scandal and White soon found himself in federal prison for securities fraud.

If you can’t beat a rival, it may be better to merge.

Sometimes you do have to fight. Where that’s true, you should fight and win. There is no middle
ground: either don’t throw any punches, or strike hard and end it quickly.

For Hamlet, greatness means a willingness to fight for reasons as thin as an eggshell: anyone would
fight for things that matter; true heroes take their personal honor so seriously they will fight for things that don’t matter.

This twisted logic is part of human nature, but it’s disastrous in business. If you can
recognize competition as a destructive force instead of a sign of value, you’re already saner than
most.