Escape The Competition | You Should Listen To This

March 5th, 2018

Topics: Culture Entrepreneurial Tech Operations

How are PayPal in the early 2000’s, Mah Ze Dahr Bakery in New York’s West Village, and Airbnb just a few years ago similar?

We might suggest that these companies created new disruptive tech platforms to upend a traditional industry. We might note that each refocused on a user centric business model. Or, we could argue that each company recognized an opportunity to diversify in a new market. While this this is all true, Peter Theil and Reid Hoffman, in their Master of Scale podcast, suggest that the key uniting feature is that each company differentiated, expanded, and carved out a unique monopoly in order to escape the competition.

This episode of Master of Scale invites listeners into a witty and illustrative conversation between Peter Theil, co-founder and CEO of PayPal, and Reid Hoffman, host of the podcast series and co-founder of LinkedIn, as they discuss the ways in which startups and entrepreneurs can set themselves apart from the competition. The two liken the process of building a company to the need for acceleration out of the starting blocks in an Olympic track race. It not only takes a certain mindset and hard work, they argue, but also requires a clear and set trajectory to escape the competition.

“The goal is not to beat the competition; the goal is to break free of competition entirely.”

This podcast takes listeners into a debate between contrarian vs competitive systems. On the one hand, companies and individuals can thrive in the competitive environment. Many cases suggest that competition breeds innovation, and can lead to great success. However, the view articulated in this podcast advocates that, at best, competitions will make you a winner in a losing game. The question, then, is how can companies move beyond the competitive environment?

Peter Theil answers this by describing his concept of Escape Velocity – the “X factor” (of retained user growth) a company needs to grow so quickly it discourages anybody from even trying to compete. The hosts believe that it is this capacity for a company to optimize its rapid growth that makes it appealing to investors, and likely secures the company’s success. They note that in the hard and fast world of silicon startups, the company with the greatest escape velocity relative to its competition will differentiate and move beyond the competition.

You should listen to this podcast because the hosts and interviewees take the listener behind the scenes into the processes that drove the growth of companies such as Facebook, eBay, PayPal, Airbnb. You should listen to this because it highlights not only the advantages of exponential escape velocity, but also the negative exponential costs associated with this needed trend. And, you should listen to this podcast because it ties together unique insights, anecdotes, and concepts that will help young companies recognize the opportunities in their industry, and advise ways in which a company can succeed by escaping the competition.

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