If you are going to create a startup, then create a product whose value is orders of magnitudes greater than competitions’ products. In other words, create a monopoly. Great examples of this are:
- Intel: > 95% MSS PC & Server CPUs
- Google Search: > 75% Global Search Traffic
- Microsoft Windows: > 75% MSS for PCs and Desktops
- Facebook: > 3.2B Monthly Users Across Apps
- Tencent: > 2.3B Monthly Users Across Apps in China
Define the Market:
Having a monopoly is all about owning a market. Based on the market definition, I could argue these companies are or are not monopolies. Tencent and Facebook are great examples: one has ~2B users and the other has ~3B users. If you are asking who has the monopoly of social media worldwide, then there wouldn’t be one since the two biggest players roughly split the market. In reality, though, Tencent has a monopoly in China due to regulatory preference and Facebook has a monopoly outside of China. From this vantage point, it may seem academic to define the market, but think about how these companies started. Facebook started with Harvard students and expanded to be used worldwide excluding China. Thus, the best thing is to set your aim high and start small.
Ignore Competition To Create a 10X Improvement:
After defining the market, notice that all of these companies have a product that is 10X better than competition for their slice. You may argue Mac OSX is better than Windows overall, but if you break it down for business users, then Microsoft dominates. Again, pick your market. Remember when Google launched? Before Google you had the likes of Dogpile, Ask Jeeves, Altavista, etc. who all did the same thing with different interfaces. Google’s Page Rank product was so superior in ranking pages automatically and instantly displaying those search results that they stole the marketplace.
A 10X better product is not about doing what competition is doing only better. For instance, if Google tried to be 10X better than Microsoft Search, then Google would have created a better interface instead of creating Page Rank. Or, Twitch (previously Justin.TV) ended up with a 10X better product when they stopped trying to compete with the other live stream broadcasters recording anything and by instead focusing in on gamers broadcasting their screen while playing video games.
All the companies I admire most have 10X better products because they focus on their customers. Jeff Bezos describes it as ‘customer obsession’ and has his teams write a mock press release before investing in a product in order to ground the team in how they will improve the customer journey. For Apple, their love for their customers shows in their design simplicity.
Focus the Entire Organization on a 10X Improvement:
Think about how Apple releases products. They do not introduce lackluster products and iterate. They release a product they believe in after killing the other nine ideas that didn’t work out. You will not get to a 10X improvement through incremental improvements based on customer feedback. You will only get there by knowing your user market segment and figuring out how to provide a 10X improvement yourself before starting to iterate.
Apple, SpaceX, Tesla, Intel, and others create their 10X improvements through vertically integrating product design with manufacturing, allowing for new innovations at a faster pace. Google invented new technology that was inherently better out of the gate. Facebook won on a 10X better experience. The definition of a 10X improvement changes case to case. The point remains, though, that to create a monopoly you need that order of magnitude improvement. No amount of spending on marketing or sales will make up for it, either.
Start with a small market segment you can win. Figure out a 10X improvement you can deliver to satisfy users’ needs and focus the entire organization on that improvement. All efforts should be on ensuring that your 10X improvement is durable to win the market and be a monopoly.