This post summarizes Peter Thiel’s characteristics of a monopoly from his book Zero to One (which I recommend).

In his book, Peter argues that a Tech Monopoly has the following characteristics:

  • Proprietary Technology
    • It must be 10x better than what is out there.
  • Network Effects
    • It provides a base value but it gets more valuable when more people use it.
  • Economies of Scale
    • It gets cheaper to produce as it grows (because the fixed cost of producing more product is spread out over more revenue)
  • Brand
    • Peter does not go into great detail about this but I understood him to mean that the Monopoly should build an expectation that a certain standard of quality will be met and then follows up by meeting the expectation. The words “delivering consistent results at or above expectations” come to mind.

Examples of a Tech Monopoly: LinkedIn, Paypal