Key Points in the book - according to my reckoning.

1. Make incremental advances
2. Stay lean, stay flexible
3. Improve on the competition
4. Focus on Product, not sales

Make it x10 Better, Faster, Cheaper than the rest

The lesson is clear: if you want to create and capture lasting value, do not build an undifferentiated commodity business. In other words, do it better, faster, and cheaper than the rest. And it has to be x100 better.

Building a Monopoly

1. Proprietary Technology
2. Network Effects
3. Economies of Scale
4. Branding
5. The labour of others built on your own. (My own view)
6. Marketing. (My own view)

1. Propreitary Technology

• If it’s not x10 better, then it’s probably a marginal improvement.
• If x10 better, then guess what: you’ve have a monopoly.

Examples:

• Paypal allowed for near instantaneous money transfer for Ebay. Before that it would take +10 days to send and receive money.
• Amazon: offered x10 more books than others.
• Superior integrated design: e.g. Micosoft, Nokia released tablet products - which effectively failed. And then Apple released the iPad.

2. Network Effects

When something is more valuable, the more people that are on it. Once you have a network, it is difficult to walk away.

Examples:

• For example: telephones. It’s no good if you’re the only one.
• They must work, even with a very tiny network. e.g. Xanadu required all the computers in the world to be connected for it to actually be super useful. But you need it to also be useful for 1-2 people. To get them to sign up.

3. Scale

• This means that in order to make $x more dollars, the incremental cost another sale is negligible. This is good, especially in monopolistic products.

4. Branding

Build a reputation for great products.

5. (My own view) - The labour of others built on your own.

Consider the app store. Developers build for the IPhone, because that’s where consumers are. And consumers buy the IPhone, because (probably in addition to being a great product) - because that’s where the apps are. i.e. there’s a network effect at play here too.

Building the Monopoly

• Try to dominate a small market. x10 better is the easiest way of dominating it. Once this has been mastered, it’s relatively easy to expand into other areas.

The Key Questions

1. Engineering: is this a break-through technology vs incremental improvements?
2. The Timing Question - is now the right time?
3. The Monopoly question - are you starting with a big share of a small market?
4. The People question - do you have the right team?
5. The distribution question - do you have a way to not just create but deliver your product?
6. The Durability question - will your market position be defensible 10 and 20 years into the future?
7. The Secret question: have you identified a unique opportunity that others don’t see?