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)
- 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