Zero to One_ Notes on Startups, or How to Build the Future ( PDFDrive )

THE MONOPOLY QUESTION
In 2006, billionaire technology investor John Doerr announced that “green is the
new red, white and blue.” He could have stopped at “red.” As Doerr himself
said, “Internet-sized markets are in the billions of dollars; the energy markets are
in the trillions.” What he didn’t say is that huge, trillion-dollar markets mean
ruthless, bloody competition. Others echoed Doerr over and over: in the 2000s, I
listened to dozens of cleantech entrepreneurs begin fantastically rosy PowerPoint
presentations with all-too-true tales of trillion-dollar markets—as if that were a
good thing.
Cleantech executives emphasized the bounty of an energy market big enough
for all comers, but each one typically believed that his own company had an
edge. In 2006, Dave Pearce, CEO of solar manufacturer MiaSolé, admitted to a
congressional panel that his company was just one of several “very strong”
startups working on one particular kind of thin-film solar cell development.
Minutes later, Pearce predicted that MiaSolé would become “the largest
producer of thin-film solar cells in the world” within a year’s time. That didn’t
happen, but it might not have helped them anyway: thin-film is just one of more
than a dozen kinds of solar cells. Customers won’t care about any particular
technology unless it solves a particular problem in a superior way. And if you
can’t monopolize a unique solution for a small market, you’ll be stuck with
vicious competition. That’s what happened to MiaSolé, which was acquired in
2013 for hundreds of millions of dollars less than its investors had put into the
company.
Exaggerating your own uniqueness is an easy way to botch the monopoly
question. Suppose you’re running a solar company that’s successfully installed
hundreds of solar panel systems with a combined power generation capacity of
100 megawatts. Since total U.S. solar energy production capacity is 950
megawatts, you own 10.53% of the market. Congratulations, you tell yourself:
you’re a player.