Chapter Three- All Happy Companies Are Different  

In order to create and capture lasting value, don’t build an undifferentiated commodity business, or substitutable products. You can determine how much a company earns by their competition. There is a perfect monopoly where there is absolutely no competition, some companies become monopolies by lying to protect themselves. They tend to do whatever they can to conceal their monopoly, usually by exaggerating the power of their nonexistent competition. Some become monopolies by getting licenses or lucrative statements by the state. But Theil speaks of monopolies that are innovative and have something new to offer, companies so good they leave their competition behind.

At the other end there is a lot of competition, where prices are determined by supply and demand. Non monopolists exaggerate their distinction by defining their market at the intersection of various other small markets. The competitive ecosystem pushes people towards ruthlessness or death.

Monopolists by contrast disguise their monopoly by framing their markets as the union of several other large markets. According to Thiel, monopolists can afford to think about other things that make money, and non-monopolists can’t. Happy companies create unique monopolies for the circumstances they face, unhappy businesses all have the same problem: competition.