Mike Maples Jr.: Capitalism and Competitive Advantage

So when I was in business school, if you'd asked the typical MBA student at the time, what is capitalism? They would have said something like, it is a system characterized by multiple firms competing for the preference of empowered customers in a free market, or something like that. And I guess I would assert that that's actually not true, that true capitalism and capitalists are opposites. I like to say that a capitalist is a person who aggregates capital based on an unfair advantage. And so those are the best capitalists I know. And so why is that important? Well, what I find is that too many people in Silicon Valley, too many entrepreneurs, too many companies engage in what I like to call mindless competition. And you've probably seen pitches like this before where one of the slides in the deck has the company presenting and then five other companies, and we check all the boxes, and the other companies check a fraction of the boxes. And when I see that slide, I almost always pass on the investment. And the reason is, it bugs me when somebody doesn't realize that being different is more important than being better and that the best competitive strategy is to choose not to compete. We talked about this already. Sometimes I get in trouble for using the word monopoly. That word offends people sometimes in other places. But so, like, let me just use a more benign word term. Do you have a structural competitive advantage? And so first mover advantage, when you think about it, isn't a very durable advantage. There's a lot of smart people in this world. But if you have a structural competitive advantage, what that means is that even at scale, your competitors can't attack you effectively. So you think about it. For example, Bing has Now spent over $10 billion in search trying to dislodge. Google has gotten nowhere trying. And that's because Google has a structural competitive advantage. We won't use the term monopoly to describe Google's search position.