Peter Thiel: Vertically-integrated companies are underexplored

In my mind, there probably are only two broad categories in the entire history of the last 250 years where people have actually come up with new things and made money doing so. One is these sort of vertically integrated complex monopolies which people did build in the second industrial revolution at the end of the 19th and start of the 20th century. And so this was like Ford, it was the vertically integrated oil companies, like Standard Oil. And what these vertically integrated monopolies typically required was this very complex coordination. You got a lot of pieces to fit together in just the right way. When you assembled it, you had a tremendous advantage. This is actually done surprisingly little today. So I think this is a business form that, when people can pull it off, is very valuable. It's typically fairly capital intensive. We live in a culture where it's very hard to get people to buy into anything that's super complicated and takes very long to build. When I think about my colleague Elon Musk from PayPal's success with Tesla and SpaceX, I think the key to these companies was the complex, vertically integrated monopoly structure they had. So if you look at Tesla or SpaceX, you ask, you know, was there a single breakthrough? They certainly innovated on a lot of dimensions. I don't think there was a single 10x breakthrough in battery storage, or they may be working on some things on rocketry, but they hadn't. There was no sort of single massive breakthrough. But what was really impressive was integrating all these pieces together and doing it in a way that was more vertically integrated than most of their competitors. Vertical integration, I think, is a very underexplored modality of technological progress that people would do well to look at more.