Sustainable Sources of Competitive Advantage | Hacker News Reader

Sustainable Sources of Competitive Advantage

collaborativefund.com

80 pointsjoeyespo9 comments

I have been following Morgan Housel's (the OP) writings for a while. He has written some excellent essays. In terms of explaining important ideas, they come close to "PG-Level" (Paul Graham) in writing. If you are interested in reading more from Morgan, I recommend the following:

1. The greatest story ever told: "Capitalism’s success is built on a belief – a story – that, given the right incentives, people can work together to solve problems. It’s worked magnificently. It’s the greatest story ever told."

http://www.collaborativefund.com/blog/the-greatest-story-eve...

2. The Reasonable Formation of Unreasonable Things "Few things have as much impact on your lifetime investment returns as the decisions you make during bubbles."

http://www.collaborativefund.com/blog/the-reasonable-formati...

Isn't willingness to fail a way of learning faster? Willingness to wait was also justified in terms of learning.

All the arguments seem to boil down to learn faster, adapt faster. Evolution's a story as old as time.

How sustainable is having proprietary information? Assuming the information is valuable today or will be in the future. I guess less so today than in the past due to leaks and information spreading in general. But I am not certain if this makes a practical difference. The willingness to fail and wait touch on the value of having rare information.

See this blog post and the associated paper: https://www.schneier.com/blog/archives/2015/09/the_declining...

Is there any way to express this advice in a more fundamental, perhaps more abstract, framework? I often find more enlightening than off-hand advice without any clear underlying structure.

Strong empathy, humility, and risk tolerance are rare, less sustainable, and harder to replicate than know-how and raw brainpower.

The author undermines his point by highlighting two companies, Amazon and Google, who at least in part have their competitive advantage solidified via an economic moat built from know-how. (Specifically Amazon's logistics, Google's AI chops, and both company's service operations expertise come to mind.)

Maybe there is no clean, abstract framework to express all this. Succeeding in business isnt as simple as methodologically following steps 1 to 10.

On the other hand, I found this advice very succint and expressed elegantly. “Be more empathetic than your competitors” is such an elegant idea and captures the meme “Eat your own dog food and be your own customer” perfectly.

The biggest and most successful companies show little evidence of empathy.

One of the most sustainable strategies is to create an oligopoly or de facto monopoly [1], and then squeeze customers for cash as hard as you can.

You will eventually run out of lock-in, but you can have a very profitable time before that happens.

A lot of people (me included) find this strategy morally objectionable, and of course if you're a customer, it's a huge pain in the ass when you're on the wrong side of it.

But as a business strategy it has obvious benefits. If you can create lock-in, where are your customers going to go?

The reality is that today's business environment selects against empathy at large scales. Making customers happy is fine for small scale service providers, but beyond a certain size, it's far more effective to work hard to eliminate customer choice.

You might wonder if business would work better if empathy was valued over cut-throat monopolistic land grabbing. That's an interesting question, and it's tempting to suspect that it would - not just in terms of customer satisfaction, but in terms of technological stability and speed of innovation.

But that's not the business environment we have today.

[1] Ideally in a limited market, so there's no danger of formal antitrust action.

> The biggest and most successful companies show little evidence of empathy.

Were them like this while they were growing fast? One can not expect monopolies to display any empathy.

Monopolies don’t interest me because I can never become one. There is little practical value talking about how to become the next Time Warner or Verizon.

Becoming a popular “small” service is attainable however and it’s hard to build a successful one unless you have empathy.

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