“Moving first is a tactic, not a goal. … It's much better to be the last mover—that is, to make the last great development in a specific market and enjoy years or even decades of monopoly profits.”
The Last Will Be First
From chapter 5 of Peter Thiel’s Zero to One (with Blake Masters, Crown Business, 2014), titled “Last Mover Advantage,” under its closing heading “The Last Will Be First.” The paragraph opens on “first mover advantage” and dismisses it: a business is worth the cash it will generate later, and a first mover that gets unseated generates none. The sentence after the quote gives the route: “dominate a small niche and scale up from there.”
Two paragraphs earlier, Thiel calls a big market already served by competitors “even worse” than a merely big one, and describes the ideal starting point as “a small group of particular people concentrated together and served by few or no competitors.” His own cases both arrived late and both started narrow. Google was not the first search engine, but by the early 2000s it had pulled so far ahead of Microsoft and Yahoo that Thiel counts it as a monopoly in his sense of the word: a company “so good at what it does that no other firm can offer a close substitute.” Facebook was not the first social network; it “started with just Harvard students,” a market so small it barely looked like one.
Founders who came later heard the same objection. When Drew Houston posted the Dropbox demo to Hacker News in April 2007, one reply began: for a Linux user, “you can already build such a system yourself quite trivially by getting an FTP account, mounting it locally with curlftpfs, and then using SVN or CVS on the mounted filesystem.” Houston did not argue the point. He named a different user: “many people want something plug and play.” Eric Yuan, one of WebEx’s first engineers, left Cisco in 2011 to start Zoom because, as he told a Stanford GSB podcast in 2022, “I did not see a happy customer”; the complaints were “quality not very good, mobile experience horrible.”
Read alongside Houston and Yuan, Thiel’s niche is the group inside a crowded market that the incumbents have stopped serving: the person who will never open a terminal, the customer with bad call quality and a horrible mobile app. That is who a late entrant makes the last great development for.