Thiel has drawn upon his wide-ranging and idiosyncratic readings in philosophy, history, economics, anthropology, and culture to become perhaps America’s leading public intellectual today, assuming a mantle once held by the likes of Thorstein Veblen or Norman Mailer. The conspicuous difference is that Thiel—a libertarian, gay Christian—espouses views that are far harder to anticipate...
I hope that you are able to go check it out for yourself: http://fortune.com/2014/09/04/
One of Thiel's key guiding principles, one that has had a monumental impact on how he lives his life, and the subject of our blog post today, is a principle attributed to philosopher René Girard: mimetic desire. And though it is almost impossible to reduce a complex principle like mimetic desire to a few simple sentences, if one were to try, it may go something like this:
Humans have a tendency to imitate and adopt the wants of those around us. Our desires reflect their desires.
But what's this mean from a practical standpoint. Well, a lot of things, including, that we (society) have a shared, but relatively small set of common wants, a product of our tendency to imitate and adopt the wants and needs of those around us.
What does this mean from a business' perspective? Simply put: if you are competing in a market that caters to one of these shared wants and needs and you don't have a distinct defensible, sustainable competitive advantage (often in the form of superior underlying technology), you are engaging in a losing battle. How so?
Well, let's play this whole thing out. Company A recognizes that people have a desire to look good (in truth, looking good is just a practical manifestation of a deeper, underlying want and need, but we'll go with look good to make this more approachable). So, Company A starts to make clothing that caters to this need. Company B also recognizes that people have a desire to look good and they enter the market. Company C does the same, so does Company D, and so on and so forth, until you have Company X, Y, Z, AA, AB, etc. all entering the market. At this point, without a sustainable, competitive, distinct, and most often, technological advantage, one becomes just another Company in the market and is thus subject to the whims of a consumer.
Succeeding in such a market means competing on price, manufacturing efficiencies, branding, and the like. Doing so also means that you basically have no actual control over how your business will perform, particularly because consumer's responses are not rational, and it also means that, to compete and differentiate yourself, you have to eat away at profits to the point that, over the long run, they are nullified.
And, contrary to what many believe, in such a market, there is no real first mover advantage. Case in point: Google in the search engine space. Google was one of the last to enter the search engine market and there were true, entrenched incumbents. Incumbents that Google unseated due to its superior algorithms and underlying technology stack. In fact, an anecdote demonstrating Google's superiority, from way back in 1998 (and mind you, Google's algorithm has only gotten better over time):
He typed in the name Gerhard Casper, and instead of getting results for Casper the Friendly Ghost, as he did on AltaVista, up popped links to Gerhard Casper the president of Stanford.
What's this all mean? Well, unfortunately, the clothing market is one that caters to the wants and needs of the masses. It's a market created by mimetic desire and it's a market that thrives on it. But it's also a market that is subject to desire, which is often unexplainable. And, there are few, if any, sustainable defenses in the clothing market, so one has to compete on branding, price, manufacturing efficiencies and the like. It's a losing battle in the long run.
So what can a clothing manufacturer do to sustain itself? Well, for one thing, they can focus on unique markets. Ones that aren't en vogue, and focus on establishing “best mover advantage” in these markets. But it's unlikely that the advantage will be sustainable over the long run. Or, one can look to the very near future, and actually create a distinct, technological advantage by incorporating technology and wearables into clothing. And I'm not laughing.
There will be a day, likely soon, where will have cameras embedded in our clothing, allowing us to monitor and capture every aspect and every moment of our day. Heck, there's already a very discrete add on to clothing that allows one to do so: http://getnarrative.com/. I've tried it and it's awesome.
There will be a time in the near future in which we'll be able to sync our iWatches, Fitbits, Jawbones, etc. with our clothing to enable us to either cool off or heat up, via properties and features embedded in our clothing, depending on our internal body temperature. Not only that, but our clothing will have heating and cooling functions embedded that are tailored for humidity levels, body hair, sun visibility, etc.
There will come a day where clothing will be more than just clothing and more than just about looking good. It will become functional and in the process of this evolution, there will be a crop of companies that is able to create a distinct, technological advantage that is sustainable, defensible, and makes their efforts worthwhile.
Until then, in the words of former Citibank Chairman Chuck Prince, who helped drive that company into the ground during another bubble, the financial bubble: "As long as the music is playing, you've got to get up and dance."