Differentiate or die

If two species occupy the same niche, one will inevitably drive the other to extinction. They cannot coexist together in the same habitat, because they compete for the same limited resources. If one species gains even the slightest advantage over the other, the one with the advantage will dominate in the long term. This leads to either the extinction of the weaker competitor, or to an evolutionary or behavioral shift towards a different ecological niche. They must differentiate or die.

Consider the story of craft beer: driven close to extinction in the Twentieth Century US by large-scale breweries. Mass production afforded low prices and big advertising budgets, leaving no shelf space for smaller rivals. Small breweries survived by occupying a new niche – flavor – that was a blind spot for big breweries. Their very strength in mass production left them unable to counter, leaving space for both to coexist. One thousand flowers bloomed, and craft beer made a comeback.

It’s through this mechanism that rationality can actually be a bias, as Sutherland says. Being rational and efficient makes you predictable, and being predictable makes you easy to kill. If everyone hires the same MBAs, from the same schools, who do the same analysis, that inform the same strategies, they’ll all get slaughtered trying to occupy the same niches, that looked so good on paper. Better to differentiate on a dimension that works to your comparative advantage, and that nobody else can easily copy. As Thiel says, “Competition is for Losers”.

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