Competitors Lie Too: Framing the Market Small

Non-monopolists tell the opposite lie. Founders in brutally competitive spaces describe their market as the intersection of narrow categories: the only British-food restaurant in Palo Alto, the only app for X that also does Y. The intersection sounds unique, but the customer sees dozens of substitutes.

Thiel used his own restaurant example: if you open a British restaurant, the relevant market is not 'British food in Palo Alto.' It is everyone deciding where to eat dinner, which puts you against every restaurant in town, and against cooking at home.

This is the more dangerous lie because founders tell it to themselves. Convincing yourself you have no competition when the market is crowded means you never build the differentiation you actually need.