We had our 14th Community Meetup on 25 October 2025, it’s always nice to see you all face to face! We shared what we learnt from studying the Dotcom Bubble in 1999, and how to find the next 100 bagger in the new AI era, using Peter Thiel’s Zero-to-One strategy.

Recording of the 14th Community Meetup and slide is available for paid subscribers.

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AI bubble and Zero-to-One strategy

What prompted us to share about this Zero-to-One strategy by Peter Thiel is because the AI theme rally is really going all out, despite concerns on the AI bubble getting stronger.

Companies in the AI value chain are cross-investing in one another, raising concerns on circular/vendor financing. So far, OpenAI has committed around US$1.4 trillion capital expenditure on AI infrastructure, much higher than the US$500 billion spent in the in Dotcom/Telecom Bubble.

With so much noise and froth in the market, Peter Thiel’s book, “Zero to One” serves a good reminder on the mechanics of how things will play out when business/countries are forming a new S-curve.

Note: You can watch the lecture above by Peter Thiel in Stanford University to give you an idea of what is written in the book of “Zero to One”. Noticed how Sam Altman (the CEO of OpenAI) was the one introducing Peter Thiel in the lecture.

As Peter Thiel always say, “Competition is for losers”. I think this serves as a good intro for what we will discuss next because this is exactly the playbook OpenAI is playing now.

If you are keen to receive more actionable financial knowledge like this, please consider to be a paid subscribers and join the community of hardworking young adults 💪 

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• Offline community meetup once every month

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Competition is for losers

There are 3 key concepts shared in Zero-to-One that you must understand:

1. Zero-to-One (0→1)

There are 2 types of business in this world: 0→1 and 1→100 business.

• 0→1 involves the business finding a new solution. For example, Uber solves the same problem as taxi drivers: bring you from A to B. But Uber offered a new solution to people, allowing people to order private car easily in-app with upfront price tag. This is considered a 0→1 business, because it is a new solution (order private car via app with upfront price tag) to an existing problem (going from A to B).

  In short, if we use 5 words to describe 0→1, it is “Better way to do things”; if we use 1 word to describe 0→1, it will be “Technology”.

• 1→100 business involves the business innovate/scale existing solution. For example, when McDonald succeed in the US and started the fast food culture, it quickly expanded to other countries, repeating the same formula. The growth and success of McDonald then just relied on “how many markets can McDonald grow” and “how much cost can McDonald cut down”.

  In short, 1→100 business involves “copying things that work, and making it work everywhere”.

2. Great companies aim to become monopoly

There are 2 types of business in this world: Monopoly and Perfect Competition. Both types of business creates a lot of value, but monopoly business captures a big portion of the value they created, while perfect competition business captures a small portion of the value they created.

For example, the US airline industry generated US$744 billion revenue in 2024; while Google generated US$350 billion revenue in 2024. The US airline only capture ~4% of the revenue as margin; while Google capture ~28% of the revenue as margin.

Because of this, the market value of Google alone (~US$3.3 trillion) is 31x bigger than the combined market value of the entire US airlines (~US$104 billion). This difference is because Google is a monopoly in Search Advertising, while US airlines are in perfect competition and all margins are competed away.

Hence, competition is for losers.

3. Monopoly today is formed by controlling demand

The biggest company today, e.g. Google, Meta are all monopoly in their own way, with Google dominating search industry and Meta dominating social media. They became a monopoly from controlling user demand. In other words, users VOLUNTARILY use Google/Meta, giving them monopoly power.

This is unlike old monopoly, where they get monopoly power by controlling supply. Rockefeller was a monopoly of oil refining and transportation; TNB is a monopoly of electricity distribution in Malaysia. Because these companies are monopoly, they earn monopoly profit by controlling supply and face no competitors. Users are FORCED to use the service of the monopoly, with no other choices.

Characteristics of monopoly business

Every monopoly is unique, but they normally have 4 similar characteristics:

1. 10x better technology: If you are a new solution, you better have 10x better technology, or else people will not be convinced to give you a try. If you are only 2x 3x better, people will not even give you a try, or it is very easy for other business to catch up to your technology. The easiest way to come up with a 10x better product/service, is to come up with something completely new.

   For example, Uber let you order private vehicle via app with upfront price tag. Uber needs to have the technology to calculate how much fares to charge upfront, app-ordering system, driver onboarding system etc. The end result is 10x better user experience.

2. Network effect: Network effect makes a product more useful as more people use it. Once the network effect flywheel started, more people using it will make the product even more useful, it is very hard to stop the momentum. The world’s strongest network effect product is the US Dollar.

   Network effects usually starts from very small group of customers/market, so small that no one will think it is a good business opportunity. It is important for 0→1 business to kickstart the network effect flywheel when it was small, so when people notice this business opportunity, it is too late for them to catch up.

3. Economies of scale: A monopoly business gets stronger as it gets bigger with network effect. This is because the fixed costs of creating a product/service (R&D, Engineering, Office Space) is spread out to many customers. In simple words, the cost to serve 1 new customer is near 0. Monopoly business can then pass this cost-savings to customers to strengthen the network effect flywheel.

   It is also important to note that many business in the service industry do not benefit from economies of scale as they grow bigger. For example, a barber can benefit from network effect (being famous from referral) for cutting hair, but it is impossible to benefit from economies of scale because it is impossible to cut 2 hair at the same time.

4. Branding: With 10x better technology, network effect and economies of scale, it is already a strong monopoly business. But if the monopoly business has strong branding, it is untouchable.

   For example, Apple is a monopoly with strong branding. Apple benefited from economies of scale in terms of hardware manufacturing and 30% service charge on iOS apps. Because of Apple’s branding, people do not complain about Apple even though they charge huge premium on their products.

Jeff Bezos (founder of Amazon) once drew this on a napkin when he first started Amazon.com. He believes network effect and economies of scale will kickstart the flywheel for Amazon, and no one will even come close as competitor.

To sustain this flywheel, Amazon intentionally press down its Amazon e-commerce margin and kept on reinvesting. Today, Amazon still did not make much money from Amazon e-commerce, but because of its success in Amazon.com, Amazon now makes more money from advertising and its other business like Amazon Web Services (AWS).

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If you are keen to receive more actionable financial knowledge like this, please consider to be a paid subscribers and join the community of hardworking young adults 💪 

Paid subscribers will get the following perks:

• Offline community meetup once every month

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• Access to DoitDuit’s portfolio

Applying Zero-to-One Framework on OpenAI

This Zero-to-One framework is important for us to find the next winner and the next 100 bagger. Since we are entering a new AI era S-Curve, the whole economy is experiencing Zero-to-One moment together, finding a new solution to solve new/existing problems.

And at the current juncture, OpenAI has the biggest potential to win this AI race, that’s why it is important for us to understand OpenAI’s strategy in this AI bubble.

Where OpenAI stands today

Using the 4 characteristics of a successful 0→1 monopoly business, it is clear that OpenAI still CANNOT tick all 4 boxes:

Fulfilled

1. 10x better technology: When OpenAI first introduced ChatGPT, it is a new way to do things. ChatGPT is also 10x better than the immediate solution in the market (Google Search). This is why everyone was amazed by ChatGPT when it first launched and willing to give it a try. Since ChatGPT 3.5 launched in November 2022, ChatGPT has grown to 800 million weekly users in 2 years.

2. Branding: OpenAI’s ChatGPT has a very strong branding today, especially in the consumer space. Most people only use OpenAI’s ChatGPT exclusively, never giving other AI products a try. I wouldnt be surprised if ChatGPT is included into dictionary as a verb.

Not yet fulfilled

3. Network effect: ChatGPT has network effect, but not fully benefiting from network effect. Network effect is strongest when the product/service gets better when there are more people using it. At the current juncture, when there are more users using ChatGPT, the experience for all users are worse, because it will make the model run slower and sometime ChatGPT even limit the number of users using the service at one time.

   But ChatGPT has achieved network effect in terms of more user data to be used in reinforced learning with human feedback. This can make ChatGPT more personalised to the user, and make it more “human-like”.

4. Economies of scale: The biggest problem ChatGPT is facing now is economies of scale. ChatGPT has successfully grown to so big right now with 800 million weekly active users, but the more users ChatGPT get, the more money they will lose because there is no “fixed cost” in AI computing.

As explained in our first AI analysis: Our AI Future, You Better be Prepared, AI companies need to spend a lot of money on AI Training (training the AI model from ChatGPT 4 to ChatGPT 5) and AI Inferencing (AI generating the answer).

This means that even when ChatGPT spent billions training AI model, they still need to spend more on AI inferencing whenever users ask a questions/create an AI photo/video.

Economies of scale is the biggest problem that OpenAI must solve, or else it will never be a successful company, i.e. ChatGPT can create a lot of value, but fail to capture any of the value as margin. OpenAI projects itself to reach US$100-125 billion revenue in 2029, if they still cannot solve economies of scale problem, the losses they suffer will grow exponential too.

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If you are keen to receive more actionable financial knowledge like this, please consider to be a paid subscribers and join the community of hardworking young adults 💪 

Paid subscribers will get the following perks:

• Offline community meetup once every month

• Exclusive groupchat for paid subscribers on Telegram

• Exclusive content on stock analysis, analyst briefings, financial tips (via email and Telegram)

• Access to DoitDuit’s portfolio

OpenAI Chess Game

The question now is, how OpenAI is trying to solve its economies of scale problem?

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