Betsy Masiello, a colleague, disagrees interestingly with Thiel. Her main argument, which I think is sound, is that competition is not one thing. She writes:
The other thing Thiel mixes up in all this is that he sort of suggests that competition does not drive innovation when he says maybe “competition isn’t as good as we’re told it is.” I think that’s wrong, competition is every bit as good as we’re told it is. Take Thiel’s own example—one could argue that losing a competition is the thing that prompted a creative spark. Without competition, he would not have experienced loss (of not getting the clerkship), and he would not have been forced to go through a coping process, through which he wound up starting PayPal. Any seasoned athlete knows why competition in games is a great metaphor for life: “the great accomplishment is not in never failing, but in rising again after you fall.” Thiel got back up when he lost. He just decided the next time to play a different game.
I think this is right, and it high-lights an important corrigendum to Thiel’s piece. There is a difference between competition in a game and competition about what game to play. Both are very difficult but for different reasons, and the difficulties are slightly different too.
I still think Thiel’s point holds for competition in a pre-defined and well-established game, but the more interesting issue is how we compete around what game we are playing, how we set rules for our (albeit metaphorical) games. The other point is that losing in the first kind of competition spurs this second type of competition where you seek other games to play. I think that is right too.
That said, there is a lot of truth in the notion that we focus too much on playing one single game, defined by others. This is evidenced not least by Thiel first having to lose that game before he engaged in secondary competition, or game selection competition. Competition in a game is not all it is cut out to be. (Also vaguely related to his discussion around how we choose market-definitions, I think).
All in all a very interesting question. On the war metaphor I whole-heartedly agree.