Peter Thiel’s CS183: Startup - Class 9 Notes Essay | Hacker News Reader

Peter Thiel’s CS183: Startup - Class 9 Notes Essay

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Perhaps the best class yet. Fantastic. But one comment:

> Google was the first company that enabled people to figure out whether advertising actually worked.

Not quite. You know those late night TV commercials for ginsu knives? They've always used a different phone number on each channel so that they know which ad worked. Billboards for lawyers? Same deal.

Google didn't invent performance marketing.

> Google didn't invent performance marketing.

They brought it to the masses

... because the masses don't watch TV? Which masses are you talking about?

The masses of millions of small businesses selling goods/services not appropriate for late-night infomercials or who didn't even have the funds to produce/air infomercials.

I agree. Google provided a medium through which people with limited funds could market. Nothing like it before.

Still, there is a lot of space in this area. The web is currently focused on selling to first time buyers. Very little about follow up sales. My first product focuses on that. Launch soon, but will talk about it in a few days.

Performance based advertising was perfected as early as the 1850s. Newspaper advertisements would use coupons that were redeemed at stores, then given to the advertiser so the stores could be reimbursed.

This is an extraordinary overview for any entrepreneur thinking about how to put together a business plan that will appeal to us at AH -- fantastic!

Marc Andreessen from AH is on HN. #awesome.

I've read every one of these so far. They've all been great!

Blake, if you're on HN, just wanted to say thanks!

(If these were converted into an ebook or paperback, I'd eagerly buy it.)

My pleasure! We're figuring out what to do in terms of wrapping them up in an ebook.

Totally agree - this material is better than 95% of business books I've read and I think could be a best seller (certainly in terms of quality, not sure about marketing/promoting it). Maybe you could co-author it with Peter.

hey do you think Peter will get upset if we post the lecture slides for other HN readers to see?

My biggest takeaway from the essay:

> So it’s worth thinking really hard about finding the single best distribution channel.

When thinking about the distribution, I always think about all the possible things we can do and try to do at least 3-4 top ones. The mistake is not to quickly zero down on the one with highest RoI and put all the energies on that one.

Interesting piece.. Calculating LTV and user acquisition costs reminds of the Harvard Business Case Study that examines how Virgin Mobile was able to compete in the US with existing mobile companies by reducing their customer acquisition costs. Here's the case study, feel free to apply info from this post towards coming up with the numbers and solution.

http://www.docstoc.com/docs/24724434/Virgin-mobile-USA---pri...

How do Peter Thiel knows about this stuff and how do I know if it's true?

How do you know anything is true? What would satisfy you in regards to Thiel's presentation? That he was a top student at Stanford? That he founded PayPal? That he was the first outside investor in Facebook? That he invested in distribution monsters like Yammer, Stripe and Zynga? That he's a chess master? That respectable people think he's smart? What would satisfy you?

Respectable smart people differ on lots of things - or do all top students at Stanford agree with Thiel? Do all chess masters agree with him? All investors? (And investment is such a random thing anyway...)

I'm just throwing stuff out there to try to understand how the poster tries to evaluate the truth of a presenter/presentation.

He is just selling himself, conning the audience – even having fun while at it, self ironically quoting Douglas Adams. There is no truth to it – this is what the whole essay is about. It is BS and BD – there is no BS like HBS, as they say.

Go down the rabbit hole: http://archive.org/details/the.century.of.the.self

How do you know if it's true? Think through it yourself. Don't look for a hook that's going to make you feel better about accepting something as gospel.

How do you know if it's true? Think through it yourself. Don't look for a hook that's going to make you feel better about accepting something as gospel.

I am not looking for a gospel. I am looking for a method so that I can understand if and how he's wrong or right.

Some suggestions: 1) Check for yourself that the facts he puts forward are true. 2) Look for notable examples of success and failure, study them closely, and see if they affirm or contradict his teachings.

That said, apart from "facts", little of what he says can be proven as "wrong or right" - he's just imparting to students what he has learned from his own experiences and observations.

It's a complex world. No individual point-of-view can come close to being 100% right 100% of the time.

But people are getting excited about this class because he seems to have developed particularly profound insights into the fundamentals of modern technology businesses - as compared with the many others who study/speak/write about the topic.

His investment track record is relevant, but that only tell part of a story. I'll also need to know the other side, his failure.

His education, the fact that he is a chessmaster, and that respectable people think he's smart is irrelevant. There's ton of smart people like him but they're not going to be wise in investment and strategy.

"Thiel was ranked #365 on the Forbes 400 in 2010, with a net worth of US$1.5 billion....However, this number now underestimates his wealth as his Facebook share alone, at a 2010 valuation, is worth US$1.7bn." http://en.wikipedia.org/wiki/Peter_Thiel

Pretty sure he's not hiding $2B worth of bad investments. Paypal, Facebook, Palantir, Slide, Yammer, Path, Stripe... that's a pretty solid investment record.

Do you disagree with something he says? If so, can you back it up with anything?

> His education, the fact that he is a chessmaster, and that respectable people think he's smart is irrelevant.

Really? I disagree. I think those are at least relevant and actually significant.

What would satisfy me is empirical evidence justifying the claims.

This is a good article for "big picture" thinking about how to grow a company. Lots of people get hung up on their specialty, and overly aggrandize their importance, instead of seeing the larger concepts. This is an article that helps bridge those conceptual gaps.

In the context of viral marketing, does anyone know how they came up with this formula?

Custs(t) = Custs(0) * (K ^ (t/ct +1) - 1) / (K-1)

where Custs(t) -> Number of customers at time t, K -> viral coefficient, and ct -> cycle time

EDIT : Okay I get it.

Basically the number of cycles that have occured at time t equals (t/ct+1)

Somewhat minor point, but I take issue with the CLV calculations. Using average retention rates can significantly undervalue your customers [1].

[1] http://blog.custora.com/2011/08/why-average-retention-rates-...

So, how did Intuit manage to sell their product? What is their distribution strategy?

I'm curious what the course has been like. To someone in it, do you do assignments or anything?

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