Steve: "One of the biggest motivations for working so hard for a few years to make a great product, is you want one yourself and we use all the handsets out there and boy is it frustrating, it's really frustrating, its a category that needs to be reinvented, needs to be made not only more powerful but much easier to use and so we thought we could contribute something and we don't mind the fact that there's other good companies making products out there. The fact is 1 billion handsets were sold in 2006 & if we get just 1% market share, thats 10million units."
I don't know why but i always remember the guy from pinterest talk, when he spoke about going over a year and just having around 13000 users. I also remember a blog post by someone who actually spoke to him about his idea and didn't like it. How many of todays VC's, incubators & entrepreneurs would stick around for 2yrs to see if an idea will get traction?
Then for some reason i always think about Kevin Rose's milk which had a couple hundred thousand users in just around 3 months and he shut it down. I noticed he has started with the same concept again. Personally i think you cant point a finger at either side as it is hard to stick with a slow growth business and also hard to accept defeat. I think that you just have to be believe so much that your way is the right way and make the world understand that, just the way Steve Jobs did with the iphone in a competitive market.
there's a fine line between tenacity and stubbornness (the latter of which is not pretty to watch).
Glad to finally see this confirmed by someone who knows what he's talking about.
but you're wrong.
http://archive.wired.com/wired/archive/9.12/aspergers_pr.htm...
http://blog.codinghorror.com/software-developers-and-asperge...
(not that I put much faith in Gawker..) http://gawker.com/5885196/the-tech-industrys-asperger-proble...
So perhaps he could have gone somewhere interesting with this, it ended up as a rhetorical drive-by shooting.
Having said all of that, the man knows a zillion times more stuff than I do. I'm simply pointing out that this quote is so woefully incomplete as to be sophistry.
Zuckerberg did not pay $1 billion for Instagram and then $19 billion for WhatsApp because he wanted to. He did it because he believed they had a shot at replacing Facebook (and so did they).
Even Apple had to fight for its position with smart phones, which it practically invented. If Apple hadn't poured resources into keeping iPhone ahead of Android it would be absolutely dead today. Their monopoly began expiring the day it came into existence.
You either acquire and kill the competition or innovate and beat them in the market. Either way your monopoly doesn't protect you.
Compared to what? Big companies and monopolies die eventually, yes, but they pretty much outlast smaller companies and startups by definition.
Being big gives you the power of scale. You can simply afford to spend more resources building moats around your business than your smaller competitors can. If someone built a better Google.com today, I'd still be checking my Gmail and using an Android phone daily, plus Google would be in a much better position to play catchup than AltaVista et al were.
Companies that have always had to sing for their supper are much stronger. Apple is the best example. They constantly make new products that result in new sources of money.
Not sure I agree here. There's much more to both companies than simply google.com the search engine and facebook.com the social network. Both firms have invested heavily in companies and technology that they feel will be leaders in future industries. And by 'future industries' I mean industries that are literally in their infancy right now but are poised for explosive growth in this century (robotics, aerial technology, virtual reality, artificial intelligence, etc). To tie into Thiel's thesis, they are likely preparing and planning to become monopolistic forces in these new fields as well, which is probably a very sound strategy.
> "If people at Twitter make billions of dollars, it must be that Twitter is worth far more than what Einstein did."
Do people actually follow this thinking? Can someone give a better example of how this supposedly works?
Eistein will certainly join the ranks of scientific giants.
There's a widespread misconception about scientists too, due to the assumption that we're all academics. In fact there are quite a lot of scientists in industry, either in companies or as entrepreneurs. I've known quite a few millionaire scientists. Within the company that I work for, and in my side-business, I have a sincere interest in seeing my inventions commercialized.
I saw a video'd lecture by Alan Kay (probably linked to from HN) where he distinguished invention and innovation: Invention is creating new things, and innovation is bringing things to market. Those are separate skills.
You should go back and listen again to what Thiel said, this isn't something he believes. He is describing society's reaction to technological innovation. Steve Jobs, Apple and the iPhone are good examples. Is iPhone the greatest invention of the 21st century? Did Jobs create more value than Einstein? You would think so just going by the media attention they have received.
His point was that it was the nature of scientific discovery that made it hard to capture any value from it, not a characteristic of scientists.
The way I see it is that science refers to research in a very fundamental sense. Computer Science, Physics, etc. I don't understand just yet how you could put a value on things like that.
So what are we are left with? I think Thiel's advice boils down to:--> Do something that you have a strong intuition is >= 10X the existing alternatives. There is always competition because you cannot invent a new need and people are fulfilling their needs with something. However you can make the competition completely irrelevant by doing something so good that it is practically new and you'd do better not to go about your day to day with competition as your driving force.
Technically speaking several airlines have remained profitable for many years without going bankrupt. Southwest comes to mind with a 40+ year profitability streak. Even if they went bankrupt now I would consider them a financial success.
I find him an engaging speaker and I'm not even refuting his point, but perhaps a better choice of industries would make his point clearer.
Thiel's point is that the industry as a whole in not especially profitable if at all. This has been true in most countries where there is free competition. In a competitive market you would expect the best companies to to make money and the least good to lose it or go bust.
Here's some Buffett quoteing on the matter:
>Back in ’95 in an interview with UNC TV, Buffett pointed out that the airline business in the U.S. “has made no money.”
>Thanks to Wilbur and Orville Wright and their adventures on the Outer Banks, North Carolina is known as “first in flight.” But Buffett didn’t let that history stop him from making a sarcastic remark about investors’ attitude toward the Wrights.
>“If there had been a capitalist down there, the guy would have shot down Wilbur,” Buffett said. “One small step for mankind, and one huge step for capitalism.”
He was joking or course. Interestingly Buffett has returned to aviation but with a business that is what Thiel would call a monopoly - Netjets. They have the vast majority of the fractional private jet rental business.
I think computer hardware (especially memory or hard drives) would be a better historical industry to point to for incredible value created and precious little retained due to a hyper competitive market.
I think Theils point was that even those airlines that do survive makes no profit.
Thiel's IMPORTANT point is that small monopolies lead to bigger ones and you can not start by going after a big monopoly. That is his point that is not only spot on but really, really important and actionable.
I read the book. He argues monopolies are good for consumers and economy as well. When companies have so much returns that they don't know what to do with it, the good ones will invest the money in R&D which in return is good for everyone.
Am I the only one who thinks this way? or am i misunderstanding his statement. It could just be a different side of the same coin.
Yes, Einstein seemed not interested in making $1 billion.
But, let's see: What about Steinmetz, electrical engineering, and GE? What about A. Viterbi and Qualcomm? What about the inventors of RSA, that is, Rivest, Shmmir, and Adleman? What about the researcher founders of some small research oriented pharmaceutical companies? Then there is research mathematician James Simons who used something between his ears to make ~$12 billion or so.
And there's R. Bixby, long a prof at Rice, lone a leading researcher in mathematical programming, at one time Editor in Chief of Mathematical Programming, and creator of CPLEX, now owned by IBM. The story goes that Bixby has a relatively nice house in Houston.
And I would differ with Thiel on the Wright brothers. They sold copies of their first successful flyer to all who wanted to get into aviation on the ground floor. And there was Curtiss Wright that was still a viable airplane engine builder in WWII. There was a lot of progress, call it research and/or engineering, in aircraft engines from Kitty Hawk to WWII.
Oh, I almost forgot: Edison who was definitely interested in money.
Sometimes the researchers do not much want to get paid a lot, but sometimes they do and do.
One thing he might be missing on is the idea of lean startups. Its my opinion that Lean Startups does not mean build and release crappy products, but to validate your market and market-fit your product before you spend years building a product. Just helps you improve your product faster (or ditch it) using market's help.
A close substitute is something that someone would buy instead of your product.
"You're the smartest physicist of the 20th century
-- you come up with special relativity, you come up
with general relativity -- you don't get to be a
billionnaire; you don't even get to be a millionaire."
2) Being worth $1m is still terrible for having done everything he did.
For those who would like their work to positively impact the world, and not starve to death in the process, it's something that needs to be considered: how high of a Y is workable in the given environment?
Okay, but the more famous economists are usually at the more famous universities which tend to have large endowments and tend to want to get high returns and often do this by investing in VCs who look for monopolies that can return money enough to pay for the professors of economics!
Actually, whatever gets taught or suggested in the classrooms, it's both common and easy enough for the high end universities to look for and like students who are wealthy or relatively likely to become wealthy and make significant donations back to the university -- no joke. Or, universities are not against monopolies everywhere on campus!
Yes. The full saying is, "competition is good... for the customer." It almost always results in reduced prices and better service. It's obviously never good for businesses, since they have to work harder to win and retain customers.
Startups != growth.
This is because early investors have, presumably, already cashed out by the time durability is in question
One point he made at the end was good: Look for things that are new. Indeed, venture capital very much needs what is quite exceptional at least in exit value but also in whatever the heck it is, likely new, that leads to that value.
But it seems to me that in the quest for work that is now, powerful, and valuable, Thiel is overlooking something both big and important and, actually, close to where he lives in SV: He is overlooking some of the crucial aspects of how SV became important, i.e., got there.
And what was that? Sure, US national security via decades of high spending on electronics for aerospace, yes, in SV.
I do agree with Thiel that it is better if a founder has a really good idea for a startup and has this without "get out of the building" feedback from customers responding to agile developments.
Okay, here's something big, solidly in the background of SV, that Thiel didn't emphasize: Suppose a founder thinks of a big problem, that is, a big need.
Next, he wants a good solution: So, he wants, say, the first good or a much better solution to the big problem. And with that solution he wants a monopoly. Good.
Now, how to get that solution? Well, SV long showed an important way -- research. And the researchers do not necessarily have to settle for Thiel's Y = 0%.
So, for US national security we have a long list of fantastic solutions, from research, heavily done in SV, for really challenging problems. Point: Such work can be done. That is, when want a really good solution to a big problem, in the case of US national security, research in SV has a terrific track record.
Yes, some of that research was expensive, but not all research is! A lot of the best research is one guy with paper and pencil. E.g., did Thiel mention Einstein?
But, wait, there's more! Now SV likes computing, that is, exploiting Moore's law. And Thiel said he liked software. Okay, it's about information. And for techniques to take in available data, manipulate it, and put out valuable information? Sure, and may I have the envelope, please (drum roll): Right, and the winner is applied mathematics, commonly done with paper and pencil, by one guy. Then convert to software and proceed! For US national security, SV did a lot of that.
Well, then, since such work can be done, do such work on commercial problems. That way, get such good technology and have a monopoly, the first good or a much better solution, much better technology, etc. I didn't hear Thiel explain the promise of this approach and thought that he should have.