Article quotes Thiel out of context, exactly reversing his intended meaning (this is the cost of saying unpopular things, I guess).
“If your product requires advertising or salespeople to sell it, it’s not good enough” and “Technology is primarily about product development, not distribution" appear in Zero to One as the wrong lessons from the dotcom crash. Thiel is saying this to establish what he doesn't believe.
In fact, that entire chapter is dedicated to convincing techies that sales and advertising do matter.
Indeed, on the book he says that engineers tend to underrate the importance of the “marketing people”, and that a good product alone won’t sell itself.
Both are true. To have a huge success you need a great product that "sells itself" and you need sales and marketing to sell it.
Having just a great product will get you so far, but won't break through into the big leagues. Having only sales and marketing but a shit product will get you a flash in the pan.
I wasn't commenting on whether Thiel or Andreessen are right or wrong, I'm just saying the article misrepresents Thiel's view as they appear in Zero to One.
Also not sure if Thiel has changed his mind since then. Judging by recent interviews (e.g. with Eric Weinstein), he hasn't.
He gives out a mental model to think how much sales is important for your company, and how much you should invest in it. On a scale from tiktok (viral) to Palantir, you have to increase your sales spendings.
He talks how advertising was important for PayPal (by giving some money(sales spending) for referring).
And he talks why small/medium sized businesses don't use softwares for day-to-day tasks. Because they lie (in his words) a dead zone of sales, the 1000$ per product.
I think of sales & marketing as two sides of the same coin, but the tactics change based on your deal size.
Coca-Cola have a field sales team, selling into convenience stores and gas stations and making sure the shelves are full, but that's dwarfed by their enormous marketing budget. It doesn't make sense to have someone making cold calls or doing door to door sales for a $2 bottle of coke.
Oracle has a marketing team, and they sponsor certain things to get visibility in the public eye, but almost all of their spend goes into a large team of salespeople. No Facebook ad, or coupon in the mailbox is going to convince a CIO to spend $5m on a new database solution.
Your argument has so many negations that it's impossible to follow.
Article quotes Thiel out of context (NEGATION), exactly reversing (NEGATION) his intended meaning (this is the cost of saying unpopular (NEGATION) things, I guess).
“If your product requires advertising or salespeople to sell it, it’s not good enough (NEGATION)” and “Technology is primarily about product development, not distribution (NEGATION)" appear in Zero to One as the wrong (NEGATION) lessons from the dotcom crash. Thiel is saying this to establish what he doesn't (NEGATION) believe. In fact, that entire chapter is dedicated to convincing techies that sales and advertising do matter (implied NEGATION).
With all due respect, and maybe it's a lack of coffee, but I haven't got a clue what you're trying to say.
I think it was lack of coffee for me too, I guess (and please allow me to hide behind English, as it isn't my first language).
Also, some of those negations are part of the original quotes, it would feel wrong to edit them, for me.
I'd edit the original comment but it feels wrong now that there are child comments.
Interesting observation! FWIW I read the original poster's comment and understood it very easily and felt the negations flowed fairly naturally in their sentence. Good observation nonetheless!
Lots of confusion by the author of this piece, unfortunately. Author seems to struggle with English so perhaps that's why they accidentally misinterpreted some points made by the investors.
Aside from the points mentioned in the comments above, I didn't quite get this point: 'The misunderstood dogma here is to have no definite plan, work in incremental iterations to find out what’s most valuable to customers today(Lean Startup Methodology).'
Having no plan is the opposite of the Lean Methodology. The approach is literally built on the notion of having a business model that contains a set of hypotheses, which you then test, and iterate accordingly. In lean, a pivot is defined as replacing a hypothesis in the business model with a new one. E.g. Who you thought your market was.
All in all, format is interesting but the author doesn't seem particularly knowledgeable in this field. Looking forward to an updated version though.
This is true, most Lean stuff is about actually having a product development plan that also factors in marketing/consumer feedback loops via continuous refinement of a set of hypothesis.
Far too many companies do product development without much of a plan at all and just do whatever the loudest customers are complaining about, some trends in the industry, fickle management ideas, or a similar bug-driven approach even before it's fully mature.
This is an artifact of the general laziness of human beings. Companies are made up of people and most people look for desire paths, the path of least resistance.
As a result, people don't do their homework and then complain that certain methodologies are fundamentally broken. [1]
The mathematical equivalent would be to say that the integers are closed under division because you checked both 8/2 and -10/5.
[1] Not to mention all the straw-manning that's going on. Entrepreneurial science is a mess tbh.
I don't think you should be downvoted although I can see why.
Your comment stems from a fundamental misconception of what Khosla means.
When Khosla says that, he's specifically referring to tight iteration loops (which implies the existence and importance of plans).
You believe in your hypothesis such that you're willing to try things others deem foolish, however, you're not so dogmatic that you become unable to change in the face of newly presented evidence.
So while you shouldn't be so petrified or overwhelmed you dare not put a stake in the ground (strong opinions), you should simultaneously be very comfortable with changing your mind (weakly held).
Interesting. Both want product-market fit; one perspective focuses on executing well to capture the market at the right time and the other focuses on building a differentiated product and creating a market that didn't exist before.
These perspectives were put forward when SaaS was really taking off and software hadn't quite eaten the world yet. The world has change a lot since then. Creating a new software product has never been easier than it is today. That should mean that competition is at its fiercest but we're also seeing a massive consolidation of markets and big winners with no apparent rivals.
I think Thiel's focus on defensibility is becoming more and more important for early-stage startups. Why bother proving out market demand if one of the big players snaps up the opportunity from under your feet. Executing well and moving quickly used to be good ways to defend against this happening but I think the established incumbents are not the slow lumbering giants they once were. They are now the software companies that won the market ten years ago. Maybe our strategies need to change to take this into account.
I agree. It's not that tech incumbents are less slow these, they are still quite slow, it's that if your only advantage over them is the ability to push out code, consider that they have armies of average, but good enough developers and WILL outcode you once you've proven your idea is worth money. They also have far more to spend on marketing, litigation, etc.
So if all you're doing is the same things Google can do, just slightly faster and under the radar, prepare for a huge onslaught later on.
Google got big because they embraced the web early on and put themselves in the position of the anti-Microsoft.
Microsoft got big because they embraced software abstractions early on, in the form of compilers, multiplatform office software and later on operating systems, and they were the anti-IBM.
IBM got big because...
Until we come up with the next big paradigm shift, the incumbents will just keep on copying startups, or buying them up.
Big, incumbent non-SW company (Kodak example) being challenged by start-up
to
Big, software incumbent (Salesforce) with massive developer resources being challenged by start-up.
Maybe the strategies need to change - perhaps increasingly partnering with the software incumbents (if you can't beat 'em, join 'em).. Maybe someone can add some insight..?
One lesson I learned since I started my business a couple of months ago, is how important interfaces are. In practical terms, you can provide any kind of service together with partners as long as the interfaces between these partners are working. Doesn't matter if it is an API or just the way collaborate with, e.g., a photographer.
This gives cloud based software companies are huge advantage, and opens all kinds of opportunities for companies developing or working with the interfaces between these cloud solutions and involved parties.
My impression is that all the platform start-ups, unless they have competencies in integration of different tools and managing the corresponding processes, are basically dead in the water once VC money is drying up. When we talk about B2B solutions, I don't see any FB-like monopoly. So if start-ups are pushing for that, they gona loose against the big incumbents on the software side and against more operations oriented companies on the integration and process side.
In his own words: Thiel prefers to go from zero to one, creating products on which you can build a monopoly.
I think that he agrees on Andreessen about the importance of timing, but he doesn’t consider timing alone a recipe for a successful business.
Also Thiel seems more focused on technology as a whole, rather than the software-centric position adopted by Andreessen.
I think that both views have pros and cons, and that we would benefit from trying to find the greatest common denominator between the two approaches—instead of discarding that or this view.
PS: I read and enjoyed Zero to One, and I’d like to learn more about Andreessen views. If anyone has any suggestion...
Not sure about Andreessen but Blue Ocean Shift and Blue Ocean Strategy are solid compliments to Zero to One. The gist being, stop trying to compete in shark-infested (blood) red water and look for blue oceans.
This article seems to make a lot of mistakes, which is unfortunate, because they are very interesting thinkers. I can mostly speak to Thiel's views. I will spell them out, if anyone is interested.
1. Peter Thiel strongly values timing. This is not incompatible with the idea of creating your own market.
2. Thiel argues strongly against the ideas that a good invention sells itself. He emphasizes, to the point of contrarianism, that sales is underrated.
3. Thiel believes that competing on quality and price only is a sucker's game, competition. To get monopoly (the goal), you need to do something fundamentally different than anyone else (in kind, not in efficiency). The exception is if you do something 10x better than anyone else, it rolls back around to constituting a difference in kind.
In particular there is a moment where Thiel questions whether Silicon Valley will be able to save western civilization the way California saved a lot of down and out people during the depression era disapora: https://youtu.be/PUhtHojSphk?t=1682
In the coming economic, biological and climate crisis I guess we'll see how it fares.
Twitter was succesful in the US because cellphone messaging was expensive. Twitter did not do well initially in parts of the world with free cellphone messaging (Europe). That is the problem Twitter solved.
I haven't heard this theory before - Twitter started off with SMS, so wouldn't it increase your SMS usage?
Also in my experience by the time Twitter started, lots of people - especially techie people that would have been early adopters - had unlimited texting plans.
They definitely didn't have unlimited data plans by the time Twitter was web-centric.
Recently I read few covid-related threads on Twitter and from my perspective it is insane how utterly useless it is as informative medium, it thrives on bubbling up most controversial sensationalist messages.
Reddit on the other hand does pretty good job at crowdsourcing important informations.
After researching this a bit, it appears that Andreessen and Thiel actually have similar ideologies, which might be described as libertarian. Even though they are both very successful, I feel that focusing on them is a form of framing that limits a broader discussion about how the distribution of seed capital affects innovation.
Does anyone know of any VCs who might be considered advocates for social justice?
In retrospect, Thiel was, and is right. We are facing a global crisis because we brushed away our most important problems and chose to profit from digital cats and emojis. Time does not forgive those who lag behind, and we are now facing a crisis similar to a global war. Science and tech has institutionally been failing for decades, knows it 's been failing and has generally brushed away those concerns. Our weapons are now ancient, containment is a tool from the 1920s. (I know people are offended by this, i was hoping a global pandemic would be a wake up call)
Which global crisis you are referring to? It can’t be Climate Change because that isn’t a technology problem it’s a political and economic problem. Is it Covid-19?
Strange to make a distinction between the two. Saving us from the effects of climate change is only a technology problem at this point, but it's hard and tedious and disincentivized because it's easier to make money right now in the consumer world or, even worse, in the world of quantitative finance and many good minds have drifted to those fields.
Saving us from the effects of climate change if we let it progress far would be a (very difficult) technology problem, but fighting climate change is an economic and political problem.
I strongly disagree about climate change. It's nothing but a technology problem. The people addressing it are people like Gates with his funding of advanced nuclear and Musk with his driving of EVs, solar power, and grid scale storage.
One of the major reasons we've failed at tackling climate change to date is that we've been treating it as a political, economic, or ultimately moral problem and trying to solve it by moralizing.
I call this approach "abstinence based environmentalism," making a direct analogy to abstinence based sex-ed. It works about as well. Trying to shame people into using less energy or pursuing less economic activity is going to be about as successful as shaming teens into not having sex.
If we try to push abstinence based environmentalism really really hard by legislating it and trying to force people to down-size, we'll get a populist counter-reaction and we'll see the election of explicitly anti-environmentalist candidates. That's worse than nothing. That's going backward. We've already seen some of this.
We've been approaching environmental problems as moral and political issues for decades and what do we have to show for it?
I agree with the thrust of your argument but its actually still totally a social and economic problem and not a problem of technology.
First covid19 demonstrates how much of education and work can take place from the home without the need of rushhour style transport.
Second your examples of gates and musk are actually examples of the general failure of governments and markets to use existing technologies. Nuclear power, Hydro electric, ocean power, traditional solar ; all of these are existing technologies that dont need innovation what they need is the economic and social Will to construct. Musks EVs ; very expensive direct replacements for existing vehicles to me indicates something very wrong in the approach to solving climate change.
The problem is one of Coordination. The sclerosis of western society and our focus on individual incentive prevents anything but the most marginal of improvements.
A great example can be seen here in Ontario. Here the government subsidized private individuals to put up their own solar on their homes. Electric prices soared. The result is basically a wealth transfer from poor to rich with very little gained. Again there is some similarity here to the Tesla EV. Not that solar makes much sense in Canada but i am sure the government could have done much better to have run this project itself.
home work and education is technology. it might have not been build to save the environment , but it could save it. None - zero - of the remote solutions were advocated by politics, in fact management and politics is hostile to it as has been attested in these forums many times
Right but im in 100% in agreement with your statements. The "real" problems are in the social -political -economic realm. NOT actually that we need significant new technological developments. Thats why I disagree that it is a " It's nothing but a technology problem."
Fossil fuels only account for about 70% of global CO2 emissions. Replacing all of them with renewable energy sources will lower emissions but also bring more emissions (e.g. from cement needed to build those power plants). Our current global economic system is pretty much single mindedly focused on exponential GDP growth. As long as this system persists, all that new clean energy will be used to produce more useless disposable gadgets, driving up more emissions from methane (from all the new trash produced with all that energy).
What we need to stop climate change is to lower consumption and to lower production. This is very much possible while also increasing quality of life. Technology can help with getting that into people's head, but a political will has to be there first, and that won't be possible without challenging the current economic system.
"This is very much possible while also increasing quality of life."
I don't disagree. It's in part a framing issue. For decades the message has been "you should feel guilty for wanting things, and to save the world everyone needs to de-industrialize and return to the lifestyle of a medieval peasant." (I'm exaggerating just a little bit, but not much.)
The mainstream response has been similar to how people respond to other moral shaming campaigns: pretend to play along and engage in a lot of token signaling gestures (like banning plastic straws or recycled disposable cups) but otherwise ignore it. Actual behavior does not change, but you get this gloss of fake ineffective feel-good junk.
The developing world's response has been a bit more pointed: "fuck you, we're poor." They're not going to listen to a bunch of rich westerners tell them they need to stay poor to save the planet.
How old a tool is has nothing to do with how good it is - we use simple machines and screws and wheels and multi decade old technologies like the internet all the time. Just pick the right tool for the job and keep inventing new ones to expand the opportunity set.
containment is a very ineffective tool, as is the wooden cart wheel. The fact that we don't have a more effective response other than containment should be extremely worrying. What if this was a more dangerous terrorist bioattack? These questions will rise up soon after this initial shock has passed. Unfortunately, fear seems to work better as a motivation for scientific progress
“If your product requires advertising or salespeople to sell it, it’s not good enough” and “Technology is primarily about product development, not distribution" appear in Zero to One as the wrong lessons from the dotcom crash. Thiel is saying this to establish what he doesn't believe. In fact, that entire chapter is dedicated to convincing techies that sales and advertising do matter.