Thursday, May 9, 2013

Fun Readings about Startups

I got the following from my collaborator Jay Gu:

Here's a fun reading about startup: a well written lecture notes on Peter Thiel's course at Stanford, which covers topics like culture, hiring, strategy, lessons and mindset etc. I've read first 5 chapters and found it interesting and rewarding so I decided to share with all of you.

Below are some fun quotes just give you a quick taste.

About hiring good engineers from "Google":
     "So the way to compete against the giants is not with money. Google will outbid you. They have oil derrick that spits out $30bn in search revenue every year. To win, you need to tell a story about cogs. At Google, you’re a cog. Whereas with me, you’re an instrumental piece of this great thing that we’ll build together. Articulate the vision. Don’t even try to pay well. Meet people’s cash flow needs. Pay them so they can cover their rent and go out every once in awhile. It’s not about cash. It’s about breaking through the wall of cynicism. It’s about making 1% of this new thing way more exciting than a couple hundred grand and a cubicle at Google."
     "We tend to massively underestimate the compounding returns of intelligence. As humans, we need to solve big problems. If you graduate Stanford at 22 and Google recruits you, you’ll work a 9-to-5. It’s probably more like an 11-to-3 in terms of hard work. They’ll pay well. It’s relaxing. But what they are actually doing is paying you to accept a much lower intellectual growth rate. When you recognize that intelligence is compounding, the cost of that missing long-term compounding is enormous. They’re not giving you the best opportunity of your life. Then a scary thing can happen: You might realize one day that you’ve lost your competitive edge. You won’t be the best anymore. You won’t be able to fall in love with new stuff. Things are cushy where you are. You get complacent and stall. So, run your prospective engineering hires through that narrative. Then show them the alternative: working at your startup."

The fundamental question
     "The path from 0 to 1 might start with asking and answering three questions: First, what is valuable? Second, what can I do? And third, what is nobody else doing?
     The intellectual rephrasing of these questions is: What important truth do very few people agree with you on?
     The business version is: What valuable company is nobody building?"
About escaping competition:
       "Intense competition makes things hard because you just beat heads with other people. The intensity of competition becomes a proxy for value. But value is a different question entirely."

About how to own a market:
     "For a company to own its market, it must have some combination of brand, scale cost advantages, network effects, or proprietary technology."

About hiring nerds vs athletes:
"In thinking about building good company culture, it may be helpful to dichotomize two extreme personality types: nerds and athletes. Engineers and STEM people tend to be highly intelligent, good at problem solving, and naturally non zero-sum. Athletes tend to be highly motivated fighters; you only win if the other guy loses."
     "The optimal spot on the matrix is monopoly capitalism with some tailored combination of zero-sum and non zero-sum oriented people. You want to pick an environment where you don’t have to fight. But you should bring along some good fighters to protect your non zero-sum people and mission, just in case."

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