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Great Products Do Not Sell Themselves

Your mind is software. Program it.  Your body is a shell.  Change it.  Death is a disease.  Cure it.  Extinction is approaching. Fight it.*

During the spring semester of 2012, a young looking and successful businessman instructed the course “Computer Science 183: Startup” at the Stanford Graduate School of Business. For 99% of the world, this trivial event went unnoticed.  It’s expected at an institution like Stanford right? The tech community, however, rejoiced.

The man was Peter Thiel and for the most part, Thiel is not a household name.  He doesn’t gleam celebrity status like Kim Kardashian or exude a superhero personality like Richard Branson. It’s OK though, because his resume does the talking:

  • Co-founder and former CEO of PayPal
  • First outside investor in Facebook
  • Co-founder of Palantir Technologies,  a billion dollar startup software company
  • Co-producer of Thank You For Smoking
  • Investor in The Seastanding Institute, an organization dedicated to experimental ocean communities
  • Billionaire

Suddenly, making it on the CS183 attendance list took on a whole new meaning.  Luckily, an even less recognizable name, Blake Masters, attended all of Thiel’s 19 classes for his Stanford Law Degree. Masters is an entrepreneur himself but it’s not his legal technology start-up, Judicata, which made him a notable name.

It’s the incredibly clear, concise, and powerful notes he published after each of Theil’s lectures that made Masters “famous.” For good reason, his notes became a sensation in the tech and venture capital community. They are like stepping into the mind of a genius. A genius that can tell meaningful and personal stories about how the world works, connect the disjointed dots of starting a business, and provide insight on strategy that every entrepreneur needs.

Digesting Master’s notes makes you feel as if you’re there. Like you’re getting secret insight unavailable to anyone else.  Like you should be paying for the content. Thiel himself said before CS183, “If I do my job right, this is the last class you’ll ever have to take.” Funny enough, Thiel is noted for his stance that too many people go to college in the first place.

The breadth of topics that he covers is immense. It includes the history of technology, life as a start up, the pitch process, the challenges of being a founder, economics of venture capitalism, luck vs. skill, energy and biotechnology, and artificial intelligence.  Be prepared for some heady stuff.

To help you dip your toes in the water, below are three interesting concepts as covered by Thiel. As Masters says before every section of his notes: “Errors and omissions are my own.  Credit for good stuff is Peter’s entirely”

Progress is either Horizontal/Extensive or Vertical/Intensive.

Horizontal/Extensive progress is pretty much just Globalization. It’s copying things. There may be small improvements, but it’s same stuff we’ve seen before. A new flat screen television, building roads, a new flavor created by Coca-Cola, these are generally easy.  We’ve seen a lot of this in the past few decades. Developing countries are a good example since they are gaining access to technology and infrastructure that we’re quite used to.  This notion of progress is also described as going from “1 to n”.

Going from “0 to n,” however, is Vertical/Intensive progress and is true technology. It involves building and doing brand new things.  Thiel’s PayPal is a great example, as are technologies like Square and Uber. Going from 0 to n  is hard. It requires a revamp of how we look at the status quo. In fact, it may even require us to ignore the bias of the status quo entirely.

The problem? People like going from 1 to n because it’s easy. It’s what we’re taught to do. We easily label the early trailblazers of true innovation that push us from 0-n as crazy, insane, or both. Yet, we need more of this. It keeps us moving forward. Areas like education, medical, and legal are desperate for technologies that go from 0 to n.

Great products DO NOT sell themselves

The term distribution is interpreted differently by different people.  A VP of Sales may view it as simply selling.  The Marketing Manager probably sees distribution as telling the story of a product to a huge audience.  The Logistics Manager will treat distribution much more literally.  In fact, distribution is really a catch-all term for everything mentioned above and more.  It simply refers to how you get a product to consumers.

The problem is that distribution generally gets overlooked by startups.  The idea that a “Great product sells itself” is engrained in many of our heads.  Assuming that a fantastic product will inevitably find a way to customers is dangerous because it’s false.  No product sells itself.  Check out the life and times of Nikola Tesla as an example.

This idea that no product sells itself is a harsh reality for a lot founders and ultimately, the elephant in the room is distribution.  This all may seem obvious to your typical salesman but the importance of getting a product out there is often easy to overlook.  Build distribution and many of your problems will take care of themselves.

You are not a lottery ticket

Society has long wrangled with this notion of “Luck vs. Skill.”  We love the notion that hard work and preparation leads to success, yet plenty of rebuttals exist.  For example, we’re pretty much born into a certain context with certain circumstances that define our destiny.  This accidental luck approach, notably highlighted by Malcolm Gladwell, is where American society is trending.

Individual and societal expectations for the future are vital to understanding how we act now.

  • An Indeterminate sees the future as unknown, random, and out of our control.  A clueless college freshman will choose a broad major and join a variety of clubs and activities.  A business will diversify their product offerings and investments.  
  • A Determinate view sees the future and known and controllable.  A college freshman will choose an accounting major, join the accounting club, and pursue accounting internships.  Businesses will focus on a single product and hedge their bets on key investments.

Whether you lean toward an Indeterminate or Determinate view of the future, you absolutely must have a plan.  The “winging it” strategy is too crowded and relies on luck too much.  Even in a world clouded with some valid uncertainty, your plan should be big.  It should answer the question “Where do I (or we) want to be in the end?”  Have a plan and your life won’t be a lottery ticket.

To read Blake’s notes, check them out here:

* This quote headlines every one of Blake’s class notes.  As far as I understand, the origins can be found here:

Mike Haeg is an industry guru in the call analytics and technology sector. He has a deep passion for helping dealers measure their marketing ROI and i...
  • J
  • October 12, 2013
What of the 10million business fails that preceded Peter Thiel's success? I guarantee you each of them had a plan that they thought was on the money. 
"...This accidental luck approach, notably highlighted by Malcolm Gladwell, is where American society is trending."
"Accidental luck" is not all about winning, it has a dark side too. Consider Dr Sam Hurst, he invented the touch screen computer in 1971.
Mike,  I am a big Malcolm Gladwell fan, connecting "accidental luck" to Outliers completely misses the depth of the Outliers story.    Going from “0 to n,” (the  Vertical/Intensive progress) is COMPLETELY dependent on being at the right place at the right time. (i.e. Dale Pollack's vAuto a great 0 to n example, it never happens in 1995). 
It takes a very brave soul to dare to go where no one has gone before (aka “0 to n”), but,  he must produce a solution who's day has come (the concept is in sync with the marketplace).
  • M
    Mike Haeg
  • October 14, 2013
Hey Joe,
Appreciate the comments. 
I enjoy these conversations a lot. 

I’m not quite sure what to make of your observation of the millions
of failed businesses.  I agree with you
that a lot of businesses (and people for that matter) fail despite having some
sort of plan.  That’s obvious.  Does that mean they shouldn't have one?  Thiel’s bigger point is simply that many
startups and individuals are “floating with the current” right now.  Even in the most indefinite of worlds, a plan
is still better than none.  Yes, plans can change but having one is still better than not. 
And on to the topic of luck, a fun one indeed!  I would agree that there is more depth to the
Outliers story than simply proclaiming 0 to n
is mere “Accidental Luck.”  The book
would end there if that was the case.  
Although he clearly doesn’t like it, Thiel’s observation is really more
an objective observation that societal attitude is trending toward the Luck
side of Luck vs Skill.   The actual argument
of Luck vs Skill aside, Gladwell, along with the media, movies, pop culture,
etc, has influenced this.
Your point that 0 to n
is COMPLETELY dependent on right place / right time is interesting to
me.  Couldn’t one argue that the very
skilled creators of 0 to n have gone as far as creating market conditions themselves?Creating a product or idea that is so good
that the market syncing is because of skill, not because of luck?
Reference for others reading this, here is a link to Masters’
notes on class 13 – “You are Not a Lottery Ticket”