
Peter Thiel’s CS183: Startup - Class 9 Notes Essay - aaronbrethorst
http://blakemasters.tumblr.com/post/22405055017/peter-thiels-cs183-startup-class-9-notes-essay
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paulsutter
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.

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bgilroy26
> Google didn't invent performance marketing.

They brought it to the masses

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

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jedc
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.

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rmATinnovafy
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.

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pmarca
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!

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mukaiji
Marc Andreessen from AH is on HN. #awesome.

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stevenj
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.)

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

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barmstrong
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.

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abhaga
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.

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n_coats
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...](http://www.docstoc.com/docs/24724434/Virgin-mobile-USA---pricing-for-
the-first-time)

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

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pbreit
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?

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gwern
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...)

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

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Create
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>

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gallerytungsten
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.

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nodemaker
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)

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aaronjg
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-...](http://blog.custora.com/2011/08/why-average-retention-rates-can-
lead-to-50-error-in-clv/)

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

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

