
Peter Thiel’s CS183: Class 13 Notes – You Are Not A Lottery Ticket (2012) - applecore
http://blakemasters.com/post/23435743973/peter-thiels-cs183-startup-class-13-notes-essay
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paulbaumgart
The key missing piece to Thiel's analysis of the design vs. statistics
dichotomy is the fact that it's best to have both: a strong vision combined
with a lot of low-risk experiments to shape your understanding of the best
path to achieving that vision.

From what I understand, Apple does exactly this: they do _a lot_ of
prototyping before settling on a product design, even though the broad strokes
of what they're trying to build are clear from the get-go. I expect the future
of product development to keep moving in this direction as prototyping becomes
progressively less expensive.

Speculating on history a bit: the transition from determinate to indeterminate
beliefs happened because people figured out that a lot of strong proclamations
about the future turned out to be very wrong. So the pendulum swung the other
way for a while, and now we're finally starting to settle on an equilibrium
between the two.

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applecore
Apple is an organization, whereas beliefs can only be held by individuals.

(NB: Procedural vs. substantive thinking draws heavily from the theory of
law.)

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s_q_b
The analogy I like best is "Work to increase your surface area for luck." When
dissolving a substance, if you pulverize it, you increase the surface area,
which allows for greater interaction with the surrounding water molecules, and
thus enables a faster dissolving rate.

In the same way, the more interactions one has, the more opportunities for
fortune to strike. The result may look like "luck" from the outside, but in
reality it was a confluence of both stochastic elements and fortuitous prior
decision making.

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tsmith
Isn't that an example of a "diversification" strategy, similar to the "join
many clubs/activities in high school" approach? The fact that it's a strategy
(and therefore involves prior decision making - specifically the decision to
follow the strategy) doesn't make it a "determinate" strategy.

I believe the lecturer (Thiel) is advocating for determinate strategies -
which, practically speaking, reduce the surface area for luck since time is a
finite resource. My interpretation is that he is advocating for "moon shot"
approaches (examples given: Tesla, Space-X, AirBNB) where the plan/vision is
laid out from the beginning.

This contrasts with the iterative "lean startup" approach whereby an initial
product is launched followed by an iterative customer feedback loop. The
evokes raises an interesting question: is the "lean startup" methodology an
artifact of "Indeterminate Optimism"?

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eldude
There is an intimate link between determinism/indeterminism,
optimism/pessimism and local/global maxima, ectropy/entropy.

Optimism is fundamentally a belief that we are not currently at a local/global
maxima. Determinism is a belief that the path to local/global maxima is
knowable through human intelligence.

This is why A/B testing, as pointed out in the article, is fundamentally
incapable of leading to anything other than a local maxima. It is optimistic,
but without determinism, it will never sacrifice traversal through local
minima to achieve a greater maxima.

This is personally why I have such a reaction of disgust to "ideas are
worthless" and "nobody knows anything until you build it," because I am
adamantly optimistic deterministic at heart and do believe in design,
increasing ectropy, and vision. A side effect of this is that in our
pessimistic indeterminate societal POV you are characterized with delusions of
grandeur until you prove out your vision. Even then though, you may be
discounted as lucky.

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dkrich
I think this idea that the US has moved to the optimistic indeterminacy
quadrant coincides nicely with the rise of the internet and cable news where
there is a huge bias towards focusing on perceived bad news, no matter how
important any of it actually is. There isn't money to be made in NOT scaring
people, so CNN/Fox News/MSNBC/Huffington Post/Politicians/Pretty much anybody
trying to make a name for themselves sell fear and fear sells well.

Twenty years ago most things that dominate the 24-hour news channels wouldn't
be conversation worthy but now people are addicted to bad news and have come
to believe at any given time that things are worse than they've ever been.

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p00b
An awesomely thought-provoking essay indeed.

“I’m a great believer in luck, and I find the harder I work the more I have of
it.”

I just wanted to point out for those who were as inspired by this "Thomas
Jefferson" quote as I was, that it was not actually TJ who said this, but a
man named Coleman Cox [1].

[1] [http://quoteinvestigator.com/2012/07/21/luck-hard-
work/](http://quoteinvestigator.com/2012/07/21/luck-hard-work/)

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njyx
This is a fantastic series - Class #4 "Last Mover Advantage" and a couple of
the others are just great stand alone, but they are all good.

Here is the index: [http://blakemasters.com/peter-thiels-
cs183-startup](http://blakemasters.com/peter-thiels-cs183-startup)

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api
The ultimate source of luck as a factor seems to me to be your origin:

\- Were you randomly selected by the genetic lottery to be smart, attractive,
healthy, etc.? Other traits might also matter, such as charisma and alpha
personality characteristics. I've often noted that individuals with a slightly
manic personality are actually very well adapted for high-speed industries.
I've experimented with using things like modafinil to push myself a little
further into this state with extremely positive results on my career. (My
natural state is more "beta" and contemplative than "alpha" and high-
energy/assertive.)

\- Were you born into high or low socioeconomic status?

\- Were you born in a rich and relatively free country or a poor or
corrupt/despotic one?

\- _When_ were you born? Not only does this matter on huge scales (e.g. it's
better to be born today than in 1500), but it also matters in a cyclic sense.
Do your life span periods of highest work productivity overlap with an
economic high note or with a recession?

Finally there is the obvious factor of accidents. If I get hit by a car and
get brain damage, obviously I'm less likely to be successful.

These lead to a few questions for me:

(1) To what extent is it statistically in the best interest of most people
then to support some form of social safety net?

(2) Is it in _my_ statistical best interest to support some level of social
safety net given that by doing so I might gain additional value due to higher
rates of cooperation? (Assuming that I am in the top, say, 25% of the ability
curve and might not need a safety net as much as many.) A safety net can also
be viewed as insurance. What if I am injured, get cerebral meningitis and get
brain damage, etc.?

(3) To what extent can these be hacked? Look at my first point about genetic
luck of the draw, and how I've managed to kind of hack this a bit with
chemistry and make myself more of an alpha personality when it's advantageous
to be one.

Personally I think that (1) and (2) are nonzero, which is why I do support
some level of social safety net as opposed to naked capitalism. I also think
that (3) is a definite 'yes' based on personal experience. Makes me wonder
what would happen if you gave the poor nootropics. (Before the PC police whack
me for that last comment, consider that I don't just mean IQ. I also mean
assertiveness, energy level, ability to focus, and so forth.)

At the end of the day I disagree with Peter Thiel. You _are_ a lottery ticket.
You are just a sentient, intelligent lottery ticket. You get to choose when
you are played, as well as use whatever hacks you can get your hands on to
change the numbers beneath the scratch pads. You also belong to a community of
other lotto tickets and together are capable of conspiring against the rules
of the game.

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AznHisoka
Boy, this is what Thiel teaches in his classes? The only useful, actionable
insight was in the last paragraph and then it ended. Lots of abstract,
thoughtful stuff, but nothing that could make me more successful.

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michaelochurch
Luck is code for "variables I don't see." The problem with defining a
luck/skill separation is that it's subjective which of those factors should be
a person's responsibility, and which are impossible to anticipate. So we'll
never resolve that one. It's a fairly subjective call. They're two sides of
the same coin. It's a "skill" variable if managing that feature is part of the
job, and "luck" if not so (perhaps that feature is unmanageable.)

I take a different and much more negative approach. Once a company or
ecosystem (such as VC-funded technology, increasingly shifted toward
marketing-driven light tech) ceases to add value, it reaches a state in which
neither luck _nor_ skill is the main variable, but pre-existing social class
and status. Indeed, one might argue that the appearance that it's _either_
luck or skill is an intentional deception.

Take college admissions. There's some merit (it's non-trivial to crack
1500+/1600 and get good grades in high school) in the equation, but there's a
huge extracurricular component ( _cough_ racism, classism _cough_ ) that is
impossible (for a middle-class parent or high school student) to predict or
navigate. It looks "random" to those people. That's how it's supposed to look.
Some cluelessly conclude, "It wasn't in the cards." Others, equally cluelessly
(and more pathetically) conclude, "I guess Johnny isn't cut out to be a
leader" (like anyone can fucking tell at 17). It's not luck or skill at all.
It's deeply classist which extracurriculars are valued and which are not, and
it's made to look random to one set of people, and skill-driven to another,
because the reality is socially unacceptable.

The same applies to Silicon Valley. It has ceased generating real value. It's
a Disneyfied farce of entrepreneurship designed to make rich twerps like Evan
Spiegel and Lucas Duplan appear to have earned it. Some people believe that
this is based on superior skill. Others are misled into believing it's luck.
It's just random "serendipity" that some people get and some people don't. Not
so. It's _corruption_. It looks like something else, because that's the ruse.
The luck/serendipity aspect is put there to muddy the water so people can't
see what is really going on.

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paulbaumgart
Possible alternative explanations to what you're suggesting:

1\. Growing up in a higher socioeconomic status environment does genuinely
prepare you better for academic and career success, so the correlation in
university admissions is rational given that universities can only change a
person to a limited degree.

2\. 90% of everything is crap, and startups are no exception. But that doesn't
mean they all are.

