Lecture 5, How to Start a Startup: Peter Thiel • Hacker News Board

Re: Lecture 5, How to Start a Startup: Peter Thiel

#81

Post by tomasien » Wed, Oct 08, 2014, 9:37 PM UTC

aytekin wrote: post #58

tomasien wrote: post #28

"Monopolies are good for the businesses that have them" is so ridiculously axiomatic I wish he would just stop making it the focus of his talk. We know this, and we know VC's get drastically bigger returns on those. The reasons we don't like Monopolies (if you're a person who doesn't like them) isn't because they're bad for those businesses or the market cap of those markets, but because they're bad for consumers and…

"they're bad for consumers and the economy as a whole." I read the book. He argues monopolies are good for consumers and economy as well. When companies have so much returns that they don't know what to do with it, the good ones will invest the money in R&D which in return is good for everyone.

I was careful to say "if you're a person who believes monopolies are bad" - it's ancillary to my point whether they actually are.

Re: Lecture 5, How to Start a Startup: Peter Thiel

#82

Post by fillskills » Thu, Oct 09, 2014, 12:09 AM UTC

zan2434 wrote: post #80

fillskills wrote: post #37

Very eye opening. Personally this was the best of the series so far for me. Helped solve a lot of questions in my mind about why certain companies succeed (Instagram, Snapchat, Facebook, Tesla etc). Serve your niche well - is a often repeated quote, Peter just brought the idea to a higher level by answering the Why. One thing he might be missing on is the idea of lean startups. Its my opinion that Lean Startups does…

Interesting, but what were the niches for those companies you mentioned? Instagram, Snapchat, Tesla - namely

Tesla - Started with electric cars only for rich and tech savvy people Instagram - Instead of doing everything related to photos, they focused only on Filtering - which at that point was considered a very niche market Snapchat - Started for teenagers to send disappearing pics to each other. Again not a huge/world changing sector

Re: Lecture 5, How to Start a Startup: Peter Thiel

#83

Post by 001sky » Thu, Oct 09, 2014, 4:26 AM UTC

applecore wrote: post #75

001sky wrote: post #21

Earlier quoted context omitted.

The point is that they are worth x if not buying them out would lower FB stock by X. Thats a wholly distinct notion than the company (per-se) being worth X. People are overly fascinated by valuations tied to $$$ signs, and under-appreciate the negative (exclusionary) value of property. There is a huge value in keeping (inexpensive) assets out of the hands of those who could usurp your power.

It's clear in hindsight that Facebook was (rightly) focused on the enormous upside optionality of the Instagram acquisition. It wasn't about paying $1 billion for downside protection. The same is true for the WhatsApp acquisition.

This is, I think, absurd. And investment banker will tell you that eliminating your largest competitor just prior to an IPO will give you a material valuation premium delta. In other words, you are going to price up the company (or not take it down) +/- 5% or greater based on such an external event. Ergo, triggering the event to occur by allocating 1% of the IPO proceeds is basically and arbitrage trading strategy. It has everything to do with things other than the ability to monetize the revenue stream at time T+1. You don't need the (furture) monetization because the deal is already NPV positive as of the close of the order books.

The logic for whatsapp is also similar, if less coldly transactional. The what'sapp TEV is something like 10% of FB value today. Again, these are the orders of magnitude financial advisors will mark-up a valuation for eliminating a major competitive threat. The only assumption really for operation performance is zero NPV.

This reallu only works for companies acquiring strategic threats at still early valuations with paper/zero interest finacing (say, Google buying FB at $7B), tho.

Re: Lecture 5, How to Start a Startup: Peter Thiel

#84

Post by jaoued » Thu, Oct 09, 2014, 11:38 AM UTC

"Competition is for losers": may be when it's competition based on price i.e. being the cheapest but definitely not competition based on being unique and creating value - and I don't mean only financial value as Peter Thiel seems always to refer to. That reminds me the Blue Ocean Strategy book by Kim and Mauborgne. http://en.wikipedia.org/wiki/Blue_Ocean_Strategy : How to Create Uncontested Market Space and Make the Competition Irrelevant

Re: Lecture 5, How to Start a Startup: Peter Thiel

#85

Post by theFish » Sun, Oct 12, 2014, 10:29 AM UTC

As a restaurant consultant I feel somewhat obliged to defend my industry. I am familiar with Russian market, but I think that fundamentally US and EU are not that different. The problem with Peter's arguments is that, while being mathematically accurate, they do not represent the real picture. Restaurants are actually pretty awesome business if you treat them like one. It's just that 95% of restaurateurs don't. But those 5% who do do pretty well. What I do for a living is help people with the transition - I help them establish metrics, collect data, make data-driven decisions e.t.c. As painful as these changes are, they are also very fruitful, and once treated like a proper business almost any restaurant can become succesful, having nice margins and turning profit.