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Startups create a better future
“Positively defined, a startup is the largest group of people you can convince of a plan to build a different future…Startups operate on the
principle that you need to work with other people to get stuff done, but you also need to stay small enough so that you actually can.” –
Peter Thiel
Most important strength of a startup: the ability to support a new way of thinking about the world.
7 Question to Answer Before Launching a Startup
Engineering Question – Do we have a technology that is 10x better than the competition?
“PayPal made buying and selling on eBay at least 10 times better. Instead of mailing a check that would take 7 to 10 days to arrive, PayPal let
buyers pay as soon as an auction ended. Sellers received their proceeds right away, and unlike with a check, they knew the funds were good.” ‐
Peter Thiel.
Engineer a solution that is 10x better than the competition.
Timing Question – Is now the right time to start this business?
“Tesla CEO Elon Musk rightly saw a one‐time‐only opportunity. In January 2010 Tesla secured a $465 million loan from the U.S. Department of
Energy. A half‐billion‐dollar subsidy was unthinkable in the mid‐2000s. It’s unthinkable today. There was only one moment where that was
possible, and Tesla played it perfectly.” – Peter Thiel
A great startup is based on an idea that wasn’t possible three years ago and won’t be possible (or special) three years from now.
Monopoly Question – Are we starting with a big share of a small market?
“Tesla started with a tiny submarket that it could dominate: the market for high‐end electric sports cars. Since the first Roadster rolled off the
production line in 2008, Tesla’s sold only about 3,000 of them, but at $109,000 apiece that’s not trivial. Starting small allowed Tesla to
undertake the necessary R&D to build the slightly less expensive Model S, and now Tesla owns the luxury electric sedan market, too.”‐ Peter
Thiel
Focus your initial efforts on a promising market segment to prove your business model can generate cashflow.
People Question – Do we have the right team?
“If you’re at Tesla, you’re choosing to be at the equivalent of Special Forces. There’s the regular army, and that’s fine, but if you are working at
Tesla, you’re choosing to step up your game.” – Elon Musk, Tesla CEO
You need people on your team who are as committed to the startup vision as you are. You also need the right balance of engineering and
sales talent to be successful.
Distribution Question – Do we have a way to deliver our product?
“Most companies underestimate distribution, but Tesla took it so seriously that it decided to own the entire distribution chain. Other car
companies are beholden to independent dealerships: Ford and Hyundai make cars, but they rely on other people to sell them. Tesla sells and
services its vehicles in its own stores. The up‐front costs of Tesla’s approach are much higher than traditional dealership distribution, but it
affords control over the customer experience, strengthens Tesla’s brand, and saves the company money in the long run.” – Peter Thiel
The sales and distribution plan is as important as the engineering and product development plan.
Durability Question – Will our market position be defensible 10 years from now?
“Tesla has a head start and it’s moving faster than anyone else—and that combination means its lead is set to widen in the years ahead.” –
Peter Thiel
Create a defensible market position for decades by either creating strong brand (ex: Tesla and Apple’s strong association with luxury
goods), proprietary technology (ex: Google’s search algorithms), large network (ex: Facebook’s user size ensures people don’t leave the
platform for a smaller and less valuable network), or economies of scale (ex: Amazon and Walmart sell a massive number of items, which
lowers their fixed cost per item and allows them to outprice smaller competitors).
The Secret Question – Have you identified a unique opportunity that others don't see?
“Rich people especially wanted to appear “green”...Tesla built a unique brand around the secret that cleantech was even more of a social
phenomenon than an environmental imperative.” – Peter Thiel
Base your business on a behavior that people don’t want to admit or are aware they’ll be doing in the years to come.
www.ProductivityGame.com