Stanford has currently a “wildly overcrowded” How to Start a Startup course, which in many ways is similar to the one we are about to round off at KTH. Even though we have had good enthusiasm by most students, some seem to have had a tough time loosing up adapting to the more entrepreneurial way of learning and sharing experiences (c.f. engingeering classes). I suppose the temperature lowers the farer you get from the heat/cluster/mecca of entrepreneurship aka. Silicon Valley..
Just as we have had the great opportunity to welcome guest lecturers such as NY-based world-wide brand guru Erich Joachimsthaler and 2014 Tech Woman of the year Karin Nilsdotter, Peter Thiel here talks about the importance of creating monopoly. (hope you all got the Blue Ocean Strategy right on the exam, huh?)
Most things mentioned in his lecture we already know as entrepreneurship students, and you should recognize most key points from the video such as “skeptical of all the Lean Startup methodology”/ compete on price and “You want to go after small markets if you’re a startup, Big piece of a Small Pie”.
A somewhat new way of thinking however, at least for me even though the rationals are logic/obvious, is his coining of last mover advantage- in opposite to the econ 101 notion of first movement advantage. You should aim at being “[…] the last company in a category. Those are the ones that are really valuable.” As examples; Microsoft was the last OS at least for a decade, Google last search engine, Facebook would be valuable if it turns out to be the the last social networking site etc. One way of thinking of this last mover advantage, is that the most of the value of these companies exist in the far future. If you do sort of a DCF analysis of the businesses profit streams, with growth rate much higher than the discount rate- we see that most of the value is in the future- which to some extent also explains some of the at first sight crazy tech valuations. This would be the same for all emerging internet companies, such as Airbnb and Twitter, where math tells us that ~¾ of the money will come from cash flows in 10 years and beyond. The most common mistake of investors, he points out, is overestimating growth rate and underestimating durability. Durability actually dominates the money equation, and you “simply” need to find/create the survivors! …
If you feel that this KTH Entrepreneurship course ended too quickly, I highly recommend you to follow this link and take part of the ongoing video lectures- updated 2-3 times a week. (One of their guest speakers is Paul Graham, included in our reading list.)
On a last note, and as comment to some of the light complaints. Even the globally recognised course at Stanford/ Silicon Valley, which get overfull every semester, gets comments on youtube such as: “I’m sorry, i think i entered the wrong classroom. it was supposed to be how to start a startup class. This seems to me more of theoretical lecture with no tips and tricks for startups.” with answers such as “It tells you which markets you might have best chances in. Quite relevant if you’re not over the positioning phase yet. And if you did make your choice, it tells you what your threats are and the imperatives you have to follow.” and “This is a very common thing in programming classes, where some students question why don’t they just get into coding instead of talking about methodologies first. First you have to understand the context of the startup world, to be able to start one, not just want to “hack” a startup into success, which as previous lectures have pointed out, it just doesn’t work.“
Surely you can’t satisfy all expectations , but me myself has definately gained relevant insights, network and feedback for my ongoing start up- and I hope most of you have taken the chance and found value in this more pragmatic learning. Please comment if you agree/ disagree on any of this, or write your own blog post and link it.
Have a good one and hope to see you around! 🙂