Peter Thiel Is Teaching A Class At Stanford About Startups, And We've Got Notes

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Famed investor Peter Thiel is teaching a startup class in the computer science department at Stanford University.Students in Peter Thiel’s CS183 class can expect to learn about the following, according to the class description:

Inner accounts from the early days of startups including PayPal, Google and Facebook will be used as case studies. The class will be taught by entrepreneurs who have started companies worth over $1B and VCs who have invested in startups including Facebook and Spotify. Students can expect to be proficient in the core skills critical to the founding and growing of a tech company upon completion of this course.

Not a Stanford student? Couldn’t get into the class?

Fortunately, Stanford law student Blake Masters is doing a good job of blogging about the class. Masters had a short stint at The Founders Fund, the firm Thiel started, during August 2011 and October 2011.

If you want to see the notes, go to Masters’ blog or click here for the first classsecond class, and third class notes.

Looking at Masters’ notes, we highlighted some of the most interesting parts. (The quotes are from Masters, not Thiel directly.)

  • Why Thiel is teaching:  “Humanities majors may well learn a great deal about the world. But they don’t really learn career skills through their studies. Engineering majors, conversely, learn in great technical detail. But they might not learn why, how, or where they should apply their skills in the workforce. The best students, workers, and thinkers will integrate these questions into a cohesive narrative. This course aims to facilitate that process.”
  • The computer industry is the only industry to live up to the hope that technological progress would advance: “Computers have been the happy exception to recent tech deceleration. Moore’s/Kryder’s/Wirth’s laws have largely held up, and forecast continued growth. Computer tech, with ever-improving hardware and agile development, is something of a model for other industries.”
  • You can’t understand startups until you understand what it was like in the 90s: “There is a keen analogue between the cultural intensity of the ’60s and the technological intensity of the 1990s. But today’s college and perhaps even graduate students, like the toddler in 1969, may have been too young to have viscerally experienced what was going on back in 1999. To participate in the dinner table conversation—to be able to think and talk about businesses and startups today in 2012—we must get a handle on the history of the ’90s. It is questionable whether one can really understand startups without, say, knowing about Webvan or recognising the mascot.”
  • No… most of the 90s wasn’t part of the dot com bubble.
  • There were a lot of sketchy people during that time though: “All the parties, money, and IPO success stories made for lots of sketchy businesses. Those businesses were funded by sketchy VCs and run by sketchy entrepreneur-salespeople. Since everybody was running around saying pretty crazy things, it became increasingly hard to tell who was too sketchy and who wasn’t. To avoid being drawn in by slick salesmen, Max Levchin developed what he called the aura test: you listen to someone for 15 seconds and then decide if he has a good aura. If so, you continue to listen. If not, you walk away. It’s not hard to imagine that companies who employed some version of the aura test were more likely to survive the mania than those who didn’t.”
  • So if you’re starting a startup in 2012, Thiel gives this advice: “To understand businesses and startups in 2012, you have to do the truly contrarian thing: you have to think for yourself. The question of what is valuable is a much better question than debating bubble or no bubble. The value question gets better as it gets more specific: is company X valuable? Why? How should we figure that out? Those are the questions we need to ask.”
  • Being first doesn’t mean you will win: “Grandmaster José Raúl Capablanca put it well: to succeed, ‘you must study the endgame before everything else.'”
  • Oh, on valuations. Take PayPal, for example: “PayPal is illustrative. 27 months in, its growth rate was 100%. Everybody knew that rate would decelerate, but figured that it would still be higher than the discount rate. The plan was that most of the value would come around 2011. Even that long-term thinking turned out to undershoot; the discount rate has been lower than expected, and the growth rate is still at a healthy 15%. Now, it looks like most of PayPal’s value won’t come until in 2020.”

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