Every once for a while, there will be some ground-breaking articles that come along. They would either redefine something I thought I’ve understood quite well, like Magic Ink: Information Software and Graphical Interface, or make something I always fail to grasp crystal clear like Paul Graham’s How to Make Wealth. Recently, I have been reading Peter Thiel’s talks at Stanford’s CS183 course. None of the above are easy-reads but they definitely worth read several times to understand thoroughly the points.
First, he talks about the engineer bias that leads many, including myself, to underestimate the importance of distribute your product:
But for whatever reason, people do not get distribution. They tend to overlook it. It is the single topic whose importance people understand least. Even if you have an incredibly fantastic product, you still have to get it out to people. The engineering bias blinds people to this simple fact. The conventional thinking is that great products sell themselves; if you have great product, it will inevitably reach consumers. But nothing is further from the truth.
He then went on to explain why most people thinks salesman are dishonesty and hence forgot we forgot president, investors, entrepreneurs are all salesman.
We are culturally biased to think of salespeople as classically untrustworthy, and unreliable. The used car dealer is the archetypical example. Marc Andreessen has noted that most engineers underestimate the sales side of things because they are very truth-oriented people. In engineering, something either works or it doesn’t. The surface appearance is irrelevant. So engineers tend to view attempts to change surface appearance of things—that is, sales—as fundamentally dishonest.
What is tricky about sales is that, while we know that it exists all around us, it’s not always obvious who the real salesperson is. Tom Sawyer convinced all the kids on the block to whitewash the fence for him. None of those neighborhood kids recognized the sale. The game hasn’t changed. And that’s why that story rings true today.
Sales work looks like easy, just like everyone thought politician is easy. But in fact, there might be similar huge gap between a master and a mediocre player.
A good analogy to the engineer vs. sales dynamic is experts vs. politicians. If you work at a big company, you have two choices. You can become expert in something, like, say, international tax accounting. It’s specialized and really hard. It’s also transparent in that it’s clear whether you’re actually an expert or not.
The other choice is to be a politician. These people get ahead by being nice to others and getting everyone to like them. Both expert and politician can be successful trajectories. But what tends to happen is that people choose to become politicians rather than experts because it seems easier. Politicians seem like average people, so average people simply assume that they can do the same thing.
The next highlight comes when he describes the importance of crack the nut of finding the most important factor in all the distribution channel under the sun and win it.
That is a really bad idea. It is very likely that one channel is optimal. Most businesses actually get zero distribution channels to work. Poor distribution—not product—is the number one cause of failure. If you can get even a single distribution channel to work, you have great business. If you try for several but don’t nail one, you’re finished. So it’s worth thinking really hard about finding the single best distribution channel. If you are an enterprise software company with a sales team, your key strategic question is: who are the people who are most likely to buy the product? That will help you close in on a good channel. What you want to avoid is not thinking hard about which customers are going to buy it and just sending your sales team out to talk to everybody.
He also covers PR/Marketing, enterprise sales and a bit history of advertisement. But from an engineer-turned-entrepreneur perspective, the above are the ones that really nail it for me. Hope you enjoy it as well.