Thiel Fellowship Essay #2: Changing the World

(For more on my decision to apply for the Thiel Fellowship see: Why I’m Stopping Out Of Stanford and Applying For The Thiel 20 Under 20 Fellowship)

How do you want to change the world?

 

I believe the world’s fundamental driver of progress is technological innovation. But it’s not enough for technologies to be invented they must be scaled and integrated into the fabric of society. The best vehicle to support the spread of innovation throughout society is the formation of new companies. This makes entrepreneurship increasingly the critical lever that moves the world the forward. I intend to change the world by creating a lever behind the lever that increases the success rate of startups. I believe this could dramatically accelerate the pace of innovation and catapult the world to a new level of evolutionary development.

In my previous essay I talked about the power of patterns to bring clarity to domains that previously appeared to be chaotic, unknowably complex, and determined by luck and intuition. Entrepreneurship is one of those chaotic domains ripe to be transformed. The initial patterns describing its essence are just starting to be discovered which effectively form the foundation for entrepreneurship to be considered a management science.

I believe effective advancement and propagation of the science behind entrepreneurship will trigger a revolution that will be come to known as the entrepreneurial enlightenment.

After years of exploration and launching projects I finally arrived at the insight that increasing the success rate of startups was the place where I could most immediately have the greatest impact on the world. The journey started when I became frustrated with the lack of relevance of what I was learning at my private high school. The classes were challenging, but I realized they would have little impact on my ability to make an impact. I wanted to make my education relevant for the 21st century so I created a technology club that ended up going on field trips to exciting startups and research centers around the Bay Area. The most transformative part of this experience was actually having conversations with people who were doing real innovation. I shared my vision for education reform with one of these innovators, Saul Griffith, a brilliant engineer who was a founder Squid Labs, and he told me something I will never forget, “Always look for the bigger problem to solve”. In the years that followed my projects evolved quickly because each time I started executing, I kept his words of wisdom in mind, and when my knowledge and networked expanded, I realized I could tackle something bigger. My journey started with education reform, but from there I was led to entrepreneurial education, and finally to realization that I needed to solve problems with entrepreneurship itself.

I believe entrepreneurship today is incredibly inefficient. Entrepreneurs learn the trade primarily through apprenticeship and trial and error. Decisions are based on gut instincts and smart people generally apply good advice to inappropriate situations. The success stories are characterized by large markets dragging startups to scale through sheer intensity of demand. But it’s a sausage making process requiring heroic effort, and consequently the failure rate of startups hovers around 90%, due more to self-destruction than anything else.

I believe developing entrepreneurship as a management science holds out hope for a better way. It let’s us build tools for entrepreneurs to navigate the chaos of reality and organize the scattered insights from battle scarred entrepreneurs into a coherent model. I have no doubt that the right tools will vastly increase entrepreneurs’ ability to build successful companies. After all, early humans differentiated themselves from other species not by their superior intelligence but by their ability to build tools.

In the beginning of 2010, I started a pilot program for entrepreneurs who were alumni of seed accelerators like YCombinator, Tech Stars and Seedcamp, to gather more data about how I might increase the success rate of startups.

A book called 4 Steps To The Epiphany kept coming up and when I read it I realized the author, Steve Blank, had the beginnings of the solution I was looking for. The book’s most important contribution was a methodology called Customer Development. It recognized that most of a startup’s beliefs on day one were simply hypotheses, and outlined a rigorous way to test these hypotheses, effectively applying the scientific method to business.

I got in touch with Steve in April and developed a close relationship with him over the next few months. He agreed to formalize our work together as an independent study at Stanford in the fall. In our first meeting Steve outlined an abstract challenge for the quarter. The difficulty level was high, but I’d already solved a few critical pieces of the problem during the summer. Within a few days I’d figured out the solution. I showed it to Steve a few weeks later and he couldn’t stop chuckling. “That’s it,” he laughed, “your project is complete.” A friend later recounted Steve saying, “Max blew my F*!cking mind.”

I’d made a few key discoveries. I figured out how to resolve conflicting startup advice, by classifying startups into different types. And I treated the startup as an organism that evolved through stages of development. Viewing the startup through this perspective allowed me to reorganize Steve’s insights into a system that was far more extensible, enabling the integration of complimentary methodology. I was then able to integrate these insights into a coherent model that can help a founder figure out what to do and when at a very granular level.

I believe the groundwork is now in place for the management science to grow into something actionable for entrepreneurs very quickly. The most exciting implications of this body of knowledge are its ability to be codified into software, and its potential to be disruptive to the world of venture capital, because it affords the opportunity to transition from picking the winners to making them. I intend to build the organization needed to make this a reality.

1 Comment
  • Anonymous
    March 14, 2012

    Very interesting. Out of curiosity, what was the exact problem that Steve wanted you to solve?