About a month ago, I joined a startup called Transpose. Upon joining, I quickly learned about our dreaded Peter Thiel problem. Our founding team had seen a clip of Thiel discussing the problem with buzzwords in the tech space. To summarize, Thiel pointed out that buzzwords (words like 'cloud' or 'SaaS') are an indicator that the company is "bluffing" and that it's "undifferentiated." Thiel then went on to say that many companies that are truly innovative end up relying on buzzwords to explain what their company does, even though those buzzwords are insufficient. "They may get mischaracterized as being in a certain category but that doesn't mean they are part of any trend," says Thiel.
Fairly regularly, our team comes together to go over our more high level focuses and problems. These conversations tend to be pretty organic: one of us makes a remark to another team member about our user base, and within minutes, our entire team is circled up in our small Seattle office, hashing out our Peter Thiel problem once again. "We need to avoid the term 'database,' for now," someone will say. "We are a platform for users to create structured data, it's that simple," another person will say. Truthfully, none of these terms or descriptions really suffice. We've battled through numerous different approaches: a place for all of your structured notes; a platform for customized templates for all of your data problems; a democratizer of relational databases for anyone... the list goes on. At the end of the day, it's just us and our Peter Thiel problem.
I think it's worth noting that yes, it's generally an issue when a founder can't quickly and easily describe what his company does. However, there are instances where the product or company itself really is tackling something undefined. As Thiel points out, referring to Google as another search engine in 1998 was not an accurate statement. Referring to Facebook as another social network wasn't really accurate, either.
So how do companies go about pitching their offerings to users or investors if they can't really explain what they are doing in the first place? How do founders know if they're on to something that is innovative enough to fall outside of pre-existing categories?
Founders in this situation have their work cut out for them. Conveying what their company does will require extra emphasis on the problem they are striving to solve and painting a powerful image of what user experiences could be like once the solution is implemented. When it comes to determining whether or not your company is operating in an "undefined" category, some indicators to look for include an absence of obvious competition, a lack of clear customer segments to focus on, and, of course, a verbal void when it comes to describing the company's offerings in one or two sentences.
At Transpose, we're well acquainted with these issues, and while we are proud of the product we've built, the more daunting work that lies ahead is how we will talk about the work we've already done.
Our apologies go out to Peter Thiel. We never meant to name our biggest problem after you, but then again, maybe it isn't a problem after all.