Be passionate about the territory, not the map
I had tweeted about my willingness to give thoughts and feedback on a startup’s deck. Anup from Spext reached out to me with their deck. I’m deconstructing it below and after that, I’ll answer questions that Spext specifically wanted me to focus on. Note that my understanding of the market is limited to a few hours I spent doing the analysis. This deck is published with Anup’s permission.
The offer for analyzing decks still holds, in case you are interested, email me your deck. ... Read the entire post →
Peter Thiel wrote in his book, Zero to One, that startups need to be cult-like. At that time, I didn’t completely appreciate his message, but now I do. By ‘cult’, I mean a group where members have values that are similar to each other, but extremely different from the outside world. Cults, as long as they don’t harm their members or others, are society’s exploration vessels. Because they’re cults, they obsess about arcane stuff that nobody else cares about. Most of the times, they keep it to themselves and rest of the world ignores them. But if they discover something valuable, rest of the world benefits. ... Read the entire post →
In my conversations with other entrepreneurs, I’ve come across tens of startups that started with a B2C angle but eventually succeed as a B2B company. Outside of my experience, famous examples include Slack that started as a gaming company. VWO’s competitor, Optimizely, started as a company that made math teaching apps for children. In my experience, it’s far more common to pivot from B2C to B2B than the reverse. Why does that happen?
On Inverted Passion, I love to get into the details of the structure of success and analyze things beyond surface level impressions. So here are all the reasons why B2B proves to be a better option after failure in B2C. ... Read the entire post →
Many designers I know started their design practice by first practicing on Photoshop. Almost all marketers I know entered the field by reading articles on content marketing, Adwords, or Facebook Ads (SEO is long gone). Engineers in my day started learning web programming with PHP (apparently these days it’s Javascript / NodeJS).
Most self-made professionals get attracted to the methods and tools because they get immediate results. Want to do content marketing? Sign up on Medium, write an article and spread it. Want to write your first app? Use Bootstrap in the frontend and Mongo/NodeJS on the backend, and you’re up and ready in a couple of hours. Tools enable immediate gratification and that’s what makes them so attractive. ... Read the entire post →
Most entrepreneurs are aware of product-market fit. It’s a good advice but I have an issue with the term “product-market fit”. It makes an entrepreneur focus on product first, market second. The words we choose to describe the world ends up shaping the world for us. This means not all “social networks” are the same and words you choose to describe an innovation has a significant influence on how much customers value it.
Repeated usage the term product-market fit, develops a mental model where the entrepreneur’s inclination is to make a product (or get an idea) first and then go out in the market to test it. In fact, that’s what Lean Startup and other methodologies suggest. Quick experiments and fail fast. ... Read the entire post →
Continuing on the same theme as yesterday’s article on the winner-takes-all effect and the structure of network effects, today I dive deeper into the very early days of Facebook. By early, I mean the very week of Facebook’s launch on Harvard campus in Feb 2004. The early history of Facebook is interesting because when it launched Myspace and Friendster already had millions of engaged users.
Any explanation of the success of Facebook as a company that it is today will fall short. There are so many factors that explain Facebook’s current valuation of $500Bn that I’m not sure if a comprehensive account of that is even possible. ... Read the entire post →
The winner-takes-all phenomenon in business is appealing. All entrepreneurs dream of their products being used by everyone in the market. Large tech companies such as Microsoft, Facebook, Uber, Amazon, and Netflix derive their massive valuations by dominating their respective markets. How did they achieve this dominance, and do new startups have a chance against them?
The primary cause of this massive growth of large tech companies in a short period is network effects. Many tech products grow more useful as more users use them, so larger the user base gets the more benefit each user is able to derive. This kicks in a positive feedback cycle whereby the tech product’s value increases exponentially (and becomes hard to dislodge by competitors). This increase in benefits with numbers of users is unprecedented in history. In the non-tech products world, if you use a particular brand of toothpaste, you do not make it more likely for a random stranger to pick up that brand of toothpaste. (Yes, word of mouth exists for non-tech products but that’s about it.) ... Read the entire post →
It’s that time of the year when people set their new year resolutions. Most of these are health-related: losing weight, quitting smoking, reducing alcohol dependence, eating better or meditating. Everyone knows that failure rate of such personal goals is high. But psychologists are a curious bunch and wanted to be sure of that. In an experiment, they tracked people’s new year resolutions and discovered that only 40% reported sticking to their yearly goals by the end of six months.
I find this high failure rate for new year resolutions utterly fascinating. How can someone fail at achieving a goal that depends solely on their own actions? If your goal is to lose weight, why not simply start eating foods with less carbohydrates? Of course, intuitively we know that achieving personal goals isn’t as simple as that. Even the staunchest believers in free will fail at quitting smoking. ... Read the entire post →
I was talking to a friend who has subscribed to an online publication called The Ken. This subscription costs him around Rs. 2000 per year and he gets access to hundreds of exclusive in-depth, well-researched articles on Indian startups. I asked him if he’ll renew, and he said probably not as he didn’t think that he got worth his money from the 15-20 articles that he had read. This conversation was happening at a bar where the average bill per person comes to be about Rs. 1500. I pointed this to him and we wondered why he was willing to pay Rs 1500 for a 3-hour sitdown at a bar but doesn’t find it worth Rs 2000 to read 15-20 well research articles. ... Read the entire post →
We value things we own much more than the things we don’t own. It’s called the endowment effect. This goes well with our intuition that other people don’t value our things as much as we do. But it isn’t just that other people devalue what we have. Experiments show that if we reverse the roles, our willingness to pay is much less for the same product that we were earlier owning (and were demanding a high price for).
How does this disparity in selling price and purchase price occur? It occurs because buyers don’t have perfect information about a product and cognitively what “jumps” in the mind of a seller is benefits of the product or service (while seller focuses on costs). ... Read the entire post →