Paras Chopra, Author at Inverted Passion

Moats for deeptech startups

March 10, 2022March 14, 2022Paras ChopraEntrepreneurship, Mental Models

I’ve written earlier that startups shouldn’t solve technically challenging problems. I still maintain the same view but wanted to add an important caveat to that claim.

The caveat is that startups shouldn’t exclusively rely on a specific technical innovation as their main advantage. I’m talking about narrow technical innovations such as making a better internal combustion engine, cheaper glue, and so on. Startups generally protect such specific innovations via patents but they’re not sufficient protection and hence quite weak as moats. ... Read the entire post →

Raise funding by showing how you can raise even more funding

March 6, 2022March 6, 2022Paras ChopraMental Models

Fundraising is an exercise in demonstrating how your company can generate financial returns for the investor.

*Investors are interested in their returns. Tell them how you’ll help them get it*

Different types of investors have different risk-reward expectations and that’s why they end up specializing. For example, a bank as an institution is risk-averse. They’re okay with a relatively smaller return (marginally more than the risk-free return) but they want to make sure that such return is guaranteed.

On the other hand, funds specializing in seed-stage funding know that most of their investments will fail, and hence to cover for those duds, they expect to fund only the opportunities which can generate 100x returns. The few 100x returning opportunities and most of the others not returning anything means that on average they end up generating a decent financial return on their entire fund. ... Read the entire post →

Startups shouldn’t solve technically hard problems

March 2, 2022March 2, 2022Paras ChopraEntrepreneurship, Mental Models

1/ Startups get funded when they’re expected to be valuable, and they’re valuable when they can generate a continuous stream of profits for its investors.

2/ With this view, the value of a startup comes mostly from its expected moat, i.e. how well can it defend its business from competitors once they take notice of the market.

3/ Startups that solve technically hard problems are often in an economically disadvantaged position because solving technical problems is hard, but once a solution is found, it’s not as hard to understand or replicate it. ... Read the entire post →

Startups thrive under uncertainty (of the right kind)

February 25, 2022February 25, 2022Paras ChopraEntrepreneurship, Mental Models

1/ Do you know how big companies make decisions? They build scenarios and models on spreadsheets.

They do this because often the decision maker’s job is at stake, so all substantial decisions by that person require justification which is often to be had from numbers.

2/ It’s a myth that big companies don’t take risks. Introducing new products is risky and so is expanding into new geographies. In fact, all decisions are risky in a way. (If they weren’t, no decision is required as it’s simply obvious to all). ... Read the entire post →

Get press by giving journalists something surprising

February 20, 2022February 20, 2022Paras ChopraMental Models

Journalists don’t get excited about new products and features the same way an entrepreneur gets.

This is because:

First, a journalist gets hundreds of pitches every day and a particular product launch announcement is no different than the many hundreds of launch announcements sitting her inbox.
Second, aliens visiting Earth is news but your product’s new feature is certainly not news.

News is something that caters to basic human curiosity about the new and surprising. There is a reason why one death in a tragic car accident gets covered as news but thousands of deaths every day due to preventable diseases in poor countries don’t make it into the news. The former is surprising. People want to know how that particular accident happened. The latter is a statistic, a daily occurrence that people are familiar with and after a while becomes pretty boring to read. ... Read the entire post →

Your 30 second pitch shouldn’t be about you

February 5, 2022February 7, 2022Paras ChopraMental Models

Entrepreneurs generally confuse their 30 second pitch as something that needs to be about what they’re doing. This interpretation is understandable because usually anyone they meet ends up asking them what they do and the entrepreneur faithfully launches into her pitch.

Unfortunately, such a pitch often ends up with the listener quickly losing interest.

This is because even though people ask what you do with good intentions, they usually do not actually deeply care about what you do. What people care about is themselves, which suggests that a pitch should start and end with them and revolve around the world they live in. ... Read the entire post →

Notes from the book: “The Spike”

January 31, 2022January 31, 2022Paras ChopraNotes and Summaries

Recently finished “The Spike: An Epic Journey Through The Brain in 2.1 Seconds” by Mark Humphries and here are my notes from it.

1/ As the book’s subtitle suggests, it’s about the neural code our brain uses for doing what it does.

The book is rich with details and I learned a lot of new facts and ideas about the brain. I highly recommend the book to anyone who has an interest in neuroscience.

2/ Since writing about an object as complex as the brain can fill encyclopedias, I will focus my notes on what I know now that I didn’t know before reading the book. ... Read the entire post →

Consumers want stuff for free, companies want to pay

January 22, 2022January 24, 2022Paras ChopraMental Models

Mark Zuckerberg famously said that there’s no point in monetizing a consumer product unless you have a billion users. Consumers are habituated to getting digital services for free. This makes monetization for consumer products very tricky. Try recalling all the digital products or services you pay for as a consumer. In all likelihood, there won’t be too many as increasingly music, news, movies, productivity apps, and games are all free.

*What you should be charging depends on who you’re selling to*

Businesses, on the other hand, prefer paying. For consumers, their salary is a cap on how much they can earn, so they can’t increase their monthly costs indefinitely. However, for a business, if an additional cost helps them grow their revenue and profits, they will happily pay for it. So, businesses are used to buying expensive stuff if they see returns from it. ... Read the entire post →

It’s winners-take-all in B2C, while B2B is a long tail

January 16, 2022January 17, 2022Paras ChopraMental Models

There are only a few dominant social networks because consumer markets are prone to winner-take-all effects. There are multiple reasons for this.

*There are many more CRM companies than there are social networks*

First, consumers want stuff for free or cheap which drives consumer companies to expand aggressively so that they can amortize their fixed costs over many such users.

Second, consumers want to conform with other consumers so inherent virality in products gets built-in. Once, a minimum threshold of consumers adopt a product, this word-of-mouth virality ensures the product becomes an obvious choice for the remainder of consumers left in the market. If you have Uber that all your friends are using and it has all the drivers in your city, why would you try something else? ... Read the entire post →

How my 2021 went

January 6, 2022January 6, 2022Paras ChopraNotes and Summaries, Personal, Reading Recap

At the closing of the last decade, I reviewed the intellectual progress I had in 2010s. Then I reflected upon the year 2020 by writing 20 lessons I learned in that year. Such reflections haven’t been part of any process – I’ve simply enjoyed taking a pause and doing stock of where my time went. Since time is the only limited resource we have, as I’m aging, I’m realizing that being conscious of how it’s getting spent is extremely important. In fact, such reflections are a fantastic way to nudge your future into a direction that you intentionally choose (v/s reacting to circumstances and drifting from year to year). ... Read the entire post →