All posts by Paras Chopra

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

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 →

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 →

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 →

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.

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 →

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

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 →