Games are problems people pay to solve

Good definitions are powerful. Lately, while reading The Art of Game Design, it became clear to me that the author’s definition of games makes a lot of sense. He defines games as problems that people pay to solve with either their time or money.

Unlike movies or books, games are not passive: they require an active participation and in that sense, they’re problems to be solved. And the fact that we willingly pay (with time or money) to solve those problems is fascinating.

Even though I’m not a gamer, I’m building a consumer startup in the behavior change domain and that’s pushing me to study games. Specifically, I’m interested in exploring what is that about great games that people will spend many hundreds of hours trying to master them, while most consumer experiences (including courses purchased or apps installed) have a ~90% churn of users on day 1 itself.  ...  Read the entire post →

Wealth is not money, it’s the things we use money for

As an entrepreneur, money is obviously a massive motivation for why you’re doing what you’re doing. However, it’s essential to understand that money is not wealth.

Wealth is stuff we want and by that logic, people can be wealthy even if they don’t have a lot of money. In fact, because wealth is anything that is directly desired and attained, even animals and insects can be wealthy.

Money is not wealth

The reason money is so popular because it allows us to acquire (certain types of) wealth. Money will be worthless if what you desire cannot be bought, or if there’s nothing you desire. Because most of what we desire can be had for cheap in modern society, the importance of money in our society is reinforced by people who are excessively driven by status.  ...  Read the entire post →

You can only succeed if you know how you can fail

We want to be successful with our decisions. Even though failure is often glamorized, nobody wants it on purpose. Everyone wishes to be successful when they’re starting a company, launching a product, hiring a leader or even while buying a house.

It may sound obvious, but the bedrock of good decisions is defining what good means before you execute on a decision.

Success criteria has to be defined before a project starts, not after it ends

Here’s why it’s important to define a clear, objective and unambiguous criteria before making any decision. First, without a commitment to an objective criterion, your brain will latch onto your how you’re feeling to decide whether the outcome of the project is good or bad. These emotions are influenced by all sorts of subconscious cognitive biases. In the end, you will end up picking data points that support your emotional inclination while ignoring the other data points.  ...  Read the entire post →

Startups live and die in a multidimensional landscape

Startups are like heat seeking missiles, except they seek profit and live in a multidimensional world where one mistake means missing the target by a mile.

The startup stack of success

Startups are hard because they require several things to go right simultaneously. It’s not sufficient to get one thing right, an entrepreneur must solve this multidimensional puzzle perfectly.

There are many smaller but important dimensions, but here are the biggest ones that need to be just right for a business to succeed:

  • Is the problem you’re solving a real one, or is it just in your head?
  • Even if the problem is real, are people actively looking to solve it? There are many problems that are merely inconveniences that not many people bother to solve. Is your problem one of that? 
  • Even if the problem has a high enough priority and that people are looking to solve it, are they willing to pay for it? There are many problems which people want a solution for, but they’d not pay anything or much for it because they’re habituated to expect a solution for free. For example, news and information is valuable to people, but people have come to expect to get it for free on the Internet.
  • Even if the problem is real and people are willing to pay for it, do you have the required capabilities to develop a solution? Some problems may have challenging solutions that are not easy to execute.
  • Even if you’re able to solve a problem that people are willing to pay for it, is there a way you can profitably market your offering to them? Marketing costs money, and often potential customers may not be aggregated at one place for you to profitably market to them.
  • Even if you’ve found a distribution channel, does your business have any lasting competitive advantage that will prevent a bigger competitor or another startup from snatching your customers?
  • Lastly, assuming you do everything right, will you deliver positive unit economics? Your business will struggle unless you’re predictably generating cash flow.

Remember: because so many things have to go right, most successful entrepreneurs either get lucky on all these aspects or they have a unique insight or expertise about one of the above aspects that others don’t have. ...  Read the entire post →

Think from first principles before you Google (or ask ChatGPT)

Like most technologies, search engines are both good and bad at the same time. They’re good because they open up vast resources of information. Today, our ability to know things instantly would seem like magic to previous generations. At the same time, precisely because searching is so easy, we’ve become habitual for googling for each little problem or doubt in our head.

To get original insights, you need original thoughts

In programming circles, coding by Googling is popular, but this is equally true for all professions. Because search results are so damn fast and convenient, we are now slowly getting wired to automatically and subconsciously Google any unresolved query in our head. This automatic reliance on search engines is dangerous because it is replacing our capacity for original thinking with second-hand information written by others.   ...  Read the entire post →

Stop assuming that your customers want things that you want

Mind projection fallacy happens when we assume that most other people are like us. It’s an error to assume that they have similar desires and fears towards things as we do.

Normally, this is not such a big issue. The worst that can happen in most cases is perhaps an exchange of incredulous looks (for example, when a cricket fan encounters a non-cricket who doesn’t know who Sachin Tendulkar is).

But for entrepreneurs, the mind projection fallacy is dangerous because it means they can end up working on the wrong problem...  Read the entire post →

Ask people what they did, not what they will do

When it comes to our life and decisions, we’re optimistic rationalizers. Every New Year’s Eve, we take resolutions that are grounded in perfectly valid reasons – reducing weight, quitting cigarettes, reading more books and so on. If someone asks why we want to read books, we can confidently blurt out that it will expand our worldview.

Memory is more reliable than intellect when it comes to understanding customer behavior

Fast-forward a couple of weeks in the new year, and we’re often back to our old ways. It’s spectacular that even when we quit our yearly resolution within weeks, we always have good reasons for why we abandoned our goals. (We’d rarely acknowledge that we’re lazy or are addicted to cigarettes.) ...  Read the entire post →

Never ask your friends or family if they like your idea

People are generally nice in person. You’d know this if you have ever gone to parties where everyone is super nice to others but as soon as the party is over, they start gossiping about the ones who’ve left. Very rarely would anyone tell a person at the party that they look like a clown (while often thinking in their head of the same).

Be careful who you ask for feedback

This tendency of people not to tell honestly what they have in mind misleads entrepreneurs when they seek feedback on their idea. Even if the idea is obviously flawed, in general, people won’t tell that to an entrepreneur’s face. This means, if you’re an entrepreneur, you rarely get to hear why your idea sucks. ...  Read the entire post →

Always seek disconfirmatory evidence

Thinking is expensive for an animal – our brain consumes almost 20% of the energy of the body (even at rest). Hence, the brain takes whatever shortcuts it can to do less deliberate thinking (that requires more energy) and more automatic thinking (that requires less energy).

There’s another name for such automatic thinking: cognitive bias.

Confirmation and confidence bias: the two cognitive biases that kill most startups

The word bias is used because our preprogrammed ways of thinking bias us towards paying more attention to certain information at the expense of ignoring other information. So, cognitive biases are systematic errors in viewing of the world. They are very hard to correct because you literally see the world through a lens that’s painted with cognitive biases.  ...  Read the entire post →

Map is not the territory

Imagine you are tasked with making a map of the world. How would you go about it? Think about this problem for a moment before reading on.

Maps are convenient simplifications

Perhaps you’d start with a stable reference point – like the North Pole – and start surveying Earth’s topography around it. Or you’d rely on the satellite imagery to gather the raw data. But regardless of what’s the source of your data, pretty soon you’d run into a challenge. Earth is a 3D surface, while you’re asked to prepare a 2D map. There is no simple way to present 3D information in 2D without losing fidelity of actual information.   ...  Read the entire post →