All posts in Systems

Entrepreneurs worry about competition all the time. And they’re correct in doing so. I think the “focus on customers, ignore competition” is a terrible business advice. Customers will never ask you to introduce switching costs, yet that’s precisely what businesses should do in order to be profitable for a non-trivial amount of time.

In my last article, I wrote about how an entrepreneur should go about creating a legal monopoly via network effects and economic moats. In this article, I’ll talk about how even legal monopolies get killed.  ...  Read the entire post →

The purpose of a business is to generate over its lifetime a higher return for its shareholders than what they would have gotten by investing in risk-free options (such as government bonds). This is a slightly technical definition but an example will illustrate what I mean.

Imagine there is an entrepreneur with a business proposal and he requires a $100 of investment for it. He reaches out to you and pitches his idea to seek your investment. To make a decision, you’ll probably analyze and estimate how much return you’d get in return of money you give to him. If you usually get 6% interest annually in a savings bank account, you would expect a higher return from the entrepreneur (given there’s a risk of losing your entire $100 while your money in the bank is virtually risk-free). In fact, you’d expect an unjustifiedly high rate of return because like all humans you’re risk averse and hence demand more upside than what seems fair. Absurdly high expectations is what makes entrepreneurship so hard.  ...  Read the entire post →

Singapore became the independent, modern nation that it is today on 9th August 1965. The history of how the tiny island-nation became a significant force in Asia is a fascinating one. Its GDP per capita (PPP) is number 3 in the world and it has the highest number of millionaires per capita in Asia. Yet the country is smaller than Los Angeles in size and its population is half of of Delhi.

How did this change happen?

This article is the first half of the story of Singapore’s growth and how it became into one of the richest nations in the world. I will examine what historical events created conditions for modern Singapore’s founding Prime Minister (Lee Kuan Yew) to do what he did and what lessons Singapore’s pre-independence history has for entrepreneurs starting companies. A follow-up article will explore post-Independence policies of Lee Kuan Yew that transformed the nation (subscribe for updates to know when that post comes out).  ...  Read the entire post →