Proven physical theories are called laws because they dictate how our world operates. If there were such a “law” of capitalism, it would probably be the fact that profits attract competitors who try to eliminate it by offering customers either a lower price or a higher quality. This law thus allows for only two types of businesses to exist: cost-focused business or quality-focused business. Think of a McDonald’s v/s your neighborhood gourmet burger restaurant. Any business that tries to be both doesn’t work out in the long run. ...Read the entire post →
End customers typically get value through a series of businesses adding value on top of each other. For example, imagine the value chain required to bring a laptop to the end customer. The production begins with suppliers of metals and raw materials which are used by computer part manufacturers to build components like CPU, screens, and disk drives. These components are then assembled to build a laptop. The laptop needs software that’s typically written by some other supplier like Microsoft. And, finally, the fully functional, ready-to-use laptop is shipped by a logistics company to a warehouse. Customers transact with an online or offline seller of laptops which is typically yet another company (Amazon or BestBuy). ...Read the entire post →
No business delivers value to the end customer all by itself. In reality, a business does very few things within its boundaries. Everything else must come from other businesses: from renting servers on AWS to leasing offices, and from advertising on Google to buying laptops from Dell. Most of the time, such dependencies emerge naturally and evolve without any conscious effort. However, sometimes some business dependencies can (and should) be deepened explicitly through partnerships.
To grow your business, first help grow a partner’s business
If nurtured well, business partnerships create positive feedback loops that help rapidly grow a business. Consider the case of Apple, a famously vertically integrated company that makes its own OS, processor, and many other phone components that other companies typically purchase from vendors. However, their iPhone App Store is proof that even Apple realizes that it can’t thrive without partners. Apple supports many thousands of 3rd party software developers who create millions of amazing app for the iPhone. These apps wouldn’t have been possible without the underlying technology supplied by the iPhone. Similarly, the iPhone wouldn’t have been as successful as it, if it didn’t provide the multitude of functionality that its users have now come to expect because of all the 3rd party apps available on the platform. So, the iPhone helped the developer community build a business on top of it, and with that, iPhone benefitted massively. ...Read the entire post →
Lately, I’ve been feeling a lack of a well-deliberated, explicit moral code. The world is changing really fast – we have Elon Musk trying to set up a human colony on Mars while Earth’s bio-ecosystem is degrading by the day. So, should I support the investment of resources into making Mars habitable while Earth is gradually becoming unhabitable?
This, obviously, isn’t the only question. Every day, I feel like I need to decide which way to swing on controversial topics. People have strong opinions about things like genetically engineered babies, bitcoin, nuclear power and other new technologies. I know enough about cognitive biases to know that I shouldn’t trust my gut fully on these questions. My gut simply doesn’t know enough to have a good opinion on complex societal issues. Instead of relying on my gut, I need to rely on deliberate thinking to make moral choices. ...Read the entire post →
Balaji is a deep thinker on crypto and its implications. Formerly the CTO of Coinbase and General Partner at Andreessen Horowitz, he's seen how technologies evolve over time, which ones change the world and which ones fizzle out as a fad.
He believes crypto technologies such as bitcoin represent the former. To him, crypto will emerge as something that's as important as the Internet and influence our society for decades to come.
I like to read about a complex (and often ambiguous) topic and break it down into simple ideas without losing the nuance that’s essential for understanding it.
It’s common for entrepreneurs to cast a wide net early on and imagine their market to be huge. The logic goes something like this: if the market is worth a hundred billion dollars, then even if 1% of it is captured, the company will be making a billion dollars.
All this sounds good in theory but in practice, it never works this way.
Why would the market leader – the big fish in the ocean – let you take even 1% of the market? In fact, as soon as your startup shows first signs of success, the big fish will do whatever it can to crush you and snatch whatever market share you may have won by that time. ...Read the entire post →
The most beautiful aspect of a SaaS business is that your monthly revenue is more or less stable. Unlike buying a soap, an automatic monthly or a yearly subscription means that customers aren’t frequently re-evaluating their decision for what to purchase.
However, when times are hard, people do think deeply about where their money is going. This year’s pandemic forced everyone to do such introspecting, including customers of VWO – a product that my company builds.
Even though the impact of economic slowdown due to coronavirus pandemic was not existential for our business, we did get impacted. ...Read the entire post →
Yet days later they find themselves smoking or drinking again. How many times your friends have told you that they want to get fitter, only to later discover them ordering a large, cheesy pizza? We, humans, are notorious for saying something but doing something else. This tendency is troublesome for entrepreneurs because when people express their desire for something, it’s a mistake to take that on its face value.
Most chapters in the new book are the same as what you find below, but there are a few new ones. The book also has beautiful illustrations by Aakanksha Gaur.
This freely accessible online book contains what I learned while bootstrapping my multimillion dollar, profitable business. There are 65+ effective mental models for startup founders and business leaders. ...Read the entire post →
