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Category: Entrepreneurship

Doing The Right Thing

2019 was a strange year for us as a company. We didn’t achieve much. We passed many opportunities and kept waiting to do the right thing. While it appears like an average year on the surface as far as what we achieved is concerned, I don’t really mind it.

Because at this point in career, where I stand today, doing the right thing makes way more sense than doing things right. What I mean by that is we’re assessing all opportunities for their long term impact. We are passing the ones that are promising but only in the short term and still trying to find the ones that will make the most sense in the longest term. We want to work on opportunities where long-term value assets are created instead of opportunities where quick money can be made.

For early stage entrepreneurs, I think it makes the most sense to do things right, no matter what kind. For mid-stage entrepreneurs like us, I think the quest for doing the right thing makes the most sense.

Two Months Streak – Gamification of Your Business & Life

Today, I’ve completed 2 months of writing this blog at least once everyday. A few days ago, I spoke to my friend in a vlog about game mechanics. We spoke of one of the game mechanics that I introduced in my life called streaks. Today, I wanted to talk a lot more about game mechanics.

Games Are Awesome

Games are very very interesting in psychological terms. They are interesting because they don’t (directly) solve any problems like email or Uber does. Despite not solving any problems, game developers retain the users. And they can only do that because they hack human psychology. Because games work in this particular manner, it means game developers must have learnt a great deal from psychology and sociology research.

I Never Played Games

I haven’t really played a lot of games. Then how did I end up studying games? I did that because I read on “gamification” which is the science of taking game mechanics from the games and implementing them in your websites, apps, businesses and even your life. And so instead of reading psychology, I simply studied games as I found it to be an easier hands-on case-study of implementing human psychology for user retention and other reasons.

Why Game Mechanics

As already spoken in a post I made earlier, user retention is often much cheaper than user acquisition. So the startups are always trying to learn new ways to retain existing customers. And there’s no better way to do it than gamification of your startup.

What Can You Do With Game Mechanics

There are many many types of game mechanics. We’ve already spoken of streaks and I’ve first hand seen benefit of implementing it in my life, time and again.

Other types of game mechanics could be points, achievements/badges, leaderboard, etc. Have you noticed Careem gives you both points and a gold status badge, if you use it repeatedly. It’s done to retain you as a user.

Another type of game mechanics is to make user feel like he’s the chosen one. The chosen one feels he was born to carry out the task given to him by the business or the app. When you receive marketing material stating that you’re chosen for something, they are basically just trying to hack your brain.

Users are also driven by sense of accomplishment and progress. A lot of apps try to integrate progress into the app usage to make users feel like they are in process of solving great challenges. This makes users feel accomplished.

Another kind of gamification is creating impatience. It sounds insane when I think about it, but revoking access to a certain feature for certain amount of time and only enabling it after a certain time has passed has a positive affect on user retention. The user craves the feature despite not even wanting it otherwise. This is creating unessential impatience.

And my favorite, scarcity. Almost everyone in e-commerce uses this. Because the stock is obviously always running out and there are only 4 pieces left that would probably go away in 8 minutes and 7 seconds. The fear of missing out is triggered and you make an impulse buy.

There are many many more types of game mechanics and I’d actually like to learn some more from you in the comments below.

Circumventing The Visa Restrictions of the Internet

Yesterday I wrote a bit about the limitations of trying to run an internet business from the under-developed and developing countries. The global online services treat different people differently based on their country of residence. Hence running an online business from Pakistan is clearly far more difficult.

But you can always circumvent the limitations and find ways to get the many benefits that the developed world offers.

Although, you’re restricted from using certain features based on the country of your residence, your company could be based anywhere in the world. And as long as your company is based in US for example, you’ll be treated like a US entity and you’d have similar features available to you as to anyone in US. I’ve only used US as an example here, your business could be registered anywhere in the world. It can be in UK or Singapore or Estonia.

You can have a virtual address & a virtual phone number anywhere in the world. You can have a virtual bank account using services like Payoneer, TransferWise & others. You could also register your company anywhere in the world right from the internet without ever leaving your country.

I’m not kidding but you can create your company, phone, address, bank etc all under $100.

Some businesses and services require that in order to unlock all features, you need to be physically present inside a particular country such as US or UK. This can be solved too. While most people would think VPN here, a better, safer alternate is to rent a server in the country of your choice and use it with remote access.

In the end, it’s still going to be more difficult than physically being in a better geo-location, but I just want you to know that all of this is possible even if you live in a village of Pakistan and have no money to start your business with.

So, what’s your excuse again?

Three Types of Founders & Financial Planning

I think I can categorize founders into three types when it comes to their financial management with regards to running a business.

The fist type of founders, and I think these are found in most abundance, do not really like to make projections and plan finances. They are extravagant with their expenses and while many times they are really good at generating revenue and achieving growth, they are still often seen in debt, or raising more funds, or struggling in general most months than they are not, despite the high amount of revenue. I’d say it’s a miracle if any of these founders and their companies survive in the long-term. The only reason they may is because their business model is extra ordinarily profitable and can afford a lot of money wastage.

The second type of founders like to make too much projections, and cut cost everywhere. They believe in MVPs and lean-startup models. They don’t spend money on creating features that someone may or may not use. They test everything with a small amount of people using unscalable methods to generate data. Their future scaling decisions are also data driven. They sometimes cut so much costs that they are often seen working long hours. They also struggle with hiring and team building because of their lower cost mentality.

The third type of founders are somewhere in between. They appreciate projections and financial planning. They love MVPs and lean-startup models. But they spend a large amount of money in building team, delegating tasks, and also on R&D which eventually results a lot of times in wasted features and money. But they do it because in the long-term it’s worth it.

In Pakistan, most of the founders I’ve met are the first type while I feel most founders should aspire to become the third type of founders.

This Article Will Completely Change Your Life & I’m Not Click-baiting You

Do you know when a butterfly flaps its wings in South America, it can cause hurricane in North America. A butterfly can cause a major catastrophic event in a different continent. This is known as the butterfly effect. Although it is called the butterfly effect for a completely different reason, but the example narrated is real. And the takeaway is that tiny decisions you will make today will have huge consequences on your life.

Let me explain this further. I became a tech entrepreneur by accident. I encourage you to read how that happened. Had I not landed on a random web page that day which happened completely out of accident, I might not even be in this industry at all. If I weren’t in this industry at all, I wouldn’t be writing this blog. And if I didn’t write this blog, you wouldn’t be reading this right now.

Because you’re reading this right now, the outcome of your life has already changed. If you weren’t reading this, you could have been doing something else, that would have had a different outcome on your life. But this article has already changed your life and when I said I wasn’t click-baiting you, I meant it.

I can remember many examples of how small actions had massive affects on my life. I’m going to share another one below.

In 2013, our Adsense account was disabled. We lost so much money there, I don’t even have the right expressions to describe it. In 2018, someone launched a class-action lawsuit against Google inviting all other parties to file their claims. Who could have thought a simple form that my co-founder filled in under 3 minutes would mean we’ll be getting paid for everything that was held 6 years ago. That we’ll be winning a case against Google. Without ever hiring a lawyer or ever thinking to file a lawsuit against them. By simply filling a form digitally.

A simple digital form and a huge amount of money. It sounds unreal, even to me, but it isn’t. It happened because of a small action that had a major impact on our lives. And so if you’re not taking actions, you are playing with the outcomes of your life.

So go ahead and make the decisions that you want to make because down the line they will not only change your life, but those of thousands of others.

Life seems chaotic. But chaos has order. Chaos is deterministic but it’s also very unpredictable. It’s unpredictable because often we don’t know the initial conditions and actions. But if we did the unpredictable chaos becomes very deterministic. And so if you take the right initial actions today, you are quite likely to have a deterministic future, no matter how chaotic life may feel.

Why Shane Used Two Identical Laptops For Work

In 2013, I and my co-founder Saad, travelled to NYC to meet a native-ad company we worked with. We were one of the largest publishers for the native-ad company at that point, and they took a lot of interest in our business. They wanted to learn more about us and our work and so we were invited to their office to deliver a keynote, where we also met one of our relationship managers, Shane.

We also met Shane a few days later on a cold December night, while he hosted us for a mouthwatering steak. Later he invited us to his place which over-saw the breathtaking Hudson river. An unrelated but interesting event, he invited over another friend who smoked weed at his apartment which I saw happen for the first time in my life. On his bed, I saw two MacBook Pros, identical to each other with the same specs and colors. I was surprised and I wondered why would someone buy two identical laptops. And so I took the liberty to ask.

I was shocked with the answer I got. Shane had two MacBooks because one of them was given to him by his employer – the native ad company while the other one was his private property. I learnt that Shane also gives out freelance consulting on the side and doesn’t do it on his employer’s MacBook.

The reason why he doesn’t do it is because of “conflict of interest” which is roughly defined at Wikipedia as a situation in which a person or organization is involved in multiple interests, financial or otherwise, and serving one interest could involve working against another.

And by Shane’s definition of conflict of interest, using his employer’s MacBook to generate freelance consulting revenue on the side is a violation of trust put in him by his employer.

Since then, I’ve taken conflict of interest very seriously. I have kept it close to my heart. I’ve avoided it as much as practically possible for me. I’ve encouraged others to do the same and I hope and expect that Pakistani entrepreneurs will start to avoid or mitigate conflict of interest seriously.

How VC Funding Can Kill Innovation

A few days ago, I published a blog post about my views on the future of the open internet. The post mostly focused around Twitter which went from being a very open platform to becoming a very centralized platform completely killing 3rd party apps that it stole innovation from. I believe all these decisions were financial and were driven by pressure from the investors.

Twitter & 3rd Party Apps

A lot of features that we see today on Twitter were actually originally developed and created by 3rd party apps. In fact, the first twitter client for both Mac & iPhone were developed by 3rd parties. Some of the clients got acquired by Twitter including TweetDeck & Tweetie. TweetDeck’s support was killed from all platforms except for Mac. Thousands of other apps were ruthlessly killed by discontinuing API supports.

Financial Decisions

Twitter said the decisions were made to discontinue support for “legacy APIs” at the same time acknowledging that no new APIs will be created. In my opinion, the decision was a financial one, and largely driven by what the investors wanted off Twitter.

Fred Wilson, a VC who invested early-stage in Twitter said in a blog post he wrote in 2016

In the early days of Twitter, there were third party applications (Summize for Search, Tweetie for iOS client, etc). These were all built on Twitter’s API. If Twitter had imagined itself as a protocol instead of an application, these third party applications would not have had to compete with (or get bought by) Twitter. But at the time, there wasn’t an obvious way for Twitter’s founders and management team to benefit from a protocol-based business model.

Fred Wilson

Posterous & Twitter

But the damage wasn’t limited to Twitter clients. Twitter acquired and closed other services too.

Posterous was an ultra-simple blogging platform with focus on social media integration and ultra-easy mobile blogging using emails with support for many forms of media.

Posterous grew at a very fast rate and had over 15 million users by 2012. They ran a wide-spread campaign asking users from smaller or dying platforms to import their blogs to this new dead-simple platform. Anyone who did that most likely regretted that decision as Twitter acquired Posterous in May 2012 only to shutdown the blogging platform, and all blogs hosted on it in the next 6 weeks.

All for financial reasons.

It’s Not Twitter

I don’t hate Twitter. I love it. But everything that Twitter has done was done in the financial interest. And somehow I don’t think it is what Jack wanted off Twitter. If he did, he would have had built Twitter like this from ground-up. But he didn’t. Because he had different plans for Twitter. Plans that obviously changed as financial concerns got in to the picture.

And it isn’t Twitter alone. I only expressed my thoughts with reference to Twitter in continuity of my original post about the open internet, which was also written with Twitter in mind.

All large tech companies have killed platforms and services, acquiring only to shutdown, for financial gains.

And while it looks sexy to say that we’re trying to change the world, with decisions like these we’re actually just trying to change our own lives and those of our investors’. As killing innovation isn’t how you change the world.

The Thing About ‘Zero’

I’ll be honest. This isn’t my thought. It’s something I read somewhere and I couldn’t agree more.

The thing about zero is that it makes you imagine. You can think of all the possibilities. If your startup is doing ‘zero’ dollars in revenue, you can sell dreams to investors. But if it’s doing $1000 or $2000 or $5000 a month in revenue, the investors are going to see, assess and project you based on those numbers.

And so in a way, if you’re seeking to raise investment, zero can be better than doing a small amount of revenue. Which is unfair, right? But that’s the thing about ‘zero’. And it’s also why sometimes you see companies doing ‘zero’ raising arbitrarily wild amount of investments.

Will Over Skill

I’ve met many people in my life who’ve done well for themselves despite not having the top skill. And I’ve met many people in my life who are struggling despite being very good at what they do. I think this is because of the phenomenon that I term as “will over skill”.

I’m a a staunch believer that most businesses just need to be run long enough for them to succeed. There’s no short cut to compounding. Most skills can not outrun what compounding growth does to your business. If you grow your business on a very small scale but do it year after year, you’ll have a very large business at some point.

And so if you’re losing will despite having skill, you’re not going to make it. But if you have will despite not having skill, you’re more likely to get somewhere.

The skills would either be acquired at some point, or hired if they can’t be acquired.

You Always Have Two Options; Retention Vs Acquisition

I feel a lot of founders, especially when they are running their first company, don’t have their priorities straight when growing a company.

Let me start with an example. When losing weight, you create a calorie deficit. You have two options to do it; you can either burn more calories or intake lesser calories. For wealth generation, you can increase your earnings or reduce your expenses. And for your business growth, you can increase your users, or reduce the number by which they are leaving your business.

Most first-time founders focus on increasing the user-base as a way to grow their business. It shouldn’t always be the top priority. In fact, I believe the top priority should be to reduce churn. Let me give you another example to explain what I mean.

Suppose your business generates $100,000 in annual recurring revenue and your churn rate is 50%. It means every year your business will need to replace $50,000 worth of customers in order to achieve the growth rate of 0%.

A lot of businesses continue to focus to add more users. They would focus to add 50% more users every year. They would spend a lot of money for this much customer acquisition and in the end achieve a 0% growth rate.

The right, easier and cost-free strategy requires working on cutting down the churn rate. If you’re able to bring the churn rate down to 25%, you only need to add 30% more users in order to see a 5% growth. You would spend lesser money on customer acquisition and will eventually achieve a steady growth rate.

We always have two options, and we often focus on the wrong one.