Siddhartha Ahluwalia 0:00

Startups should start as cults. Why?

Paras Chopra 0:03

Yeah, I know cult as a word ends up being a little controversial. But what I meant by cult was that everyone should have the same value system. So to dissect this when people talk about diversity, I think it’s important to question that yes, diversity is good, but diversity of what kind.

So what I write in the chapter diversity of experiences is very valuable. So if everyone comes with a different history of what they know, then obviously as a team, you know a lot more than what you would know individually. But a diversity of value system very early on in startup is not important.

Not important. I mean, it’s actually detrimental. And what I mean by value system diversity is that, for example, if some people value first principles thinking, but other people value the intuition, then if you put these two people together, they’ll never end up agreeing about anything.

Because they end up seeing world from a very, very different point of view, and they value very different things. And in a startup, and this is, I think, diversity of value systems are great for democracy if you’re running a country. But if you’re running a startup like a democracy, you’ll never end up making any decision with fast enough speed that a startup requires.

So what you really want in a startup is a core group of people who have very, very similar value system so that you don’t end up spending time and energy in aligning them. But yet, all of them ideally should have very different life experiences so that you are learning from all of them. So that’s what I meant by cult.

And this is what happens with cults. If you see cult of any kind, even people who love iPhones, a lot of them are very similar value system. And if you put all of them together, they’ll end up agreeing on things, whether they agree on right or wrong thing is separate matter.

But they’ll not waste a lot of time in just debating what their value system should be in the first place.

Siddhartha Ahluwalia 2:08

And let’s say I have to take an example, what’s been your value system as a founder? And how did you build your tribe around it at Wingify?

Paras Chopra 2:16

Yeah, so my value system has always been that you should argue from first principles, and you should believe in data. Which means that I mean, my value system has always been if you put two rational people in a room, they should end up concluding to one point of view. So either and this is what I’ve always also behaved like with my team and with my co founder at Wingify, Sparsh where if you put two of us in a room and if we come with a very different point of view, either he ends up convincing me or I end up convincing him.

And in that sense, that’s how we’ve grown Wingify where we’ve never been in a position where we had to take a very different point of view for a long period of time. And I had to impose my point of view or he had to impose my point of view. We always ended up like believing that logic should just help sort out our differences.

And we never debated the value of logic. And that’s what I mean by, you know, being a cult, we both believe that logic is just our topmost priority.

Siddhartha Ahluwalia 3:24

And you shared another, you know, belief in the book, right? You mentioned that one of the models that you operate with is believe that things that will not change in the next 10 years and build for that.

Paras Chopra 3:38

Yeah. I mean, this question is becoming increasingly harder to answer.

Siddhartha Ahluwalia 3:44

Yeah, everything is changing.

Paras Chopra 3:45

Yes. But I still feel, I mean, at least over the next, I mean, see the principle of value creation are very likely to remain the same. And in fact, that was one of the motivations of how I structured the book.

Also, if you see, there is very little, in fact, non-existent information about my own Wingify story in the book. The book is really about the abstract principles that lead to startup success and failure. And I do feel those principles will always remain the same.

The world will always reward you when you build up something that is both rare and valuable, literally the first chapter in the book. So, whether particular technologies come and go, but let’s say the principles of value creation will remain the same. And similarly, the fact that humans always want more for less, again, another chapter in the book, that has always remained the same.

And this is why startups exist, right? Because humans want everything faster, cheaper, better. And incumbent companies get too comfortable with their offerings.

And that creates an opportunity for startups. And startups come along and exploit that opportunity. So, I don’t think these principles that have been in existence ever since our economy and the free trade started will going to change in next 10 years.

Siddhartha Ahluwalia 5:09

And do you have a different system on what will not change in the next 10 years besides the thing you meant, like people want things better, cheaper and faster?

Paras Chopra 5:20

Yeah. So, I think one way to think about, let’s say, why AI is succeeding. AI is succeeding because AI brings in tremendous amount of efficiency in any process.

What used to take, let’s say, 10 people a week, maybe take copywriting, for example, right? Copywriting has always existed as a need. And it always existed as a need because people want information to make the decision.

And this is why writing exists. But what used to take humans, let’s say, a week to write an article, now, it’s almost instantaneous. So much so that people are just using ChatGPT for a lot of their information needs.

So, the reason AI succeeds is because it brings a lot of efficiency. And the fact that humans want efficiency in whatever they do will always remain. But at the same time, you can flip this question and say, what will rise in value for human skills, for example.

And the way to think about is, what is those aspects that AI cannot do efficiently? And I think what AI cannot do efficiently is, let’s say, what we both are doing where humans to humans trust is needed, humans to humans communication is needed. So, if you’re going around and selling a million dollar deal to someone, then you’re not just transmitting information.

That information transmission can happen through AI. But you also need to transmit a level of trust because someone is going to pay you a million dollars. And at least for next 10 years, that trust can only be built by humans because you can’t jail an AI.

But you definitely can jail a person. So, a lot of these things which require this humans trust, for lack of a better word, let’s say, being a salesperson, being a politician, being a community organizer, being a leader, those are the things which are not going any time soon. But in fact, they will rise in value over the next 10 years.

Siddhartha Ahluwalia 7:26

So, the narrative around sales processes getting replaced by AISDR, you believe that it might not be in the case?

Paras Chopra 7:36

I think the point is more nuanced. If you think what a salesperson does, there are probably 10 different tasks a salesperson does. In the subset of tasks where it’s, let’s say, things around data entry, things around information transmission that you are to send a PPT, those will definitely get automated away.

But there are aspects where the customer gets a sense of comfort from talking to a humans, especially face to face. Those are the things which are not going to get automated away. So, instead of thinking that AISDR is going to get automated away, I think a better way to frame this is, what is the task in question and whether that task requires something that only a humans can do in terms of efficiency.

If that’s the case, then it’s not going away any time soon.

Siddhartha Ahluwalia 8:34

I believe why AI is working is because it has reduced time to value under 30 seconds. Like if you…

Paras Chopra 8:42

For most tasks, but not all tasks.

Siddhartha Ahluwalia 8:44

Not all tasks, but for most tasks. And why are the workflows in most of the digital places getting reimagined is because once you taste a time to value under 30 seconds, then you want it across your workflows.

Paras Chopra 9:00

It’s like once you’ve tasted ice cream, you want more ice cream. That’s how we have primed. Once you’ve tasted 30 second Instagram shorts, it’s very hard to go back to one hour long lectures.

So, that’s how we have primed. But again, just to double down what I was saying, for example, even if you see what does a doctor do? Now, a doctor both transmits information to you on your symptoms, your diagnosis, but also doctor gives you comfort that things are going to go all right.

That is what ChatGPT will not… It will tell you all the information you need, but it can’t really come in flesh and really give you assurance that it’s going to be all right. And I would say some part of our healing does happen because you see someone in authority figure telling you things are going to be all right.

So, in that sense, those roles that humans are playing are just not going to go away.

Siddhartha Ahluwalia 9:59

And one question that AI has made me ask is that do humans value accuracy?

Paras Chopra 10:08

Yeah. I mean, in very few domains, we want accuracy. And in fact, not just that do we want accuracy or not, it’s just that measuring accuracy is also very hard.

And when you’re reading an online article, I mean, something as simple as why does fake news spread? Because we don’t always want accuracy. We want entertainment.

We want excitement. So, yeah, you’re right. We don’t always want accuracy.

Siddhartha Ahluwalia 10:32

And that’s why AI is succeeding because ChatGPT, even if it might be 50% accurate or the range can be 50 or so…

Paras Chopra 10:38

Who has time to fact check ChatGPT?

Siddhartha Ahluwalia 10:40

Yeah, that’s still working. And, you know, people can keep on questioning whether what results ChatGPT is giving are not as good as maybe Google, but the time to value is so huge.

Paras Chopra 10:52

Yeah, exactly. Yeah.

Siddhartha Ahluwalia 10:55

And you have also covered in your book, you know, that founders should not build XYZ. So, I want to understand your mental model now. How should founders decide what not to build, what not to pursue, and whom not to sell to?

Paras Chopra 11:10

Yeah. So, my blog is called Inverted Passion. And the reason I named this blog was because my assumption is that a lot of entrepreneurs become passionate about the first idea they come along or some idea that sounds very beautiful in their head.

So, they would get very passionate about it. And what happens with this scenario is that they get this rose-tinted glasses where they start seeing the world as pink, when the world is actually full-blown in different colors. So, once you fall in love with the idea, then you just start seeing confirmation about that idea everywhere.

And that’s very risky. So, in that sense, the reason I say inverted passion is because instead of being passionate about whatever idea you get, how about you become passionate about what other people are passionate about? And so, what not to build is really to not to build the things that you feel very passionate about, unless you’re very, very super sure that that passion is shared by a wider community.

But generally, that’s not what happens. As entrepreneurs, we are a very special breed. And most people in the world are not entrepreneurs.

So, the problems we get excited about, especially as tech founders, are very likely that the majority of people out there are not excited about. And that’s where the mismatch is. Because in your head, some idea sounds very interesting, the best things in sliced bread.

But for others, it’s just like meh, because you are very two different people. So, good founders are really like good ethnographers, where they study other people, almost as scientists to figure out what their days are like, what are they passionate about. And then they end up building stuff that other people care about and not what they care about.

I mean, this is also repeating what Paul Graham and Y Combinator’s mantra is, right? Build something that people want. I would just make it more practical that build things that people are passionate about, or solve problems that people are passionate.

Siddhartha Ahluwalia 13:33

And do you have any other mental models on what not to build on? Like one is you mentioned, not to build what you’re passionate about, but what other people are passionate about.

Paras Chopra 13:42

I think the mental model is around, I would say, timing becomes important. And the way to gauge timing of an idea is to see how many competitors exist, direct competitors. And both ends of the spectrum are risky.

Sometimes people get very excited about having zero direct competitors. And I would argue that’s never the case, you’re always competing with something, it might be inefficient alternative, but there’s always an alternative. So for example, the reason spreadsheets are called spreadsheets, because they were competing with literal, physical sheets, people would spread on their table.

So you are always competing with something. But if you have zero direct competitors, that signals that probably either someone tried it before, but failed, or this is a non-existent problem. But also at the other end, if there are 10 different direct competitors, then the field is likely saturated.

So as per me, sweet spot is if you’re able to find, let’s say one or two direct competitors with some customers, that validates the problem exists, but also validates that it’s just very nascent, where the if the whole market grows, your company will grow with it also. So I would ask don’t build it if you have zero competitors or 10 competitors.

Siddhartha Ahluwalia 15:03

I have a different point of view, like Google was the 20th search engine. And Facebook was the nth social media website. Would you call them anomalies?

Paras Chopra 15:17

Not really. But I think indexing on these outliers is also very risky for entrepreneurs. In our head, the stories of Google, Facebook dominates.

But in reality, what would happen is you will end up making the median B2C app or the median SaaS company. So I mean, these are great from analysis point of view, what went right with Google and Facebook. But I think as an entrepreneur betting on becoming a Google, you can’t just even Larry Page and Sergey Brin didn’t know they were building the size and the scale of the company they ended up building.

It’s a nice outcome, but you can’t really plan for it.

Siddhartha Ahluwalia 16:04

But let’s say in case of Wingify, from a global perspective, Wingify would have been, you know, maybe the 1000 most valuable, I’m just taking a number 1000 most valuable SaaS company. But in Indian context, from a point of view, you would be like 25th or 30th company by revenue. So was it, if you have to think in hindsight, was the timing right in your case?

Paras Chopra 16:34

Yeah, so definitely the timing was perfect, in hindsight. And I would argue, let’s say even in Google and Facebook’s case, I think if you really have to be analytical about it, then of course, my comment on having few competitors, or zero competitors, you can dissect it. And in reality, things succeed when you are solving problems.

A, you’ve identified the right problem and B, you’re building something that solves for that problem. In let’s say, at least 2x or 10x better than alternatives. So the suggestion that you should not enter if there are no competitors is simply as a heuristic.

But why did Google succeed? For example, Google succeeded because their page rank was 10x better than Yahoo or anyone else who came along. Why did Facebook succeed?

Facebook succeed because they had this, their growth came from being an exclusive social network, where exclusivity made sure that the network effects were very strong. So if you’re really thinking about startup success, and I’ll come to the Wingify point, you can be very analytical about it. But doing this analytical is only possible in hindsight.

I think prospectively, it’s very hard to figure out all the variables. And in Wingify’s case also, I think we were at a stage where it’s not like we invented A-B testing. That would have been very difficult task if we had to teach everyone A-B testing.

So A-B testing existed. Google Website Optimizer was a product back then, which people who are very motivated to do A-B testing used it. It’s a very hard product to use, but it was being used.

So the problem really existed. What Wingify came along and did was to simplify the effort that it took for A-B testing in Google Website Optimizer from a week to let’s say 30 minutes, because we had this visual editor where you could just change headlines without knowing how to code. So the desire for A-B testing existed.

Wingify simply made it 10x more efficient. And interestingly, I think you’ll always notice that when companies who ultimately end up succeeding, they usually have a second and third alternative. In our case, Optimizely was our competitor.

And ultimately, I think two or three companies in the industry end up just dominating it. And the fact that two or three companies ultimately end up dominating means that the problem is hanging in the air. Someone has to pluck it.

So this is why timing ends up mattering. I’m pretty sure if Wingify didn’t do it, Optimizely plus someone else would have done it. But doing what Wingify is doing today would not be optimal because we’ll just defend our product and revenue stream.

So direct competition with Wingify wouldn’t make sense right now. And this is why timing just ends up mattering significantly.

Siddhartha Ahluwalia 19:44

And why is it very hard for successful entrepreneurs with one product to make the second or third product equally successful?

Paras Chopra 19:52

Because there’s so much luck involved. Again, the last chapter of my book is really you are a lottery ticket. And in that I disagree with I think Peter Thiel had a chapter and it’s intentionally provocative because Peter Thiel in zero to one says you’re not a lottery ticket.

But the more I think about it, the more I feel having a successful startup is just a mix of so many different factors. You get one factor wrong and you are a failure. The timing right, the product right, your team right, your equities structure right, investors right.

How many things do you have to get it right? And I think a lot of repeat founders, not a lot of, but some repeat founders end up over indexing on their particular story in the first startup or first product they did. But by the time they do second, the world has changed.

The expectations have changed. Everything has changed. So how do you get yourself in the beginner’s mindset?

And even after in beginner’s mindset, you still are playing with the odds. I mean, if startup success was so predictable, then VCs won’t play on the power law that day. I mean, you know better than anyone else.

You expect many or most of your startups to fail, but one to work so well that it returns entire fund.

Siddhartha Ahluwalia 21:18

In your book, you also discuss customer value metrics. Why do they matter more than financial metrics and what are they?

Paras Chopra 21:28

Yeah. So customer value metrics are really to give an entrepreneur a handle on what to change in the product that will ultimately lead to the financial metrics. So the way to think about it, of course, all companies are ultimately evaluated on their outcome metrics, which are revenue, profit, and similar other metrics that would so-called give you a valuation.

But you really don’t have as a founder and a company, a very direct lever on those things. If I tell you to double your revenue, you have no idea. So customer value metrics is really a set of metrics that you can very confidently say that they are highly correlated with ultimately revenue metric.

That if I increase this metric, so you can think of it as leading indicator to the lagging indicators, which are financial metrics. And these are generally, you can call them as North star metric, where if this metric increases, ultimately, even if the lag in three to six months or even a year, your revenue or profit will increase. For example, in our case, we built an AB testing tool and we knew very clearly that the number of AB tests that are on our platform are highly correlated with our revenue growth.

Now, revenue growth is something we cannot directly increase, but we can find ways to increase number of AB tests. And it says customer value metrics, because obviously, if you are delivering more value to customer, that is where customer will give you more value in return. So only way to increase your profit and revenue is to find out what aspect of your product does customer really love?

And how do you just give more of that to the world and the market? Could be anything could be. Yeah, I mean, it depends on product to product.

But finding that core metric that customers are paying you for is important, because only by tweaking that can you change the growth of your company.

Siddhartha Ahluwalia 23:40

One thing that I wanted to ask you is, you know, I have been a small part of your second venture Nintee, right? Very grateful for that.

Paras Chopra 23:47

I’m grateful for you believing in me, even though it didn’t work out.

Siddhartha Ahluwalia 23:51

Yeah. Well, I always wanted to ask you, right? If you have to now go back in time and just like what made Wingify successful?

What what made Nintee not successful? What would you call those factors?

Paras Chopra 24:05

Yeah, so I think with Nintee, again, as a background for people who don’t know what Nintee is, Nintee was about using an AI coach for changing habits. Like if you’re trying to get into a habit of running fitness, eating well, how can an AI help you there? My hypothesis was that I mean, this is when ChatGPT, GPT 3.5 was coming along. And my hypothesis was that having an AI who’s reminding you, who’s motivating you, for example, if you said you will read a book every day, and you don’t read it, you can get a personalized message with an AI. So my hypothesis was that, you know, this is better than let’s say, just static reminders, which are very dumb, and you get bored of them. But this is where an AI will literally remind you, hey, you said this, you want to do this, and so on.

I think looking at Nintee now from an efficiency point of view, what Nintee provided efficiency for was slightly better tools and reminders versus static reminders. And this would have worked well for people who already put reminders. So for example, it would have worked really well for people who are so disciplined, that they are setting reminders for running themselves, they’re setting reminders for recording calories, and so on.

And this is like a better way to put reminders. But obviously, most people are not like that. For most people, a digital app ends up playing such a small role in the day, that they will just completely and simply ignore what’s coming.

So my lesson, in fact, this book was a result of me contrasting what worked with Wingify and what didn’t work with Nintee. And my learning with this was that aligning with people’s motivations, and helping them fulfill those motivations more efficiently is the way to build business. And here with Nintee, I was swimming against people’s motivations.

Because motivations is not in what people say, a lot of people say I want to get fit. Motivations isn’t what people are trying to get done as evidenced by their own behavior. And their behavior just suggested what they say and what they end up doing is just very different things.

And products have to index on what people do and not what people say.

Siddhartha Ahluwalia 26:37

So essentially, people wish they want to be fit, but they were not putting enough evidence.

Paras Chopra 26:42

Not enough effort.

What I could have done, if they were putting effort, I could have made that effort being simpler, faster, cheaper. But they were not willing to put in effort. So the tool was completely useless there.

Siddhartha Ahluwalia 26:57

Another interesting concept that you discuss in the book is the difference between micromanagement and what you call microcommunication. This is the first time I heard the word microcommunication.

Paras Chopra 27:09

Yeah, so microcommunication. I think I mean, if you think about why does micromanagement happen…

Siddhartha Ahluwalia 27:17

Lack of trust, maybe

Paras Chopra 27:18

Lack of trust. And I feel also lack of clarity, where a lot of times people who micromanage they themselves don’t know what they’re expecting out of a task.

And they end up micromanaging because they’re learning what the task should be about and what they expecting as the person is doing it. If you think about if the task is super clear, then you don’t need to micromanage. And that’s what I mean by microcommunication.

The more detail you can provide someone on what you expect from them, I think the better they’ll be able to do the job and the less you need to micromanage. So why not put all the effort upfront, that if you have to expend X amount of effort in micromanagement, why not put that all upfront and specify the task to such a clear detail, that the other person is able to just do it really, really well. So and I feel that that’s a lot missing.

In my observations for some other people, they end up giving a very vague task and they get a they end up getting a very vague output. And that’s the genesis of micromanagement. A perfect world is where you just as a manager, take the onus of doing effort yourself so that the task is so clear that it’s just executed flawlessly.

Siddhartha Ahluwalia 28:41

So what you’re really asking for is for managers and startup founders when they’re building their team, write down the task to the nth detail before think of delegating it.

Paras Chopra 28:53

Yeah, yeah. I mean, just like you would like I mean, it’s just if you’ve ever played with AI tools, the more specific you make a prompt, the better the output you will get.

Siddhartha Ahluwalia 29:03

The prompt engineering came from that.

Paras Chopra 29:04

So I mean, as a founder, you need to do prompt engineering with your team wherein don’t let anything be ambiguous. Because otherwise, ambiguity is where this micromanagement comes, right? Where you if you’re not clear what’s to be done, how can you expect your teammates to deliver exactly what you wanted?

Siddhartha Ahluwalia 29:25

And can you share your your journey of how you learned this over the course of Wingify? Because at one point in time in Wingify, you, you became a chairman rather than a CEO and Sparsh, your co-founder became the CEO. And you were focused on, you know, I think more innovative initiatives.

Paras Chopra 29:42

Yeah, yeah. I think this comes from just the habit of writing. So I’ve been writing in last 20 years.

If you go to my blog, the first post is from 2005. And it’s really crappy if you see it’s full of grammatical mistakes and so on, but still, I think writing is something I’ve enjoyed and my process of working is to write a lot and write in as much detail as possible and to discuss via docents so and that’s that’s helped a lot in building the organization as well because this means that I don’t have to be in meetings all day long. I can spend a lot of effort being in my room but writing very detailed docents and then hoping other people are able to get all the context that I have and execute what I expect to be executed.

Siddhartha Ahluwalia 30:39

I think that’s one of the reasons why Amazon is so successful and the people who adopted like a writing culture and companies.

Paras Chopra 30:47

Yeah because writing is thinking. Once you a lot of things are clear in our head until you’re asked to put that in writing at that part of time you start seeing big gaping holes in your understanding like pick any topic you think you know and you will have like a very vague feeling you know it but the moment you put into writing so many questions automatically keep on cropping up in your head. Do I really know this term?

What’s success for me? When do I know it’s done? What would be the weaknesses and so writing is to me it’s just equivalent to thinking so if you’re not writing you’re probably not thinking enough about the problem because I just working memory is limited how many things can you keep in your head versus how many things can you keep in a word docent or or a notebook it’s just orders of magnitude higher on the kinds of objects you can have on a notebook and the way you can manipulate it’s just not possible in the head.

Siddhartha Ahluwalia 31:45

And what I’ve realized is people obsess over tools rather than the processes like they will they will let’s say for example I was my next question to you was which are the tools that you use for your writing because asse they would have evolved yeah right.

Paras Chopra 32:01

Yeah I mean it doesn’t matter I agree with you I think a lot of people end up thinking let’s say if you have slack you’ll have good team communication it’s a tool you need to define what good means for you what communication means for you and what good communication means for you. You have to define all these things yourself no tool can help you with that right tools come with their own biases and again I mean some people have opposing experiences which are ChatGPT or coding tools so it’s not the tools that matter but really how you use it you have to bring a lot of things from your side you can’t just expect tools to do that magic for you.

Siddhartha Ahluwalia 32:47

Another interesting topic that you discussed in the book is organization design and you mentioned that founders should obsess over it.

Paras Chopra 32:56

Yeah, yeah!

So organize ultimately companies end up shipping their organization chart and what I mean by that is because organizations is how communications flow in a normal in like the whole organization is about how communication happens.

So it and so it’s very easy to make mistakes because it’s just not about just putting the right people in the team but how are they assembled also and this obviously is more relevant to all companies that are a little bit in the mature stage instead of the startups.

For example some of the mistakes you can do if you put someone who’s responsible for long-term strategy under someone who’s responsible for driving short-term results your long-term strategy is never going to work. Because if the manager is obsessing about something which is short-term then they’ll just not get the resources, time, bandwidth, attention that’s required and similarly if you put someone who’s responsible for quality assurance under someone who’s responsible for shipping regularly the quality assurance will go for a nose dive right so it’s really about carefully thinking about what people you are putting where and what are the incentives and KRAs if anywhere you find an inconsistency you’re just wasting resources massively so I think a lot of founders think carefully about their products but not enough about the exact org design and whether there are glaring inconsistencies in the kinds of hierarchies they’ve ended up building.

Siddhartha Ahluwalia 34:40

Can you share more examples from your personal life be at Wingify, how you built it?

Paras Chopra 34:49

I think, I mean we’ve made mistakes for example one of the mistakes would be let’s say if you have if you have a sales org that’s optimized to do inbound sales and the leader has grown organically leader has been there for you for quite a while now you suddenly want to do outbound sales and the natural instinct is let’s just either hire someone or have someone who’s been doing inbound sales out of 10 people one will start doing that never works out.

Your whole sales motion is about inbound processes about inbound your leader is measured and cared about closing or inbound sales that one person that you put as outbound is just not going to get enough time, bandwidth, attention, resources for it to be successful. And you end up concluding that outbound doesn’t work the right way to do it is even I mean a you should not first change someone who’s been doing inbound for a long while to suddenly do outbound. It’s a different skill set so right thing would be to hire someone in the outbound even if it’s an outbound STR. But probably report that outbound STR directly to you as a founder as a CEO because new functions do require that hundred percent attention and focus for them to initially bloom enough to show any results.

So we made those mistakes and we ended up concluding sometimes that the function doesn’t work for us when we just put in the wrong org and similarly if your engineering team is a lot of times what founders do if the engineering team has been groomed to deliver regular features or fix bugs they end up saying that now I’m going to designate maybe a engineer or a small team for innovative products or innovative new features that never ends up working because the whole leader is optimizing around delivering what customer is asking very fast. Innovation requires a different mindset and horizon so it just ends up dissipating even before they have had a chance so the right thing would there be to have an innovation team that reports to you directly or outside of the org which is designed to deliver features.

Siddhartha Ahluwalia 37:10

What I believe is you know if you have to measure the outcome of a company a few things are right.

For example what you mentioned is timing right right is does the company has initial product market fit which also means like once you are building you do you have a market which is you know ready to serve what you are building which is can be different then the size of the outcome is completely determined by the size of ambition of a founder.

Paras Chopra 37:46

Not really I think this this assumed that founders are Gods they can do anything.

Siddhartha Ahluwalia 37:55

I think a few things are right and then whether it’s a it’s a 10 million ARR company or a 50 million ARR company or a 500 million ARR company.

Paras Chopra 38:04

Of course I think it’s it’s it’s hard to answer because: A Of course I think they if you are a founder who can continuously found then the opportunity is unlimited. And what I mean by that is that every stage of the company let’s say you get to 0 to 10 to get to 10 to 50 you need to be entrepreneurial again because you need new sources of revenue. We need to expand the market and then at 50 to 500 again you need to be an entrepreneur again from 500 to 5 billion.

You need to be an entrepreneur again so but just the way I think earlier we talked about that startups have high failure rate and even repeat founders have only a marginally increased success odds this also means if you have to be a founder again and again at different stages of the company I do think it’s not as predictable as we like to imagine of course there are success stories founders who’ve taken zero to billions of dollars of revenue I would argue there is a healthy mix of ambition plus luck ambition itself cannot move mountains it just can everyone in your market is trying to also compete with you so it’s not like other people are less ambitious or they are less smart one of my mental models is also to asse everyone is equally hardworking and ambitious and smart as you so what gives you the right to succeed over others when others are thinking similarly that I’m also ambitious.

Siddhartha Ahluwalia 39:43

And if you take out luck as a factor which you mentioned and you know which is I think the most interesting chapter. In the last chapter of the book right. How do you make some predictable outcomes again you know?

Paras Chopra 39:57

It’s actually to think about what drives luck so I would say you should not take luck out of the factor but you should think about what drives luck. I think a single biggest factor that drives luck is persistence.

Siddhartha Ahluwalia 40:11

Or surface area

Paras Chopra 40:13

Both surface area persistence. The more I, I know it’s a little bit of a cliche to say but the more shots you have at the goal the higher your like likelihood so if you just keep at trying to sort of knock down a problem it will get solved ultimately and I mean in my case also personally it’s true for me if I was my fourth attempt at doing the startup and then it succeeded if I had given up in my second attempt a third attempt I would have never done that so if there is so many factors that drive luck then the more repetitions you have at trying to be lucky the higher the chances you’ll be lucky.

So are you learning from all your attempts are you reflecting what went right and wrong are you still solving the problem with same enthusiasm the nth time as you had the first time. All these things just contribute to you being lucky.

Siddhartha Ahluwalia 41:29

And this brings me to another interesting topic that you brought about in the book mind project fallacy and how does it mislead entrepreneurs?

Paras Chopra 41:26

Yeah so this is what we were talking about earlier that mind projection fallacies where you implicitly believe that everyone or most people have the same point of view in the world as you have. They have the same passions likes and dislikes it’s just very natural for us where because we know ourselves the best. We we end up imbibing that learning about ourselves in everyone else. If if you are extrovert I think we just end up assuming that most people are extroverts but that’s not the case. If you like pickleball you end up thinking a lot of people like pickleball. So we are just I think evolved with a lot of these biases and for entrepreneurs especially risky because any any bias they imbibe it better be right because they end up wasting a lot of time on it. If you love tweaking on terminal with git and so on maybe that’s just you.

Siddhartha Ahluwalia 42:30

And you say that successful startups often look like toys when they first appear.

Paras Chopra 42:34

Yeah yeah and this is also reflection one of the mistakes I did and I’ll just take an example and I think a lot of people did that mistake with let’s say Bitcoin where bitcoin came along and it just felt like a toy and who cares about what people are doing on the computers mining these things at bitcoin it felt like a toy right.

And I still have this thread email thread with my friends in 2013 where we were making fun of bitcoin for being this silly little project but this is the fact that all things that become big eventually look like silly little things you name a product that has become big and on the very first phases of it just look like a glued together project that couldn’t possibly be big I mean if you go back and see what Google’s home page looked like on the very first launch it was literally an index of research papers I think in Stanford library or something. It was a search engine for research papers very goofy very quirky and if you looked at it you would have said who cares about research papers for example. And and yeah and that’s why it’s very easy to mistake something as a toy very early on.

Siddhartha Ahluwalia 43:54

You have said that you know deep tech startups have lower orders of success as compared to conventional startups but I would classify Tesla, SpaceX, all the Robotaxis all as deep tech startups.

Paras Chopra 44:07

Yeah again we are taking exceptions.

Siddhartha Ahluwalia 44:10

Or from India Agnikul, Sky root.

Paras Chopra 44:13

Yeah but for each deep tech startup that you know there are probably 100 that have failed and the reason deep tech is difficult is because research is a very tricky vector for startups to pursue for generating value.

Because more often than not when you do research the outcomes of research are just known for everyone and the value of companies come when they have a defensible model so unless you’re able to. So in in that sense deep tech versus non-deep tech is one level abstracted I think the real question is having a Moat versus not having a Moat. So what is the ultimate Moat that will exist once you have some product some success for deep tech companies it’s it it becomes harder because purely because let’s say if you publish a paper it becomes you are immediately just spilling the secret sauce and even if you’re not publishing a paper but demonstrating that something exists it’s very easy to not very easy but relatively easy to reverse engineer and see what worked so this is why it becomes very very hard and that’s why research I believe should be funded by governments and public money because the knowledge belongs to everyone and for a startup to spend so much of time generating new research knowledge and then seeing whether it commercialized or not I think it’s a very very long pathway. Startups are perfect for commercializing what knowledge exists and that that’s what it should do but fundamental research of course companies like SpaceX exist. But I don’t think startups should pursue that.

Siddhartha Ahluwalia 46:04

Your your journey of starting Lossfunk is it inspired by open AI because it also started as a research non-profit and ChatGPT came like four five years or six years down the line.

Paras Chopra 46:18

Yeah yeah it’s not inspired by OpenAI just for Lossfunk I’m just following my curiosity on AI and nature of intelligence what comes out of it is really unpredictable and that’s not what I’m optimizing for. Another another commercial oriented startup or company is not what I have in mind. Maybe it will emerge automatically but I’m not trying to create any big breakthrough product from here. It’s really to pursue research and explore yeah what intelligence means where AI is going and so on I mean I I’ve made money with Wingify. I’ve grown company and products. So I I don’t feel I have anything to prove to anyone right now and building a company like Wingify takes 10 15 years it’s it’s a lot of hard work.

Siddhartha Ahluwalia 47:14

And you gave I think another one or two years to Nintee.

Paras Chopra 47:17

Yeah so I I don’t think I’m ready for another startup right now another company being on another 10 year journey.

Siddhartha Ahluwalia 47:24

But that was that one of your learnings while building Wingify that the best things come out more organically if you put enough research or let’s say the way direction that you want to take Lossfunk.

Paras Chopra 47:37

I I do believe so one of the books I really like is called Why Greatness Cannot be Planned.

And the whole message of the book is that great things emerge when people do things without trying to be great. Because if you think about I mean there is no direct path to greatness if there was a direct path it would have been profited away and if it was easy to build big companies in an algorithmic fashion these big companies would already when they’re sitting on tons of profit Apple Google Infosys also why why are they not generating tons of innovative startups why do startups still exist because there’s no direct paths to startups and in that sense just directly aiming for being big is just recipe for not being big but rather you could hope to be big if you work on things you find yourself very curious because that’s when you’ll be really great at and but again the path I am pursuing is also not the optimal path for being a startup founder I’m not even doing a startup I don’t even know maybe a research paper would come out maybe some scientific breakthrough will come out if you are trying to optimize for startups I think you have to at least keep the principles of value creation back in the mind but if you take one level abstraction and say I want to have a really interesting life then to do that you have to do really interesting projects and not care so much about where they end up leading.

Siddhartha Ahluwalia 49:18

Would you say the best product market fit comes out of just following your curiosity?

Paras Chopra 49:29

Following your curiosity but also being aware of this principle the value creation again just like this there are laws of physics I think there are laws of business also. Those laws do not give you a recipe to create a successful startup. But if you go against those laws then failure is guaranteed. So being aware of these laws I mean I’m calling laws their mental models and principles like in my book you need to be aware of them because if you aren’t consistent with them then failure is guaranteed. If you launch something that another people have already launched it’s very likely that you will fail. If you’re solving a problem that doesn’t exist then very likely. So at least be aware of it and then within that context I think you should follow your curiosity. And that’s what I mean by the whole inverted passion where you’re just not curious and passionate about anything if you want to build a startup just know what it takes to build be curious about that right and what what it takes to be a successful startup.

Siddhartha Ahluwalia 50:32

Another thing that you have said is that uncertainty is good for startups.

Paras Chopra 50:36

Yeah so uncertainty is actually a MOAT for startups. And I would differentiate uncertainty from risk. Risk is something that you can model on an excel file. Risk is what you can say I have a five percent chance of failure and so on. And if you’re able to quantify risk then big companies are able to pursue projects. So big companies work really well. So when when people say you know big companies do not take risky projects and that’s not true. Big companies do take a lot of risk. What they don’t take is uncertainty uncertainty is something which you cannot model in Excel. Because you can’t even put a number there and the best MOAT for startups is have so much of uncertainty whether some approach will work or not that by the time the startup becomes big they have enough MOAT that you know they end up succeeding.

Siddhartha Ahluwalia 51:34

Can you give an example?

Paras Chopra 51:36

For example in Netflix case when Netflix and blockbuster saga was playing out I I think one of the uncertainties there was whether that whether people will be okay to watch things online which initially was not with enough bandwidth and the clarity was not as much as DVDs that blockbuster was giving so how do you model this for example and because of this uncertainty Netflix thrived and by the time it was clear that people are okay doing that because the benefits of instant streaming wide selection outweighed the cost of a little less resolution by the time it was clear I think Netflix had enough Moat in the market.

Siddhartha Ahluwalia 52:33

Any any example closer back home or from your own life?

Paras Chopra 52:41

Not from my own life but I think any startup you can find find this element of uncertainty.

For example even with let’s say when this home delivery started on Swiggy Zomato etc I don’t think it it was it it it was very clear that if if you charge extra fee for delivery or if you charge commission from restaurants to deliver it how many restaurants would be okay to do that. So if these things are very hard to model let’s say change of behavior where if I’m going to grocery shop versus if I’m trying to order online. If it’s very hard to model that you just need enough time for these startups to remain that cloud of ones because see the counterfactual if it’s very obvious that someone like Swiggy comes comes along and changes the whole scene then existing players would have done it maybe Bigbasket would have

Siddhartha Ahluwalia 53:56

So you are right by the time like it needs a long window of uncertainty on the entire market. The entire market should be questionable for a long time.

Paras Chopra 54:03

Even take the case of Flipkart. When Flipkart came along initially it was very hard to model whether Indians would shop online or not there was just no precedent for it. If if it was very easy, Reliance, Tata, and all these big companies would have entered it. So what would have happened is very likely A these initial starters would have been discounted as toys and B these companies would have said that we have no idea how this will pan out. So we’re not okay to do like a 500 crore investment because how do you justify to your superiors and big companies these juniors are making a lot of decisions right. How do you justify it when there is a zero data backing it up so it does require entrepreneurs conviction initially and just being lucky at the end of the day.

Siddhartha Ahluwalia 54:49

What what helps you navigate direction during these uncertain times because it can’t be just conviction.

Paras Chopra 54:55

I think as a as a startup you have data on what’s playing out right. It is just that data is not very clear outside so the conviction is always about the customer value matrix if if you know that what you are solving for is something customers are valuing and they’re valuing you know because they’re giving you time money and you have product market fit which really is about whether word of mouth is going around if you are getting all these positive signals and you have the data. It is just that the data is not apparent to your competitors so you should just keep mum and just have enough breathing room that your competitors are not able to sniff out that you have hit upon like a golden egg laying hen.

Siddhartha Ahluwalia 55:51

You have also written that you know your products price determines an entrepreneur’s entire playbook. What do most founders get wrong about pricing and why is pricing not so malleable? Like many founders think that hey today I can price anything tomorrow I can change it.

Paras Chopra 56:10

Yeah the price you put determines the kinds of customers you attract and how many customers are there. If if you have if you have an if you have an enterprise-like product but you are pricing it like SMB you’re not just going to make enough revenue to justify investment into what it takes for building an enterprise company and similarly if you have a consumer product and you’re pricing it too high it won’t work so the world naturally has segmented itself into different kinds of products at different kinds of price points and that’s the expectation market comes with and you just really don’t have too much leeway there. You can’t just price arbitrarily because people see around what other things like your thing is priced at and that’s where they have they build expectations from and at different price points people have different expectations when you enter into a luxury hotel you do expect a lot of things that remind you of a luxury hotel and similarly when you go to a budget hotel so the kinds of investments you need to do into your company would really be determined by where you place yourself in the price continuum in your market.

Siddhartha Ahluwalia 57:32

Tell me about your learnings on pricing from the experiments that you did on pricing at Wingify.

Paras Chopra 57:40

Usually when founders are very young like I was. The tendency is to price way cheaper than it should be I remember I wanted to price at nine dollars per month and I was chatting with someone who was more experienced and they were like you’re crazy price at 99 dollars per month and in my world view as a recent college grad it was impossible for me to think why would anyone pay 99 for something I had made literally in a month but that was a my mistake was to first asse that my market thought behaved and assessed price like I did as a college graduate and second mistake was to think that pricing should correlate with the amount of effort I had put and not with the amount of value someone else got so more often than not I think entrepreneurs end up under-pricing than over pricing and I’ve seen that many many times so simple experiment if you have a startup just try and overpricing, raising the price.

Yeah continue raising the price until customers start complaining. It’s it’s very rare that you overprice so much that customers don’t even talk to you. If you’re delivering value people will at least get on the negotiating table. And you can always reduce the price and make someone happy but increasing the price is just very very difficult once you’ve just put out things out there and people expect it to be super super cheap.

Siddhartha Ahluwalia 59:17

When you started Wingify you innovated only on one metric right and rest you know you didn’t care about anything else like the landing page was copy of 37 signals. Did you follow the principle what you said that innovate on one factor but copy everything else blatantly during that time?

Paras Chopra 59:37

During Wingify initially? Yeah yeah quite a bit. Because Wingify was made out of desperation because everything else before can kept on failing and everything else initially I was just in a perfectionist mode build it for many many months then launch it and then it wouldn’t work. So, this time I just again thought of just doing one thing and not spending enough effort. So getting away with whatever I could get away with was the whole principle.

Siddhartha Ahluwalia 1:00:14

I think one interesting thing that I get from you is your compass to measure failure is quite accurate. Like most people or many entrepreneurs that I see is they don’t admit failure. So in name of persistence, they would end up barking on the wrong tree or solving the wrong problem for five years.

But the way I have known you, the first three products didn’t work. So the fourth product was Wingify. In case of Nintee also, you didn’t drag it for five years.

You were very quick to return investors 75% of the money back.

Paras Chopra 1:00:52

Yeah. It’s important not to attach ego with the company or the project you’re involved with.

Siddhartha Ahluwalia 1:00:59

But I’m talking about a different thing. I’m talking about measuring failure.

Paras Chopra 1:01:03

But it’s related because if you are too attached to a project, you end up being, you don’t end up being objective about whether something is working or not, right? If your identity is attached with your startup and your measure, you feel that your measure of life or personal worth is attached to whether your startup will succeed or not, then you’re just clouded by this judgment that if my startup fails, I’m a failure. I’ve never felt that.

So I’ve always seen the projects I end up getting involved from a very objective point of view. So I don’t derive my self-worth from whether my startup succeeds or not, my product succeeds or not. Because I’ve been driven by curiosity in the sense of what it takes to make something successful or not.

So when Nintee failed, I really didn’t feel it.

Siddhartha Ahluwalia 1:01:57

You didn’t feel the pain?

Paras Chopra 1:01:59

I didn’t feel it was a personal failure. Of course, I made mistakes. But I didn’t feel like I had to prove something to someone.

I learned a lot. I treated the team really well. They got six months of severance and jobs at Wingify and half of the team is still at Wingify.

So I felt investors got almost 75% of their money back. So I felt that it was a good project, a nice attempt. It didn’t end up working, but I wasn’t a failure because of it. it’s not like after I felt this the way after I did Wingify, when I was failing multiple times, they were always an object of curiosity for me. So when my startups failed, I didn’t feel like I failed.

Instead, I thought of how do I take what has failed into almost like an object I’m studying and derive lessons from it instead of just getting into this abyss of maybe I’m no good or I’ll never be worth something. That’s very self-fulfilling prophecy. And that’s where founders end up spending five years or sometimes even a decade just to attach to their own thing.

They need to dissociate it and only then they can admit it. And this is important because startup success requires a lot of luck. You start with assumption.

If you start with that assumption, then the failure will not feel like a personal failure. If you put some money into a lottery and you don’t win the lottery, you don’t feel like a failure. That’s the same way startup should be.

Siddhartha Ahluwalia 1:03:43

But lottery doesn’t require that kind of effort.

Paras Chopra 1:03:46

Yeah. I mean, it is some effort. I’m giving an analogy.

But a lot of things are dependent on luck, which you cannot personalize to your own self.

Siddhartha Ahluwalia 1:03:57

Maybe the better way to say it is, like first, my question to you is, how do you derive your sense of self-worth?

Paras Chopra 1:04:06

It’s diversified in a number of projects. I love writing. I love coding.

I love hanging out with friends. I love exercising, fitness, diet. So the best way to have a sense of self-worth is to diversify it, just like your portfolio, so that anything that doesn’t go well, there are other things that help you out.

But in general, self-worth is very just internally generated. You should feel life is worth living, actually, because just you’re alive. No external reason is needed.

And if you seek for external reason, I think no reason can be enough for you to feel that you’re worthy for being who you are. Why shouldn’t you just feel worthy of life just because you’re alive? Why do you need a justification?

Who do you need to prove? And if you need to prove to someone, there is probably more issues you need to investigate.

Siddhartha Ahluwalia 1:05:14

But maybe the learning for the founders is, if you have invested enough in self, developing your self-worth, and it’s an internal compass, right? It can’t come from external advice.

Paras Chopra 1:05:27

Yeah, yeah. Self-awareness for founders is extremely important. Startup game is all about mental game.

And mental game starts and to a large extent ends by knowing yourself, what drives you, what’s your strengths, weaknesses, when you feel happy, unhappy, what irks you. The more founder is self-aware, the more objectively they can look at the situation they need to deal with, and they need to deal with thousands of situations.

Siddhartha Ahluwalia 1:06:02

No, that’s quite amazing. I think if I have to tell founders if they have to take one learning from this podcast, this is a must learning.

Paras Chopra 1:06:14

100%. The more reflection someone can do on their own behavior as a founder, the more they can tilt the odds because you’re not then just like a puppet reacting to your impulses. You can make very conscious choices.

Siddhartha Ahluwalia 1:06:36

What do you say, like the outcome Wingify gave you money or wealth?

Paras Chopra 1:06:43

I mean, the question is about how money and wealth are different.

Siddhartha Ahluwalia 1:06:49

Yeah, you said money is not wealth yet.

Paras Chopra 1:06:50

Yeah, money is not wealth. Wealth is things that we want and money is a means to an end to it. Wealth is literally things that you require in life that make you happy.

And they can range from something as simple as strolling in a garden to hanging out with friends to, of course, money does buy material things that can also end up adding to your wealth. But if you see what drives humans, what drives anyone is not the numbers in the bank, but what those numbers in the bank can get you. And having a lot of clarity on what are the kinds of things that give you a satisfied, fulfilled life is much, much more important question than how many numbers you have in the bank.

Because it could be possible if you’re not clear about that, no amount of money can make you happy if you’ve not really created situations around yourself that lead to happiness. If you’re working nonstop, making money when you’re truly happy around friends, you’re just being logically inconsistent.

Siddhartha Ahluwalia 1:08:09

Thanks Paras, this has again been an amazing conversation.

Paras Chopra 1:08:12

Thank you. Yeah, it was a lot of fun. Thanks for having me here.

Siddhartha Ahluwalia 1:08:16

Again, my request to listeners, just think more about these topics. It might not make you a successful founder, but at least your self-reflection index would be high and it might take your sense of self-worth.

Paras Chopra 1:08:34

Yeah, I mean, I wrote the book because I agree with you. The book and the principles in the book cannot guarantee success, but it’s all about tilting the odds of success. And I’m confident that this book will tilt the odds of success.

I wrote it for myself. If someone had given me this book when I was starting my first startup, I don’t think it would have taken me four attempts to get here, maybe in the second or third attempt. Because I’ve just short-circuited a lot of learnings that I learned.

I was just making a lot of mistakes and reflecting on those mistakes.

Siddhartha Ahluwalia 1:09:08

Thanks again, Paras.

Paras Chopra 1:09:09

Thank you, Sid.

Really, it was a pleasure chatting with you. Thank you.