It’s winners-take-all in B2C, while B2B is a long tail.

a 🧵
1/ There are only a few dominant social networks because consumer markets are prone to winner-take-all effects.
2/ There are multiple reasons for this.

First, consumers want stuff for free or cheap which drives consumer companies to expand aggressively so that they can amortize their fixed costs over many such users.
3/ Second, consumers want to conform with other consumers so inherent virality in products gets built-in.

invertedpassion.com/consumers-want…
4/ Once, a minimum threshold of consumers adopt a product, this word-of-mouth virality ensures the product becomes an obvious choice for the remainder of consumers left in the market.
5/ If you have Uber that all your friends are using and it has all the drivers in your city, why would you try something else?
6/ But since businesses want to differentiate, each one of them is different than the other in their processes and strategy.

invertedpassion.com/consumers-want…
7/ This differentiation between businesses creates an opening for numerous products to exist, each one of them solving an almost unique problem for a specific set of businesses.
8/ Also, for B2B products, since the number of businesses is far less than the number of consumers, whatever network effects are there, they are weaker than B2C.
9/ There are network effects in B2B for sure: partner networks and communities emerge from successful B2B products but their impact is weaker.

These network-effect-driven benefits in B2B can be overcome by solving a business problem in a way that’s specific to a niche market.
10/ That’s why there are hundreds of CRMs out there that businesses buy in spite of Salesforce because these non-Salesforce CRMs are able to offer a better service, customized implementation, or that tiny feature that some companies want (which Salesforce doesn’t have).
11/ Of course, there’s a flip side to this. Because few B2C products dominate the entire market, the largest tech companies in the world are predominantly B2C commanding astronomical valuations that B2B companies can only dream of.
12/ So, ultimately, the choice between B2C and B2B is really a choice between high-risk/high-reward and low-risk/low-reward.
13/ Remember 🧠

a B2B company is far more likely to be successful but it is far less likely to be as valuable as a successful B2C company.
14/ That's it!

I'm posting ~1 new mental model for entrepreneurs every week.

Here's the entire list of 60+ mental models that I'll cover: invertedpassion.com/free-book-ment…

Make sure you sign up for email updates on the book page.

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More from @paraschopra

Jan 13,
🎉 Announcing December winners of Gaur and Chopra Escape Velocity grants.

We're awarding 6 people under 25 years of age, a sum of Rs 50,000 each.
1/ Sanjana is from Sikkim and she wants to use the grant money to create a mentorship network for students from rural areas in north-east.

She will connect people from north east with well-established careers to these kids, hopefully uplifting the region.
2/ Abing is from a rural area in Arunachal Pradesh and has launched a podcast using his mobile phone only.

anchor.fm/abing-lamnio

With this grant, Abing will purchase equipment to be able to record his podcasts professionally.
Read 8 tweets
Jan 12,
One big difference between how biological intelligence (like us) and current AI systems is active sensory foraging.

When we are not sure about something, unlike an AI, we don’t blurt out and answer, but instead actively seek new information to reduce our uncertainty.
Give an unfamiliar image to today’s ML systems and they’ll immediately output a label.

But we will look at things from different angles, try to touch them, hear them — only when we’re sure, we will label it.
Of course, this is possible because we live in an interactable world while ML systems are input-output workflows.

But we can give AI systems mechanisms for active foraging for new evidence.

@OpenAI’s new webgpt is step in that direction openai.com/blog/improving…
Read 4 tweets
Jan 11,
What can we learn about the 🧠 brain if we map it at a nanometer resolution?

In my latest 🎙️ podcast, I talk to Jeff Litchman (from Harvard University) about their project to map human brain tissue and what insights we get from it.

Listen here ->
1/ They map just 1mm cube of human brain and revealed 1.6 petabytes worth of data, which can fill 3000+ laptop hard drives.

And. 1 mm3 of the human brain which is 0.0001% of the entire brain. The human brain is truly staggering in its richness and complexity and we explore that.
2/ If you want to read the paper with details from the project, here's the link to it biorxiv.org/content/10.110…

In it, you'll find beautiful pictures of the human brain such as this one where one neuron is making several contacts with another.

cc: @harvardbrainsci
Read 5 tweets
Jan 3,
I read 28 books in 2021.

a 🧵 recapping all of them.
1/ This little book is jam-packed with insights about money.

2/ In fact, the learnings from the book resulted in probably my most popular thread so far.

Read 40 tweets
Dec 22, 2021
The world record for brain-computer interface for typing is 18 words per minute.

In contrast, eye tracking based typing averages around 20-25 words per minute.

This is a good lesson for why cool technology alone cannot win if there are cheaper, low tech alternatives available.
Source for the BCI typing record: the-scientist.com/news-opinion/b…
Typing demo for eye-tracking based systems.

Read 6 tweets
Dec 21, 2021
Consumers hate getting sold to, companies love it.

a 🧵
1/ Many failed B2C products might have worked out if consumers had the patience to understand what the product might do for them.
2/ But consumers are impatient and if the value is not delivered immediately and continuously, they stop engaging and abandon the product that could have been valuable later.

invertedpassion.com/marketing-need…
Read 14 tweets

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