Solving Real Problems

Often times when I’m on Twitter or Hacker News I find my feed full of links about yet another startup failing. Success rates for startups are quite low but this seems to be a separate breed of problem. These startups aren’t failing because they had a great product or idea, but didn’t get the little things right, or because they were in markets with high barriers to entry. No, this seems to be a case where there was absolutely zero product market fit – startups pursuing ideas that didn’t solve any real or perceived problem, where customers had no interest in paying for it.

These failures, which may come as a big shock to the founders, don’t really surprise many. Sure, part of the problem is that “failure is hardly the worst thing that can happen to you in Sillicon Valley” but the bigger issue stems from an inability to solve a real problem.

That may sound like a simple goal, but the reality is that even finding a problem to solve is quite difficult. I’m sure these startups set out thinking they had a real problem at hand, but on further exploration nothing could be further from the truth. It’s hard to come up with ideas that people are willing to fork over their cash for (and then much, much harder to execute on these ideas).

Real problems do exist, though, and will always exist. In this day and age, with the relatively low barriers to entry in the tech industry and the ease of distribution, the chances of having a unique idea are quite low, but your ideas don’t have to be unique. You can take an existing idea and put a different spin on it or offer a more pleasant customer experience with better design, and chances are you can strike gold. Of course, you will have to get all the little things right, but that’s another story altogether.

One of my favorite examples of this is Nest. Thermostats have been around since 1883, yet Tony Fadell found a way to reinvent the device and find a niche in the thermostat market. Now they’ve moved on to tackling smoke detectors in the same manner. Another example that I recently heard of on an episode of Planet Money, is Fan Duel. Fantasy sports have also been around for a while now, the first official league being created in the fifties, but Fan Duel found a way to put a new spin on an existing product by offering single day leagues with smaller cash prizes. Apparently it works, because they awarded payouts totaling $50 million last year, and secured an $11 million investment from Comcast for revenues that are supposedly well into the $100 millions.

Now if you do a bit of research on both of these ideas, you will find that the founders were annoyed with the existing implementations and set about to solve problems that occurred in their lives. Unfortunately, finding these problems to begin with isn’t something we’re wired to do. Most people get frustrated with daily annoyances but move on. When we think of money-making startup ideas, we tend to think of the fun, cool and glamorous ideas like AirBnB or Pinterest, but there’s also plenty of money to be made solving mundane ideas like clunky and ugly thermostats. The key is to find the right problems to solve in the first place.

Habit Forming

I propose we start an exercise to help us identify these problems. This is nothing new, and it’s been written about before, but as more people start implementing this idea, more successful startup concepts will start to emerge (or at least I hope).

Starting today, write down a problem that you would like to solve, a problem that you have in your life, or a problem you have identified. Undertake this exercise daily. If you are an iOS developer, be like Matthijs Hollemans and come up with a new app idea every day. Or if you are an inventor, like Meredith Perry, carry a notebook around, jotting down ideas of things you want to improve.

Carry out this exercise daily for a month. At the end of the month, go through your list of ideas. Discard the ridiculous ones (there will be plenty of those) and research the remaining ideas. If a solution already exists, note its shortcomings. Is there room for improvement and how would you make things better? As you vet each idea, your research will reveal the complexities of solving the problem and you will find that you aren’t as interested in it as you were when you wrote down the idea. That’s fine. If you’re bored by the idea already or the thought of tackling it, discard it immediately. Creating a company around it means being surrounded by the idea 24/7 for the foreseeable future. You have to be passionate about it and if it’s boring you now, don’t even bother trying.

At the end of this, you may or may not have a few ideas that you deem worth pursuing. If not, repeat the exercise. As Aristotle once said, “We are what we repeatedly do. Excellence, then, is not an act, but a habit.” Soon you will learn to identify problems, figure out solutions and carve out a market for it. Then you’ll be on your way to building a legitimate company, solving a real problem, that people are willing to pay for.

And then, hopefully, there will be a lot fewer of those “Help, my startup is dying” posts.

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Pasan Premaratne

Pasan Premaratne is an Expert Teacher at Treehouse with a focus on Business. He has degrees in Finance and Economics and in his spare time loves learning everything on the planet from math, coding and economics to music, photography and more. Catch him on Twitter at @pasanpr.

Comments

5 comments on “Solving Real Problems

  1. My favorite example of a company inventing a problem to solve comes not from tech but food and beverage. Gatorade A.M. Most people probably won’t remember it because it was short lived but Gatorade claimed in their marketing that this stuff replaced the electrolytes you lost while sleeping. Really as far as I could tell they just gave Gatorade citrus-ish flavors and called them breakfast drinks.

  2. Very sound business advice, Pasan. I think part of the problem is the insular nature of Silicon Valley, from which many of these failed startups come from. Much like the record industry of decades past, investors are looking in a location where they found success before. As a result, creators with big dreams flock there, and start designing for VCs instead of customers. Sustainable ideas are crucial to maintaining growth and profitability. A business shouldn’t be dependent on outside investors to make it profitable with no end in sight. Much like the record companies of the 80s and 90s, they are willing to invest in hundreds of non-successes to get one or two mega-star businesses of which they own a portion.

    Photo filters and weather apps are very nice and all, but getting people to pay for an app or product is key. It is difficult to understand the needs of ordinary people when immersed in an insular tech culture, where everyone has the same problems, and variety of life experiences are not as well rounded as they could be.

    Failure as a startup if you are a single young adult is not the worst thing that can happen. I hope this articles and ones by others like Amy Hoy give designers and founders a chance to reflect on the purpose of the businesses they are creating.

  3. Awesome post. It really helps out for those who want to start something to make the world suck less but have no idea on how to do it.

  4. Yes Pasan I definitely agree!

    I like the fact that you have to write down all of your problems and try to make better solutions out of it. And then try to improve your ways of solving it.

    It is very encouraging by putting your own idea about it and the thought of “Soon you will learn to identify problems, figure out solutions and carve out a market for it. Then you’ll be on your way to building a legitimate company, solving a real problem that people are willing to pay for.”

    Thank you for this post!
    I found and “kingged” this on the Internet marketing social site Kingged.com

    • Floriefe,

      You’re welcome! I only recently started writing my problems down and it definitely takes some time to build the habit.

      Thanks for reading :)