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.
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.