Have you heard the saying “love the problem not the solution”? Or have investors asked you what problem you are solving?
Entrepreneurs are urged to start with the problem in mind when thinking of startup ideas. A solution looking for a problem is seen as a bad thing.
However, I believe that there are two exceptions to this rule; starting with new innovative technology or a vision for a better world. My own thriving startup falls into the latter.
Start with a new innovative technology
Let’s take Intel as an example. They were a first mover in the microchip industry. Intel had breakthrough technology in its hands. Was that technology ready to solve huge problems like powering the first rocket launches to the moon or the billions of smartphones we have today?
No, initially not!
Intel started with a use case of pocket calculators. Yes, they had to find a problem to solve. This is the opposite of the advice we give startups these days. The solution came first, and then they looked for a low-hanging fruit problem.
Let’s look at the Web3 revolution ongoing at the moment. Web3 is a movement around crypto, NFTs (non-fungible tokens), and DAOs advocating for a move to a new internet, in which ownership of assets is decentralized among the community of builders and users.
The Web3 movement is powered by the technology that emerged, after a few iterations, from a technical paper that gave birth to Bitcoin. Currently, one of the most famous applications of Web3 is NFTs. In particular, Bored Apes come to mind. Bored Apes are NFTs in the form of JPEG avatars that signify joining an exclusive community. One Bored Ape now costs a minimum of around $200k.
Were the creators of Bored Apes doing a ton of research on the problem of exclusivity claims in high-end communities? I doubt it. They probably just played around with the technology called NFT and stumbled upon a profitable use case.
Web3 also has a second force blowing in its sails: a vision for a better world where the internet is not a monopoly, and everyone owns a piece of it. Let’s discuss the vision as another possible starting point for a startup next.
Start with a vision for a better world
Think of SpaceX. Yes, there is a ton of incredible tech powering the company, such as reusable rockets, but it all started with a vision to make humanity a multi-planetary species and colonize Mars. As Elon Musk says:
“I think life on Earth must be about more than just solving problems… It’s got to be something inspiring, even if it is vicarious.”
Even SpaceX had to find low-hanging fruit problems such as shipping cargo for NASA, but this was not why and how they started.
If you think of Facebook, do you think Mark Zuckerberg thought Harvard students in 2004 had a problem with not being connected to enough people? If you had asked those students what they wanted, would they have answered that they wanted to post photos online and receive likes from friends and strangers? I realize that in the case of Facebook, it might have been better to ask the people, but hindsight is 20/20.
We shouldn’t underestimate the power of the vision for a better world. As Henry Ford famously said:
“If I had asked people what they wanted, they would have said faster horses.”
My own startup Pandatron began with the grand vision of bringing education to the next level. This was both the inspiration for coming up with ideas and the backbone that allowed us not to give up on a startup idea and endure 2 major pivots over 3 years. Having a vision is a good proxy for a founder/market fit. If you like the idea you are working on and think it is important, you are less likely to give up. To me, education is the most potent tool for changing the world, and that’s inspiring.
Currently, we are helping corporations like SAP, Universal Pictures, and Skanska with corporate change management. Is that the end goal? No. The end goal is bringing education (whether corporate or otherwise) to the next level and making investment in people profitable.
Pandatron is also powered by breakthrough technology: AI-driven coaching. Business coaching alone is a $10.9bn industry in the US, with coaches frequently making $250 per hour. Making coaching automated will not improve it tenfold, but one hundredfold, as it will provide access to this tool for everyone, as opposed to only the rich.
That being said, we are solving a huge customer problem. 70% of change management programs fail. Problem definition was, for us, perhaps, step #2 after defining our vision.
Do you even have to solve a problem?
A VC partner Ali Tamaseb researched how many unicorns solve must-have vs. nice-to-have problems, and the results can be seen on the graph below. It shows that building a pain-solving solution gives you a statistical advantage.
But it is not the only way.
My conclusion is simple.
Most rules have exceptions. And sometimes, the number of exceptions is non-trivial. All the companies mentioned in this article solve customer problems, whether big or small. But what got them started was either new technologies, a vision, or a mashup of both.
Author: Dima Syrotkin