The Most Successful Startups Arise from Addressing Real Needs
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Chapter 1: Understanding the Essence of Startup Success
What frustrates you the most? I’m not referring to politics or your partner's quirks, nor the noisy kids next door. Actually, I do mean those incessant Zoom calls. Do they drive you up the wall because of connectivity issues experienced by just one participant?
How would I tackle that? I’m uncertain. But if I could devise a solution, I’m confident many others would benefit from it too.
I categorize startups into two main types: those offering solutions to specific problems and those creating technologies in search of a market. While I’m inherently drawn to technological advancements, I’ve observed that startups designed around solving a defined problem are significantly more likely to thrive than those merely seeking applications for new technologies.
Perhaps my perspective is skewed since all of my own ventures began as answers to particular issues. I never set out to be an entrepreneur, but when challenges arose, I felt compelled to address them.
Section 1.1: The Journey of Problem-Solving
My inaugural startup originated as a contract developer focused on internet protocols, functioning more like a custom software firm than a traditional startup. Yet, when satellite operators implored us to find a method for transmitting internet data via their networks, we recognized a specific problem that we were uniquely positioned to solve.
In the course of product development, we required a simulator to test our solution across various networks. Unable to find a suitable option on the market, we created our own. During demonstrations, customers inquired about purchasing the simulator, leading to the inception of my next venture.
Later on, I encountered a QA manager who lamented the extensive time taken to execute thousands of tests, most of which were irrelevant to the current code changes. When he developed a machine learning tool to pinpoint the essential tests, I eagerly joined him to help launch Appsurify.
While mentoring startups, I met a founder who asked if we had ever experienced thermostat wars in the office. I certainly had! It was infuriating when some rooms were too hot while others were too cold, leading to daily conflicts over the thermostat settings. Consequently, I teamed up with him at KomfortIQ.
All four of my startups were not birthed from a quest for wealth or groundbreaking technology; instead, they stemmed from a deep-seated need to resolve specific issues, knowing that no one else would tackle them.
Subsection 1.1.1: Real-Life Examples of Problem-Solving
What about Facebook? Did Mark Zuckerberg ponder, "What software can I create to become a billionaire?" Not at all. He received a request from Harvard University to digitize their printed student orientation guide. This led to discovering a broader need among other universities, ultimately culminating in a platform that connected students across institutions.
Similarly, the founders of Airbnb simply wanted to generate some extra income by hosting travelers on their couches.
Resolving an issue often involves leveraging existing technologies rather than innovating entirely new ones. For instance, Tesla revolutionized electric vehicles and battery technology, but it initially began by installing laptop batteries into a Lotus Elise, driven by the desire to create an enjoyable EV rather than a mundane option like the Leaf or Volt.
The examples are numerous, and it’s not restricted to consumer-focused unicorns. Most thriving startups originate from the fundamental question: how can I resolve my problem? As Aesop and Frank Zappa astutely noted, necessity is indeed the mother of invention.
If you are grappling with a problem (and who isn't?), it’s likely that many others share the same challenge. With insider knowledge of your industry, assessing how many individuals face similar issues becomes much easier.
Being entrenched in the field, founders typically understand the landscape well. They are familiar with customers, distribution channels, and industry events. Conducting customer interviews can be as straightforward as reaching out to friends for their feedback on the concept. With established connections, pilot customers might even finance the development of the product.
Section 1.2: The Alternative Approach
In stark contrast, some founders create an intriguing new technology and then search for potential applications. They often uncover numerous uses across various sectors, leading to the creation of a "platform technology" with a vast Total Addressable Market (TAM). They select a "beachhead market" and seek funding to initiate sales before exploring larger opportunities.
While the pitch may be compelling, and the team may boast top-tier expertise and advisors (perhaps even I am among them!), such ventures frequently face hurdles.
Although the new invention may offer improvements, an existing solution often suffices, and the proposed enhancements may not justify the transition. Founders entering the industry from the outside frequently lack an understanding of the constraints and complexities involved.
Although starting with a problem in mind sounds straightforward, it doesn’t guarantee financial success. Some challenges are insurmountable, no matter how pressing the need, like the myriad pitches I receive for new social media platforms purported to unite rather than divide us.
Other issues may be solvable but lack sufficient market size to attract venture capital. Instead of designing the business around funding strategies, the focus should be on developing a business plan that revolves around the product.
For instance, the market for network simulators was too limited for venture capital, necessitating that we bootstrap the business. If you’re addressing a significant opportunity, like a video conferencing platform that demands substantial investment, then it’s time to approach investors. Conversely, for lower-risk endeavors involving existing solutions, such as adding EV charging stations to apartment complexes, project financing or private equity may be more appropriate. Ultimately, the product should shape the business plan, rather than the need to identify a large market appealing to venture capitalists.
Chapter 2: Addressing the Zoom Dilemma
The first video, "How to Get and Evaluate Startup Ideas | Startup School - YouTube," discusses the critical process of identifying and assessing startup ideas based on real-world needs.
In the realm of virtual meetings, platforms like Zoom (along with Teams and others) have become both a blessing and a curse. They have facilitated a semblance of normalcy during the pandemic, yet there’s always that one participant whose audio and video falter. We often spend half the meeting confirming if they can hear us and the other half requesting them to repeat their comments. This inefficiency leads to daily headaches.
This is my dilemma. While it may not be a world-altering issue, and solving it won’t bring about global harmony or resolve climate change, I genuinely desire a solution. If anyone has ideas, please connect with me on LinkedIn.
Should I fail to discover a viable answer, that topic may just become the focus of my next article, as I will need to find a way to create it myself.
The second video, "Build Something People Want: Solving Real Problems - YouTube," emphasizes the importance of addressing actual needs in the startup journey.