What’s Your Problem?
Don’t fall in love with any brilliant idea. As an entrepreneur, you’re fighting against a problem, you’re not cherishing ideas. You’re about to dedicate all of your time and energy to tackle this problem. So make sure it’s a good one. A good problem is real, you can clearly acknowledge and define it. It has a huge impact and it’s getting worse every day. A problem is difficult to overcome. The pain is obvious and not already solved - the way you think it should be. So leave your ideas and concentrate on the problem that is obsessing you. Let’s go!
As an Entrepreneur, you need a problem. It’s the first step in finding a solution. But it’s not always easy to see the problem, or to really understand it. So here are some questions that you need to ask yourself.
Is it a real problem or not?
Today, this gets tricky right away. You have to live at the center of contradicting possibilities: how do you find good ideas that might seem bad to others, and how do you find the real problems amongst all the fake problems? Good ideas that solve obviously real problems, everybody’s working on those. They’re easy. What you need is a real problem, not a problem that you imagine, and you need a solution that’s not obvious to everyone else.
Let’s take the case of Google. When Google began, there weren’t enough websites for it to really be a problem to keep track of all of them. When they said they wanted to store and search all the information on the web, it wasn’t a real problem. But Google saw into the future, when there was an exponential explosion in the amount of data on the web. So they had a real problem that was not obvious because it was a future problem; and they solved it with a good solution. (And don’t fall into the trap of people who say that, “Oh, of course it was going to be a problem! Anyone could have seen that!” The future is unpredictable, and anyone who claims to always know what is coming is a liar. That’s part of why it’s so hard to identify those future opportunities today, and why Google became what it became.)
Identifying problems like that means that you have to get inside the thing you’re trying to change. That’s how you see the real pain points and the real trends that indicate problems. If you’re not sure it’s a real problem, you’re already lost. Because the execution of a solution, there’s a lot of people who can help you to do that. Execution follows similar patterns all the time. But if you want to identify real problems in an industry, you have to truly understand its day-to-day realities.
It’s hard to find real problems. Sometimes you have to keep trying. So do that — keep trying. But be clear about what you’re looking for — don’t invent problems that don’t exist and will never exist.
Can you define the problem?
Being able to define your problem in detail, and to explain it using very few words to whoever is listening, is an absolute necessity for an Entrepreneur. It takes time to do it right. Anyone who tells you that there are overnight success stories is either a journalist who is selling you a story, or an Entrepreneur who is selling a story to a journalist.
Defining the problem well is important because even if you find a real problem, what happens with your business isn’t going to exactly follow the road that you originally saw. There are going to be roadblocks and maybe even dead ends. But if you have defined the problem properly, you’ll see either a way around those roadblocks, or a new road taking you out of that dead end.
Is the problem big?
This comes down to choices, because here’s the reality: whether you start a big company or a small company, you’re going to deal with the same issues. Whether your ambition is huge or small, you’re going to come up against the same horrible things when you start out. Finding success as an Entrepreneur, no matter what you’re trying to do, is hard. The percentage of success is extremely low. That being the case, you need to clearly see the upside of your risk. When you finally find success one day, it’s better for it to be a significant success rather than a small one.
So don’t pull back in terms of ambition, and make sure that the problem you’re aimed at is big enough to make it worth your time and effort.
Is it a difficult problem?
If you think that the problem isn’t that difficult, be worried. Because if it isn’t difficult, why hasn’t anyone already done it? What’s more, difficulty isn’t a bad thing. The more difficult the problem, the more opportunity there is. Not only will the potential success level be higher, but it makes it more unlikely that anyone else will also be able to succeed. Too many Entrepreneurs only go after projects that have low-risk problems. Good Entrepreneurs take on the big problems and the difficult problems, the ones that really need to be solved.
So don’t hesitate to tackle something big. WhatsApp was a great example of this. The particularity of WhatsApp was simply that they took an extremely difficult problem and were the only team that said, “We can do this and we can do it across every operating system at the same time.” Every engineer would see that as an incredibly difficult problem. WhatsApp decided to do it anyway. And you saw how that story turned out.
Is the problem obvious?
WhatsApp is again a great example here. Of course there was a problem that people wanted to be able to communicate with their friends, no matter whether their friends were on iOS or Android. It’s clear that no one only wanted to be able to communicate, essentially for free, with their other friends who happened to have the same phone as them.
Chipotle is another one: any restaurant chain has an issue with scaling. The easiest way to scale is to accept a reduction in quality. Whether it’s a restaurant or a hotel, you run into the same problems in terms of decreasing quality as you scale up. Chipotle was the first one to say, “We’re going to scale and we’re going to use organic ingredients all along the way.” No one else did it because it’s so hard. But once they decided that was a problem that they were going to solve, it became obvious that it would work. Because it’s something that people would want, but that was never available to them.
Has the problem already been completely resolved or not?
Whenever a bad Entrepreneur starts investigating an idea, they look around at the competitors and say, “Oh, well, somebody’s already doing it, guess I’ll keep looking.” But the question isn’t about competitors. The question is whether or not the problem is completely solved.
Why is it that there are competitors to Google that keep coming along in the search field? It’s because as great and as massive as Google is, there are still issues that haven’t been solved in terms of search. Google’s almost a $500B company, and they’re still having competitors come along. And that’s good.
Because it’s not simply a matter of looking to see if something else already exists that’s addressing the problem. Until the problem is completely solved, there’s always an opportunity. Either you can find an opportunity because there are fundamental problems like geography that others can’t overcome, or there’s an opportunity because the response to the problem can be adjusted and improved.
Is the problem getting worse every day, or not?
My favorite. If you’ve got a problem that’s constantly getting worse, send us your application for The Family today.
Take something like pollution. Every day that goes by, it’s getting worse. Sure there are a lot of people working on it. But it hasn’t been solved yet. That’s the indicator of a huge market opportunity.
So those are the seven questions that you need to ask yourself about your problem. Once you know the answers, you can move on to thinking about some other important things.
Understand your Market
Like understanding your market. Are you trying to break into a market that is growing, with more and more people every day who need your solution, or are you going after a market that is shrinking, with less and less people needing your help?
By definition, the market is alive. It’s never static. And you have to evaluate it on three shifting levels: the target market, the served available market and the total available market. When a startup is thinking about its market, it always falls into the trap of thinking about the total available market, all of those people in the world who might eventually be your customers. They start thinking about competitors for that market.
But for a startup, the target market is the real goal. Apple didn’t start out aiming at the total available market that they have today in 2016. They started out with that personal network of computer enthusiasts in Palo Alto in the early 1980s.
Once that’s clear, you can move up a level and look at your served available market, which is the market that you can actually reach with your startup. Only once you’ve gotten past those two steps, finding your target markets and then filling your served available markets, is there any question about competition.
Let’s be clear: Coke and Pepsi are competitors. If Coke sells less, Pepsi sells more. That’s how it works, because they’re dealing in the total available market. But when you’re an Entrepreneur launching a startup, the likelihood that there will be a direct relationship in which you’re going to sell more because your competitor is selling less is extremely low.
When you do get to that point of addressing a total available market, you’ll be able to hire people to worry about the competition, and you’ll be able to pay them very well. But until then, why worry about it? Your job as a founder is to conquer your target market. Period.
So do yourself a favor: forget about your competition. Ignorance is bliss, and that’s doubly true when you’re trying to stay focused on your product. You can’t control your competition, so why waste any time on them?
That doesn’t mean that you can’t take a look around and see what other people are up to. But you can’t be doing it to see what the competition is doing, you need to be doing it to see if there are any good ideas out there that you can use. And when you see something good that can help you, use it — but use it intelligently. Never turn off your brain. Adapt those good ideas to your context and your needs. Don’t just go around copy/pasting, actually think about what you’re doing and how it helps you.
Inspiration is everywhere, especially for startups
And go looking for inspiration in industries and domains that aren’t your own, not just in the tech world. We’ve got thousands of years of world history, in which there were people doing absolutely incredible things. If you want to find people who faced universal problems and in moments of crisis created new paradigms (for better or worse), you just have to go back into the history books!
There were people in art, literature, medicine, the railroads, who did things that will blow your mind. In the tech world, there’s about 20 or 30 years of stories to go through, and that means there aren’t that many, relatively speaking. So don’t get stuck in the world of Entrepreneurship and startups. Let your mind go free, and as long as you keep it working and not on autopilot, you’ll find amazing stories that lead you in new directions.
None of this learning is done in a weekend. But if you want to be an Entrepreneur, it’s something that you take on as part of your long-term lifestyle. Because once you’ve seen what people have done, the theories that people have developed, the studies that are out there, all of the excuses that you could have for not trying something new just fall apart. You aren’t too young, you aren’t too old. You don’t have enough experience, great. It’s not a requirement. You aren’t too dumb, and neither are the other people out there. You don’t have any business experience, that’s ok — no one else did either when they first started out. You don’t have any ideas? Open up Google and look for one. Or use a different search engine, they’re out there.
The excuses don’t work. The only thing is whether you’re willing to take the risk or not. And if you’re not, that’s ok. Not everyone needs to be an Entrepreneur. But if you’re going to take the risk, take it — be ambitious, be aware, and be fast.
Your idea equals your solution, your problem equals your market. Many entrepreneurs are obsessed with their idea: that’s a mistake, because startups are market-driven, the result of an intimate relationship between a team and a market with a problem. So what’s your problem?
Is your problem real?Fake problems are problems that only the entrepreneur sees. Be careful not to think that your bubble is reflective of the outside world. BUT never use traditional market research methodologies such as a market study or going to a market expert. Those are based on the assumption that exploring a market means asking what people want. But people do not know what they really want until you push it to them, such as was seen with cars, TVs and cellphones. There is a huge gap between what people say, what people think, and what people really think. The question, “Does my problem matter or not?” is a very good clue of your project’s long-term value.
Can it be defined?If you have a well-defined problem that you are trying to solve, your “why” will be obvious (watch the TED video “Start with the why”). By the way, you should always explain the problem and not the solution because that’s how you’ll connect with people.
Is it big?The present market is not the reference, the future market is: you can become as big as you can make the market grow. That means you have to conquer the existing market AND create a market that does not exist yet. It’s that latter opportunity that is key.
Is it difficult?Be ambitious: the more difficult a problem seems, the more valuable the solution will be if you succeed. In the European paradigm, difficult problems are the one that create big companies on the long term. You have 2 choices as an entrepreneur:
- Do things that lots of people are trying to do - this will be quick and mainly consists in execution, as you’ll need to be the best to succeed in a very competitive landscape;
- Choose a very long-term approach and work for the next 10 years on a problem that is not obvious - within 10 years you can become an expert in any field, and that path never fails.
Is it obvious? That is to say, has it been solved?Obvious problems are already solved. But has it been solved the right way? There is always room for competition, but the more a market has been solved, the more impressive the new solution must be.
Is it getting worse?There are 2 kinds of problems:
- those that are naturally improving, meaning that the market is decreasing;
- those that are getting worse and more painful, which means ever-bigger opportunities to offer a game-changing solution. Remember, it’s much easier to sell painkillers than a vitamin ;)
Understand your marketAll of the above questions should help you truly understand your market. Markets are alive: they are like animals, they all have their personality traits and they are very unequal, and something that applies to one market is dead wrong for another. That’s why early-stage startups should not talk together about their businesses.
Focus first on the target marketMarkets are too big to be conquered at once, so first find your problem (the big vision). Then, as a second step, narrow your vision and find the small segment of that problem that you will solve - that is your target market.
Forget the competitionComparing your inside with the outside of your competitors will only distort your decision-making.
Unless it’s for inspirationStill, it’s better to look at other industries for inspiration and adapt it to your situation, since when you look at your competitors you never know if you are looking at winners or losers (and then you take the risk of copying mistakes).
Inspiration is everywhereYou can read blogs and Techcrunch, watch how-to videos, but the most important source of inspiration remains the outside: movies, novels, biographies of non-entrepreneurs, your Facebook newsfeed, and your own history. One life changing article you should definitely read: The Cook and the Chef: Musk’s Secret Sauce. A Cook is someone who follows a recipe, a Chef is someone who reinvents cooking.
It takes timeIt takes time to know your problem, to understand your market, to become an expert. Stay a project as long as possible because as soon as you become a company, collateral problems will arise. Be a project that becomes a company and not a company that is looking for a project.
Are you willing to take the risk?If not, try something else, because entrepreneurship is about great risk and even greater boldness.
Articles to go deeper
Nicolas Colin, “Low-Risk, High-Reward : Why Venture-Capital Thrives in the Digital World”
The Family Papers, November 2015
Vinicius Vacanti, “The Manual-First Startup”
Barry Jaruzelski, “Why Silicon Valley success is so hard to replicate”
Scientific American, March 2014
Stewart Butterfield, “We Don’t Sell Saddles Here”
Medium, February 2014
Sangeet Paul Choudary, “A Platform-Thinking Approach to Innovation”
Wired, January 2014
Nina Curley, “Why Good Startup Ideas Look Like Bad Ideas”
Wamda, July 2013
Chris Dixon, “What the smartest people do on the weekend is what everyone else will do during the week in ten years”
@cdixon, March 2013
Bob Dorf, “Why Too Many Startups (er) Suck”
Steve Blank’s Blog, September 2012
Paul Graham, “Schlep Blindness”
Essays, January 2012
Paul Graham, “Ideas For Startups”
Essays, October 2005
Paul Graham, “Why Smart People Have Bad Ideas”
Essays, April 2005
We told you, they lived it!
Philippe Gelis, CEO @ Kantox
Philippe started in finance, working at Deloitte. He met his cofounder at a Startup Weekend and cofounded Kantox back in 2011, in Barcelona. Kantox is a peer-to-peer foreign currency exchange for businesses. It has today over 1,600 clients in more than 50 countries and totalize over than $2 billion in transactions. Kantox raised $11m in 2014.