Startups: Start with a Problem, Not an Idea

Potential startup founders are always looking for ideas to implement, when they should be looking for problems to solve. Customers pay for solutions, and there is no market for ideas. I’m often approached by people with a “million dollar idea,” but I haven’t seen anyone pay for one of these yet.

Equally often, I see startups who are on the road to implementing an idea, but haven’t figured out what problem it solves – the business plan waxes on eloquently for 20 pages about how great this product and technology is, but never gets around to defining the problem (investors call it the “solution looking for a problem” syndrome).

A related “red flag” in a business plan is a missing competitive analysis section, or a short paragraph that essentially says, “this product has no competition.” My reaction is, if there is no competition, then there is no market demand for your product, so why are you building it?

Luckily, many startups are smart enough to keep morphing their idea, until it finally fits a real-world problem, and they can move forward in the marketplace. Unfortunately they could have saved themselves much lost time, money, and heartache if they had just focused on identifying the problem before they built a solution.

• Automate a labor intensive process. Henry Ford applied this principle to auto manufacturing, Lotus 1-2-3 applied it to accounting spreadsheets, and Google applied it to information mining on the Internet. There are still millions of these opportunities for startups out there.


• Fix something that’s broken. In business, it seems to me that the traditional banking business models are broken or at least no longer fit the purpose. On the other end of the spectrum, Internet dating sites don’t seem to work. They have millions of users, so they must be promising something people want. And yet they work horribly. Just ask anyone who uses them.


• Take a luxury and make it a commodity. People must want something if they pay a lot for it. It is a very rare product that can't be made dramatically cheaper if you try. When you make something dramatically cheaper, you sell more, and people start to use it in different ways. For example, once cell phones were so cheap that most people had one, people started using them as cameras and Internet devices.


• Making things cheaper and easier to use. Making things cheaper means more volume and more profit. For a long time making things cheaper made them easier, but now even cheap things are too complicated. Computer applications today are cheap, but often impossible to use.


• Take it to the next level. Solve the currently intractable problems that impact all of us. Cure cancer, predict where earthquakes will occur, find alternative energy sources, and solve the global warming problem. There is no shortage of opportunity here.

Combine these with the value of really understanding every promising new technology, and the value of having friends with complementary skills. New technologies are the ingredients startup solutions are made of, and conversations with friends are the kitchen they're cooked in. Start cooking up a solution today that you can use as the “idea” for your next startup.

Marty Zwilling

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