Identifying the Problem Solution Fit for Your Startup
In layman's terms, we want to see if your Startup Idea "Makes Sense in the Real-World".
Start by asking these basic questions to access your Idea. I assume you already have a shortlisted idea or a couple of ideas you are interested in. Preferably you also have assembled a team as well.
We will quickly learn how to access your idea with a few basic questions.
These questions will enable a better understanding of the pros and cons of the ideas you are looking to pursue.
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The Questions are Threefold
- The Problem you are trying to solve.
- The Solution you have proposed.
- The customers you are looking to cater to.
By answering these questions, you could identify if you should continue with your idea or "Drop it like it's not" and look for a new one. (See what I did there, wordplay with Famous Snoop Doggy Dogg Song, lol)
I shared the reality bytes with you earlier, correct?
75% of Startups FAIL. That’s according to Harvard research conducted in 2012 after surveying over 2000 startups that had received Venture funding.
** I haven't had the time to look up the latest research. That ratio would have only increased, with the Crypto and NFT startups falling like dominos post-COVID. Add to that the AI Startups waiting to bust. That's a topic for another post, another day.
¾ couldn't return the investor's capital (Hello, Cash Burn). That number rises for Non-VC backed Startups. 80%, to be precise. Non-VC-backed Startups tend to run out of cash even faster.
Any idea why that happens?
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Customers don't Care about Your Path-Breaking Discoveries; They Care about Themselves.
No. 1 reason for Startup Failure is…….Yes, you got it right this time! No Market Need. _ CB Insights. Survey 2014.
Just like the cat does not care about your fancy cat tower, similarly, customers don't care about your innovative ideas.
They care about their gratification. They want to know and experience the feeling once that problem vanishes from their lives.
So much effort, time, money, and sweat equity are wasted on creating products no one wants.
Let's change that, shall we? No Startup idea should be launched before real-world validation of its viability.
There’s always a Silver Lining. There are tried and tested methodologies available in the market that helps us validate our Startup ideas.
You have got methods made famous by Steve Blank w Customer Development, Eric Ries w Lean Startup, and Ash Maurya with Lean Canvas.
Traditional Ways of Building a Product
- Focus on the Product
- Build it and customers will follow suit.
You can compare this approach with building a Rocket. You can't do anything once it's launched, and it can go either way.
Legacy businesses that understand their market segments and customers to the P. can successfully pull this approach off. However, this can be totally counterintuitive for startups looking to drive innovation.
Startups will be Better Served if They Use this Updated Approach
- Focus on Customers
- Anticipate what they want
- And then build a product backed with data (Remember - Data knows better)
This approach can be equated with driving; you can start and stop @ will, easily change directions, and always know there’s more than one way to reach your destination.
Also, yours truly would be sharing a number of case studies you can use to reference your learning.
The case studies would help you learn how these startups assessed their ideas, and you can apply similar logic to the frameworks you will discover in the upcoming posts.
Some startups fail to access the significance of the impact their solution would bring to the market and fail.
Then there are those who continue to inspire and innovate in every niche they enter.
So where do you begin?
Startups are inclined to solve some sort of a problem. And problems are the Foundation of potential successful ideas.
So let's start by accessing the problem you are looking to Solve, shall we?
To Assess your Startup idea, follow the Simple 2 Step Approach.
- Start by assessing your Problem
- Then, move into assessing the solution in terms of the viability of the solution.
Problem Assessment: What Customers Really Want?
How to quickly assess your Problem?
You could ask three key questions to understand the scale and stickiness of the problem you are looking to solve.
The bigger the problem and the more painful it is, the greater the Payback and potential rewards.
For example, the companies that developed the COVID vaccines had seen windfall profits never before seen in Pharma history.
These problems occur once in 150 years or even less. Coming back to more everyday problems, not every start-up would be looking to develop breakthrough vaccines for potential pandemics in the future, let's look @ more real World assessments.
Start by looking at these 3 characteristics of the problem:
- The frequency of the problem: How frequent is the Problem?
- How Common is the parable, i.e. how many people are impacted by the problem?
- The answer to the above two questions would help you answer the 3rd question - Is the problem worth solving?
Let's Look at a Real-World Case Study
A promising new startup wanted to launch an innovative way for people to be able to share events:
They raised a seed round and started developing the App. The app was based on user-generated content.
That is the focus was for people to share updates about the events that have attended or are planning to attend in the near future.
As it turns out, people don't go to events as frequently as they assumed and or share updates about them.
Think about it, when was the last time you shared an update about an event you were going to attend? And this realization was pre-covid.
Possibly a couple of times a month at best. That's a FAIL.
On the other hand, Facebook continues to make a killing by enabling people to share their day-to-day activities.
People share their Status updates a couple of times on a daily bases.
In the case of Startups targeting user generated content: A good problem occurs at least once a day. Meaning the App should be sticky enough to make you come back to it at least a couple of times a day.
Now the 2nd most important factor to consider is the probability of the problem. It helps if it's common to many people.
If you want to learn more about how to launch a startup, please check out my online course here.
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Inspiring indeed !
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