Common Startup Mistakes

by Victor Cheng

It never ceases to amaze me how many startup ideas I hear about that are just fundamentally flawed.

The flaw I’m referring to is a startup whose premise is to solve a problem that fundamentally nobody really cares about… except for the entrepreneur, of course.

In most other industries, new businesses are started to solve old problems in new ways.

But somehow in the world of high-tech and the Internet, we suddenly seem to feel the need to solve problems that 1) don’t exist, and 2) exist, but nobody cares enough about the problem to spend time or money fixing it.

This is, of course, a major topic in my book Extreme Revenue Growth, and it’s a terribly important one.

Personally, I like businesses that solve old problems in new ways.  They are simple to understand.  There is absolute certainty the problem exists.  There is absolute certainty that people care about the problem.  The only uncertainties are can you get your new solution to work and can you get distribution for it?  (Well, I suppose there are other issues as well, but these are the main ones early on.)

For example, the essence of eBay is it’s an easier way to get rid of your junk (A.K.A. use eBay instead of holding a garage sale).

Match.com is all about solving the loneliness / matchmaking problem.  That problem is thousands of years old.  That  problem will continue to exist for thousands of years to come.  Personally, I find that incredibly re-assuring.

This reminds me of a comment I once heard Warren Buffet make, with respect to his investment in Gillette (since acquired by P&G).  I’ll paraphrase here: “I find it terribly re-assuring that every single day, 2 billion men on planet Earth wake up with more facial hair on their face than when they went to bed.”  Gotta love it.  The problem comes back EACH NIGHT.  It has for millennia.  It will continue to do so for millennia to come.

Let’s look at other examples.

Anti-spam software.  Does that solve an old problem?  Well, at first glance, you think it doesn’t — after all, e-mail has not been in wide use until the past few decades.

But if you simply generalize the problem of spam as getting unwanted visitors, THAT problem has been around for thousands of years.

Kings built big castle gates to keep out the unwanted vistitors who came to visit on horseback.  Business people hire adminsitrative assistants to serve as their telephone gatekeepers.   At home, we use caller ID to do the same.  So, when e-mail came along, it was only natural to expect some type of gatekeeping function to be needed with the new medium.  So, while the medium of e-mail was new, the problem of needing a gatekeeper (or literally a gate thousands of years ago) is many years old.

The reason this exercise is useful is because it forces you to think really hard about what problem you’re actually solving and who you’re solving it for.

This has implications for target customer selection (the first step in creating growth, incidentally, which also happens to be the opening chapter of my book Extreme Revenue Growth), which, of course, has implications for product development.

Let’s look at cell phones.

When you try to do customer research regarding a new product, it’s useless to ask them if they need the product.

So, in the 1960’s or whenever the initial cell phone prototypes were invented, if you asked a prospective customer, “Do you need a cell phone?”  they had no idea, because they simply couldn’t get their heads around how, when, or why they’d need such a thing.

But if you ask them, “Do you ever have an appointment to meet someone really important, but are running late and can’t afford to offend them?  (See, that’s asking the customer about the PROBLEM.)

Or you could ask a construction foreman, “Do you ever have a situation where you need to get an ETA update on major material deliveries so you can schedule your team more effectively?”  (Once again, you’re asking about the PROBLEM.)

Each of these could have been potential early adopters of cell phone technology — the traveling salesman and the construction foreman.  The key insight here is NOT to ask about the product, but to ask them about the PROBLEM.

Customers can ALWAYS tell you about their problem.  If you understand their problem enough, you can independently figure out if your product is 1) going to solve their problem, and 2) do so in a way that works for them.

When you do it right, the risk in your startup is really only focused around “Will the product solve the problem?” (along with distribution and the other operational risk).

What should NEVER be a risk factor is not being able to determine if the problem exists, if anyone cares about it, or if you’ve picked the right problem to solve.

When I think about the past few elevator pitches I’ve heard, in the back of my mind I can’t help wondering, “Okay, that sounds interesting… but what problem are you trying to solve, for whom, and do they really want this problem to be solved?”

It’s a really fundamental question that is, unfortunately, often overlooked.

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