Maybe I’m just cranky because the Seattle weather has been so terrible recently, but I’ve seen a bunch of ideas recently that I would classify as “solutions in search of a problem”. This is frustrating, not just because these aren’t deals I feel comfortable investing in, but also because the founders behind these ideas are extremely capable people who have the capacity to build real businesses.
But instead of looking for unmet needs among addressable customer groups which are both willing and able to pay, these founders have fallen in love with an elegant idea or a piece of cool technology and are expecting others to care about it too. This “build-it-and-they-will-come” mentality seems to strike engineering-driven companies more often, but marketers and creative types are susceptible too. (By contrast, it’s rare to find a successful sales exec who doesn’t steer into customer pain by both instinct and training).
I’ve tried to build a company this way myself and can say from painful experience that it decreases your odds of success. Maybe my own experience has made me irrationally averse to this approach, but it’s hard for me to get excited about a company that doesn’t have crisp and convincing answers to the following questions:
- Who is your target customer?
- What specific pain point of theirs are you aiming at?
- Why will they choose your solution over others?
- How much are they prepared to pay?
- In what ways have you engaged your target customer to validate the assumptions above?
- What proof points can you offer to demonstrate this validation?
There are many examples of companies that achieved great success without having clear answers to these problems at inception, and there are many investors out there who have done well by betting on them. It just happens that my personal appetite for that kind of risk is very low…