Starting a Business? Solve a Pain Point.

Look for Ways to Solve a Problem First, THEN How to Make Money

The most successful business ideas share a simple, common characteristic: they solve a problem. Serial entrepreneur, Seth Goden, said, ““None of [my] businesses [were] about making money, they were about solving a problem. What’s fascinated me in my career is, how did we brainwash everybody else not to go solve a problem and raise their hand when they’ve got a question? …If you see a problem, you’ve got an obligation to solve it.”

You can trace most successful company’s beginnings to the basic objective of solving a pain point in the marketplace. A few examples…

• Google provided a search engine that allowed people to find websites and explore the Internet without knowing the URL of every page.
• Netflix saved people the trouble of going to a video store and worrying about late fees.
• Apple provided a computer that an average person could employ for personal use (and later introduced a device that could store and play hundreds of songs in your pocket).

Why is solving a problem so important? There are two main benefits to solving a problem: 1) your product will be much easier to market, and 2) you can more easily measure the market potential (easier to value your company for investors, better to understand pricing, and easier to test your product because you know who your market is).

1) Your product will be much easier to market.

If I decided to create a shoe that has a speaker in the heel, how would I market it? I’m sure that many people would like running while listening to their “Music from the Sole” shoes (patent-pending; I’m looking at you, Nike), but it doesn’t address a need in the current market. I would burden myself with two objectives: convince people that they have a need, and then convince them that my product would address this need that they should have. If I could instead find a way to solve a pain-point in a current market, I am left with only one objective: convince people that my product would address their existing need.

2) You can more easily measure the market potential.

Measuring the market potential is important for several reasons, including valuing, pricing, and testing for your product. For example, Whole Foods started in Austin, where there was already a market and (measurable) demand for natural, organic foods. But not many stores that addressed the need, and the ones that did were generally small and offered little selection. Whole foods provided a large store that was a natural food-lover’s dream come true, bringing in a wide selection of products. They were able value their company based on their measured demand, and they could show this data to their investors. After they determined how much their market was willing to pay, they were able to model their pricing with little guesswork. Because they knew exactly who their market was, they could even test their product much more efficiently.

There are plenty of entrepreneurs out there who can attest to the consequences of a product that fails to address a real need. For instance, some startup ideas focus on profit, not solving a problem:

• “Make sure your company is solving a unique problem that others haven’t solved yet,” said Neil Patel, referring to his failed Advice Monkey job-searching site. “My reasoning behind creating a job board was that if I could make 1% of Monster’s revenue I would be a rich kid. Sadly Advice Monkey never made any money and within two years I closed it down.”

Others may come up with ideas that are cool, but still fail because a need is not addressed:

• “Blippy was a solution without a problem,” wrote Paul Mardsen, referring to the social commerce site valued at $43 million in the year before it flopped. “People, it would seem, didn’t want to post their credit card purchases to their social networks. Neither did they want to post reviews.”

Businesses can fail for many reasons. You can fail with good ideas, you can fail with great ideas. But if you truly want to run a successful business, you should commit your full effort to every aspect and every step. And the first step is coming up with the right idea that solves a problem.