Startup ideas vs problems?

Are you a startup founder? Should you focus on startup ideas or problems?

Most startup Founders at startup networking or mentoring events start with an idea that they have. It’s good to start with an idea. But what’s better is starting with a problem that doesn’t have a “simple” solution already.

Issue with the former approach is founders drink their own kool-aid and get emotionally attached to the idea so much that they are like horses with blinders. But the later approach keeps the founders focused on the problem at hand and just objectively focused on any approach that can help solve it.

Boiling the ocean

Focusing on the specifics of the problem is equally important. Since startups are always short of resources, bandwidth and money, trying to solve multiple problems at once is like the proverbial “boiling the ocean”. So limiting the initial scope of the problem to be solved at first is absolutely critical. However, common misconception among founders is that, limiting the scope of the problem also reduces the size of their (potential) business. But veterans with arrows on their back will tell you, it’s anything but.

Confusing depth of the problem with number of problems

Here it’s important to distinguish the number of problems from size/scale of each individual problem. Solving too many problems at once is detrimental to a startup because it will marginalize every solution without being the best at any one of them. But instead, picking a deeper problem that can maximize the reach and impact, lends a better chance of success.

Also solving a single deep problem helps the startup be under the radar of incumbents, who as described in innovators dilemma, will ignore your solution as very narrow. But once your solution gathers enough momentum in terms of early adopters and majority, you have already achieved the beach head and Trojan horse effect and it’s probably too late for the incumbents to jump in. Only choice for them to neutralize the threat is to buy your company out. Think:

• Instagram vs. Facebook: Instagram made pictures suck less. Didn’t try to create a social network.
• WhatApp vs. Facebook/Skype: WhatsApp made messaging cheaper & easier.
• Mint vs. Intuit: Mint made managing personal finance easier and more fun.
• iPod vs. MP3 players: iPod made it easier to carry your entire music collection in your pocket, easier.
• iPhone vs. Blackberry/PocketPC: iPhone made the phone also an Internet device.

In all of the above examples, startups didn’t try to tackle all the problems at once. Instead they picked the most pressing problem and solved that so well that it created network effects and spread virally throughout social media.

Benefits of starting with a problem

Above startups or entrants had few advantages such as:

• The initial problem that was being solved was “so narrow” that incumbents ignored them until it was too late.
• By the time incumbents noticed and took action, upstarts became market leaders.
• Since they were solving only one problem, they could out innovate other companies trying to copy the idea.

Summary / Conclusion:

• If you are a startup, pick a “real problem” that users are waiting to be solved.
• Focus on the biggest problem, solve it, grow user base until it has achieved market leader position.
• By then your startup either has acquisition offers OR it has raised enough capital to diversify into other products to maintain growth.

Your thoughts:

What are your thoughts? Do you agree or disagree. Share your comments below. Let others learn from your experience.