Tomorrow’s startups are today’s problems

Crises reshuffle the cards, which favors those who did not start with the right ones and penalizes incumbents. This is why entrepreneurs experience crises with intensity, even though they regret their human damages.

Work From Home, accelerated digitalization of all processes, loss of faith in money, renewed relationship to death, necessary internalization of externalities, availability of future customers and partners… We weren’t used anymore to seeing the world change so quickly.

However, getting better starting cards is not enough, you still have to know how to play them better than the others. Crisis or not, looking for “startups ideas” in the newspapers or on your sofa is not how you will find them. It’s by being focused enough on one or several fields to notice interesting problems in it.

Everything around you that you call life was made up by people that were no smarter than you…

…they were just more focus.

Our brains are programmed to think of the world as intangible, and not to challenge it. It’s kind of a good thing because always questioning it would be exhausting, depressing, and most of the times not very productive. But it’s also what keeps us from seeing what could be improved.

It’s hard to escape that, besides our own area of expertise. But we can fight against it by concentrating our energy on areas that interest us while, at the same time, forcing new problems to appear and increasing our ability to see them.

Pushing the world to its limits

Trying to solve known problems with known methods is rarely enough to get you started on a startup. Specializing in one or several fields makes it possible to identify topics before the others, but also to apply new methods to known problems, which creates new problems to solve.

It requires to be passionate about at least one aspect of what we do, otherwise we will not push the world hard enough to bring out new problems, or to know if they are actually interesting.

When Benjamin Netter was the CTO of Lendix he tried to send fake phishing emails to his employees to make them aware of the danger. He realized that it worked, but created problems (evolutionary scenarios, training …) that an MVP was not adequate to solve. And Riot was born.

If your job, or at least a part of it, doesn’t interest you to the point where you see problems and solutions arriving before others, changing job is the first step to “find a startup idea”.

The coming months are the perfect opportunity to do new things and find problems to solve

Lockdown has not been the best time for most people to write a bestseller or change their lives. Stress, children, the very concrete adjustment to a new way of life were hard enough to manage.

The period starting with the end of lockdowns, however, seems particularly favorable: new problems are blossoming everywhere, enhanced by the reopening of the economy. Work From Home, combined with the decline in activity of existing companies frees up time for future entrepreneurs as well as their future employees and prospects. In many states, unemployment insurances make changing job easier than usually.

And finally, this is a golden opportunity to find your co-founder! Whatever expertise and skills you are looking for, the number of people who hold them and are ready to consider life changes is 10x higher than usual.

Pro tip, tinkering with a mini product with a potential co-founder allows to kill three birds with one stone: seeing how we work together, doing new things and therefore see new problems arise, and if it turns out that the idea makes sense, getting a MVP!

When History meets your own story

The list of phenomena below does not pretend to be exhaustive, or even correct. And even less enough to generate ideas for startups. But if this list allows a few readers to see a personally-felt problem from a different angle, it will have achieved its goal.

Software finally digested the world

The “2 years of digital transformation in 2 months” observed by Microsoft are a reality in all fields. From notaries who can now sign documents remotely, to Michelin-starred restaurants that deliver at home, to grandparents, professional trainers and 4th-graders teachers on Zoom, no one will be able to say “we never did it this way” or “it’s too hard”. Rings a bell?

WFH is here to stay

The elephant in the condo. What should the office be like if we’re less there? Home, if we’re more there? What happens to cities if you no longer have to live there to work? No one knows what will remain of it, but the respective sizes of the real estate and labor market and their countless connections (communication, transport, food, furniture…) mean that the slightest change will have massive effects.

The CEO of Morgan Stanley has already announced that the WFH will become a monthly or even weekly reality for its employees, well funded US startups are beginning to close their SF offices, and Facebook extended it’s WFH policy to year-end.

If employees prefer to stay home and employers keep asking them to, there is no reasons for it not to happen. Dense cities as we know them (NYC, Paris, SF…) may change forever.

Social events are the new Offices / Universities / Restaurants

We learned that we weren’t going to offices to work, nor to restaurants to eat, neither to schools to study, but to share with peers. Remote work frees us from non necessary travels, but does not replace that.

Places and events adapted to these new forms of “intense socialisation” need to be invented. Maybe Wework wasn’t such abad idea after all.

Relationship to death

The relationship to death is obviously linked to the way we organize our life, in broad outlines such as the balance between private and personal life as well as in details such as the taste for wasted administrative time or superfluous expenses. Not to mention a possibly renewed interest in new experiences.

Cheap CAC

Since the screen time has gone from 10 to 13 hours daily, advertisers’ budgets are shrinking and Facebook global CPM (cost-per-thousand impressions) has been cut in half, an all-time low. It may not last, but that’s still rather good news when you mostly rely on paid customer acquisition, like in insurance for instance.

Cash is trash

To compensate for the loss of activity without increasing the actual debt of the States, the Central Banks have printed more money in 2 months than they had done in the last 2 years, not to mention the economic recovery that will have to be financed as well. The coming effects on consumer prices are debatable, but the effect on rising asset prices has historically been fairly evident.

Between negative rates and assets that never stop rising, investing savings will continue to be a thorny problem for those who do not want to get poorer. Not to mention the looming worsening of inequalities…

Sofas full of talents

Before the crisis, the war for talents was raging in startups, to the point that past Product Market Fit the ability to attract and retain talent better than competitors had become one of the main levers of success. This crucial raw material is now accessible even without being Airbnb. In addition, this transfer window will be an opportunity for intermediaries and marketplaces of all kinds to grow.

Externalities impose themselves on us

Global warming, terrorism, and now pandemics, are all signs that, to prosper capitalism must learn to take its externalities into account, probably by integrating them into prices. It challenges the historical doctrine that the invisible hand coordinates individual interests in the best possible way, but unless an impossible coordination of all the states of the world, we don’t no any other. Tricky problem ;)

Inspired ? 👉 pierre@frst.vc