Next generation technology in the home for an aging population.
Startup founders can often find themselves working on an idea that sounds plausible, but does not provide a solution to a problem people care about in a meaningful way. Y Combinator founder and investor Paul Graham says that often, these startups are born from individuals who are simply “trying to think of startup ideas” and not looking for problems. Graham calls these ideas “made-up” or “sitcom” startup ideas, as they sound like something a writer for a television sitcom would come up with when creating a script for a character that had a business idea. The idea seems possible, even though in reality it is bad and no one would use or buy it.
Take a look around at the products and services you are currently using and surrounded by. Why are they there? Well, it’s because they are solving a problem or filling a need you would otherwise be experiencing. This is how all great inventions and startup businesses are born, from a problem or need. From electricity, to the telephone, to the Internet, and more recently to Uber and AirBnb, great businesses are built on big problems.
So, if you would like to create an amazing startup company, start with a problem. In order to do that you need to understand three things. You need to know key facts and trends about the four major population segments (e.g. Gen Z, Millennials, Gen X and Baby Boomers) in the world, then you need to understand what’s happening with emerging or next generation technology and last you need to understand what is actually going on in key industries you care about. Let me give you an example. Several years ago, two founders were tracking Millennials, the pet care industry, cloud technology and trends for all three. Based on a problem they saw, they created an online only pet care/food business called Chewy. It sold two years ago for over $3 billion.
Consider the first question on your startup litmus test: “What problem does my startup or solution solve, and how painful is that problem?” Think critically about this question, as an honest assessment may save hours, days, weeks, months, or years of your time.Once you have identified a painful problem, 9 times out of 10 the solution will not be obvious or easy. Problems often necessitate creative solutions to make a business successful and enduring. Though this intuitively may sound difficult (because it is) it often creates a barrier of entry for competitors as well.
Next generation pet food and pet care.
So how can you make sure your startup solves a painful problem? Well, what if you simply looked for the biggest problems that existed in the world and then looked at those problems through the lens of either business model disruption or next generation technology? Here are some thought starters:
- Reduce childhood obesity
- Improve aging-in-place livability
- Reduce food waste in the USA
- Increase financial investing for young adults
- Imagine the next generation of entertainment
- Imagine the next generation of fashion
- Imagine the next generation of education
- Disrupt the healthcare industry
- Disrupt the travel industry
- Disrupt the insurance industry
- Disrupt an industry with Iot
- Disrupt an industry with 3D printing
All of the markets (humans) and industries(companies) listed above are extremely large. Even a startup with a mild problem-solving success could still be a $50-100 million company. Unfortunately, finding a painful problem and coming up with a creative solution is not enough. Once a problem has been identified, and a solution has been formulated, the entrepreneur must discern whether or not the solution is something the target segment will pay for. So, you need to test it. If people aren’t willing to pay for the solution, you still don’t have a business.
Hedge your startup bets and study big problems or industries in relation to people and trends and maybe you will spot a problem that you can solve.