Lately, I have been thinking quite a bit about the ways to build a company — more specifically the question of how do you find the problem you want to solve?
The 2 ways to build a company
I see too many companies struggle with finding product/market fit, building solutions for problems which are pretty obviously too small to justify the existence of a company singularly focussed on solving them or creating imaginary problems to fit a hypothesis the founders have.
It’s a vexing problem which, I believe, contributes greatly to the abysmal survival rate of startups.
Over the years I have come to believe that there are largely only two ways to build a successful company (this comes with an asterisk — you can, of course, build a company with the sole purpose of being folded into another company, i.e. you build a feature for another company’s solution, but it’s typically a long shot in terms of your odds of being successful):
Either you create a new market or you identify a problem people are willing to pay for.
Both options are devilishly hard to solve for.
Creating a new market is what everybody dreams of and is insanely hard to pull off. The rewards are outlandish though — PayPal, eBay, Amazon, AirBnB, Uber…
They all created new markets where there were none before.
The other option is easier — but often leads to companies which do seemingly boring stuff (nothing wrong with that!): Identifying problem spaces where people are actually willing to pay for (and do so in amounts which make companies viable) more often than not leads you to B2B solutions.
Solve a problem for a business and they gladly pay you for it. Solve a problem for a consumer and you need a lot of paying customers to make it work.
Whatever you do — take a hard, honest look at what you’re doing and ask yourself if you’re either creating a whole new market (in which case the new market needs to be big enough to sustain you) or truly solve a problem people are willing to pay for.
What do you think? Have you tried asking these questions yourself before? How do you build your company? Let me know what you think in the comments section below.