In the whirlwind journey of getting market attention and investor interest, the urge to show off innovative solutions often overshadows the real purpose of any business: solving a customer’s problem.
Typically, a startup’s journey or the launch of a new product is marked by three phases: identifying the problem/solution fit, achieving product/market fit, and scaling the business. Linking back to my previous post on Simon Sinek’s Golden Circle, you could consider the ‘problem/solution fit’ to be like defining your ‘what’, the ‘product/market fit’ finding your ‘how’ and scaling is all about expressing your ‘why’.
Most enterprises and investors prioritize crafting solutions for clearly defined problems rather than doing fundamental research like universities and their spin-offs.
Yet, it’s not uncommon for startups and growth companies to fall in love with their solutions, overlooking the actual problems they set out to solve. By doing so, they set themselves up for failure. Read further to learn why you should fall in love with the problem, and not your solution.
The Clear Danger: Building the Product You Want Rather Than What the Market Needs
Some years ago I helped a friend who was the CEO of a fast-growing company focused on online chess. One of the products was a platform born from the vision of a product manager who passionately wanted to create a chess coaching marketplace for semi-advanced players. This manager, armed with insights from interviews and market analysis, was determined to bring his dream product to life. He built a platform aimed to be the bridge between students and high-ranking players, focusing on a creating a complex chess teaching environment with a super polished user interface and advanced marketing functionalities. The unit economics were however horrible, and whatever trick I tried, I could never get the CAC lower than the CLTV. Simply put for those not familiar with the SaaS lingo: it cost us more in marketing spend to attract a new user than the revenue we would generate on that customer. In other words: we would never make a profit. Ever.
Reviewing all the qualitative and quantitative user research again clearly showed a demand for administrative solutions from chess coaches themselves. They would love to be unburdened of tasks like scheduling sessions and payments.
Despite this clear data, we had built a super slick product for the students and not the coaches. The team had developed the solution they would have wanted to use, and not the solution for which there was a need. As we had already burnt 1M USD and there were no more funds to pivot the product to focus on chess coaches rather than chess students, I had no choice but to shut down the product.
So here lies the stark reminder: falling in love with a solution without anchoring it to a genuine problem can lead to a venture’s downfall.
Who Needs a Segway When You Have a Bike …
Look at the original Segway Personal Transporter launched in 2001 for another extreme example. A marvel of engineering, with a top speed of 16 km/h and a range of about 15 km. However, a traditional bike still is a much better and cheaper solution for this kind of transportation, and the Segway became a financial flop for its investors. A clear case of falling in love with your solution without considering the problem you are trying to solve.
The High Risk/Reward Game: Anticipating the Market Needs
Sometimes it pays off to try and anticipate the market needs. This is at heart a very risky and speculative approach, with tremendous pay-out potential if it works out.
A friend and co-founder of a cloud processing company for DNA sequencing left because she felt they were offering a solution to a problem that didn’t exist yet. Despite investor enthusiasm, no biotech or pharma company showed immediate interest.
Then the Covid pandemic hit, suddenly increasing the demand for DNA sequencing and leading to the company’s lucrative acquisition.
This narrative underscores the unpredictable nature of founding a business on a solution for a problem that will arise in the near future. It can be a financial bonanza if you really understand the nascent problem, or it could be a total disaster for the investors. To do this well, you really need to be a domain expert to properly predict what problem will pop up in the near future.
Growing Your Market: Finding New Problems For Your Existing Solution
Expanding your (addressable) market basically boils down to finding new customers or new problems for your existing solution. Some years back, I was running an expense management scale-up which had a product that was the best on the market for coping with complex accounting rules of large multinationals.
Initially not designed for intricate overhead cost tracking, the platform was discovered by customers to be an effective tool for monitoring expenses across departments and individuals—transforming overhead costs like corporate phone subscriptions and group fuel cards from companywide lump sums into detailed insights per team. Through engaging with customers and understanding the unintended use of our product, we adapted and enhanced its features to better serve this newfound application. Add some webinars about this ‘new’ problem we were solving with some genuine testimonials from our customers, and voila, we had entered a new market, solving a new problem with our existing solution.
The Core Lesson
The stories above highlight a pivotal startup wisdom: the magic lies not in the solution itself but in solving the problem for your customer.
Falling in love with the problem means staying grounded in the reality of your customers’ experiences, ensuring that your solution remains relevant, valuable, and timely. It’s about building a business that’s not just in love with its technology or product but is deeply committed to making a difference in the lives of those it serves.
Business innovation, at its core, is about solving problems. As entrepreneurs and innovators, our greatest achievements arise not from the solutions we create but from the problems we choose to embrace.
Think twice and remember this article the next time somebody tells you to focus on the solution and not the problem …
