Necessity is the Mother of Unicorns

What drives you crazy? I don’t mean politics or your spouse or your neighbors’ kids playing loud music or all those Zoom calls. Actually… I do mean those Zoom calls. Do they give you a headache because one person on the call has bad connectivity?

How would I solve that? I don’t know. What would the solution look like? Not clear. But if I could solve the problem, I’m sure there are millions of people who need it.

I put startups into 2 categories: solutions to a problem and technologies in search of a need. Though I’m a technologist at heart and drawn to scientific innovation, startups built around a specific solution to a specific problem are far more likely to succeed than a new technology looking for uses.

Perhaps I’m biased since my own startups have all started as solutions to a specific problem. I never intended to become an entrepreneur, but problems needed to be solved, and there was nobody else to do it.

Solving what needs to be solved

My first startup started as a contract developer of internet protocols — more of a custom software development business than a startup. But when satellite operators begged us to find a way to make the internet run over their networks, we knew there was a very specific problem that we uniquely knew how to solve.

While developing that product, we needed a simulator to test our product over different networks. Nobody else built a simulator that fit our needs, so we built our own. When we ran demos of our product, customers asked where they could buy the simulator. Aha! That was my next startup.

Later, a QA manager complained it took days to run thousands of QA tests even though the overwhelming majority had nothing to do with the code changes. When he built machine learning to identify the small subset of tests that were actually needed, I jumped on board to help get Appsurify off the ground.

While mentoring startups, I met a founder who asked me if we ever had thermostat wars in the office. Yes, I did! It drove me crazy. Some offices were too hot and some too cold. We fought over the thermostat. Every. Single. Day. So I joined his startup, KomfortIQ.

All 4 startups started not with a desire to build a rocketship to riches or to invent a new technology, but with a burning desire to fix a particular problem and knowing nobody else was going to do it for them.

My startup experience isn’t unique

What about Facebook? Did Zuck think to himself, “What software can I write to make me a billionaire?” No. He had a contract from Harvard University to put their printed student orientation handbook online. Then he found other universities needed the same thing, and once that was done, he discovered people at different universities wanted to connect with each other. A unicorn was born.

AirBnB? The guys just wanted to make a little extra money hosting travelers on their couch.

Solving a problem often means integrating existing technologies much more than scientific advancement. As much as Tesla has done for improving electric vehicles and advancing new battery technology, it started by putting laptop batteries into a Lotus Elisa because the founders wanted an EV that was fun to drive instead of a boring Leaf or Volt.

The list is endless, and it’s not just consumer unicorns. Most successful startups start from the question, how do I solve my problem? Or, as Aesop and Frank Zappa put it — necessity is the mother of invention.

If you have a problem (and don’t we all), there are plenty of others facing the same problem. With inside knowledge of the industry, it’s easy to judge how many people are struggling with the same issue.

Coming from inside the industry, the founders already know the lay of the land. They know the customers, they know the distribution channels, they’ve attended industry conferences. Customer interviews are as easy as calling up their friends and asking what they think of the idea. With the founder’s contacts and industry knowledge, pilot customers may even pay them to develop the product.

Necessity is the mother of invention

Contrast this with the alternative — the founders develop an interesting new technology, then look for potential uses. Inevitably, they find lots of uses across different industries, so it becomes a “platform technology” with a huge TAM. They pick a “beachhead market” and go off in search of funding to begin sales of the product in the beachhead market before moving on to even larger opportunities.

The pitch is fantastic, and they have a world-class team of experts plus lots of great advisors (maybe even me!) But inevitably, it runs into problems.

The new invention is an improvement for sure, but there’s an existing solution that’s good enough, and the gains may not be enough to make the changes worthwhile. Coming into the industry from the outside, the founders often don’t know constraints and complications they don’t understand.

Starting from a problem to build a solution sounds obvious, but it’s no guarantee of riches. Some problems can’t be solved, regardless of the need, such as all the pitches I hear for a new social media platform that will bring us together instead of driving us apart.

Other problems can be solved, but the market is too small to be suitable for venture capital. Instead of building the business around the funding plan, the business plan has to be built around the product.

The market for network simulators was too small for venture capital, so we had to bootstrap the business. If it’s a big opportunity like a video conferencing platform but will require lots of cash, then begin pitching to investors. If it’s a low-risk business assembling existing pieces like adding EV charging stations to apartment buildings, project finance, or private equity might be the way to go. Let the product dictate the business plan instead of starting from the need to find a big market to suit venture capital.

So, back to that Zoom problem that I mentioned at the beginning. Zoom (and Teams and all the other video collaboration platforms) is both my savior and the bane of my existence. It’s the only thing that has made business-as-kind-of-usual possible during the pandemic.

But on every call, there is always one person whose sound and video cuts in and out. We spend half the call asking if they could hear us and the other half asking them to repeat everything they said. Meetings are inefficient, and deciphering the garbled stream leaves me with a headache every day.

That’s my problem. It’s not the end of the world, and fixing it won’t bring world peace or even contribute to solving climate change, but I would really like a solution. If you have one, reach out to me on LinkedIn.

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