We held our monthly office hours yesterday morning, meeting with twenty idea stage founders over a period of two hours. It’s a a high octane set of fast paced meetings that I look forward to very much. It’s great meeting lots of great people and learning about lots of great ideas so quickly.
The last one I met had identified a large and fast growing market riven with inefficiency. The more we delved into it the more excited I got. Big markets with lots of opportunities for improving things are great places to start new companies. Then, when we got to discussing his company’s product/service, I knew that he wasn’t yet at the point where we could have a serious investment discussion. He knew that existing products in his market were of inconsistent quality and that consumers go to extreme lengths to buy them anyway (often gathering in groups to buy wholesale on AliExpress), but was only just coming to the conclusion he wanted to build a product company and had a feeling that the best opportunity lay at the premium end of the market but couldn’t articulate what his product differentiation would be or how he would price it.
That’s fine. We will keep talking and help him through that process, but right now he has identified a great problem space but hasn’t matched it with a compelling product solution.
That contrasts with another company we are talking with where the founder started selling a product to his friends and family because he loves delivering it and they love buying it. In this case the product solution is already defined in great detail and we have been working with him to work out how big the opportunity is.
In other words he has built a compelling product solution and it’s unclear whether it’s in a great problem space.
The best business opportunities match great problem spaces with compelling product solutions. Most businesses start with one and then work to find the other. “Technology looking for a problem to solve” is a cliched way of describing interesting solutions with poor problem spaces, and perhaps more common but lacking a common descriptor is companies in interesting problem spaces constantly ideating in search of a product people want.
Entrepreneurs who know their problem space but not their solution should, with discipline, be able to ideate, research and iterate their way to a compelling product. Entrepreneurs with a compelling solution are in a more binary situation – either their problem space is interesting enough or it isn’t.