Startups are like heat seeking missiles, except they seek profit and live in a multidimensional world where one mistake means missing the target by a mile.
Startups are hard because they require several things to go right simultaneously. It’s not sufficient to get one thing right, an entrepreneur must solve this multidimensional puzzle perfectly.
There are many smaller but important dimensions, but here are the biggest ones that need to be just right for a business to succeed:
- Is the problem you’re solving a real one, or is it just in your head?
- Even if the problem is real, are people actively looking to solve it? There are many problems that are merely inconveniences that not many people bother to solve. Is your problem one of that?
- Even if the problem has a high enough priority and that people are looking to solve it, are they willing to pay for it? There are many problems which people want a solution for, but they’d not pay anything or much for it because they’re habituated to expect a solution for free. For example, news and information is valuable to people, but people have come to expect to get it for free on the Internet.
- Even if the problem is real and people are willing to pay for it, do you have the required capabilities to develop a solution? Some problems may have challenging solutions that are not easy to execute.
- Even if you’re able to solve a problem that people are willing to pay for it, is there a way you can profitably market your offering to them? Marketing costs money, and often potential customers may not be aggregated at one place for you to profitably market to them.
- Even if you’ve found a distribution channel, does your business have any lasting competitive advantage that will prevent a bigger competitor or another startup from snatching your customers?
- Lastly, assuming you do everything right, will you deliver positive unit economics? Your business will struggle unless you’re predictably generating cash flow.
Remember: because so many things have to go right, most successful entrepreneurs either get lucky on all these aspects or they have a unique insight or expertise about one of the above aspects that others don’t have.
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