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What should you build your start-up around: A Problem, a Need, or an OLI?

Here’s a piece of received wisdom that gets parroted a lot whenever entrepreneurs seek advice:

“Your business has to solve a problem.”

Sometimes it’s formulated another way. Sometimes a prospective start-up founder will be describing their idea and a self-styled mentor will cut them off, saying:

“Yes, but what’s the need?”

It’s a very appealing way of looking at start-ups, because it makes them seem pretty important. We solve real-world problems. Our customers need us.

And certainly, there are plenty of examples of start-ups where this way of describing the fundamental service they offer makes sense. Some property owners who travel a lot have a problem because they can’t afford to leave their property vacant while they’re gone, but they don’t have a reliable way of renting it out for a short period. AirBnB solves that problem. Lots of people need to get around but they don’t have a car. Uber meets that need, and so on.

So it’s come to be understood by the community at large that this is how to go about planning a start-up: Find an unmet need and meet it. Find a problem and solve it.

Which is all well and good, except that, when you stop and think about it, it’s quite limiting. Some really, really successful companies don’t meet needs or solve problems. No one needs Ben & Jerry’s ice cream (despite what your kids claim). No one has a problem that a triple A game will solve.

Of course, at this point people start pushing back. You need to eat, they say, and Ben & Jerry’s is food. But no one eats ice cream to avoid going hungry. The problem that game buyers are trying to solve is boredom, they say. But people don’t buy a specific game because it’s that or sit round doing nothing and being bored; they buy it because they’re excited by it, and want to play it in preference to all those other non-boring things they could be doing instead.

I’ve even heard some very respected business mentors tie themselves in knots, saying things like: ‘The need for Coca-Cola is their own need to make money’. Now, this is true, Coca-Cola do need to make money, and people buying what they’re selling solves that need. But the same is literally true for every other business in the world. If that’s your definition of meeting a need, then saying that every business needs to meet a need is saying nothing of value at all.

Ok, say the need crowd, but what you’re missing is that all disruptive companies have to solve a problem. If you want to be a proper start-up, one with potential for extreme growth, you have to introduce a new business model, and sell something that no one has ever bought before. To be successful doing that you have to meet a need or solve a problem. Whereas companies that simply offer their own version of an established category of product – the way that Ben & Jerry’s sell ice cream or Nintendo sell video games – can get away without meeting a need.

I’m pretty unconvinced by that line of thinking. First of all, I think there’s far too much emphasis on disruptive business models. Think about BrewDog. Ultimately, they make and sell beer. This is one of the oldest business models in history. And yet they’ve recently hit unicorn status and been the fastest-growing F&B company in the UK. They are a high-growth start-up of the sort that any entrepreneur should aspire to create, and their beer doesn’t solve anyone’s problems. Even if you think that drinking beer solves your problems, the alternative to drinking BrewDog isn’t not drinking. The alternative is drinking a different beer.

But suppose you’re a purist, and you’re not interested in BrewDog because it’s not disruptive enough. Well, let’s look at a start-up that did something completely novel, and that has genuinely changed the world: Twitter. What Twitter did was new, what it offered was unprecedented, and what it has become is unique. But does it really service a need? Did it take off because there was a problem that it solved? No. People adopted Twitter because they enjoyed it. Because it let them do something they couldn’t do before, but once they started doing it, it came to feel normal. It let people communicate by broadcast and fed them a continuous stream of interesting snippets. I outright reject the idea that Twitter users need the service that it provides, or that the vast majority experienced a problem that Twitter solved.

Now, you might assert that since it’s not the users who pay for Twitter, it’s not their need that matters. It’s the advertisers who need to put their message in front of potential customers. But there are two things to point out about this. The first is that advertisers have lots of ways of reaching potential customers, and Twitter is just a ‘yet another’. The second is, the reason Twitter has lasted so long has nothing to do with its ability to meet the needs of advertisers. In fact, the fact that it’s never turned a profit demonstrates that it has achieved success despite not satisfactorily meeting the needs of advertisers. If it did, they might spend more on it. What has powered Twitter’s success has nothing to do with what it offers to advertisers and everything to do with what it offers to users.

So if we can’t reduce every successful business to a need met or a problem solved, what can we use instead? I propose the Opportunity for Life Improvement. Every business that does well does so because it convinces a group of people that the business’s services will make their lives better. Some businesses do it in a fleeting, transient way: Your life will be slightly better, right now, for a few moments, if you buy BrewDog beer because it tastes great, and it’ll make you look cool. Some businesses do it more holistically: Your life will be better if you use Twitter because you’ll be able to express yourself and read funny, poignant and inspiring things written by your friends, your idols and complete strangers. Some do it more indirectly: Your life will be better if you sign off on buying our accounting software for your firm because you’ll save money so your boss will like you more, you’ll spend less time manually writing those reports that you hate so much, and you’ll get fewer complaints from your team about how slow the existing system is.

Once you set aside the notion that your business has to solve a problem, and accept that it has to offer an OLI, then a whole world of possibilities opens up. It also allows you to see the world in a more positive light, as a entrepreneur. Rather than ask: ‘What are the problems that are making you miserable, oh future customer?’, you can ask: ‘What could I do to make your life better?’. The answers to that question might surprise you.


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Published inEntrepreneurship