May 18, 2018, 09:00am EDT
How To
Successfully
Identify Problems
Worth Solving
YEC COUNCIL POST | Paid Program
Entrepreneurs
POST WRITTEN BY
Sean Harper
CEO and co-founder at Kin Insurance
Shutterstock
In my experience, the main difference
between entrepreneurs and everyone else is
this: When most people encounter an
annoying problem, they figure out how to
avoid it. When entrepreneurs encounter an
annoying problem, they figure out how to
solve it.
That’s exactly what led me to start a
business. I had a really frustrating
experience buying homeowners insurance.
The process took hours and required me to
fill out long forms that asked me questions
whose answers were publicly available. I
knew there had to be a better way, given
the technology currently available.
I’m excited and energized by what we’re
doing at Kin. We are making a big
difference in our customers' lives. We’re
saving them a lot of time and frustration.
But at the same time, I’ve noticed a trend
(particularly in Silicon Valley and
particularly among a certain type of
founder) of startups that don’t make sense.
They don’t solve a real problem or they
create more problems than they solve.
This got me thinking: How can an
enthusiastic would-be entrepreneur (or
investor) filter out sustainable, wastebusting ideas from the ones destined to
fail? Here’s what I came up with.
Questions To Ask Before You Launch
Passion is a prerequisite among startup
founders. But before you let your passion
carry you away, ask these waste-focused
questions about the product or service
you’re hoping to offer.
Is there really enough waste
that it can be considered a
problem? In my case, I knew more
than 60% of the country owns a
home. Almost all of them have to
apply for homeowners insurance.
And the existing homeowners
insurance offerings were all like
what I’d experienced. Bingo.
Millions of people had the same
problem I did.
To what extent will this
solution eliminate the
waste/solve the problem?
Applying for homeowners insurance
can take hours, so building a quote
engine that takes seconds would
save (and is saving) American
homeowners millions of hours of
time. Test your solution by first
measuring the waste. How many
extra minutes do consumers spend
on an activity? How many extra
dollars do they inadvertently shell
out? Once you know the amount of
waste, you can determine whether
your solution measurably makes a
difference in the consumer's life.
Will this product/service create
additional waste (of time,
resources, energy, etc.) or
additional problems? While we
invested time upfront building the
engine and continue to spend time
maintaining and improving it, the
tradeoff is well worth it. Make sure
the amount of effort it takes you to
create your solution doesn't exceed
the effort, resources or time it saves
consumers.
Why hasn’t anyone fixed this
yet? In our case, it was a question of
the available technology. That’s
usually a good sign for startup
success. A bad sign would be
something like prohibitive costs.
That’s why no one has succeeded in
inventing flying cars yet.
Startup Red Flags
There’s no single right or wrong answer to
the questions above that makes a startup a
good bet. But looking through the lens of
waste reduction, I’ve identified a few red
flags that signal a startup may not be
viable:
Market-product fit rather than
product-market fit: The former
involves seeing a hot market (like
health and wellness) and developing
a product to capitalize on the
popularity. This approach usually
means adding more of the same to
the existing marketplace. The latter
involves seeing a need among a
target market (like the need to
reduce food waste) and developing a
product or service that fulfills it. In
this scenario, the solution either
doesn't already exist (hence the
need) or the solution hasn't been
optimized.
Defining inconveniences as
problems: Finding quarters when
you need to do laundry is an
inconvenience. Fixing it will at best
improve people’s mood but not their
lives. There’s nothing wrong with
making life more convenient, but
startups with the potential to scale
need to solve a problem for a large,
diverse group of people.
Overpromising: I mentioned
above that the maturity of
technology was a big reason Kin can
exist now -- and couldn’t have
existed five or 10 years ago. Be
careful not to overpromise results
that are not yet backed by
technology. It’s easy to see red flags
when we look at a lot of these failed
technology startup stories in
retrospect, but a lot of smart people
missed or ignored them in real time.
My guess, though, is that many of
those folks had a gut sense that
something wasn’t right but ignored
it because so many others seemed to
think things were fine.
Even when a startup has an ironclad plan
to eliminate significant waste for its
customers, there is always room for
improvement. We’re based in Illinois so we
started out serving customers here. But we
soon realized that there was a much greater
demand in more underserved areas of the
country. So we shifted our operations to
Florida and then expanded to Texas. Our
plan is to eventually have products for
homeowners around the country, but we’re
expanding our network based on where the
demand for what we offer is greatest.
Sounds pretty obvious in retrospect. But,
then, I guess a lot of good ideas do.
YEC
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