Startups that start with the Pain

Welcome to the series on how to become an entrepreneur.

Let’s start by placing startups into three categories.

1. Platform startup
2. Pain startup
3. Technology startup

In this blog, I’ll talk about the startups that start with the pain.

Let me begin by putting something out there. It is challenging and painful to start and run a startup. Any startup. What keeps you going is the vision of the difference you can make to customers. And ultimately, to institutionalise it, so that it lives beyond you. And the money!

Pain startups start with a basic stated or unstated need. You start by requiring a product or service that doesn’t exist. The gap is as obvious to you as it is not, to everyone else. As Laxmi Mittal once said when he was asked about his vision for steel, and why he felt there was value in acquiring distressed steel producing assets, when entire governments were trying to get rid of them; “I can see what others cannot see”. And he was a mere millionaire when he said it, rather than a multi-billionaire that he is now.

The only reason to do a startup is that you see a gap between what customers need and what’s available, and you take it upon yourself to bridge that gap. There’s also the temptation to put a dent in the universe, as Steve Jobs said.

A startup that starts with the pain implies that you have a requirement that cannot be addressed by existing technology. Once you come up with a solution, you may realise that others also have a similar requirement. You have now identified a customer segment. It can be significant, as this illustrates.

As the story goes, in the early 80s, Leonard Bosack wanted to communicate with Sandy Lerner, who happened to be working in another building. He realised that he couldn’t communicate with her electronically, since they were both on different networks. That definitely was a pain. To resolve this, he built a router to enable the communication. The rest, like they say in Cisco, is history.

There are several points that need to be addressed before you jump headlong into such a startup.

The first question is whether the gap is clearly defined and the value of your proposed solution demonstrable. The greater the clarity, the better the chances of the initial potential customers being converted. These will be your chief proponents, so they are the ones who need to know what the value is.

You need to ensure that the value that you expect to bring to customers can be monetisable. To take an example, if you had brought an instant and totally reliable communication service in 1990, users would have been willing to pay a significant sum per use, since this was the time when you had to post letters and it took weeks to get to another country. However, after the advent of e-mail for free, a better e-mail solution can only be given for free.

Scale is critical. You need to ensure that the addressable market is large enough. Otherwise this becomes a limiting factor and investors simply won’t bite (much more about this in a latter blog).

Reconcile what you’re bringing to the table vs what your customers are taking away. In a discussion with NATO regarding flexible solar modules, I was highlighting the high efficiency whereas they were mostly interested in the different colour options. This was due to their operating in conflict zones, so modules that stuck out from the ambient colours posed a risk from fringe factions.

Once you’ve answered these questions, or at the very least, are aware of what the questions are, you simply need to go ahead and do it.

Send your questions on your challenges in your own entrepreneurial journey and I’ll try and answer them.

I wish you the very best for your own entrepreneurial journey.

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