The successful founders are the ones who are obsessed with solving a problem. Your original solution is probably not the right one and your company probably will look a lot different after a few months than when you started it. But the companies we fund—the ones we believe have a chance to succeed—are the ones whose founders are willing to pivot and adapt their business plans, because solving their problems are what drive them, not one particular product or service they developed.
That was the paraphrased advice from a prominent tech investor at a startup panel in New York last month. Similar sentiments had been expressed before, though I was struck by his implied exhortation: go forth and put all of your energy into solving the problem you feel most passionate about. The “what?” and the “why?” matter more than the “how?” when a venture is first conceived.
While the panel wasn’t specifically focused on social sector, this broader message has clear implications for social ventures. Choose a social ill or underserved market that matters to you and make fixing that the basis of your life’s work.
Later on, during Q&A, a member of the audience asked the panel about new startups they were excited about. I leaned forward, eager to hear about a bold vision held by a relentless, passionate founder to solve some significant issue that appeared to him/her like a gaping hole in the economy or society.
The aforementioned investor’s answer? Swill. An app that allows you to have alcohol delivered to your doorstep. (In true competitive spirit, this is only one of many with a similar concept.) In a city with tens of thousands of bars, restaurants and liquor stores, the burning problem of our day is the amount time it takes to walk to the bar or corner liquor store?
This isn’t too unduly pick on these developers, as market-making takes many forms. But it is the reason that the Wall Street Journal ran an article titled “Is Silicon Valley Funding the Wrong Stuff?” The article makes a dramatic comparison between the venture capital space and the broader economy:
“Consider this. The entire market for advertising is around $100 billion a year in the U.S. (Globally it's close to $500 billion.) Yet the nation's gross domestic product is more than $16 trillion.”
“That means every venture-backed startup chasing advertising revenue is going after just 0.6% of the economy. Put in employment terms, the ad-related economy employs just a few million people, versus 140 million Americans whose job it is to do everything else.”
Obviously the economy extremely complicated, as is venture capital investing and the potential for growth. But is it a stretch to say that substantial segments of the economy are being ignored by investors, areas that could have profound impacts on people’s lives?
There are many problems out in the world that need smart, passionate people to solve. You can work to address the dearth of beer delivery services. Or you can do more.