Identifying the Right Problem Is Key to Startup Success

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In his article “Excuse me, is there a problem?” published on April 16, 2023, Jason Cohen examines why many startups fail despite addressing genuine issues with effective solutions. He outlines a common failure pattern:

1. A founder identifies a problem.

2. After consulting a few potential customers or experts who confirm the problem’s existence, the founder develops a product to solve it.

3. Despite the solution’s effectiveness, the startup struggles with sales and eventually shuts down due to financial constraints.

Cohen argues that merely solving a problem isn’t sufficient for success. He emphasizes the importance of ensuring that a substantial market recognizes and is willing to pay for the solution. He suggests that even for small startups, targeting a market of at least 10 million individuals or 100,000 companies is crucial. This scale accounts for typical conversion rates and the need for a sustainable customer base.

Additionally, Cohen highlights the necessity for potential customers to be aware of and care about the problem. If they don’t perceive it as an issue, they are unlikely to seek or purchase a solution. Therefore, understanding the target audience’s awareness and concern regarding the problem is vital.

By carefully evaluating these factors, startups can better position themselves to develop solutions that not only address real problems but also meet market demand, thereby increasing their chances of success.

Source: A Smart Bear, https://longform.asmartbear.com/problem/

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