Don’t Sell Solutions to Universal Problems

“Would you like to make more money?”

“Is hiring people hard?”

“Are you overwhelmed by email?”

“Do you wish you were healthier and more fit?”

For most people the only answer to these questions is “yes”. They’re truisms. Universal truths. Universal problems. And they’re unsolvable.

Too many startups confuse big vision and trying to solve universal truths. Big vision is important. You need a lofty, change-the-world type goal. But claiming you’ll solve a universal problem is usually an indication that you don’t understand the real problems at-hand.

When selling to prospects, founders make the mistake of starting with a question that can only have one possible answer, and when they get that answer they use it as justification for their solution.

Startup founder: “Do you have a hard time recruiting great talent?”

Prospect: “Yes. It’s very hard.”

Startup founder: “I thought so! I’ve got the perfect solution for you.”

It goes like this: Big, obvious problem (universal truth) … our solution … win!

Except it doesn’t really work that way. All the real issues, challenges (and opportunities!) lie in the dot dot dots.

For starters, asking these kinds of questions is pointless if you want to learn about a customer’s pain (which you should). The actual pain is many levels deep, nuanced and specific. Let’s break down the universal truth, “I want to be more healthy and fit.”

What’s the real problem here? It could be a lack of time. But that’s probably not specific enough; most people have 30 minutes of free time a day, and they still don’t exercise. Maybe people are too embarrassed to go the gym and workout in front of other people? Maybe people are embarrassed about the locker room experience? Maybe people don’t know how to work out or what’s right for them? Maybe it’s all of the above for one segment of people and other problems for another segment?

You have to really understand your customers’ problems–peeling away the onion layers–until you get right down to the core. Asking “yes/no” questions, especially those where everyone is almost always going to give the same answer, won’t help you learn anything useful.

Secondly, the leaps of faith you’re making are just so massive you can’t possibly know the gotchyas that are going to hit you square in the face. Even if you’re an industry insider with domain expertise, you’re bound to hit some snags that you could have discovered in advance. Attempting to solve a universal truth without identifying the risks and connecting the dots is a surefire way to fail.

Earlier I said that universal problems aren’t solvable. That’s not actually true. Universal problems are solvable, but they’re only solvable when you truly understand your customers: how they operate, buy, what they care about, their pain, etc. You have to fill in the dots and know the gotchyas in advance if you ever want to solve the big, hairy problems that truly matter. Don’t sell solutions to universal problems, sell solutions to the underlying problems that allow you to genuinely make a difference for your customers, and over time realize your big vision.

The Two or Three Things You Need to Raise Capital

Yesterday I chatted with an entrepreneur that was looking for advice on raising capital. I’ve written quite a bit about fundraising in the past, but it’s a hard topic and a challenging thing for people to get through. Most people have never raised funding before, and even with all the advice out there it’s still a scary, black hole.

While speaking with the entrepreneur (which was through Clarity btw) the basic question was this: “When should I raise capital and what are investors really looking for?”

There’s no easy answer.

Investors look for all sorts of different things based on their own experiences, preferences, what’s hot right now, and so on. But I highlighted four things that critical, of which, I’d argue, you need at least two or three. Here they are:

  1. Past success. If you’ve successfully exited a company before, there’s a very good chance you can raise money again. Investors like to back past winners, and will often reinvest in founders that they previously made money on. First timers, of course, can’t play this card. Go to #2.
  2. Unfair advantage. This is a hard one to quantify, most companies at an early stage don’t have an unfair advantage, but I would specifically look for one of two things: (a) fantastic, never-before-seen technology; or (b) industry insight that no one else (or very few others) have. These are two key differentiators that can lead into genuine unfair advantages. If you don’t have one of these, you’re going to get hammered on how you’re different than the competition.
  3. Vision. In a Lean Startup world, vision occasionally gets lost. I’ve argued that vision and Lean Startup are actually symbiotic, but I think many early stage companies don’t really have a compelling vision. A truly inspirational, world-changing vision isn’t something you can fabricate out of thin air, but if you can share a future that your startup helps create and people believe in, you’ve got something meaningful. Incidentally, riding a trend is helpful but is not really meaningful enough in this category. For example, we know everything is going mobile, but saying that you’re going “mobile first” doesn’t count as a vision.
  4. Traction. Traction rules everything. If you have traction, you may be forgiven on past experience, unfair advantage and vision. Your unfair advantage might be the traction, although the bar for traction is constantly going up (10,000,000 is the new 1,000,000), so don’t assume that you can get away with traction alone. Ultimately though, most startups don’t have significant traction when they try and raise capital. And without it, the other three better be there in a big way (or at least the unfair advantage and vision.)

If you can hold off on raising significant capital in order to build up traction, do it. Traction trumps everything else. If you can’t wait, or traction is something that’s going to take a long time (and/or requires the capital to get) then you need to have at least two of the other items I’ve described above. In some cases, I’m pretty sure super successful entrepreneurs can raise capital without anything else, but that’s a rarity.

Note: I didn’t mention team here. It didn’t come up in my conversation with the entrepreneur but it’s very important. Investors always look at the team and decide whether they can make a bet on the people. Past success is an indication of team quality, but so are the other things as well. If you have an unfair advantage, a strong vision, and/or traction, it’s very likely you have a solid team as well. In some cases the team is the unfair advantage because of their experience, insight, market knowledge, talent, past success, etc. So team is critical.

I also didn’t mention the market you’re going into. Investors care about large markets but having a large market without any of the above things won’t matter. It’s easy to say, “We’re targeting this multi-billion dollar market,” without really understanding if that’s true, if anyone in that market cares, or if you have any legitimate access or know-how into that market. So yes, big markets do matter, but it’s more of a “given” than the points I’ve described above.

For first-timers or entrepreneurs that haven’t hit a home run yet, focus on vision + traction. The traction proves you can execute and march in a direction quickly, and you’ve started to crack a real nut; the vision proves you’re actually going somewhere compelling.

I have 1 year of savings, so I’m giving this startup thing a try…

Making the jump from a day job to starting a company is a scary one. I don’t believe there’s a ton of real risk –after all, you’re probably highly employable (particularly if you’re a developer)– but it’s still a big leap. And often, people do it after they’ve saved up about a year’s worth of money so they know they can survive without regular income. Saving money in advance is good. Avoiding bankruptcy and abject poverty is also good.

But here’s the thing: when you give yourself a time limit, say a year, to “make it happen”, you often end up just filling up the time. And by “filling up the time” I mean you spend a year trying to get your startup to work, all the while not really adapting quickly enough or making the hard decisions you need to make … because, after all, you have a year.

I’ve seen a lot of people take this approach, and somehow, magically the time gets filled up and the progress just isn’t there. Now they’re out of savings and have to go back to a day job, leaving their startup in the lurch.

We tend to fill up the time we’re given, whether we need to or not.

If you ask someone to get something done by next Friday, generally, they’ll deliver next Friday, but not before. People don’t seem to value time enough, even though we understand it’s an extremely limited, non-replenishable resource. There’s always a reason for the time filling up, but it’s rarely justified.

Instead of filling up the time and exhausting your one year’s worth of savings, you should assume that you have no time at all. All the time. You shouldn’t be in a constant state of panic, but you can’t assume you’ll figure it out a few months from now and feel OK with that, simply because it’s within your window of opportunity. That window is closing all the time, faster than you realize. Don’t get caught giving yourself a set period of time to succeed and simply filling up the time, and not holding yourself to the highest standards of intellectual honesty and discipline needed to succeed.

When someone says to me, “I’ve got a year to figure this out,” I always think (and should say), “So you have a few weeks. Maybe a month or two. Three tops. At that point if you haven’t got something validated, you won’t have time to build a product, get traction and either raise capital or bootstrap with revenue.”

Don’t fill time.

Execute faster. Recognize you have no time. Be insanely honest with yourself and disciplined in your efforts. Pivot. Move on to something else if you have to. But don’t spend your time spending your time and spinning your wheels. In a year, your savings are gone, you’re broke and you haven’t made enough progress. It’s not the end of the world, but you would have been better off shifting ideas sooner, or saving some of your money, trying something new, getting another job and living to fight another day.

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Ben Yoskovitz
I'm VP Product at GoInstant.

I'm also a Founding Partner at Year One Labs, an early stage accelerator in Montreal. Previously I founded Standout Jobs (and sold it).

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