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Why startups need to focus on problems

Many starry-eyed entrepreneurs have the view that technology is limitless. What they don’t understand is that new technology does not a business make. Juggle Street’s David James explains why.

Technology—it’s new and shiny,and that’s a lot of its appeal. But if you’re trying to start a business, focusing on the technology is not the way to go, for all that glitters is not gold. Entrepreneurs are attracted to technology because it puts them at the leading edge of all things mobile and tech, but far too many of them fall into the trap of building the thing first and then trying to find a problem to stick to it, rather than starting with the problem and building technology as part of the solution.

The truth is a tech business needs to be outcome-driven, not product-driven. If your product is not giving the customer a beneficial outcome by solving a problem or easing a pain point, it means you’re looking to create a market rather than serve an existing one. Creating a product and then having to create a market for it is beyond what startups should be doing with their limited funds.

If pain persists…

Start with the problem and seek to identify and quantify it. We all experience and live with particular pain points in our personal and professional life, and when these pain points persist for months and years, many of us become motivated to fix the problem ourselves.

The good news is, using ingenuity, persistence and passion— all great entrepreneurial qualities—a small percentage of us succeed at fixing the problem.But fixing a particularly annoying pain point doesn’t mean we have discovered the world’s next Unicorn, or even the beginnings of a small,profitable business. The true test of whether you have a business idea worth pursuing is whether there are other people experiencing the same problem. If your problem is unique and your solution only addresses your individual circumstances, you’ve found a life hack, not a business idea.

When I began thinking about Juggle Street, it was initially personal. I was already an entrepreneur, having founded five businesses in 25 years, and I had four children across daycare, primary school, high school and university. My wife worked and I was about to embark on my sixth startup. We were living on ‘juggle street’ and I suspected that we were not the only ones.

The next equally important step is for the entrepreneur to verify that their personal pain point is also experienced by a large number of other people.

I did my research and facts supported my hunch: over the past three decades there has been a fundamental shift in the structure of the Australian workforce. Families where both parents work have become the norm: in 1991,55% of women returned to work after their first child; by 2011 this had increased to 65% (ABS Census). Compounding this trend are longer commute times, extended working hours thanks to ‘always on’ mobile technology, the rising cost of home ownership (and rental) and spiraling daycare costs. The need to outsource childcare to affordable, local helpers is becoming a common solution to these problems.

Then talk to as many other people as possible about their experiences around this problem and scope out the potential. How big is the total addressable market (TAM)? If you can establish that the TAM is huge, then you need to ensure the technology solution will scale to address it.

Next comes tech

Once you’ve properly defined the problem and ascertained your market, build a proof of concept, a minimal viable product (MVP). Only at this point are you ready to speak with potential investors about your pain point, your solution, and the huge potential upside of your TAM.

Be realistic about the investment required to launch your startup. Even if the tech is phenomenally good, it doesn’t guarantee instant success. Juggle Street is my sixth startup, and the number one lesson I have learnt is that startups always take longer and require more money than you think. While I knew it had a huge potential market—there are more than 2 million working mothers in Australia alone—it has taken a long time and significant investment to build trust and grow Juggle Street to critical mass. Only now, four years after we launched, do we have the user numbers to expand into new markets (New Zealand) and new channels (home tutoring and aged care).

The rule is simple: if you’re not solving a major problem, don’t try to launch a business. Technology for technology’s sake is a very expensive hobby—the market demands cost effective solutions. Customers reward you by paying for your solutions, this is what will give you a viable business.

David James, CEO and founder, Juggle Street

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David James

David James

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