Most successful products share one thing in common: they are efficient painkillers. In order for your app to capture a share of the market and become profitable it must immediately and effectively solve a big customer pain. Big customer pain equals big start-up opportunity as nobody is going to pay you to solve a non-problem. But how do you find the next monetizable problem that needs solving? This guide will show you the way.
1. Start with the Market for your startup app
A successful product is one that effectively solves a serious customer problem. However, even the most colossal problem in the world will not lead to a profitable solution if there exists no market for it!
From a start-up perspective, the significance (i.e., value) of a problem depends on the size and growth of the market to which it belongs. In order to be successful, an app requires a big problem within a big market for which there is a big consumer demand for a fix.
No market = no business — period. It’s not a coincidence that the pharmaceutical industry operates in such a way that a number of the worst diseases from which people suffer receive little-to-no investment: without an existing market, pharmaceutical companies recognize that their returns on investment (ROI) would be terrible, even if research and development (R&D) were to succeed.
Determining whether a sufficiently large market demand exists for your product requires differentiating between total available market (TAM), serviceable available market (SAM), and target market (TM):
Assessing the value of the problem for which your product is meant to be the solution necessitates collecting data on:
- The size of the entire market in which your specific niche is based
- The number of people you can expect to reach through your marketing
- The number of people most likely to purchase your product.
These numbers will necessarily get smaller and smaller as you filter down from the TAM to the TM but if they are too small then your startup will never become profitable.
Entrepreneur, investor, and software engineer Marc Andreessen clearly spells out the reasons why a start-up’s potential success ultimately rests on the health of market in which it operates:
The market is the most important factor in a startup’s success or failure. Why?
In a great market—a market with lots of real potential customers—the market pulls product out of the startup.
The market…will always be fulfilled…by the first viable product that comes along. The product doesn’t need to be exceptionally great; it just has to basically work. And, the market doesn’t care how good the team is, as long as the team can produce that viable product.
When you get right down to it, you can ignore almost everything else [besides the market]. I’m not suggesting that you do ignore everything else—just that judging from what I’ve seen in successful startups, you can.
A successful startup…is one that has reached product/market fit… Usually along the way[, it has] screwed up all kinds of other things, from…pipeline development strategy to marketing plan to press relations to compensation policies to the CEO sleeping with the venture capitalist. And the startup is still successful.
Conversely, you see a surprising number of really well-run startups that have all aspects of operations completely buttoned down—HR policies in place, great sales model, thoroughly thought-through marketing plan, great interview processes, outstanding catered food, 30″ monitors for all the programmers, top tier VCs on the board—heading straight off a cliff due to not ever finding product/market”.
What Marc is essentially saying here is not that entrepreneurs should feel free to disregard or forget about all those aspects of creating a company that are not directly related to the market but rather that none of them will ever matter if due diligence isn’t done to ensure a genuine product/market fit.
Of course, focusing on the size and growth of the market does not mean that you have to give up on trying to make the world a better place by curing diseases or pursuing other altruistic projects. Indeed, many profitable companies and successful app startups are founded on, or thoroughly connected to, altruistic endeavors (see here and here).
The key, rather, is to be absolutely sure that a market actually exists for the solution you intend to offer—otherwise, your startup won’t ever earn the money it needs to do good in the world.
2. Define Your Skills, Then Assess Your Passion
In my last essay, I tried to explain the proper balance between skills and passion:
“Passion is absolutely crucial to building a successful business but it is not the be-all and end-all of everything. In fact, passion as such is often overrated and its significance overestimated.
In most cases, real passion develops as you begin to accumulate success. Thus, when thinking about the focus of your company, don’t concentrate entirely on things you’re most passionate about at this very second but instead include areas of interest that have the potential to give you a sense of satisfaction and accomplishment over time.
What are you really good at? What are your unique talents or abilities? What can you do better than others? … You undeniably possess a number of special skills, talents, and bits of knowledge with which you have the potential to excel within the start-up world [and these are what you should be thinking about when first starting your business.”
In business, thus, skills come before passion. Many people have passions for multiple things but that fact in itself does not mean that all such passions should (or even could) be pursued as potential businesses. Just because you’re passionate about going to gym doesn’t by itself signify that fitness necessarily should be your next business endeavour. Steve Jobs had developed a real passion for Zen Buddhism and meditation throughout his life but were he to have turned this passion into a business then the world might not have ever borne witness to Apple Computers (at least as we now know it).
Real passion comes with real progress: regardless of what it is, the more you do something, the better you become at it, and the more you start to enjoy it. In order to become great at something fast, double down on your skills, i.e., play off your actual strengths and abilities by pursuing something you know you can do very well.
The crucial point of all this is that it’s important to let your existing expertise be a guide when it comes to locating big problems needing solutions in particular markets or niches. Use your existing knowledge and abilities to hone in on the particular kinds of pains that consumers dread and with which they want and need immediate help.
Don’t forget about passion altogether, though! A young Elon Musk reportedly met a girl at a party back when he was still a student. He allegedly introduced himself by telling her, “I think a lot about electric cars. Do you think about electric cars?” This is the kind of passion you can use to help you find the major problems that will lead you to major business opportunities. Nobody can permanently sustain doing a job that they hate and so being passionate about your work is crucial—just make sure you don’t allow your love for your start-up blind you to the objective chances of its success.
If you’re struggling to connect your skills to your passions, to figure out how to successfully merge your talents with your interests, then try asking yourself the following kinds of questions:
- What do I want to be remembered for?
- Which problem(s) am I most passionate about solving?
- What would I do with my life if money were not an issue?
- What kinds of things do people constantly tell me I’m good at?
Don’t panic if none of your answers to these questions absolutely thrills or excites you. If that happens then trust in your desire to become an entrepreneur, start mobilizing your skills, and allow your passions to flow from your abilities and pre-existing knowledge. Sometimes the best way to discover exactly how you can best pair your skills with your passions is to start a project, i.e., dive into something that requires you to “get your hands dirty” and bring ideas to life. Don’t be scared to “jump”.
3. Define The Problem
Having spent a good deal of time researching the market to make sure consumer demand exists for the basic kind of mobile app you intend to sell and thinking about the variety and applicability of your different skills and passions, it’s now time to define the exact problem on which you want to focus your mobile startup app.
Virtually all industries comprise many different aspects of doing business, from customer acquisition and customer service to sales and operations. You need to acquire as much information as possible about the specific industry in which you plan to launch your future product. Talk to as many professionals as you can; ask lots of questions, record their answers, and look for emerging patterns.
One common way of devising a new business idea is to take an existing solution from a related but different market and apply it to your specific industry (or a particular region of the world). For example, studying the multiple ways in which Uber creatively solves a host of problems associated with the traditional taxi industry, and does so whilst providing the consumer with dependable convenience and trust, could allow you to create your own start-up by uncovering other industries with similar problems that might be solved using similar methods.
Another common and often very effective approach to locating a genuine problem that can form the foundation of a profitable start-up is to significantly improve upon an existing solution to a problem. We see this occur all the time in the world of technology. For instance, Facebook is a drastic improvement on Friendster, which existed for years before Zuckerburg came along, and Google represents a much better platform than the approximately thirteen other search engines that existed before it: in the former case, Friendster crashed a lot and couldn’t retain users; in the latter, Google was nothing like the slow and cluttered experiences that users would have on other search engines. And, of course, the list goes on; Apple came after Altair, Tesla after Prius, and AirBnB after Couchsurfing, etc.
Entrepreneur, venture capitalist, and author Peter Thiel said it best: “Forget the first mover advantage: it’s much better to be the last mover.”
The point is that if the existing products within your market were actually meeting all the needs of consumers then there’d be no room for improvements to be made by other entrepreneurs like yourself, who are eager to get their specific solutions into the market and into the hands of users.
To learn even more about expert techniques for building successful app startups, download our FREE White Paper here: