May 29, 2024

Non-obvious problems

I’ve seen a ton of startups from my time building Product Hunt and now investing in early-stage opportunities at Weekend Fund.

Most founders pursue obvious problems. These can succeed if met with non-obvious solutions, but I’m most interested to see founders tackle non-obvious problems.

A framework from venture

In early-stage investing, there's a well-known framework to consider when evaluating opportunities

If you invest in a company that is wrong, you'll lose money regardless of whether it was consensus or non-consensus.[1]

If you invest in a company that is right and consensus, it’s harder to achieve outsized returns because the market already priced in the potential when the check was written.[2]

If you invest in a company that is right and non-consensus, you're more likely to see outlier returns because the market hasn't priced in the potential you saw early.

There's a similar framework for founders to consider when pursuing an idea:

Obvious problem, obvious solution

If you pursue an obvious problem with an obvious solution, you're unlikely to succeed. Why? There's likely a graveyard of similar attempts before you that didn't work for legitimate reasons.

There may also be dozens of competitors chasing the same idea, making it increasingly difficult to break through the noise and attract customers.

An example of this is an app to meetup with friends (obvious problem) where the user broadcasts their location (obvious solution). You'll find dozens of products on Product Hunt that have tried this over the years.

Obvious problem, non-obvious solution

If you pursue an obvious problem with a non-obvious solution, you might succeed. The non-obvious solution might be possible only now due to technology or cultural shifts. This might be the first time the problem can be solved or the introduction of a dramatically better solution to an obvious, long-standing problem. It might be uncovered from an earned secret or insight from your past experience.

The downside is that you may find fast-followers who are chasing the same obvious problem. Once the solution is known, it may be easy for competitors to replicate and sell into their existing, highly relevant customer base.

An example of this could be calendar management and scheduling (obvious problem) that introduces a clever UX pattern to dramatically decrease friction (non-obvious solution). Calendly introduced exactly this in 2013, flipping the scheduling workflows into a simple booking system.

Non-obvious problem, obvious or non-obvious solution

If you pursue a non-obvious problem with an obvious or non-obvious solution you'll be met with far less competition and the potential to establish yourself as the leader of a new category. Your target customer will be less inundated with potential solutions, likely more receptive.

Non-obvious problems are often driven by a change in the world. It might be a new problem, a problem that is affecting a growing market, or a problem that is becoming more painful.

An example of this is Deel (Weekend Fund portfolio co). In 2018 the company was focused on remote payroll for globally distributed teams. This wasn't viewed as an obvious problem at the time, discounted as too "niche". Of course, this market has since exploded, partially driven by COVID and cultural shifts in how people live and work.[3]

How to find non-obvious problems

By definition, non-obvious problems require a unique insight or rare perspective. Consider:

  • What unique problems have you faced in your personal life or work?
  • Which problems seem to be getting worse?
  • Have you hacked together a solution to a problem that few people have identified?
  • Do you have a strong view of the future and the problems that might emerge if your prediction is accurate?
  • Are you seeing recurring complaints from people in your network or communities you’re a part of?

Of course, startup success entirely depends on one's ability to solve a real problem with the right solution.

If you're pursuing an idea, consider where it fits along these axes. Perhaps the biggest blue ocean opportunities are in non-obvious problems.

And if you’re building something non-obvious, shoot me a note at ryan@weekend.fund. :)

[1] Unless you sell at the right time in secondary markets.

[2] Of course, there are outliers. That's the nature of early-stage investing.

[3] We wrote a deep dive on Deel on Signature Block if you’re interested.

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