Busted: The Biggest Lie that Entrepreneurs Tell Themselves

confusionAll my experience of running a startup and mentoring many entrepreneurs during the early stages of their venture are characterized with a recurring theme – the Founder’s firm belief that the problem they are facing is faced by everyone and the solution they will build will be a one-size-fits – all, which will solve the problem for everyone. This is what I call the ‘everyone thinks like me’ syndrome.

In reality, industries are too complex with multiple stakeholders across the ecosystem. While the fundamental problem could be the same, however, every industry participant attaches different stakes to various aspects of the problem and seeks a solution that resolves the problem in its unique context.

Let’s consider an example – unsold rooms of a hotel at night

When a hotel room is not booked for a night, it leads to losses in revenue, which can never be recovered. Now, from the outside it may look like a great business idea to connect travellers seeking last minute accommodation to hotels seeking last minute bookings. There is a clear need for the two to connect for a business to transact. However, as you dig deeper into each stakeholder of the ecosystem, you realize that the problem is far more complex than the one line statement I just mentioned.

Traveller’s Perspective: First of all, there is no one single-traveller profile that can represent all travellers. There are travellers seeking an economic deal and willing to put up with some inconvenience. Then there are travellers who are seeking a good experience and safety, for them, service and price is secondary. Then there is the business traveller who is seeking comfort and possibly status in a pre-defined budget. He has no interest in signing up for a downgraded deal. As one can see, each traveller is seeking a room but has different selection criteria and each requirement needs a unique solution.

Hotel’s Perspective:  Let’s also consider the hotel’s perspective. Some may want to discount tariffs to attract last minute bookings, while others may be reluctant as it impacts the brand. Hotels may see a risk here as they could attract bookings only at the eleventh hour at a reduced price that can adversely impact their regular business. There may be other set of hotels with a large percentage of loyal repeat customers. They may feel that the loyal customer will feel cheated, as someone ‘not so loyal’ has been offered the same room at a lower price. So, while the problem of dead inventory is common across all hotels, everyone has other aspects to consider and this leads to all sorts of complications.

The key point here is that businesses are highly segmented and as an entrepreneur, you yourself belong to a particular segment and your thinking does not represent the industry as a whole. So, if you believe that your venture is solving an industry’s problem because it solves your problem, you are walking towards a dead end! While a few like-minded individuals might adopt your solution, it is actually just a matter of time before you hit a wall and can’t scale any further.

Techie founders: be forewarned

Ventures founded by pure tech founders are at a much higher risk, as their focus is totally on building the solution to fix the problem at hand instead of first validating how many more people are out there facing exactly the same problem? They don’t make the required effort upfront to study the industry, see how it is segmented, run surveys or seek inputs from various stakeholders and define the segment for which they are trying to create a solution. And, is that segment large enough to give them enough buyers for their solution and for their venture to scale and survive?

Lessons Learnt

To conclude, if you as an entrepreneur are having the mindset that everyone thinks like me and hence everyone should be facing the same problem and therefore will buy my solution, you are dead from the very beginning. Your mindset needs to be why the problem that I am facing has not been solved yet? Are there even enough people who are facing the same problem? Is this group big enough to build a scalable venture? What needs to be done to talk to a few of them and validate that the solution I am building to solve my problem will also solve their problem?

“This defines entrepreneur and entrepreneurship – the entrepreneur always searches for change, responds to it, and exploits it as an opportunity.” Peter F. Drucker, Innovation and Entrepreneurship: Practice and Principles

Disclaimer: This is a contributed post. The statements, opinions and data contained in these publications are solely those of the individual authors and contributors and not of iamWire and the editor(s).

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