Right from VCs to gurus will tell you that as a startup, you should be solving a problem. Solve a pain point.
Yes. You should be.
redBus was acquired for ~INR 800 crores (i.e. $138mn).
Bash Gaming got acquired for $160mn!
Who was solving the real pain?
redBus? Yes. The team integrated offline-online world and took a while to build the industry, got bus operators onboard. They were solving a serious problem statement that nobody in the industry dared to. The team put in a lot of effort to get here.
Why is Box.net valued at $2Bn and Dropbox at $10Bn? That too, when Dropbox took so many years to enter the Enterprise segment, while Box was enterprise from day one (the hypothesis is that enterprise focus bring better valuation)?
Who was selling Vitamin and who was selling Painkiller?
Welcome to The New Digital Economy
What problem did WhatsApp solve? Think about it – $19Bn valuation = GDP of 100 countries!
The Characteristics of New Economy
1. People have time (though we think we don’t have enough, but we ensure that we update our ‘close friends’ in social media that we just don’t have time).
2. People have money (yes!).
3. People are bored (immensely! Plus, we all are going thru’ FOMO syndrome, i.e. Fear of Missing Out).
4. People want to believe that they are happy (and update Facebook when they want to be!).
5. People don’t want to think.
Take a look at top 100 sites in the world – except Wikipedia (and Google search), how many of them are actually solving a pain point?
What about Youtube? Yes, there are educational content – but that’s not what Youtube actually is.
“The internet makes human desires more easily attainable. In other words, it offers convenience. Convenience on the internet is basically achieved by two things: speed, and cognitive ease.” In other words, people don’t want to wait, and they don’t want to think — and the internet should respond to that. “If you study what the really big things on the internet are, you realize they are masters at making things fast and not making people think.” [Evan Williams, Twitter/Blogger/Medium Founder/via]
#Note : Convenience. ‘Not Make People Think’. ‘Don’t Want to Wait’.
Think about it : How do most of us use free time (10-15 minutes) during the day? We call up friends/family or logon to social network. It’s not that we want to stay connected, but we just want to avoid thinking. A few minutes of *doing nothing* actually leads to boredom (and fiddling with smartphone is the best way out).
And that’s where the money is : In keeping everybody busy. And NOT letting them think.
Is there a pain point you are solving? Actually not. Nobody wakes up saying ‘I will not think today. Give me tools’. Some of the greatest successful companies are solving your latent needs which are not necessarily pain points (and apparenly, those solving latent needs are getting higher valuation/exits).
The new economy is about convenience, latent needs and hitting the higher levels in Maslow’s Hierarchy of Needs.
“Take a human desire, preferably one that has been around for a really long time…Identify that desire and use modern technology to take out steps.”
And how can one justify the crazy valuation?
Remember, the valuation in new economy is not defined by value you are creating, but a LOT from the threat, you pose to market leaders.
Whose Lunch Are You Going to Eat Today, Defines Who You Are!
Back to the question : Do you really need to solve a pain point to do all of this? Aren’t we getting used to paying more (and frequently) for vitamins than pain killers?