I spoke to a friend of mine over the weekend. He is an entrepreneur whom I greatly appreciate and respect. Here are the key lessons gleamed (both from my own introspection, and from what he told me):

When prosecuting an enterprise:

• You must provide a good or a service, that solves someone’s problems. People have “pain points”. If you’re not fixing them, you don’t have a product. i.e. Ben, products focused on altruism don’t work.

• How do you know you’re solving someone’s problem? Test it: make a small bet, and see if someone will pay you cash for it. The trick is to take measured risks:
  • Would you jump into a stream without knowing what’s in there? A crude, cheap solution minimizes losses. If it works, then you can bet your house with equanimity. If it doesn’t, then consider whether it’s worth solving. If you don’t test the waters? Then you are leaping blindly: a crocodile may be lurking beneath the surface - you may be throwing away years of your life, money, debt etc on something which goes nowhere. Nothing is more humiliating.
• The success of your enterprise will be directly proportional to:

1. The labour / pain others save in using your products.

2. and how much better/faster/cheaper/easier/marketed it is compared to other solutions, and

   (a) the difficulty for competitors to arise, and

   (b) the extent to which consumers will be willing to switch to competitor products. i.e. “stickiness”.

   (c) the number of people who face the problems, and

   (d) how much they are willing to pay you, to solve those problems. This ties back to the labour you save, how difficult it is for competitors to copy your solution, and how “sticky” consumers are.

3. The corollary: if you intend to compete with existing solution providers: the only way you can survive is if you solve their pain points better than they do. It has to be an order of magnitude better, for consumers to start raving about it, or for them to switch.

There is nothing more important than his advice:

“Solve someone’s problem”

Or to adopt the Y-Combinator aphorism:

“Make something people want”.

Let’s elucidate these ideas with examples:

Case Study: Number Counter

I made a game (Number Counter) - a simple one. I couldn’t afford to spend too much time on it: ~15 hours (I wanted to take a measured risk). I imagined sending it out to my friends (perhaps 8) would be torture enough for them. I put a Google Analytics tracker on it, and came back later and found, to my astonishment, the game had been played: +15,000 times, with 4,605 unique users. Particularly in the UAE. Wow! I would have been happy with 10. The concept was not a unique concept. I had actually copied it. But I did make slight improvements.

The key lessons:

Don’t guess (you could be wrong). Try. Let the market decide how valuable something is.

Where was the value? The value lay entirely in competing with your friends, in a challenge that was not too difficult, and not too simple either. This was the simple marginal improvement I had made:

• People could share results with others. I encouraged sharing by saying: “Why not take a screen shot and compare your results with your friends?”. I didn’t have the time to install a “share” button on the game, but I solved that problem with a text prompt which took 2 minutes. In a way - this was taking a “measured” approach to risk. It was a calculated bet - and a crude solution. If it proved successful, I could improve upon it. Wordle did much the same: he added a feature, that made it super easy to share their results with friends.

• Lastly, talk to your users. Some might be able to articulate their problems, but not their solutions. Solve their problems. Don’t waste time solving something you think might help.

Case Study: AfterPay

I had often wondered why AfterPay has been such a “success” (in terms of the number of users / merchants on their platform). To me, AfterPay looks just like a credit card for those who don’t have one yet, or who can’t get one. In fact, it is worse than a credit card, because it entirely relies on credit card infrastructure itself except it’s more expensive. Ostensibly, AfterPay are not providing a good/service that doesn’t already exist? Are they better / fast / cheaper than American Express / Visa / MasterCard? A naive answer is, “no” - they are just the same.

How then can you account for its success? They do solve a problem. A marketing problem. And a pain point problem. Kids (18-25 year olds) these days don’t wanna get involved with credit cards. AfterPay essentially makes credit cards sexy again. Secondly, it’s super easy to sign up easier than smashing down a cold beer on a hot day. Or rather, buy-now-pay-later scheme are not subject to the same regulatory requirements that other credit based products are required to meet…at least not yet.

They solved a marketing problem. And they dodged regulatory issues.

And they did it a lot better than all the old time sluggards. They innovated: marginally yes, but marginal innovation is enough to create yuuuge market caps.