Make sure you have the right kind of problems, not the company-killing kind.
Entrepreneurs often find conversations with venture capitalists to be somewhat schizophrenic. In a blink, the questioning can veer from, “Why would anyone use your product?” to, “How do you scale when everyone uses your product?” This can easily make a confused entrepreneur answer, “Um... what’s most important?” For me, both as an entrepreneur and a venture capitalist, there are only two types of problems: Problems you want to have, and problems you don’t want to have.
I recently met with a terrific entrepreneurial duo. Theirs was the classic partnership: one of them was the charismatic sales and business leader; the other was the technical and visionary brains of the operation. Their product was a web-based software application for health insurance companies. They met while they were both working for an insurance carrier, and instantly connected over their mutual aggravation with the same problem.
Their frustration spawned an idea, and then a company. They toiled away for a year, bootstrapped the product to life, found a first customer, and made that customer deliriously happy. Sales force? Development strategy? Support organization? Investors? They had none of that. A product that a customer loved? That they had.
Until this point, their work had been hard: They were coding 24/7, trying to convince others to help for free, selling the product, and pretty much giving up on eating or sleeping. But their decisions were easy: Nothing else mattered if they didn't have a product and a customer.
Now they were coming up for air and realized that their problems were getting harder to prioritize. Hire sales people or developers? Pursue investors or customers? Customize the product or insist on the cookie-cutter model? Provide high-touch or self-serve support?
In the urgent “now-now-now” frenzy of an early-stage/high growth company, problems fly around like trucks and cows in the eye of a tornado. This is when judgment matters - how does the entrepreneur approach these whirling problems? Which do you avoid, which do you embrace, and when?
Entrepreneurs who succeed eliminate the problems they don’t want to have – a bad company culture, lack of focus, tepid user response, a small market, or a lousy revenue model. Once those are gone, they're hopefully left with only the good problems: the market's too big, there are too many customers, not enough employee talent, too much demand for new features or services, and often, copycat competitors.
When confronted with competing problems, I focus on just two things:
1. Eliminate the “don’t want to have” problems first, and in the right order, so you’re not wasting time and money;
2. Be honest with yourself on whether you’ve actually eliminated the problem or are just caught up in your own passion.
Ultimately, staying disciplined and self-aware is easier said than done, but worth the effort.
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