Your startup is solving a real problem. But do you stand a fighting chance?

Photo credit: Hans-Peter Gauster / Unsplash

This essay was inspired from a 30-minute chat I had with a prominent Indonesian startup founder. My initial goal was to consult the founder about an acceleration program we were rolling out at our startup accelerator Pedals.id, but it turned out to be one of the most insightful conversations I’ve ever had.

One insight from the founder that’s very useful is this: “Whenever I meet a startup, I ask them three questions. The first two are pretty generic: (1) Are you solving a problem? (2) Is the problem big enough?”

Then, he said, “But then comes the bomb: (3) Do you have the right to solve the problem?”

Shit. That’s a tough question.

Let’s say you want to build a startup that solves Indonesia’s transportation problems through an on-demand transportation service. Your solution can reduce the number of cars and motorcycles on the streets.

1. Are you solving a problem? Yes!
2. Is the problem big enough? For sure!
3. Do you have the right to solve the problem? Sadly, no way, Jose.

Why?

Because there are three startups operating in Indonesia with a combined valuation of ~US$80 billion ready to kick your ass the second you step into their market.

Simply put, here is the meaning of “right”: do you have a fighting chance against all the existing players in the game?

In Indonesia, the same goes for some sectors that already have their own giants:

1. Ecommerce: Tokopedia, Bukalapak, Shopee, Lazada, and Blibli control 90 percent of ecommerce traffic in Indonesia.
2. Online travel agencies (OTA): Even fewer players. Traveloka and Tiket.com both account for 80 percent of OTA traffic in Indonesia.
3. Messaging apps: Want to build a local messaging solution for the people of Indonesia? Bad idea. WhatsApp has 1.3 billion users, Facebook Messenger has 1.2 billion, Line has 600 million. The battle belongs to them.

I can go on, but I think you guys already get the picture.

Here’s the point I’m making: just because you’re solving a real problem in a big enough market doesn’t mean you can enter the game just like that.

Point of sales (POS)

Agriculture technology

Chatbots, which everybody is building right now