Is your startup solving an important problem?

Hsu Ken Ooi is the Co-Founder and Managing Partner of Iterative, an accelerator focused exclusively on Southeast Asia.

A startup exists to solve a problem. In fact, this is the most crucial element about any startup.

The problem dictates a startup’s product, market size, talent pool, and more. Therefore, a startup needs to address an important problem in order to be successful.

Image credit: Timmy Loen

Is it important?

A simple but effective test of whether a startup is solving an important problem is to ask the following questions:

• How many people have the problem?
• How painful is it for each individual?

If we enumerate the possible configurations and give them labels for easy reference, we get the following:

• Type 1: Many people have the problem, and the pain for each person is acute
• Type 2: Many people have the problem, and the pain for each person is mildly annoying
• Type 3: Few people have the problem, and the pain for each person is acute
• Type 4: Few people have the problem, and the pain for each person is mildly annoying

In table form:

Chart: Hsu Ken Ooi

Obviously, the most significant problems are Type 1 problems and the least important are Type 4 problems. Unfortunately, Type 1 problems are exceedingly rare and Type 4 problems are abundant.

What’s not obvious is whether Type 2 or Type 3 problems are more valuable. But I’d rather be working on a Type 3 problem than a Type 2 problem for a few reasons.

First, it’s easier to solve a problem for a small group of people who care about finding a solution as opposed to a large group of people who don’t really care about it. The latter aren’t concerned enough about the problem to talk to you and haven’t thought about it that deeply, so their feedback isn’t as useful.

Who works on what?