The Hidden Truth Behind Startups And VCs.


Nowadays, everyone is solving problems. The trend started after Mark and company launched multi-billion dollar companies. Prompting everyone to chase the objective of being an entrepreneur who starts "start-ups" and "solves problems".

“I want my start-up, how can I get one! By solving problems. Find yourself a big disaster, and solve it. The bigger the disaster, the better. At some point, being an athlete or a celebrity is what every kid looked up for. This was life. Now, even celebrities and athletes want to be entrepreneurs, launch start-ups and "solve problems". This is the real thing, the big bang and everyone wants it.”

Why do VCs make problem-solving mandatory?

Venture capital firms invest in "Problem Solvers" because it solves their problem of having to generate a very high ROI (return on investment). Usually the ground-breaking, problem solving companies are the VC-fit ones. Startups which can generate insane growth, in a short period of time. Achieving enormous returns for their investors.

VCs and Investors don't invest in "Problem solvers" per say. The previous is the marketing term. It's not appealing to say "We only invest in Startups, which have the potential to generate high returns". However, this is the reality. And it's why most VCs limit themselves to high growth industries like Tech and Blockchain.

“If it's just solving problems, why cherry-pick high-growth cherries?”

There are many Businesses/Start-ups out there which solve problems, but VCs don't want them. They can't grow big and fast enough. They don't have the potential to hit the Million/Billion Dollar Club. And exit to public markets.

Social Media Doesn't Solve Problems

Let's take Social Media platforms as an example. I believe they don't solve any problems (They can actually cause them). However, they create endless opportunities, and make the biggest fuss and money. Primarily, because of the large user base and population. Which makes them perfect for advertisers.

Social Media Platforms are entertainment which connects people. There were many ways for people to communicate prior to social media. However, they didn't have a complete ecosystem offering entertainment, messaging, media, and more, all in one place. This is an innovation!

Social media platforms created an alternative life. An addictive ecosystem which pulls you in, keeping you busy every second of the day. They created a desire which you didn't know about. Nevertheless, if you deactivate Social Media for 10 years. Nothing will happen to you. Aside from involuntary itching caused by boredom!

“This is coming from someone who deactivated Social Media for 7 years. There were no problems. Zero.”

Who benefits from the “Solving Problems” trend?

Investors and VCs benefited the most. They made solving problems the norm in Startup Land. Media outlets often repeat the same idea. Because stories of start-ups which radically change the world and solve problems are glamorous to write about. This only projects a false reality. You're programmed to think in terms of solving problems, finding the next big idea, and making millions/billions.

Investors and VCs identified a consistent pattern, across very successful Startups. And found something in common. The secret magical formula of Solving Problems. All the big Startups like Airbnb, Uber, Netflix, etc. were solving big problems. As a result, they made it a gold standard. They demand you to solve a disastrous problem, so they can invest.

Investors also started to see everything in terms of solving problems. They must ask you, what problem does this solve? If the business plan doesn't have a "problem" slide, then it's doomed. Sometimes you're forced to invent a problem and pretend to solve it, just to please them. They made solving problems a philosophy which everyone must follow, to successfully run a Start-up/Business.

The Problem of "Solving Problems" and building "The Big Thing".

You will become obsessed. And you might waste your whole life looking for the next big thing (Without finding it). When all you need is a good thing. You don't have to be the next Steve Jobs, Bill Gates or Elon Musk. Be yourself, and improve to be your better self. This is where you will succeed. Only then, you can build your own legacy. One that might end up exceeding all the previous names. If not, then you've still achieved your own version of life. Happy, successful and wealthy to live beyond any restrictions.

You might be fooled into thinking your idea is nothing. It's not good enough. It's too traditional. How am I going to succeed in such a sea of giants? I must raise money, make billions and appear on Forbes. Just like them. I must start the next Airbnb or Uber. But then you face the dark reality, after constant rejections from Investors and VCs. Prompting you to doubt your idea. However, understand that your idea may be good, just not good enough for their standards.

The intense desire to be like someone else isn't productive. And can be outright destructive. It might serve you well in sports. Where you can idolize a legendary player, copying his moves and mentality. Pushing yourself to new boundaries. However, in Business, it may not go too well. It might be a negative obsession. It's better to view the grandest stories of success, as a way to learn. The most successful people as teachers.

You Don't Have to "Solve Problems" to Launch A Business.

A lot of people start businesses which don't solve any problems. Think about food & beverage, e-commerce, import and export, franchising, etc. Millions of businesses in these industries. A lot of them are not solving any problems. They just offer good products and services. Can't you think of something similar, if you want your own business? There must be a good idea for you.

People were starting businesses, long before the trends of entrepreneurship, startups, and solving problems ever started. Some of these businesses really solved problems, radical ones. And some of them existed for a desire to gain success, financial rewards and make people happy.

Maybe it's something you cook well. You can start a product and a business out of it. Many Food & Beverage brands started this way. Perhaps you can make excellent chocolate or cookies. Something sweet that will make people happy. This is a great thing. And you don't need to solve any problems to start it!

You can:

  • Entertain people.
  • Make them happy.
  • Create something delicious.
  • Sell good products and services.

You can but don't have to:

  • Solve a problem.
  • Earn millions/billions.

Key Takeaways:

  1. Solving problems can make Investors and VCs a lot of money. This is why they're chasing it. But you don't need it to start a business. And they don't always profit from it.
  2. You can always start a Business. It doesn't have to be a big idea. Don't limit yourself.  Look for a good-enough idea.  You can always grow it into something big in the future.
  3. Don't be obsessed with creating a Startup which solves problems, and makes millions/billions. Be obsessed with your own Business!
  4. Look for a good-enough idea!


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