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Why Some Crazy Startup Ideas Succeed

The biggest key to success — for any product — is how much motivation a user has to use the product. Value proposition, incentive, friction and anxiety all play a part in conversion but without a good level of user motivation, a product is doomed.

Problem solving is critical

Products that attract highly motivated users often solve a real problem the user has. The more painful the problem, the higher the motivation to find a solution. This is why some products are referred to as pain killers (must have) while other products are vitamins (nice to have). The problem with this type of thinking — particularly for investors — is that good startup ideas are often dismissed as bad ideas early on.

If you look at Facebook, Twitter, Pinterest, Instagram or Snapchat, none of these products are solving a painful problem yet the user motivation of these products is similar to that of a pain killer? What is going on here?

Human needs

While the technology around us continues to change, our universal needs do not, at least not at a macro level. Our need for community, affection or connection for example has existed for thousands of years and will continue to do so. Products like some of the social networks mentioned above, tap into these needs.

And what about news? Our curiosity and need to understand, discover and learn via news has not changed…. but the way we get our news has:

Bad Ideas

Paul Graham, renowned startup mentor and founder of Y Combinator has this to say about investing in startups:

“The two most important things to understand about startup investing, as a business, are:

(1) that effectively all the returns are concentrated in a few big winners, and (2) that the best ideas look initially like bad ideas.

If startup ideas are only viewed through a lens of whether they solve a real problem and not the human needs they meet, then it’s easy to see why some ideas are considered bad ideas. Here is a list of successful startups that looked like terrible ideas early on.

As you can see above, picking successful startups isn’t easy. But if you study the list carefully you’ll notice that every company fulfils an existing human need that was already validated, in some cases by a similar company before it.

The lesson here for investors is to consider human needs when evaluating startup ideas — before lore completely dismisses the opportunity.

Let’s look at Airbnb

Airbnb — the accommodation marketplace with a $2.5billion valuation makes a lot of sense in today’s sharing economy but this wasn’t always the case. When Airbnb first raised investment, a lot of investors missed out.

Check out this email exchange between Paul Graham and VC Fred Wilson who turned down the opportunity.

Fred Wilson (who I respect a lot) later summed up why his VC firm didn’t invest.

“We couldn’t wrap our heads around air mattresses on the living room floors as the next hotel room and did not chase the deal,” said Wilson.

What Fred and others overlooked at the time was the human needs behind Airbnb, particularly the needs of Airbnb hosts. Funnily enough, one of Paul Graham’s emails reveals a user need that sits somewhere at the bottom ofMaslow’s Heirachy of Needs.

User motivation for Airbnb hosts = pay the rent! What more motivation do you need to use a product?

My own motivation to become an Airbnb host was the same, it supported my startup journey. If you understand this user need, it helps explain why Airbnb hosts go the extra mile to provide a great experience for travellers — a host’s livelihood depends on it — and the benefit for travellers is a great experience at half the cost of a hotel room.

Of course, everything is easy in hindsight and a lot of other factors contributed to Airbnb’s success such as the team and execution. But the team is not why most investors said no to Airbnb.

Conclusion

Investors and founders alike should know what universal needs drive user adoption, particularly if the product is not easily recognisable as a pain killer right now. Founders, when pitching, should use past examples of how this need has always been met and the demand for it. Show investors that the solution can be tweaked, but the human need will always exist and you’ll be there to fulfill it.

This article also appears on jasonallan.co and is published here with the permission of the author