Niche-first or problem-first?
Many of you are familiar with this recipe for a bootstrapped business: take a niche, listen to them, find their most pressing problem, then build a solution. However, all the success stories I read about recently started differently. A founder realized they have a problem, realized that their niche has the same problem, and built a solution.
For example, I'm reading Zero To Sold by Arvid Kahl, and they started with the problem they had themselves. At the same time, the book clearly advises to find a niche and then find their critical problem (page 24).
Personally, I'm leaning towards "problem-first", because it's more fun to solve your own problem than someone else's, plus you get a lot of feedback from yourself. On the other hand, it's sometimes harder to find a niche, plus your problem seems to be more important than it is really. In the end, you tell yourself that if nobody buys it, at least I'll use it myself.
For example, I'm building a productivity extension for GMail, and I don't have any idea about the niche I could sell it to. I just hope that if I love it, there might be a few hundred people in the world who would love it, too. On the other hand, I know that if I go and talk to accountants, they would have a lot of manual labor that can be automated. But that's a totally alien crowd for me, and I would do it only if I were hard-pressed to have a working business in a short time.
What do you think? Are there many IH startups that succeeded in going niche-first?
When working out if an idea is worth pursuing you'll often hear of three areas of your idea/business model that need to be tested:
However, this is only half the picture because it doesn't factor in why you the entrepreneur is building the product. How much value do you want to capture? And what type of value are you trying to capture. Money, is just one type of value. A charitable/social enterprise doesn't need to capture that type of value, it could be capturing physical resources to build a school. Or, you may be looking to build and capture trust with an audience, before selling to them later.
Also, ENJOYABILITY is missing form the list. If your just looking for a problem to solve for a niche, if you don't enjoy it, you will quickly give up and abandon the product.
The best place to start is to give yourself the best chance at succeeding. Pick something that you either know a lot about and your an expert in or something you will enjoy doing. If you enjoy something, you can become an expert over time.
Set a goal for the value you want to create. If you want to hit ARR of $100k, aim to do that within 3 years. If you already have an idea for a product that you will enjoy, are an expert in and has the potential to hit your goal, then start to validate DESIRABILITY by speaking to customers, and validating the problem. If you don't have Customer/Problem fit, you may need to pivot. Maybe a different customer segment or a different problem.
You can do this with multiple ideas in quick succession before building anything at all, just speaking to them. And when you do find Customer/Problem fit you can start to develop a potential solution. Again, don't build it, but put together an offer, then test that with customers until you get to Problem/Solution fit.
After that you can build prototypes/MVP's etc, and test those, to get to MVP/Customer fit. Finally, iterate on features of your MVP towards Product/Market fit. All the while speaking to customers, testing and validating as you go along, correcting and adjusting course to refine the value you create.
If you want a really good resource to go deeper into this process check out LeanStack.com (i'm not affiliated). It's free and has some great content.
I'm more than happy to help further if you want some more advice, just reach out.
Hope this helps!
The book definitely doesn't address this dilemma about problem first or niche first clearly. As you mentioned Arvid himself founded his business based on a problem his partner experienced first hand. Here's how interpreted it from my experience with multiple successful and failed businesses (I consult for growth marketing).
The businesses that are successful are most often than not founded on a real problem experienced by founders or someone closely related to them. That's important for 2 reasons- 1. you can fully understand the problem and current ways to solve it when you experience it firsthand, 2. if you fail to build a business, you at least solve your own problem.
Then why Arvid and many others advise otherwise? IMO they don't want people to start finding problems by going after a niche. They want to validate the problem from the niche. So when you experience the problem, you find a niche who you think might be having the same problem. You then go to that niche and ask them what is their most pressing problem and how they are solving it. If your problem comes out in those discussions, you have validated your problem. If not, you know people are not too much concerned about it (or it's not that big a problem for them or they already have a solution).
Sometimes people may not be problem-aware. In those cases you need to probe further to see if the problem is actually their but people don't realize it. But either ways, it's you who comes up with the problem and not the niche.
Thanks, this looks like the best approach.