Whenever I talk to entrepreneurs with business ideas, my first question to them is always, “What pain point are you solving?”.
A pain point is a problem, real or perceived. Entrepreneurs create opportunities for themselves by creating solutions to those pain points. Solutions create value for everyone.
The pain points also that is the exact terminology he used when identifying opportunities.
Sometimes the solution can be ground breaking and disruptive. For example, the warehouse receipt that made all grain fungible back in 1865 in Chicago was a solution to a huge pain point in grain trade. That solution created warehousing, the Chicago Board of Trade, and the entire risk management business that grew up around it. You might say the city of Chicago owes the entire wealth creation around it to the creation of that warehouse receipt and the canal dug for the Chicago River.
The pain point being solved doesn’t solve a problem, but creates a new market entirely. We had smartphones. When we were standing around, or passing time we needed something fun to do on smartphones. Zynga solved that problem and created an entirely new kind of gaming. Is Zynga crazy innovative when it comes to games? Probably not so much. However, they are innovative in the way they execute and with the way they use data. They are creating value by creating a market that wasn’t there.
Pain points don’t have big markets. For investors and entrepreneurs that are thinking big, they will be left alone. However, that doesn’t mean you cannot solve them and make a little money off of them. Many investors call them lifestyle businesses. They might scoff at them. However, lifestyle businesses are just a different kind of opportunity. Put in the right hands, the lifestyle business might be scalable.
Pain points sometimes aren’t particularly hard to find. Everyone is a critic! When entrepreneurship gets hard is when you start to find a way to execute your plan to solve them.