Not solving a “tier 1 problem” is a recipe for (startup) disaster: Or maybe not?

“Timing, perseverance, and ten years of trying will eventually make you look like an overnight success.”

– Biz Stone

Tier 1 Or Nothing

2 weeks or so ago while scrolling down my Facebook’s newsfeed I stumbled upon this eye-catching (business) quote:

If your startup failed, it’s because it didn’t solve a tier 1 problem for a large enough audience.”

Which was a post intro from a guy named Mitchell Harper, a big shot ‘exited entrepreneur’.

His point in a nutshell?

Unless you solve one of the top 3 problems your target customer is experiencing you’re scre*ed!

Yep, irrespective how good your product is if you don’t abide by that ‘market reality’ you will fight an uphill battle.

And that made me thinking…

Is that claim any true?

Or maybe another classic business BS as usual?

Since it’s not an easy one we have to do a bit of digging.

Painkillers, Vitamins, Oxygen Or Vaccines: Which One Is Your Product?

First things first.

Why does Harper think that way?

In his own words…

…“[it’s because], they’ll be so focused on solving their first 3 problems that you’ll never get a look in… They simply won’t have time (or budget) for you if you’re not solving a problem that’s top of mind for them — a tier 1 problem”.

And that brings us to the old-age business dilemma:

Vitamins vs painkillers!

In fact, over the last couple of years, some additional elements got blended into the mix (and yes, I am of course referring to oxygen and vaccines).

Just in case I lost you, let me explain these analogy-driven terms really quick:

1. “Painkiller products”:

Two words…

“MUST HAVES”

Yep, these type of products fall under the essentials category.

And another common characteristic of them is that they provide an almost immediate relief.

Some classic examples?

Gasoline, electricity, internet, telephone, just to name a few.

2. “Vitamin products”:

The main alternative to painkiller-products?

You guessed it…

Vitamins (aka “as nice to haves”).

Said differently, this kind of products are not bought out of sheer necessity but rather because of a desire to fulfil some non-critical individual preferences.

Such examples could be things like jewellery, watches, productivity tools, dating apps, etc.

3. “Oxygen products”:

Not hard to guess what’s that about, right?

That’s correct. Are products that, as ‘the experts’ put it, “you can NOT live without”…

Usual suspects/examples?

Insulin (for diabetics), revenues (for companies), heating (for Siberians), or on the flip side air-conditioning (for ‘Middle Eastern people’ during summer).

4. “Vaccine products”:

And last but not the least are the so-called vaccines.

Which as you might imagine are goods with strong preventive nature such as insurance products, health check-ups, staff engagement programmes or making…a will.

Everything clear?

Good!

But at this point some of you will probably wonder; how is that related to ‘tier 1’ problems?

Well, if you think about it the underlying assumption is the same:

Either you go for this option or you’re doomed to fail.

The cold hard truth?

They are both better in theory than in practice!

Good in theory but a bit messy in practice

Why do I say that?

3 reasons to get you started:

Reason #1: Vitamins can become painkillers

That right, you did read that correctly.

But what’s the reasoning?

Quite simply because for pretty much any product category there are some trigger events (aka points of market entry) that cause people to…

… start getting really interested (or even experience an intense desire) on them.

Take for example calcium supplements.

Under no way, shape, or form could be described as a painkiller product, right?

WRONG!

Why?

Because one such trigger event (pregnancy) turns them into painkillers.

In case you wonder why, is because during pregnancy, the baby needs plenty of calcium to develop its bones and as a result, pregnant women are often being advised (on top of adding certain foods in their diet) to take separate calcium supplements.

Reason #2: A product can fall into multiple categories at the same time

This shouldn’t come as a surprise.

After all, naturally, different people have different visions, ways of thinking and set of priorities, which makes their buying habits and preferences vastly different to each other.

Let’s take handbags for examples.

As you might remember just a couple paragraphs earlier, we described them as “nice to haves.”

And here comes the question…

In what universe this product category is both a painkiller and a vitamin at the same time?

Well, if you think about it even though the majority of people can hardly describe them as a ‘must haves’ I can assure you that for a sizeable section of fashion-conscious ladies is a completely different story…

Reason #3: Tier-1 problems alone “don’t bring happiness”

What does that suppose to mean?

Simple – just because a problem is painful, urgent and on top of peoples’ minds doesn’t make it a winner.

In fact, what’s equally important is the competitive landscape, people’s budget (and past behaviour) and even the existing ‘out of the box alternatives’.

Why do I say that?

A couple of reasons…

a) If the competition effectively address that problem and people are happy with what’s out there unless you have a unique angle you’re not in any better position than none tier-1 driven businesses)

b) For a big chunk of people even painful and urgent problems don’t justify the decision to open up their wallet and actually pay for them (mainly because of budget limitations, and fixated consumption behaviours).

c) Most products don’t just compete with goods that fall in the same product category but also with existing alternatives (example: taxis compete also with bus, trains, bicycling, walking, or even car riding)

***

My take on all this?

Even though I have to say when I started out my startupper journey I didn’t pay much attention to this dilemma, over the years I came to terms with the importance (at least for B2B) of connecting the product to the wallet as closely as you can.

But to answer today’s question, even though I definitely see the merit of going after tier-1 problems, I do believe the claim that it’s the only way for making it is more BS than reality – just look around you; how many successful products defy that logic?

And with that said let’s put this post to bed with today’s key takeaways:

Today’s Key Takeaways

– Products that are both painkillers and vitamins at the same time are more the rule than the exception

– Tier-1 problems alone “don’t bring happiness”

– Just because a problem is painful, urgent and on top of people’s head doesn’t make it a winner

Ok guys, that’s all from me for today.

If you enjoyed today’s post, check out my kindle book, The Aspiring Entrepreneur Entry Strategy: A practical step-by-step guide for finding a validated, winning business idea that stays true to who you are, that is currently available at Amazon.

I hope to see you soon.

Best,

Andreas

“Logic is the beginning of wisdom, not the end”

– Leonard Nimoy

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