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

Not Solving a Tier 1 Problem is Recipe for Startup Disaster: Or Maybe Not?

Tier 1 Or Nothing…

Just the other day while scrolling down my newsfeed I stumbled upon this eye-catching biz 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 – as you can see below – some additional elements got blended into the mix…

Let’s explore them one at a time!

1. “Painkiller products”:

Two words…

“MUST HAVES”

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

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.

Such examples could be things like jewellery, watches, handbags, 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 come 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 all these ‘elements’ relate to tier one problems?

It’s simple – there is a widespread assumption that by definition a tier one problem equates to painkiller or an oxygen product because that’s naturally what most people care about that.

The cold hard truth?

That’s b*llocks…

Tier 1 Problems: What’s Truth and What’s Fiction

Why I hear you ask?

1. Vitamins can become painkillers

What’s the reasoning?

Quite simply because for most product categories there are trigger events that make the need for acquiring them much more acute.

Take for example calcium supplements.

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

WRONG!

Why?

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

* 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.

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 females is a completely different story…

So yes, the same product can mean different things to different people.  

3. Urgent problems don’t equal money

What does that suppose to mean?

Simples – 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 goodsthat 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 definitely see the merit of going after tier 1 problems, I don’t agree with the notion that they are ‘all or nothing’.

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 one 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 Vertical Startup: A Practical Guide on How Today’s Bootstrapped Entrepreneurs Turn their Late Market Entry Into An Advantage By Going Vertical, 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

Categories: tier 1 problem

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