It’s my favorite time of the year! No, not because it’s spring time…this is not a post about warm weather, sunshine and butterflies. Instead, this is the first post in a series of posts I’m planning to write, about entrepreneurship. Every year, around this time, the Massachusetts Institute of Technology (MIT) holds its annual business plan competition called the MIT100K Launch. For those of you who are unfamiliar, the MIT100K is one of the largest business plan competitions in the U.S. and it’s 100% run and managed by MIT students. It primarily caters to start up entrepeneurs who have an innovative idea and are looking for capital in order to launch their product or idea into an unknown market. The winner (usually a team) receives $100K to launch or grow their companies, hence, the name 100K. While there is only one winner of the competition itself, all participants who make it into the semi-finals receive a great amount of mentoring from advisers and exposure to potential investors, which is worth way more than the prize money. I’ve actually competed in this competition several times and landed in the semi-finals twice. To me, the mentorship and guidance I’ve received from the sponsors and participants at this event has been absolutely priceless.
I love this competition because of the energy and supportive community that you become a part of by participating in it, which lasts for years after the end of the competition. I’ve received so much help and support from the MIT100K community over the years and I’ve always wanted to give back, which is the reason why I’ve participated year after year as a mentor. But I do have to say, that being a mentor is way more fun than being a competitor (isn’t it always?) and what I love about it is that I get to look at business ideas and/or inventions from a completely objective perspective.
Given that this IS MIT, when I meet my team for the first time, they are super eager to show me how cool their new technology or idea is. I get dazzled with these really spectacular pitch decks and digital presentations that are absolutely awe-inspiring. On the flipside, however, every year, without fail and regardless of how experienced my mentoring team members are in their respective fields, no one seems to know the first step in creating a business plan. This is very important because this IS a business plan competition after all. This is not to say that they don’t know what a business plan is – I’m sure everyone knows what it is. But the first step in writing a business plan is not generating data or even listing an amazing collection of granted patents at the end of your pitch deck. Instead, it is about effectively answering the question: what problem are you trying to solve? Yes, I can hear the groans now because this is such a cliche, I get it. But for some reason, most people I meet, when they’re trying to launch a company get so focused on their cool solution that they often forget to find the right problem to go along with it.
I don’t currently (and don’t want to ever) have a cheat sheet that tells people how to effectively create a problem statement because I want a founder to be passionate about what he/or she is trying to sell me as a “solution.” That does not come from being formulaic, but rather having a true passion for what it is that you’re trying to accomplish. Let’s take skin care products, for example (my fave!). My first stop when I’m unhappy about something on my skin is my dermatologist. Why? Because I don’t know enough about skin to figure out what the problem is when I see something on it that I’ve never seen before. So, I go see my favorite dermatologist in Boston and say: Dr. I have this thing…see? What is it and what is the problem? Usually, she will write a prescription for me or tell me about a hideously expensive procedure that I can’t and don’t want to afford. But the most value I actually take from these visits (other than I love seeing my dermatologist) is that she’ll tell me what the problem is and then leave it up to me to go figure out what will work as a solution that I can also afford and comply with.
Now that I have a definitive problem, I actually know what I’m looking for. So, I read copious amounts of PubMed articles on the issue looking for compounds and/or therapies that might help and spend days researching companies that sell or provide them. When I do this type of research, it usually takes days to find what I’m looking for because the cosmetics industry, especially in the U.S., is inundated with so many “solutions” looking for a problem. Take for instance, SK-II (which used to be my favorite skin care line). Their marketing strategy is to blast commercials with a very ethereal-looking Cate Blanchett showcasing the product, talking about her crystal clear skin and telling us all about the “miracle” that is Pitera. However, if you do a search on the term Pitera, you’ll quickly learn that it’s the trademarked name of Saccharomycopsis Yeast Ferment Filtrate, which comes from the same species as the stuff that makes beer. Now, I do agree that most college kids, including me when I was that age, would probably say that beer is a miracle especially on a Friday or Saturday night. However, I seriously doubt that anyone would call it a miracle if instead of drinking it, they had to splatter it all over their face at $155 a bottle.
When the ferment was discovered in the 1970’s, scientists had made the observation that older workers in some rice factory in Japan who had spent years working 8+ hour shifts with their hands submerged in the yeast ferment that is now “Pitera” had youthful, wrinkle-free hands compared to their faces. Based on that observation, SK-II (which is now owned by P&G), started selling Pitera as an anti-aging solution way back when. 40+ years later, we’re now claiming this anti-aging (almost beer-like) product as a “miracle” for achieving crystal clear skin. Sounds like the wrong solution if my problem is that I have a lot of acne and my definition of “crystal clear” skin is skin without acne and not wrinkles, don’t you think? This is an example of marketing a cool solution (heck, not just cool, but a MIRACLE nonetheless!) without identifying a problem. Sure, SK-II sells a lot of products year after year but they are constantly going to be subject to consumers who will switch to different brands because it’s not clear who they are selling their “miracle” solution to. If someone struggling with acne buys SK-II they’re going to quickly find that it’s not going to work. So what do these consumers do? They go on their blogs, twitter, or other social media sites and talk about how SK-II sucks because it did nothing for them. The thing about cosmetics is, once you lose a customer, there are thousands of other brands or “solutions” waiting around to catch them. This makes it extremely important for these companies to find their target customers and offer a really good solution. Because once a customer finds a solution, they are not likely to let it go. I mean, who wants to go and solve a problem they already solved?
While this might seem like a silly example, it’s a very common issue when launching a company. Sometimes, we get so disillusioned with our amazing solutions that we forget to identify the problem that it’s trying to solve and most importantly, the people who will support our products. There are so many cool ideas out there just like there are many cosmetics and skin care products already out in the market but the ones that survive and truly gain a loyal following are the ones who can best pinpoint the right problem that their solution works for. Because once you establish a strong relationship between the problem and your solution to that problem, marketing and writing a business plan just flows.