Years ago I wrote about a framework I used to help identify whether a problem or opportunity space was actually worth pursuing. The basic idea — which builds upon work from organisations like Strategyn — is that you’re able to:
- Identify how much people care about the problem
- Map that to how effectively the problem can be solved currently, and
- Walk away with reasonable clarity surrounding whether you should try and solve it
This may seem obvious (visually and otherwise), but you’re aiming for the sweet spot.
The sweet spot is where a problem is highly valued but poorly served by existing solutions (whether created by people themselves or enabled by a product or service in market).
I referenced this in my recent blog designed to encourage aspiring angel investors to start their investing journey. Here I’d like to dive a little deeper in the hope it benefits folks other than me.
Let’s start with how I use it.
Step 1: Define the problem or opportunity
It’s hard to utilise this simple research method if you can’t clearly define the problem. Let me give you a for instance from a conversation with a super smart founder earlier today.
People really love eggs. They’re integral to so many of people’s favourite recipes. People are also concerned about the environment, their health and the wellbeing of animals. So, how do you give people the product they want (taste, nutritional profile, texture, usability etc.), whilst also aligning to their ethical intentions (consume more consciously)?
This broadly defines a problem.
Step 2: Conduct a basic survey
This really is quite simple.
- Figure out who you’re targeting and why
- Find a way to access them
- Design a simple survey using two questions and a 1–7 likert scale
- Publish it
- Analyse it
- Use it
Using the example above, here are some simple questions:
- How important (1 being not important and all and 7 being very, very import) is it for you to find an egg alternative that aligns to your values?
- How satisfied (1 being not satisfied at all and all and 7 being completely satisfied) are you with existing egg alternatives you have made at home or purchased from a company?
Step 3: Make a decision
You — as the potential investor — now have some very basic data to support your decision making process. This augments what the founders have already given you access to.
I’ve deliberately kept this super simple. I want it to be easy to do. The easier it is, the more likely folks are to do it.
I should also note that this is mostly useful for super early stage ventures. I’m talking pre-product, post product/pre-revenue etc. This is where I find it most useful.
These investments are still guesses. But i’d rather make reasonable guesses.
Now over to you. do you use a method like this to help you make these investment decisions? What specifically do you use? How does it work? What does it give you that something like the PWS framework does not.
I’d ❤️ to learn from your experiences.