Startups, Forget about the Technology

Soon after Brian Chesky graduated in 2007 with a degree in industrial design, he moved from Rhode Island to San Francisco. He was shocked by the cost of living, at one point owing $1,200 for his share of the rent for an apartment, but with only $1,000 in his bank account. Chesky saw an ad for an international design conference being held in the city, which mentioned that all the nearby hotels were completely booked up. He immediately saw an opportunity: designers needed a place to stay, and he needed rent money. So he set up a website and advertised that his roommates had space to accommodate three visitors, if they would sleep on inflatable air beds. What would later become Airbnb was born.

The following year, Chesky was reading an article about the Democratic National Convention, which was due to be held in Denver. How, the article wondered, would Denver, which had some 28,000 hotel rooms at the time, accommodate about 80,000 convention goers? The entrepreneur immediately recognized that this could be a big break for his fledgling startup. “Obama supporters [could] host other Obama supporters from all over the world,” Chesky recalled three years later. “All we did was become part of the story.”

As well as being a memorable origin story that explains their name (air mattresses were the air in Airbnb), this is an instructive lesson in entrepreneurship. Chesky and his cofounders identified a twofold problem—lack of affordable accommodations and sky-high rents—and thought creatively of how they might be able to solve it and make some money at the same time. In the startup world, it isn’t necessarily the best product that ultimately wins out. Rather, it’s the best way to solve the problem. Once you do that, you can figure out how to scale it.

Too many startups try to do things the other way around. They develop technology that they think will solve a problem, rather than first identifying and understanding the problem and then thinking creatively about how to solve it. Typically, it matters very little that the technology is proprietary, clever, cool, or new: without a problem to solve, it will struggle to find a market, and, therefore, to become a profitable venture.

Airbnb is far from alone in being among the Silicon Valley startups that we think of as technology companies but which began with very little technology, and, instead, had a strong focus on what I would call getting orders. The correct way to think about these startups is not as tech companies but, more accurately, as problem-solving companies. Where they have used technology, it has been done to aid the solution to those problems, not the other way around.

Uber is another such example. Like Airbnb, it grew out of a problem that one of its cofounders had experienced directly. Not long before Uber’s founding, Garrett Camp and a few friends decided to hire a private driver for New Year’s Eve. The bill had come to $800, which struck Camp as too high. His solution was that sharing the cost could bring the price down. But Uber realized that the more immediate problem than cost was how difficult it was to hail a taxi cab at certain times. So in the first few years after it launched, in 2010, the company went after sporting events in New York City and San Francisco, where it was really hard to get a cab. At that time, all the cars it used were black luxury automobiles, and the price of a ride was more than a taxi. It had an app, but on the other end of the app, things were very low tech. Like a taxi company, it had real people coordinating with the drivers about how to pick up all its orders.

The danger of starting with technology, rather than a problem, is that startups can quickly overbuild, spending too much time and resources on perfecting the technology itself rather than focusing on problem-solving. By retaining a problem-solving lens, successful startups are able to adapt and troubleshoot as they go along, rather than continue to tinker with their technology or try to build further scale.