Tag Archives: Paul graham

Be an ‘exceptionally’ good problem solver

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Some time back I read this essay by Paul Graham – Be Relentlessly Resourceful . The essay attempts to answer a very fundamental question –  “Which is the most important quality / skill you should have as a startup founder”.  Like all essays by PG it is a very insightful piece, but it felt like something was missing, the answer was not complete.

I tried to pin point the missing part.  But even after thinking hard, I was stuck and wasn’t able to figure out what was missing.  So I let it go from my conscious mind & assigned the task to my unconscious mind, so that if there is a good answer it will bubble up.  Here is my post on the same – hope you will enjoy it.

Problem solving is the single most important skill you should have as an entrepreneur or a start-up founder

Just like we break down materials to elements, elements to atoms and atoms to electrons & protons. If we break down the work of an entrepreneur, go to  the most basic level and ask

  • What’s the job of an entrepreneur? What does  he do?
  • Answer:  He solves problems

That’s what an entrepreneur is continuously doing. Solving problems is what moves things forward.

  • You are in STATE A, you come across a problem, you start working on solving the problem, if the problem is solved you move forward to STATE B
  • If you don’t solve the problem – you will be standing still
  • And if you solve a problem in a wrong way, you will move backwards
  • Good problem solvers keep navigating from state to state and the progress keeps happening

Some common problem statements:

  • How do i get featured in techcrunch?
  • How much of seed capital do we need? How can we minimize the requirement?
  • How to find contacts of the right angels?
  • How to in launch next 1 week?
  • How do i make money?
  • How can I define my target customer?
  • How can I make the website load faster?
  • How can I negotiate the rent of my apartment?
  • How can get the damn coffee machine to work?

Problem solving has two aspects to it:

  • Quality of solution
  • Speed of problem solving

Assuming that quality is constant, the speed of solving the problems – that’s what will you give you an edge. It will allow you to be ahead of your customer’s requirements. In case the speed is constant – a better quality solution will make the difference.

But at the end of the day its not an either-or game. To be an exceptionally good problem solver you have to do a good job on both aspects – quality and speed, and you have to do it consistently for all kind of creative problems that a start-up will come across – from technology – to – finance, legal, UI, people, funding, partnerships, sales and the list can really go on.

How to get better at problem solving?

An entrepreneur must be exceptionally good at problem solving in order for their venture to succeed. This skill can be learnt by someone with good aptitude and a discipline to learn. Also one can keep getting better at it, so keep working on it.

Here are some fundamental approaches to problem solving. Use of each of these can make you a better problem solver.

  • The Scientific Method Of Problem Solving

    • Come up with a clear “Problem Statement”  – A problem can’t be solved if it isn’t understood
    • Form a Hypothesis – Hypothesis are reached at after gathering enough information about the problem
      • Hypothesis can be a possible solution to the problem, so if its tested its true you will arrive at the solution
      • Hypothesis can define potential reason for the problem. So if its tested true you would have identified the cause of the problem and can build a solution around that knowledge
    • Test the Hypothesis – For each hypothesis an experiment/ test is performed to determine if the hypothesis is true or false. Experiments are done to gather data.  It is very important that good observations and records are made during an experiment / test
    • Collect the Data – This is where you record your observations, measurements, or information from experiment / test
    • Analyze the Data – Just what does all that data indicate about answering the problem you are solving?
    • Draw Conclusions – After examining the data from the experiment, conclusions can be drawn. In it’s simplest form, the conclusion will be “yes” the hypothesis was correct, or “no” the hypothesis was not correct
      • Yes means – you have the possible answer
      • No means – this was not a correct hypothesis and you cross it out. Based on the current information you should come up with the next hypothesis and test it all over again
    • Repeating the above will normally take you to the solution
  • Increase your collection of “Mental models”

    • Google founders used the citation analysis as a model to solve the “search ranking problem” and created the page-rank algo based on that. This only happened because they knew the  citation analysis and had it in their mind as a mental model
    • Whenever you are solving a problem your mind does pattern matching or looks for similar mental models which can be applied to the current problem you are working on
    • You take a mental model – modify it as per the problem at hand and apply it
    • So the more mental models you are aware of – specially the ones that are used in the context of start-ups – the better it is
    • Here are some ways to increase your collection of relevant startup mental model:
      • Read biographies
      • Read good books: business books and books that have nothing to do with business but can teach you something about life
      • Blogs
      • Info on internet : text, videos on youtube, ted.com, slideshare, fachak
      • Meet lots of people
  • Use the white board and ask four Questions

    • Where are we?
    • How did we get here?
    • Where do we want to go?
    • How can we get there?

I have found this one to be the most useful starting point in problem solving. I have found that this is also the one which most people miss out on. I suggest you put it on paper and paste in your office. The way it works is; bring the team in a room , put the four question on a whiteboard and start putting answers to the questions on the board. Most likely by the time you get to the last question you will see the answer.

  • Networking and relationships

    • Have a network of people who may have faced similar problems and can help you solve it
    • Knowing them well will give you access to the mental models that these folks have collected
  • Focus! Focus! Focus

    • While solving a problem, keep a laser sharp focus on the problem at hand. Don’t go into tangents. Don’t get distracted.
    • If you get some ideas in between, write them down and worry about them later
  • Practice! Practice! Practice!

    • The more you practice the better you will get at it
  • [Updated]  Create your own road maps without a prior set of rules

    • Dipankar made an excellent point in comments, end of the day its about you figuring out your own rules and not be constrained by any lists.

First time entrepreneurs (FTEs) – Building businesses in India

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Just read the couple of articles written by Paul Graham : Y Combinator (answers what exactly does YC do?  or  Seedcamp, Techstars, MVP etc ) and Equity (explains why should you give 5-6% equity to a program like YC)

The thoughts expressed got me thinking about how should First Time Entrepreneurs (FTEs) go about building businesses in India. While a lot is in common between the approaches of YC, SC and MVP there are a bunch of things unique to the Indian Ecosystem which FTEs should consider.

Uniqueness of India

First things first, only during the last 10 years India has started seeing bootstrapped or garage startups by talented, educated, experienced and passionate folks who dont have access to a lot of capital but have the skills, will to solve problems and the staying power. The number of successes out of these have been limited and have not been really publicized for folks to get inspired by or learn from.

The VC industry is just about 8-10 years old in India as compared to 50-60 years in US and Europe; among them majority of the funds in India are under 5 years old. VC being a long gestation industry we are a good 5-10 years away from seeing major VC success in India. Most of the firms are focusing on the existing pipeline deals in the market and there are quite of few of these available – companies by serial entrepreneurs, companies started by Executives (CXO, VPs) from large companies, some of FTE companies where the traction is fairly significant, also since PE sector has performed very well and the bigger funds are shifting time and money to PE  deals. Clearly all of the above are the right things to do for the Indian VC firms, since the firms need to perform for their investors. None of this directly supports the FTEs, which is where the gap that needs to be filled in.  We need to create new pipeline of deals that will become successful startups and will feed into the VC pipeline 1-2 years later. That’s the role folks like MVP, iAccelerator, Upstart.in and others are attempting to play.

Another dimension of difference is IT / internet. The penetration of Internet and PCs in India is quite limited (9 computer for every 1000 people, as compared to 700 for every 1000 in USA). On the other hand the awareness and usage of IT in companies, specially SMEs is limited as well. There are a lot of other fundamental needs to be fulfilled in India (remember we are a developing country).

FTEs in India: What to focus on ?

First thing to ensure is to build a cash flow positive business within the initial capital that you have managed to raise (self, friends, family, fools). Keep lowest possible costs and create early revenues. Expenses should ideally be below 50,000 INR and in no circumstances higher than 1,00,000 INR a month.

Dont think of funding as a validation for your venture. Be prepared to wait longer, to build your business to the 50-100 crore revenues in 7-10 years, with VC funding coming after 2-3 years of being in business or no VC funding at all. If this does not appeal – don’t do a startup.

Internet only business models targetting indian market are not going to viable for atleast 2 years ( or more). View internet as a cheap way to build products and get the initial users with zero marketing budgets. From day one build alternate channels : mobile, call center, SMS, kiosks , shops , sales team into your model. Use technology as a enabler to drive costs down and to drive quaity upwards, but do not depend on customers using it directly via internet.

If your idea only lends itself to internet, think about doing it for developed markets like US and Europe.  India still has lower costs and we are very bullish on build here – sell to the developed world model.

So while you take into consideration the universal wisdom of building businesses, paying attention to the uniqueness of India can make an big impact on the outcome of your venture.