Does your startup solve a problem? Vitamin or pain killer?

I saw 20 new startups at Y Combinator earlier this week, and 32 more startups at the Under The Radar conference today. OK, so how do you sort through all of these companies and pick winners?

There are a list of questions I ask entrepreneurs when evaluating start-ups. One of them is "Is your product a Vitamin (nice to have) or a pain killer (got to have it)? Of course everyone wants to think their product is a "must have" painkiller, but very few are. Another question I ask is "Who will pay for this, and how much will they pay?" The last question I ask myself is "Is this a product or a feature?" Meaning, will this product/service stand on its own and generate revenue? Or is it really a feature that should be incorporated into an existing product?

Many products fall into the vitamin category. Things like productivity tools, content aggregators, mashups, utilities, collaboration applications, measurement and monitoring tools, in fact anything that is a tool, development or otherwise, is by definition a vitamin.

Pain killer products are products that solve for a specific pain point. Sometimes the pain is measurable in terms of ROI, winning sales that could not be won before, or satisfying a regulatory requirement.

There is another set of products that are "vitamins" (nice to have) until you feel the pain. Then they become "pain killers" (got to have it). There are actually lots of products that fall into this category.

In the past, corporate governance and compliance applications were "nice to have". Then Sarbannes-Oxley (SOX) legislation went into effect. Suddenly these applications that were "vitamins" became "painkillers". You had to have them to comply with the new law.

Back-up and restore products for small companies or individual users are vitamins until the first time you lose a disk or significant data. Then they become "must have" painkillers. I am sure you can think of lots of products that fall into this scenario.

So, the new questions I have added to my list are; "What catalyst or event causes your prospects to actively seek your product or solution?" "When you look at all the sales you have won versus all the sales you didn't win, what was the main reason?" "Did they buy a competitive product, or not buy anything and just continue business as usual?"

Understanding what makes your product a "must have" painkiller versus a "nice to have" vitamin is the key to successful marketing. Identifying the key pain points and how your product solves them in a simple value proposition is job one. There are sometimes "trigger events" that cause these pain points. These "trigger events" cause your product to convert from a "vitamin" to a "painkiller" for customers. Qualifying your sales leads by trigger events and pain points will help focus your sales and marketing efforts and result in much higher win ratios.

Think real hard, right now. Make a list of the pain points your product solves. Make a list of trigger events that cause the pain to happen. Now think about how to identify these "trigger events" as they happen among the hundreds or thousands of potential customers. Get this right and your sales productivity will sky rocket. Get it wrong and your sales people will end up "dialing for dollars" and wondering why they are not being successful.

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Comments

[Mayur]

There is a third category of product that lot of the current crop of startups fall under - it's called "booze". Not solve any real pain nor are truly helpful but instead are just "feel good and get high" type of offerings. When the industry starts churning plentitude of of booze and vitamin products, you can rest assured that the boom is on and the bubble is approaching.

that said, booze products do make profitable exits, some of them are quite astronomical. that ensures that the VC money in these startups keeps flowing. Everyone loves to get drunk, so why not!

[Chris Dodge]

Good post Don. It's always good to re-hear the "Vitamin vs. Pain Killer" discussion.

I see that you listed "collaboration applications" as an inherent Vitamin since it is a tool by definition.

Looking back at your time in Sales at Groove Networks, how to do think that product fared in this Litmus test? Was it a valuable stand-alone product, or something that really is destined to be some features inside Outlook/Exchange?

If you feel that it was ultimately a Vitamin, would there have been a way to make that product a pain killer? Additional features? Specific verticalizations of that base product?

Thanks again for the post and any analysis. It's always good to look at these abstract guidelines against specific experiences and products.

- Chris

[Charles Hudson]

Don - very timely post. I wrote something similar about Money 2.0 start-ups about a week ago. You can check it out here - http://www.charleshudson.net/?p=445.

[Scott Quick]

Nailed it again, Don. See my post on Enterprise RSS here: http://www.scottquick.com/ignite/enterprise-rss-the-top-ten-things-i-want.html

[Julien W]

Nice post (again), Don. A bit late to comment but I was going through your past posts.

I very much like the 3 questions but I would argue that they fit well in a given paradigm or "state of the world". Let's take Social Networks, I'm not sure they would have passed the first question. At the time consumers did not feel the pain of not having Facebook or MySpace or alike because it was not part of social habits to be constantly connected with friends. These products have created an unexpressed need (which at best was a vitamin at the time) and have changed the social habits (hence became a pain killer afterwards).

Julien