Two entreprenuers wish to start a company in the online micropayments space and pitch to you for investment.
Entrepreneur A’s product is a product in the microlending space. Its team has work hard to craft the coolest in this space. No other product has its formidable suite of features. It works flawlessly and has a sparkling UI. Entrepreneur A invites you to the grand unveiling ceremony of his product, where leading journalists are in attendance.
Entrepreneur B also has a microlending product. While using it, you see how it is rough around the edges, has a couple of typos and you even spot a minor bug. Yet, entrepreneur B states in writing how several customers have paid in advance for the app to fund its early development, since it addresses a pressing problem they face. Now she needs your funds to scale up.
Whom would you rather invest in? To answer that question let us turn the tables. If you were a customer, what are you likely to buy? A cool product that doesn’t address your most burning problem? Or a crappy one that makes this problem easier to live with?
Starting a business is like developing a drug. A customer will gladly pay for a bitter pill that eases their pain rather than the best tasting medicine that is ineffective. And yes – you are better off starting with customers with the most painful symptoms.