The best startup ideas always have a critical flaw

Even the best ideas have critical flaws. But don’t worry: the bigger the problem, the bigger the opportunity.

A local entrepreneur invited me to breakfast last week. He’s an entrepreneur who’s had a couple of impressive exits and I was curious to know what he wanted from me. After all, having created several successful companies on his own, he sure didn’t need my advice.

It turns out he wanted my opinion on a new idea he was considering. After selling his last company (and spending a few months enjoying the fruits of his success in the form of luxurious world travel), he’s become restless and is looking for his next big idea. Apparently, part of his strategy for vetting potential ideas is to pitch concepts to other entrepreneurs and ask them to find as many flaws in the idea as possible.

«As usual you are writing about startups»Explain, “I thought you’d be good at poking holes in one of my ideas.”

“I am happy to give my opinion”I said while blushing slightly at the thought of such a successful businessman reading my articles.

Obviously, I won’t betray his trust by publicly sharing the specifics of his idea. For my purposes here, it’s enough to simply explain that the idea is creative, but not anything crazy. It’s not about building a space colony on Venus or anything like that. Instead, he proposed a concept to me that sounds like a relatively straightforward software company. Frankly, I was surprised it didn’t already exist.

In fact, the relative obviousness of the entrepreneur’s idea turned out to be the majority of our conversation. We marveled above all at the simplicity of the idea and the lack of apparent competition. Finally, after about 30 minutes, I sighed and said: “I’m sorry, but I don’t see any major problem.”.

“It worries me too”, agreed. «“Why doesn’t this thing exist already? What is the critical flaw?”

For anyone who hasn’t spent much time building companies, our concern about not being able to spot an obvious problem should seem strange. After all, aren’t problems bad? Wouldn’t entrepreneurs want to avoid ideas with obvious problems?

Somewhat counterintuitively, the answer to these questions is: “no.” Simply put, every startup idea has at least one fundamental flaw and/or a reason for it not already existing. To understand why, think about companies from a purely functional perspective: since startups solve people’s problems, and since people always want their problems solved, then every startup without a good reason for not existing should , by definition, already exist.

For example, let’s think about a company like Uber. If we traveled back in time 50 years ago and asked people if they would like to be able to press a button in their pocket and have cars pick them up wherever they were and take them wherever they wanted to go, surely everyone would say, “Sounds like a car!” great idea!”.

So why didn’t Uber exist 50 years ago?

Because it wasn’t possible.

Fifty years ago, the technologies needed to build and run Uber simply did not exist. As a result, no one could build Uber. The lack of technology was the critical flaw of the idea, and it could not be carried out until the problem was solved.

Just like the Uber idea 50 years ago, every startup idea that doesn’t exist yet has at least one critical flaw, a fundamental problem that prevents its existence. Unfortunately for most entrepreneurs, those critical flaws are usually not as obvious as the one that prevented someone from developing Uber 50 years ago. After all, it doesn’t take an entrepreneurial genius to realize that smartphones with GPS didn’t exist in the 1970s.

But even if the reason isn’t as obvious as the one that prevented Uber from existing 50 years ago, every startup idea has a reason why it doesn’t exist, and good entrepreneurs know they need to find that reason — the critical flaw in their startup idea — before they start building.

The importance of finding the critical flaw in an idea for a startup goes beyond knowing why an idea does not succeed.
Identifying the critical failure is about understanding your market, your technology, and your customers in a way that others haven’t. It’s your cheat code for focusing your efforts precisely where they’re needed most.

Let’s consider another example of a critical failure: Airbnb. The concept of renting out a spare room to strangers seems simple now, but when Airbnb first started, it faced major critical flaws. These include trust issues between hosts and guests, legal obstacles and market skepticism. By identifying and addressing these flaws—through verification processes, insurance policies, and community-building efforts—Airbnb turned potential obstacles into strengths.

Tesla’s story is also a good example. Remember, electric cars existed long before Elon Musk turned a small company into a huge business, but those early electric cars suffered from a critical flaw: battery technology was too expensive and inefficient to create a vehicle with mass-market appeal. Tesla’s breakthrough was not just in making electric cars, but in making them viable by addressing this specific flaw. By innovating battery technology and creating a network of superchargers, Tesla transformed a niche market into a mass one.

As the examples I’ve shared demonstrate, every successful startup is a testament to the power of identifying and solving critical flaws. If something doesn’t exist, it doesn’t exist for a reason, and understanding that reason is crucial to building a successful company. To be clear, I’m not suggesting that you have to have all the answers from the start. I’m highlighting the importance of knowing all the big problems you’re going to face. Knowing the problem is going to prepare you for the challenges ahead, which means that before you start building a startup, you need to poke, prod, and question ideas until you find the fundamental questions that, once solved, will pave the way for your startup’s success.