Randy Komisar: Bigger the Problem, Better the Opportunity
In working through a current business plan, I have been looking for some inspiration to organize my thoughts into a high-impact presentation. I ran into an interesting framework from Randy Komisar of Kleiner Perkins and a long list of startups prior to KPCB. Here is a link to a Forbes article based on an interview with him and a link to a video interview.
The most important thing is identifying whether a problem is even worth solving. This is how Komisar describes it:
“The way I think about the entrepreneurial or innovation process is from a ‘what’s the problem I am trying to solve’ standpoint. In my business, I look for the biggest problem because the amount of resources, time and money that go into solving a small problem is pretty comparable to the amount of resources that go into solving a big problem. Why not solve a big problem?”
I like his notion that you might as well work on the big problems, because they take about as much effort as smaller problems. In the video interview, Komisar also describes needing a vision and passion of how the world is going to be better through your business vision in order to sustain yourself. This flows from believing that you have, in fact, identified a big and important problem that you are solving, i.e., big problem solved, ergo the world is better.
There is a little fraternal resemblance to Vinod Khosla’s “black swan” investing, which I have blogged about before, in determining whether a problem is even worth solving, although I think Khosla is talking about taking much greater risk, and is probably less interested in Komisar’s next steps in his current investment approach. (Khosla, of course, was a long-time KPCB partner.)
After identifying a problem and a potential solution (which will change over time and thus the concept of the ever evolving Plan B), Komisar then offers a process to answer those critical questions to figure out whether there is actually a business opportunity.
He says you should identify proxies out there including analogs, examples suggesting that the plan will work, and antilogs, examples suggesting it will not work. In thinking through how one might have thought about the iPod and iTunes, he notes that an analog would have been the Sony Walkman, suggesting that people will walk around with headphones, and an antilog would have been Napster, suggesting that people would not pay for music. Antilogs will tell you where you might have to approach a problem in a slightly different way.
What you are left with after this exercise is those unique, unanswered “life or death” and “leap of faith” questions about your business problem and solution. He suggests using a “dashboard” tool to lay out those questions with proposals on how you will answer them empirically in a quick and inexpensive fashion.
Komisar’s method allows you to both demonstrate your “passion” by laying out the enormous problem and associated opportunity and your “rational coolheadness” by breaking the opportunity into the important questions and associated testable propositions, some of which you may be able to answer using existing data out in the world, and some that you will have to generate the data for.