2. Finding a Problem Worth Solving

Most first-time founders start with a solution: an app idea, a product they love, a technology they want to use. Experienced founders start with a problem. A problem that is painful, frequent and expensive is the soil in which good businesses grow. A clever solution to a problem nobody cares about is a hobby, not a company.

What makes a problem worth solving?

Use the following four tests. A great problem passes at least three of them.

1. Pain: Does it cost people money, time, health, stress or reputation? A headache, not a mild itch.
2. Frequency: Does it happen daily or weekly, rather than once in five years?
3. Willingness to pay: Are people already spending money or effort on a workaround — hiring someone, using spreadsheets, travelling to another town?
4. Access: Can you actually reach these customers through channels you understand?

The third test is the most revealing. When people already pay for a bad solution, they are telling you the problem is real. A dental clinic that employs a full-time receptionist only to remind patients of appointments by phone is signalling a problem that software might solve better and cheaper.

Where to look for problems

• Your own work. What frustrates you or your colleagues every week? Insiders spot problems outsiders miss.
• Your family and community. How do your parents bank, shop, get treated, pay bills? Where do they struggle?
• Broken handovers. Wherever information moves between people by paper, phone calls or WhatsApp forwards, errors and delays hide.
• New rules and new infrastructure. Changes such as digital payments, GST or new government platforms create fresh needs for tools and services.
• Underserved regions and languages. Many products are designed for English-speaking metro users. Tier 2 and 3 towns, and Indian-language users, often need different designs, prices and support.

Story: Arjun and Farhan’s clinic problem. Arjun was a software developer; his friend Farhan managed his father’s eye clinic in Lucknow. Farhan complained that patients often missed follow-up appointments, and the clinic lost both revenue and continuity of care. They visited fifteen clinics and found the same pattern: paper registers, staff making reminder calls, and no clear view of which patients had dropped out. They did not yet know what to build, but they had found a problem with pain (lost revenue), frequency (every day) and willingness to pay (a salaried person was already doing the job).

Market size: TAM, SAM and SOM explained

Once you have a problem, you need to ask how big the opportunity could be. Investors and serious founders use three related numbers.

• TAM — Total Addressable Market. The total annual revenue available if every possible customer in the world (or country) used your type of solution. It is the ceiling.
• SAM — Serviceable Available Market. The part of the TAM that your business model, geography, language and product can actually serve.
• SOM — Serviceable Obtainable Market. The share of the SAM you can realistically win in the next three to five years, given competition and your resources.

Here is an illustrative example. The numbers below are invented to show the method; always research your own.

1. Suppose there are about 2,00,000 small and mid-sized clinics in India that could use appointment software. If each paid ₹24,000 a year, the TAM would be 2,00,000 × ₹24,000 = ₹480 crore per year.
2. Arjun and Farhan’s product works only in Hindi and English and they can sell only in North India for now. Suppose that leaves 60,000 clinics. SAM = 60,000 × ₹24,000 = ₹144 crore.
3. If they can realistically win 3% of those clinics in five years, that is 1,800 clinics. SOM = 1,800 × ₹24,000 = ₹4.32 crore per year.

Notice two things. First, this is a bottom-up estimate: number of customers multiplied by price. It is far more believable than a top-down claim such as “the Indian healthcare market is huge, and we only need 1%.” Second, a SOM of a few crore may sound small, but it can support a healthy, profitable company, and if the product succeeds, expanding to new regions and features grows the SAM over time.

Investors trust a careful small number more than a lazy big one.

Common mistakes when sizing a market

• Using the size of an entire industry instead of the spending on your specific problem.
• Assuming everyone will pay the price of your most premium plan.
• Ignoring that some customers will never switch from their current habit.
• Forgetting the cost and time of actually reaching customers in a fragmented market.

Worksheet: The problem scorecard

List three problems you are considering. Score each from 1 (low) to 5 (high) on these points, then total them.

1. How painful is it for the customer?
2. How often does it occur?
3. Are people already paying for a workaround?
4. Can I reach these customers cheaply?
5. Do I have unfair insight or experience in this area?
6. Is the bottom-up SOM large enough to support the life I want, and the company I want to build?
7. Will I still care about this problem after five difficult years?

Do this exercise with a co-founder or a trusted friend if you can. Score separately, then compare. Wherever your scores differ by two points or more, you have found an assumption that needs real evidence rather than opinion. Those differences often become your first interview questions in the next chapter.

A score above 25 out of 35 suggests a problem worth testing. The final question deserves special attention. Building a company is long work. Founders who care deeply about their customers keep going when the spreadsheets look grim.

When you have chosen a problem, resist the temptation to start building immediately. The next chapter shows how to test whether customers truly want a solution, often before you write a line of code or cook a single extra meal.