Startups are inherently risky ventures, where there is no guaranteed success or tangible return value for the work that you put into a project, but couple that with macroeconomic uncertainty and it makes it seem like giving up a normal life to pursue something that may totally not work out.
Uri Levine knows a thing or two about this journey. A little over ten years ago, he made international headlines for selling his company Waze, a crowdsourcing map company that helps fight traffic, for over $1 billion dollars.1
Solve problems, don’t force solutions
Levine starts by addressing the topic of his latest book, Fall in Love with the Problem, Not the Solution.
“What enterprises want is to create value. The simplest way to create value is to solve a problem. If you solve a problem, you create value. Therefore, I always say, start with a problem. Think of a big problem, something that's worth solving,” the businessman shares.
He continued,: “Ask yourself: ‘So, who has this problem?’ If you happen to be the only person on the planet, then you know what? Go to a shrink. It's going to be way faster and cheaper than building a start-up. But if a lot of people actually have that problem, go and speak with those people and understand their perception of their problem and only then going to do the solution.”
Levine explains that by focusing on solving a problem for a group of people you’re inherently working in the world of creating value, whereas if you fixate on building a final product –– or a “solution” –– you risk building a product that doesn’t bring actual value to users. He argues that it doesn’t have product-market-fit.”
He then posed the question: “From searching Google to using WhatsApp or Waze or Uber or Netflix or Instagram or whatever it is, ask yourself, what is the difference between any of those today and the first time that you used it?”
“The answer is that there is no difference,” said the entrepreneur. He continued: “What is really important is once you figure out product market fit, you don't change that anymore.”
“If you don't create value, you will die, as simple as that,” Levine says of product-market-fit.
ChatGPT isn’t Disruptive Technology … yet.
Likely the most contrarian belief Levine has is that OpenAI’s flagship product, ChatGPT, is not yet a disruptive technology. A very heterodox idea given all the hype around not only their product, but generative AI in general.
Levine believes that while the service is quite promising –– ChatGPT hasn’t yet found its product-market-fit, pointing out that while the technology captured many users –– it doesn’t have a strong retention rate of active users.
“If I'm going to go into a class of 100 students and I'm going to ask who has used ChatGPT, then 100 hundred people are going to raise their hand,” Levine says.
The Waze founder continues: “I’m going to then ask them how many of you are continually using it? Then it's going to be very few that will raise their hand because their use case where value is being created constantly is not there yet.”
Levine continues to explain that while ChatGPT has captured the attention of culture by storm –– it’s still on the journey of figuring out how it will actually be used by people and more importantly, continue to be used.
“OpenAI is seven years old. It took them seven years to get to where they are today. This is the duration of figuring out product-market-fit, and they're not there yet. What we have is an absolutely amazing opportunity, but we don't know what the use case yet,” says Levine.
He continued: “Product-market-fit at the end of the day is measured by retention. One metric. Because if you create value, they will come back.”
Building in a bad economy
We asked Levine about the struggles of building companies in the present economic climate. Between a rise in interest rates, inflation rearing its head, and a banking crisis that seems to be uniquely threatening the start-up world –– it may feel like there’s never been a harder time to bootstrap a start-up.
Levine urged FCAT’s readers to contextualize the present problems surrounding entrepreneurship.
“The fact that we are in a bad period doesn't make it any different because in general, I would say most startups will have a journey of about ten years until they're ready to take off. In these ten years they're going to figure out product market fit, then figure out business model and then figure an outgrowth strategy.” Levine explained.
Levine believes that it is veritably impossible for a founder to avoid troubles that come from external factors during the start-up journey, hence a founder cannot let the present state of society dissuade them from trying.
“In a journey of ten years, there will probably be crisis. So never give up. As simple as that,” Levine says.