Human Nature and Products: needs
While on vacation in Lisbon back in January, my family and I were routinely approached by street hawkers selling useless crap, like glowing objects and the likes. We always turned them down. And I'd watch them fruitlessly chase every person walking by. When I looked at them, I saw hardworking entrepreneurs selling products people didn't want or need. I couldn't help but wonder how much more successful they would be if they were selling something else. It made me consider my own entrepreneurial journey. I thought to myself: I don't want to be like these guys.
While still in Lisbon, we visited Pastéis de Belém, a famous bakery that makes egg tart pastry. To our surprise, the place was absolutely crowded. There were literally hundreds of hungry tourists queueing up outside the bakery, and hundreds more being served inside. I remember thinking: "wow, it must be amazing to be the owner of this shop". The waiters didn't have to chase or convince anybody; customers were more than happy to have a chance to pay for this product.
What made these 2 businesses cause such different responses from their potential customers? What drives demand? Why do people care about certain products, but not others? Why do some entrepreneurs have to chase after their prospects, while others literally struggle to cope with the overwhelming demand?
Let's start from the most basic piece of the puzzle, humans. Customers are people. Every person is unique. However, there is a lot we share. We're the same species, with mostly the same physical and mental abilities and constraints, forged by the same millions of years of evolution. Therefore, at a fundamental level, we are driven by the same needs and desires.
As an entrepreneur, your success depends on identifying a need that humans care about. Most startups fail because they fail to build a product that solves a real need. Little matters if you have a great team, great technology, great design or lots of funding. The million-dollar challenge is finding problems people care about. Problems they desperately want solved. Needs they desperately want fulfilled.
Most massively successful consumer tech products solve problems driven by fundamental human desires. Tinder relies on the fundamental human desire for mating. WhatsApp relies on the fundamental need for social connection. Instagram relies on the fundamental needs for social status and social information. Airbnb on the fundamental need for shelter. I could go on and on.
Having said that, there are other factors for success. Other world developments that startups need to rely on. Market conditions. Cultural aspects. World trends. Tech advancements. Actual startup ideas need to tick off many other boxes. But I suspect "fundamental human need" to be an essential box to tick off.
Take eating, for example. It's essential for human survival. Most people experience discomfort from being hungry. It's a powerful driver. No matter who you are in the world, you eat at least once a day (except those who unfortunately can't). Therefore, you are well motivated to spend time, money and effort to get food, which makes the Pastéis de Belém outcome possible.
Interestingly, basic needs tend to correlate with consumer spending. For instance, take a look at the following data, showing that Americans spend most of their income on food, housing, transportation, and healthcare:
After identifying a fundamental need, the next step is to consider the barriers preventing it from being fulfilled. With eating, the problems can be: a lack of access to ingredients (solved by supermarkets); the skills, effort and time required to cook (solved by restaurants such as Pastéis de Belém); the effort required to travel to the restaurant or supermarket (solved by delivery companies).
Some needs lack a barrier. Take breathing, for instance. It is an even more pressing need than eating. However, in many contexts, clean air is easily accessible. It's just there, freely available for your consumption. Unlike finding food, breathing is an autonomous process that usually requires zero effort. Thus, the mere existence of a need is not enough. There have to be significant barriers keeping your potential customers from fulfilling their needs; barriers that your venture can eliminate.
All of this seems very obvious. The whole Make Something People Want mantra. Why would any business build things nobody needs? Why are entrepreneurs unaware of people's fundamental needs? I think the answer lies in the fact that these needs often manifest themselves in complex ways. There are many levels of complexity between the basic need, and the manifestation of it in the real world. The fundamental need is hidden many layers down. What you should be looking for is the root cause. When analyzing a particular behavior, you have to ask many consecutive "Why?" questions, in order to reveal the underlying fundamental motivation.
Human behavior seems complex and arbitrary at first sight. It probably is to some extent. But still, I would bet any day that people would be more interested in enjoying a delicious egg tart pastry than buying some random glowing toy.