VCs often reject business plans because they feel the solution being offered is one that is searching for a problem. What the VCs know: new ventures succeed when they relieve pain for the customer, a concept that is sometimes called “whole customer marketing” or “demand innovation” – depending on who you are talking with.
Examples abound. Amazon does more than simply sell books online. College students turn to Amazon as an alternative source when bookstores ran out of course necessities. eBay delivered a veritable bazaar of products and put money in people’s pockets. Both companies solved pain points. There are similar lessons in what’s going on around us today. Thanks to the Internet, for the first time in history, the supply chain and the selling chain have been integrated into one mega-channel. For some companies and their customers, the Internet is the entire channel—their entire relationship exists over the Web. E-business lends itself to a self-service model. This has been successfully applied in B2C businesses like Amazon, eBay and Dell. There are still opportunities to create this in B2B, where employees and customers can fulfill business requirements when and how they want. Meanwhile, small businesses are poised to explode. Seventy percent of US businesses with fewer than 250 employees still don’t have a Web presence, according to an October 2002 SBA report. For bigger companies, small businesses have the potential of becoming new clients and, through partnerships, providing access to niche customers. They can act as a virtual salesforce, extending a company’s reach. eBay, for example, has become so successful with its Power Sellers program that it can now offer them health insurance. New concepts such as this are expected to proliferate in the future.
Darwin Magazine May 2003