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Discovering Problems That Customers Are Willing To Pay For

By Edwin Maganjo, Verdant Frontiers Fintech Fund

The one thing that all great start-ups have in common is that they are solving a big problem for a big market in a way that is in order of magnitude greater than pre-existing solutions. It is fiendishly difficult to get these three factors aligned. Oftentimes, we see a variation of the combination, e.g. big market small problem, or big problem small market - but rarely do we see all three simultaneously at play.

Janette Chung is a product superstar with 20 years in the industry leading product teams at global fintech giants such as PayPal and Alipay. As a product executive and advisor for fintech start-ups, Janette is passionate about company building via best practices in product management.  Today we have the privilege of picking her brain on how to discover problems worth solving. Hope you enjoy the read 🙂

Q: So how and why did you get into product management?

I graduated from the University of Hong Kong with a degree in Computer Science. My initial professional experience was at Arthur Anderson, where I worked as a business consultant helping enterprise clients with technology transformation.

Though I enjoyed this experience, I could not shake the desire to be part of a team that built products rather than implementing them. I longed to understand the broader context in which technology solutions operated. Tech was also massively revolutionizing life back then, with e-commerce, PayPal, etc. I wanted to participate in that journey as a builder, not just a consumer.

So, I packed up and moved to Northwestern University's Kellogg School of Management in the US. In this business school, which is well known for marketing, I developed an appreciation for big-picture thinking, i.e., discovering highly painful customer problems that can be solved with technology and distributed at a large scale in a profitable way.

Q: What’s one big thing you have learned about discovering painful customer problems?

To successfully discover painful customer problems, one requires a mix of the right brain (intuition) and the left brain (analytical thinking). The former is the hunch that gets you excited that a problem exists. The latter keeps you grounded, forcing you to thoroughly validate your hunch before declaring victory.


Q: How do you strike a balance between right and left brain thinking?

That’s where diversity comes in! Ideally, a group of people discover the customer problem together, each with their own strengths and lens of viewing problems. This helps with more objective conversations around observations and insights. Customer discovery is always better if it is done by a group of diverse people with diverse backgrounds and perspectives.

“Customer discovery is always better if it is done by a group of diverse people with diverse backgrounds and perspectives.” - Janette Chung 

Q: I love that answer! What are some key impediments to diversity?

Culture comes to mind. You may have a diverse team that gets overshadowed by a stifling/toxic culture.

Take for example executive (as opposed to customer) driven innovation. Someone high up is very confident about a certain path. Leaning on the data from their past successes, they ignore customer feedback and surround themselves with yes men who validate their every hunch. This sort of culture nullifies the benefits diversity brings to problem discovery.


Q: What advice would you give to executives who have created echo chambers?

Two things: first, recognize it. Second, make concerted efforts to get out of the echo chamber: hire diversely, listen to customers, and willingly accept evidence that does not confirm your ideas.


Q: Ok, let’s switch gears for a bit. How do you go about determining how painful a problem is?

It depends. If it is an “old problem” (i.e. one that humanity has dealt with and attempted to solve for eons) then you can be reasonably confident about the intensity of the pain. Fintech operators are fortunate in that they get to solve many of the world's oldest problems: insufficient capital, movement of value, trust and safety, etc.

It is also worth noting that new technology creating new ecosystems could generate “new problems.” Take, for example, the world of e-commerce. Before e-commerce, credit card fraud was not a massive issue, but today billions of dollars are stolen annually.


Make a point to think and read more about the world’s oldest problems and how people have solved them over the years. Also, take an interest in new ecosystems; they always bring about new opportunities. Take AirDNA, for example, a SaaS platform that provides historical Airbnb booking data for prospective Airbnb hosts. 

Q: Can you think of an example in your career where the intensity of a customer problem was incorrectly sized? What happened?

Some years back, I was working on a project where we were looking to solve for the high commissions that platforms charged developers on app sales. 30% looked unacceptably high.

But that was only one part of the story. It was only when we started questioning the values platforms created for developers that the intensity of the pain began to wane.


Q: How did you go about rethinking the intensity?

We started by creating a customer journey map to understand what jobs these platforms (e.g. Apple App Store) did for developers. We also researched what alternatives developers had, and what they would do if these platforms did not exist.

Ultimately, it was clear that these platforms created enough value to justify their high commission by removing the hassles of listing applications, exposing them to hundreds of millions of potential consumers, collecting and disbursing payments.

The 30% stopped looking like a problem and more like a convenience. For any solution to make sense to the developer, it would need to do all the jobs these platforms were doing and in a significantly better way.


Fight the temptation to think about problems one-dimensionally. Take the time to understand the context in which your customer is interacting with the problem. If you haven’t already, acquaint yourself with Clayton Christensen’s Job’s To Be Done theory. It’s what Janette was referring to when she mentioned “jobs.”

Q: Share one hindrance to product discovery.

Founders falling in love with one solution. When this happens everything they learn is biased by a big desire for the solution to work. Negative feedback is swept under the rug with the rationalization that maybe the customer is not in their target segment.


Q: How do you fight against confirmation bias? 

Have multiple solutions in mind. You’re less likely to fall in love with one solution if you’re cheaply prototyping several. This approach sort of forces you into a more analytical state of mind whereby if one solution doesn’t work, you drop it and switch instead of flogging a dead horse. 

A great practice to follow is to use the “Continuous Discovery Habit,” that Teresa Torres describes in her book which discusses mapping out the problems/opportunity space and potential solutions, most importantly, the assumptions for each solution to work. Instead of testing solutions, testing assumptions could be faster and more objective.


Q: What should come first? Figuring out how big your potential target market (TAM) is or validating problem intensity?

People often focus on validating the problem and spend little time thinking through the addressable market size. This can lead to wasted resources, as you end up building a product for a non-existent market. Figure out your total addressable market (TAM) early and cheaply.


Figuring out TAM in Africa is tricky as data is typically very fragmented and outdated. You can mitigate this by building highly conservative financial models and creating aggressive pricing strategies — where the business makes financial sense with a handful of customers as opposed to millions.

The biggest thing that stood out for me in this interview is the importance of diversity in unearthing deep customer problems. Without diversity, teams are more susceptible to tunnel vision, falling in love with one idea as opposed to testing several. So, if you’re struggling to find a problem that customers are willing to pay for, look inwardly. The answer may be a more diverse team or a culture change that allows the voicing of diverse views.


At Verdant Frontiers Fintech Fund, we not only invest in start-ups, but we leverage our decades of entrepreneurial experience to help our portfolio companies accelerate PMF. Reach out to us here if you would like to learn more.

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