Software Industry Opportunity Mindsets
October 2024
I've noticed three distinct mindsets for identifying opportunities in software. They're not mutually exclusive — most successful people I know blend them — but they lead to different kinds of companies and different risk profiles.
The Pain Point Observer
This mindset starts with lived frustration. You experience something broken in your daily life and can't find a good solution. The opportunity is obvious to you because the pain is personal.
The strength: Deep understanding of the problem space. You're not guessing about user needs because you are the user. The risk: Assuming your experience generalizes. What annoys you might not annoy enough others to support a business.
Do Little Lab came from this place. Wrestling with insurance denials personally made the opportunity obvious. The challenge was determining whether enough others shared the same pain to justify building for it.
The Technology Optimist
This mindset starts with capability. A new technology emerges — LLMs, mobile, cloud — and you ask what becomes possible that wasn't before. The opportunity emerges from the delta between what people needed and what technology previously allowed.
The strength: Timing. Being early to a platform shift can create durable advantages. The risk: Solutions in search of problems. It's easy to build impressive demos that don't solve real needs.
The best technology optimists anchor their explorations in specific use cases. They're not asking "what can GPT-4 do?" but "who has been forced to accept bad outcomes because language understanding was too expensive?"
The Market Analyst
This mindset starts with economics. You identify an industry with high friction, regulatory protection, or information asymmetry. The opportunity comes from structural inefficiency rather than personal experience or technical possibility.
The strength: Larger addressable markets. Industries like healthcare, finance, and government have massive budgets and entrenched incumbents ripe for disruption. The risk: Underestimating complexity. Institutional knowledge matters. Regulators protect incumbents for reasons that aren't always irrational.
Successful market analysts spend months understanding industry dynamics before building. They respect the complexity that protected incumbents for years.
Combining Mindsets
The most durable opportunities I've seen combine all three. A personal pain point in a market with structural inefficiency, addressed through newly available technology.
Stripe: Painful payment processing (pain point) + Internet commerce growth (market) + API-first infrastructure (technology). Notcoincidentally, their founders had lived the problem while building previous companies.
For builders deciding what to work on, the question isn't which mindset is correct. It's which combination of mindsets you can authentically apply given your experience, technical skills, and risk tolerance.
The pain point observer without market analysis builds lifestyle businesses. The technology optimist without pain point grounding builds solutions seeking problems. The market analyst without technical capability gets stuck consulting about opportunities rather than capturing them.
Know your starting point. Then deliberately develop the complementary perspectives.
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Building Do Little Lab. Previously: SRE, engineering manager, humanitarian relief organizer.