
How Developers Find $1M Problems Everyone Ignores
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Video Summary
Software engineers possess immense potential, often underutilized in corporate roles on mundane tasks. This video presents a playbook for leveraging AI to find and solve high-value problems in overlooked industries, transforming from a junior developer to a seven-figure consulting firm owner. The key lies in understanding that businesses are fundamentally driven by pain mitigation, and identifying these pain points—especially those software engineers typically ignore due to cognitive biases—opens doors to lucrative opportunities.
By thinking beyond the typical SaaS solutions and utilizing one's unique advantages like location, network, and experience, engineers can uncover untapped markets. The video delves into a detailed process of problem vetting, customer profile research, and solution design, using a custom POS system for farmers' market vendors as a case study. This demonstrates how to move from identifying a problem to creating a viable business model with projected revenues, emphasizing iterative refinement and a deep understanding of customer needs.
Short Highlights
- Software engineers can leverage AI to significantly increase their output, acting as "one-man armies."
- Pain is the primary motivator in business, and businesses prioritize risk mitigation and survival by addressing pain points.
- Software engineers often fall into a cognitive bias by defaulting to creating SaaS products in familiar areas like developer tools, neglecting overlooked industries.
- Utilizing one's unique advantages—location, network, and experience—is crucial for identifying problems outside the common scope of software engineering.
- A structured process involving problem vetting, customer profile research, solution design, and financial projection is essential for building a successful business.
Key Details
The Underestimated Power of Software Engineering Skills [0:00]
- Software engineers often have their potential wasted on routine tasks in corporate jobs, rather than solving real-world problems.
- The advancement of AI allows a single software engineer to achieve the output of multiple engineers from a decade ago, multiplying their effectiveness.
- Humans who embrace AI will ultimately replace those who don't.
"As a software engineer, your skills are one of the most powerful sources of leverage in human history."
The Importance of Problems in Business [2:24]
- Pain is the greatest motivator in business; businesses exist to mitigate risk and survive.
- Businesses are built around pain, and they actively seek to avoid it more than pursue gains because losses carry more weight than wins.
- Problems represent pain points, and the world is full of them, offering numerous opportunities for solutions.
"At its core, business is all about risk mitigation and survival, right? So, I'm sure you've heard before it's a marathon, not a sprint. That's because at the core of it, businesses are entirely built around pain."
Types of Problems and Avoiding Bias [4:25]
- Problems can be categorized into: problems you are aware of, problems you are not aware of but exist, and problems you don't know you don't know.
- The majority of problems fall into the "you don't know you don't know" category, representing the greatest opportunity.
- Software engineers often default to creating SaaS solutions in familiar domains (developer tools, productivity, marketing) due to cognitive biases and the visibility of successful startups, neglecting deeper, untapped opportunities.
"As a result, we want to focus on these two over here. That's not to say we want to completely disregard this but our primary focus should be on these two slots over here."
Leveraging Unique Advantages for Problem Identification [8:41]
- Your unique advantage includes your physical location, network, and experience (technical and life).
- By thinking beyond the "tech bubble," software engineers can find opportunities in diverse fields like healthcare, logistics, and finance.
- Golden opportunities often exist within your existing network, through family, friends, or local businesses you're familiar with.
"The goal here is to use your actual physical location, your network and your experience... to find problems outside the common scope of a software engineer."
The Financial Potential of Niche Problems [13:10]
- Most people underestimate the vast amount of money that flows daily through various transactions.
- Even seemingly small, niche problems can lead to multi-million dollar businesses.
- The speaker's company generated over $500,000 in the last month alone, primarily from local clients.
"You see, most people grossly underestimate how much money there actually is in the world and how much money actually flows every single day and exchanges hands."
Examples of High-Value Niche Problems [15:19]
- Customized CRM for law firms handling civil cases.
- Paperwork automation for the shrimping industry.
- Inventory management software for independent used vinyl record stores.
- Custom POS software tailored for vendors at farmers' markets.
- Automation of patient care plans to streamline nursing workflows.
"And these are all ideas that will get you at least a million dollars if you choose to solve them."
Vetting a Problem: The Checklist [20:06]
- Significance, Pain, and Growth: Is the problem severe enough to demand a solution and becoming more prevalent?
- Market Size and Willingness to Pay: Is there a sizable audience willing to pay for a high-priced solution? (10,000+ for B2C, 1,000+ for B2B globally; 100+ locally).
- Solution Feasibility and Competition: Can an effective, repeatable solution be created and compete within a reasonable timeframe?
- Reachability: Can the target audience be easily reached and communicated with?
- Competitor Viability: Are competitors successfully solving this problem, indicating market viability?
Vetting the Farmers' Market POS Problem [24:23]
- Significance, Pain, Growth: Yes, vendors need better tools as cashless payments grow.
- Market Size/Pay: This is complex; high prices might not work for farmers.
- Feasibility/Competition: Yes, a smart solution is possible within 1-2 months; competition exists (e.g., Square), proving demand.
- Reachability: Yes, direct interaction at markets and social media outreach are feasible.
- Competitor Viability: Yes, competitors like Square prove market viability, but a niche focus is key.
Deep Dive into the Ideal Customer Profile (ICP) for Farmers' Market Vendors [29:04]
- Who they are: Vendors selling produce, handmade goods, or artisan products.
- What they sell: Seasonal produce, baked goods, crafts, specialty foods.
- Biggest Pain Points: Efficient payment handling, sales tracking, inventory management, keeping costs low.
- Current Solutions: Cash, basic card readers (Square), manual methods (notebooks).
- Goals: Faster payments, increased sales, reduced errors, seamless customer experience, low budget ($50-$20/month), cost-effective and easy-to-use solutions.
- Location: Local to regional markets, often in outdoor settings with limited connectivity.
- Tech Savvy: Moderate, requiring simple, intuitive systems with minimal setup.
- Buying Process: Decisions made by the vendor, based on affordability and usability.
- Where they spend time: In person at markets, online vendor communities, social media (Facebook, Instagram).
Drafting Solution v1: POS System for Farmers' Market Vendors [36:00]
- Offline Functionality: Process transactions and track sales without internet, syncing later.
- UI/UX: Simple, intuitive, easy to use with minimal training, large buttons, clear menus.
- Affordability: Low monthly subscription ($5-$20/month) or one-time purchase.
- Multi-Payment Support: Cash, credit, debit, contactless, QR codes.
- Basic Inventory Management: Real-time tracking with low stock alerts.
- Sales Reporting: Simple daily/weekly summaries.
- Customization: Quick product setup, variable pricing (per pound, discounts).
- Mobile App Integration: View sales, manage inventory, generate invoices on the go.
- Customer Support: 24/7 live chat or phone support.
- No Hidden Fees: Transparent pricing.
Vetting Solution v1 and Identifying Challenges [42:09]
- Target Audience Size: Farmers' market vendors have slim margins and are budget-conscious, requiring significant outreach.
- Pricing Constraints: $50/month requires 1,000 vendors for $50k/month in subscriptions, necessitating large user base and steady acquisition.
- Customer Retention: Off-season churn can create revenue fluctuations.
- Competition: Established players like Square and Clover dominate the small vendor market.
- Technology Hesitancy: Vendors may be resistant to adopting new technology, especially if accustomed to manual processes.
Further Research and Solution v2 Requirements [46:43]
- Demographics: Understand age range and tech savviness for tailored user experiences.
- Business Size: Differentiate needs for solo proprietors vs. larger teams.
- Business Operations: Account for product types (e.g., weight-based pricing), seasonality, and sales volume.
- Pain Points: Deeply understand frustrations with existing tools (fees, offline functionality, inventory).
- Financial Capacity: Determine realistic willingness to pay for solutions.
- Hardware Investments: Assess openness to purchasing card readers, printers.
- Technology Usage & Devices: Design for smartphones, tablets, laptops.
- Internet Access: Prioritize offline functionality.
- Sales Channels: Consider in-person, online, and e-commerce integrations.
- Customer/Market Preferences: Align with payment methods, networking, and professionalism.
Solution v2: Enhanced POS System with Hardware [53:47]
- Hardware: Portable, durable, lightweight, battery-powered device for outdoor use.
- Offline Functionality: Robust offline transaction processing and syncing.
- UI/UX: Simple, intuitive, minimal training, large buttons.
- Affordability: Low monthly subscription ($5-$20/month) or one-time purchase with lower transaction fees than competitors.
- Multi-Payment Support: Comprehensive payment options.
- Inventory Management: Real-time tracking, low stock alerts.
- Sales Reporting: Simple summaries.
- Customization: Dynamic pricing, specific catalogs, bulk discounts.
- Rugged/Waterproof Hardware: Designed for outdoor conditions.
- Mobile App Integration: Smartphone app for remote management.
- 24/7 Customer Support: Prompt assistance.
- No Hidden Fees: Transparency in pricing.
Key Differentiators from Competitors [57:43]
- Offline Operation: Fully functional offline, syncing later.
- Dynamic Pricing: Integration with scales for weight-based pricing.
- Seasonal Flexibility: Option to pause/resume subscriptions.
- Tailored Outdoor Hardware: Weatherproof, long battery life.
- Tiered Plans: Basic (POS terminal + portable card reader) and Pro (adds scale integration, weatherproof case).
- E-commerce Integration: For vendors with online stores.
Sales, Onboarding, and Revenue Model [1:00:50]
- Sales/Onboarding: Partner with associations, offer free trials/discounts, collaborate with health/organic influencers.
- Revenue Model:
- Subscription: Basic plan ($50/month), Pro plan ($100/month).
- Transaction Fees: Basic (2.5%), Pro (2%) - lower than competitors (Square ~2.75-3.5%, Clover ~3%).
- Hardware Sales: Basic ($500), Pro ($750) - aiming for 2-3x ROI based on Alibaba pricing.
- Custom Add-ons: Loyalty programs, advanced reporting.
- Maintenance/Premium Support Plans.
Financial Projections (Conservative Estimate) [1:05:24]
- Assumptions: 100 customers (300 total vendors: 100 Pro, 200 Basic), 50% hardware purchase rate, conservative monthly sales per vendor ($2,924).
- Subscription Revenue: $20,000/month ($240,000/year).
- Hardware Revenue: $87,500 (one-time purchase).
- Transaction Fees: $245,616 (calculated based on plan fees and sales volume).
- Total Year 1 Revenue: $573,116.
- Profitability: Low software costs, hardware cost is the main expense; AI can build the software.
"You found a problem. This is how you would go about the solution. Once again, to kind of go back through the steps, we have a problem. We vet the problem to make sure it's a good problem."
Iterative Process of Solution Development [1:09:30]
- The process involves: Identifying a problem, vetting it, creating a requirements document, identifying why it might fail, researching further based on feedback, and creating an improved solution (v2, v3, etc.).
- The goal is to iteratively refine the solution until it is close to ideal.
- The next video will focus on monetizing the solution.
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