A few weeks ago, Steve Blank, a Silicon Valley-based retired serial entrepreneur and professor of entrepreneurship at UC Berkeley and Standford, wrote a blog post on how to build a billion dollar startup. In his post, Blank classifies the value proposition in a billion dollar business model into either one of two categories:
1) It solves a problem and gets a job done for a consumer or a company (accounting software, elevators, electricity, electric toothbrushes, email software, etc. ). Some examples of successful startups in this category are Dropbox, Evernote and Mint.
2) It fulfills a fundamental human social need (friendship, dating, sex, entertainment, art, communication, blogs, confession, networking, etc.). Some examples of successful startups in this category are Facebook, Twitter and Instagram.
The typical formula to create a successful startup is to find a solution for a bleeding-neck problem that really annoys enough people. That’s usually true. I’ll talk about that some more in my next post.
I find the second category for value propositions of billion-dollar startups interesting. If you look at Facebook, Twitter and Instagram, they really don’t solve a bleeding-neck problem. So, why have they become so successful?
Is It a Problem or a Need?
The 5 stages human motivations generally move through: Physiological, Safety, Belongingness and Love, Esteem, and Self-Actualization.
What Facebook, Twitter and Instragram fulfills is the basic human need to connect with another person. In 1943, Abraham Maslow, a psychologist, proposed that human motivations generally move through 5 stages: Physiological, Safety, Belongingness and Love, Esteem, and Self-Actualization. Once our physiological and safety needs are met, we now look for social needs. We have this need to be accepted. We have this need to belong, whether it comes from a large social group such as clubs, religious groups, office cultures or more intimiate connections such family, close friends and love partners. We have this need to connect with other people. What Facebook, Twitter and Instagram have done so well is to bring this social need to the digital world:
Facebook takes our need for friendship and attempts to recreate that connection on-line.
Twitter allows us to share and communicate in real time.
Instagram allows us to share our pictures in real-time with friends.
What Facebook, Twitter and Instagram also offer is a digital platform for people to feel accepted. Don’t you feel good when you realized you have a lot of friends on Facebook or followers on Twitter? Don’t you feel great when you post something witty or clever on Facebook or Twitter and someone liked or re-tweeted your post? No one would admit it. But it’s in the back of people’s mind. “I hope someone re-tweets this or likes this post.” 
This is why Facebook, Twitter and Instagram have become so successful: They provide another platform where people can connect, belong and feel accepted.
Focus on the need
So, if you’re working on a startup that’s focused on fulfilling a social need, ask yourself the following questions:
Are you trying to build a community where people feel a sense of belonging?
Are you trying to provide a platform where people can feel accepted?
Are you trying to connect people together?
Make sure your value proposition is clear to your users. Your product should also reflect your value proposition. Focus on what brings your users back to your website. Focus on fulfilling that social need, whether your trying to build a platform where people can connect, belong or feel accepted.
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