The Hole at the Bottom of the Pyramid

“Innovation ultimately winds up being, quite frequently… solving very, very hard problems”, Max Levchin, co-founder, Paypal

“Only small companies do impressive things”. Vinod Khosla, Managing Director, Khosla Ventures

A few years ago, I read a TechCrunch article that had one of the best Venn diagrams I’ve seen in years. It only had 3 circles: “Problems we can solve”, “Problems we are solving” and “Problems we should solve”. While the article focused on the intersection between “can solve” and “are solving”, I’ve found myself spending more and more time thinking about the intersection between “can solve” and “should solve”.

It’s pretty easy to rattle off the names of 5 social networking tech companies, or casual gaming, or even product marketplaces for that matter. Yet when we try to do the same for tech companies that provide better access to clean water, or democratize education we quickly draw a blank. Why?

Poor marketing prowess? Not sexy enough? Biased tech news media coverage? Perhaps.But the simple fact of the matter is that there’s just not that many of them out there. Companies in the first batch outnumber ones in the second batch by orders of magnitude.

The needs and wants that the first batch of companies addresses differ substantially from the ones addressed by the other batch. Though by no means a consensus in the academic world, it’s interesting to think about this problem through the lens of Maslow’s “Hierarchy of needs”. At its core, Maslow’s theory is based on an intuitive concept: human needs can be grouped based on their importance to human survival and development. Those groups are often illustrated as a pyramid, with the most basic, physiological needs (food, water, sleep, etc.) at its base, followed by safety needs (health, employment, resources), love/belonging (friends, family), esteem (self-esteem, confidence, achievement) and finally at the top, self-actualization (creativity, problem solving, etc.). As you move up the pyramid, needs transition into wants. Companies at the first group batch needs and wants at the love/belonging level and upwards in the pyramid, while companies that are part of the other batch address needs at the bottom two levels.

Sadly, it seems that the further you go down the pyramid, trying to address more basic needs, the number of startups and innovation seem to decline dramatically. This is a serious problem.


Addressing needs at the bottom of the pyramid means solving really hard problems. Though not perfectly correlated, “hard” and “valuable” tend to go hand in hand, making this a worthwhile endeavor.

We should all be taking more problems from the “can solve”-“should solve” space, and move them to the “are solving” intersection. If software is eating the world, we can all help make sure that it’s eating the more important parts first.



The Hole at the Bottom of the Pyramid

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