Pick an important problem

This document is a bit of a work in progress. I realized I could streamline my findings by combining the insights from my study of 10+ companies backed by Sam Altman, Peter Thiel, and others into a more organized framework. I believe my ability to structure my thoughts stems in part from years of reading economics books, finance, and watching and studying companies on shows like Shark Tank, Dragon’s Den, and The Final Pitch. This document lays the groundwork for my research, starting with a clear understanding of the problem and why it's crucial to address.

This document will outline the problem I'm addressing and my proposed startup solution to answer the question “am I solving an important problem?”

Interests & Skills

My main focus is building products that solve significant problems. My skills are in branding, graphic design, and strategic digital marketing, with ongoing training in UX design and Advanced Data Analytics. My ultimate goal is to become a self-taught full-stack programmer or software engineer.

How It Started

Two years ago, while working as a branding expert, I started a social media management agency to help companies build an online presence. I interviewed local retailers, including a traditional dress seller and a cacao-chocolate seller. Their stories inspired me, and they all wanted updates on my progress.

By 2024, I had rented an apartment as an office and noticed inefficiencies in local store deliveries. Despite apps like Grab and FoodPanda, stores struggle due to high commissions and low customer retention. 

I believe there's a way to sell products online without inflating in-store prices, offering faster (10-minute) and cheaper delivery. The solution should focus on local markets first, aiming to expand nationwide, one local store at a time.

Background

The Philippine economy is developing. With a GDP of only US$ 404.3  billion in 2022 [1], it’s evident how small our economy is compared to Southeast Asian nations like Singapore, Indonesia, Thailand, and Vietnam.

Despite our size, MSMEs play a significant role in our growth, providing 63% of the country’s jobs [2], generating 35.7% of the country’s total value-added. [3] comprising 99.5% of all businesses in the Philippines [4] and contributing 40% to our Gross Domestic Product (GDP) in 2022 [5]. This means that as of 2022, MSMEs in the Philippines represent a $160 billion industry, with the e-commerce market size valued at $15 billion [5.1]

According to DTI [6], there were 1,109,684 business enterprises operating in the Philippines in 2022. Of these, 1,105,143 (99.59%) were MSMEs, while 4,541 (0.41%) were large enterprises. Micro enterprises made up 90.49% (1,004,195) of total establishments, followed by small enterprises at 8.69% (96,464) and medium enterprises at 0.40% (4,484).

The top five industry sectors among MSMEs were: (1) Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles (546,863); (2) Accommodation and Food Service Activities (158,113); (3) Manufacturing (133,504); (4) Other Service Activities (71,145); and (5) Financial and Insurance Activities (50,782), collectively accounting for 86.90% of all MSME establishments.

The Problem

The ecommerce platform is very difficult and expensive for micro and small businesses in the Philippines to adapt to. There is no single ecommerce platform that creates an entire ecosystem, like a small town, where everything the retailer, suppliers, consumer, and third-party partners needs are within reach.

The world is rapidly advancing in digital infrastructures and strategies that reduce operational costs, simplify processes, enhance brand awareness through effective marketing, improve customer journeys, and, most importantly, increase revenue. Therefore, MSMEs must adapt to new and evolving technologies to achieve these goals.

MSMEs in the Philippines are at a crossroads, facing the choice of either adopting these technologies or losing their competitive advantage. The DTI conducted a baseline study on this [7]. 

The DTI's baseline study revealed that 56% of MSMEs use basic digital tools like Microsoft Office, email, WhatsApp, PCs, and mobile phones. Another 34% have an online presence through websites, social media, e-commerce sites, tablets, and printers. Only 10% utilize advanced digital tools like ERP, CRM, analytics, big data, automation, and pure online business models.

In examining e-commerce platforms in the Philippines, it's evident that many MSMEs struggle to grow due to the marketplace model most platforms use. This model allows vendors to list products with basic descriptions and prices but does little for brand development. While platforms like FoodPanda, Grab, Shopee, and Lazada might drive sales, they fail to help businesses build a lasting brand identity which is crucial for MSMEs aiming for longevity.

The study also found that 82% of respondents are familiar with Facebook and Instagram as e-commerce platforms. This suggests that any effective solution must leverage FB and IG storefronts and advertising capabilities.

Additionally, 54% of MSMEs do not require delivery services, while 35% manage their own deliveries, and only 18% use third-party agencies. Preferred delivery partners include Lalamove (67%), Grab (49%), and LBC (33%).

This indicates a gap: delivery partners are often not integrated into the e-commerce platforms MSMEs use. To reduce costs and retain customers, logistics must be central to any solution to cater those who handle their own deliveries and those who rely on third-party services.

The Solution

Here are the things that I need to solve:

1. E-commerce Platform with Branding Features

An ecommerce platform/website with high mobile responsiveness that will host the visual and language branding of stores to increase brand awareness. This will also offer advanced features that will help them see how they are doing in their business like advanced analytics, dashboards, and inventory management. 

2. Integrated Delivery Service

An ecommerce platform with its own delivery service wing and directly integrated in the platform. This must support both those with the ability to do delivery and those who don’t. This delivery service will use a vetting system that corresponds to the location of the store, address of the delivery address, and the delivery rider. This will also cover deliveries of suppliers from factories to the retailers. Logistics is very essential to encourage a road-to-market model where original breeders have the ability to sell their own goods. This will lower costs for the consumers and is very good for the market, sellers, and my startup idea as well. 

3. Seamless Social Media Integration

An ecommerce platform that will enable advertising on FB and IG and TikTok will be easier. Or a store that will develop stores on FB and IG with an integrated backend in the platform.

4. On-the-Go Talent Marketplace

An ecommerce platform where MSMEs can hire talents to help them with their store development, branding, graphics design, copywriting, and business development on-the-go. 

5. E-commerce Store Directory

A platform where they can list their ecommerce store so consumers know where to find them and can visit their websites based on location, keyword, needs, and cost. This will also allow customers to utilize the features that only that platform provides. 

6. Vendor and Supplier Connection Hub

A platform that connects vendors and suppliers. It’s like bringing Alibaba to local stores so they can save costs in logistics and with better informed decisions. The idea of supply saturation must be applied here so the platform can encourage competitive costs just like how it works in the market. If more people sell the same thing, R&D normally occurs which results in a more affordable cost for the consumers. 

7. Comprehensive Coverage

The solution must cover both the food and non-food stores.

8. Space renting

Stores will be able to collect payments from people who want to sell stuff through their store. Much like Airbnb. In the Philippines a lot of people have the product to sell but without the space to display their products. They can use the traction of another store to display their products for an agreed rate.

This solution will utilize the idea of localism. This means delivery drivers will deliver to the nearest point of contact, with a fixed rate. Advertising will also be based on local demographics. Local MSMEs, unless they intend otherwise, should primarily serve local areas, as that's where most of them aim to provide their services. Hiring talent on-the-go will be nationwide to find the best talent across the country. This will function similarly to OnlineJob.ph, but for the ecommerce sector. Suppliers will come from all over the world, but with a focus on local areas to avoid value-added costs.

These are the solutions I hope to provide, with each feature being released progressively. It's like GoHighLevel for local retailers and suppliers.

1. A website builder (like shopify). 

2. An advertising feature (store connected to FB, IG, and TikTok). 

3. Recruitment marketplace (like OnlineJobs.ph). 

4. Ecommerce marketplace (like amazon).

5. Marketplace of wholesale trade for supplier-buyer market (like Alibaba). 

6. Delivery services (like grab and foodpanda) 

7. AI capabilities to understand how their customers behave and the best time to do high-value tasks.

8. Developing other features as I learn more…

All of these features, in one platform, at a lower cost – an everything app for local retailers and suppliers.

We’ve often heard people talk about serving a local market, but there seems to be a gap when it comes to platforms specifically designed for this purpose. While I aspire to create a solution that benefits businesses nationwide, I believe a strong foundation can be built by focusing on local businesses first.

Please note that my understanding of this topic may evolve as I delve deeper into my research. However, this is a promising starting point.

Is the timing good?  

The government has introduced a new plan for MSMEs called the 2023-2028 MSME Development Plan. This plan aims to integrate artificial intelligence and digital technologies to strengthen MSME capabilities and help them adapt to and excel in the rapidly evolving technological landscape.

This development presents a promising opportunity for my startup to gain traction and reduce Customer Acquisition Costs (CAC), as the government will provide assistance to drive education campaigns. My role is to leverage this assistance to increase awareness of my solution among the public. This can be achieved through partnerships with relevant government agencies and by supporting their campaigns nationwide.

Study 10+ companies that Sam Altman, Peter Thiel, and Bill Gates invested in

I will attempt to discuss the 10 companies that Sam Altman, Peter Thiel, and Bill Gates invested in and try to put my startup idea against them to see which concepts I can adopt and which are not applicable.

1. Stripe

Founders: John and Patrick Collison

Problem: The existing payment systems were complex and difficult for businesses, especially small ones, to use.

Solution: They aimed to create a platform that would make it easier for businesses to accept payments from customers, regardless of their size or technical expertise.

Things they did: 

• Reduce the complexity and time involved in setting up and managing online payments.

• Provide a solution that is easy for businesses of all sizes to use.

• Implement strong security measures to protect both businesses and customers from fraud.

• Offer a platform that can be used by businesses around the world.

Analysis: Both Sam Altman and Peter Thiel invested in Stripe. The reason why Stripe is appealing to me is because their purpose of building Stripe rings true to me. They wanted to simplify the process regardless of technical expertise of businesses. As a result, they became a multi-billion dollar bonanza in the fintech industry.

2. Shopify

Founders: Tobias Lütke, Scott Lake, and Daniel Weinand

Problem: They were trying to solve the problem of the complexity and cost associated with setting up an online store.

Solution: They aimed to simplify this process by providing a user-friendly platform that would make it accessible to anyone, regardless of their technical background.

Things they did: 

• Shopify simplified the process of building and managing an online store, eliminating the need for coding or web development skills.

• Shopify offered a subscription-based pricing model, making it more affordable for businesses of all sizes.

• Shopify provided a flexible platform that allowed businesses to customize their stores to meet their specific needs.

Analysis: Other than trying to simplify building an online store, Shopify was very much concerned about the cost associated with it. I am adapting this model as an ecommerce platform because one of the reasons why Filipino micro and small businesses don’t mind about setting up an online store is cost and technical expertise to maintain it. Shopify removed all of that except that in my case, I will literally be the one to make the websites of the first few customers so I will have those first customers. I’ve read Paul Graham’s email in 2013 that says “Do things that don’t scale”. This explains why doing things manually at first is a good signal that you believe in your product and determination to succeed until scale stage. So, I’ll make it simpler for my customers in the first few months.

3. Airbnb

Founders: Brian Chesky, Joe Gebbia, and Nathan Blecharczyk

Problem: At the time, Airbnb's founders were primarily trying to solve their own financial problems. They were struggling to pay their rent and saw an opportunity to earn extra income by renting out their apartment. However, they quickly realized that there was a broader need for affordable and unique accommodations and expanded their platform to cater to a wider audience.

Solution: was to create a platform that connected travelers with people who had spare rooms or entire homes to rent. This provided a more affordable and unique alternative to traditional hotels and other accommodations. By leveraging the sharing economy, Airbnb offered travelers a chance to stay in local homes and experience destinations like locals.

Things they did: 

• They built a basic website where people could list their available accommodations and travelers could search for them.

• They used social media platforms like Craigslist to promote their listings and reach a wider audience.

• They personally contacted people they knew or met to convince them to list their properties on Airbnb.

•  They implemented basic measures to ensure the safety of both travelers and hosts, such as requiring basic information from users.

• The company's social media strategy focused on marketing local experiences as the main attraction of vacation rentals.

Analysis: Airbnb is my most favorite model of all time. It’s very good at every level. I want to highlight the fact that in the early stages they did a few things that I will also do: 

1. They personally contacted their early customers to list their properties.

2. They used the idea of local experience to attract vacation rentals.

3. They recognized their own problem so they tried to find a solution which happened to become a billion dollar idea. 

4. Doordash

Founders: Tony Xu, Andy Fang, Stanley Tang, and Evan Moore

Problem: They were trying to solve the problem of inconvenient food delivery options. They saw an opportunity to create a more efficient and reliable food delivery service that could cater to the needs of busy individuals and families.

Solution: Their solution was to create a platform that connected restaurants with customers. 

Things they did: 

• They developed a user-friendly platform that made it easy for customers to browse menus, place orders, and track their deliveries.

• They formed relationships with local restaurants to expand their selection of food options and provide them with a delivery platform.

• They built a network of independent contractors to deliver food to customers, ensuring efficient and reliable delivery.

Analysis: One thing that Dorrdash did in the early stage was they were the ones who would deliver the order. And before they made it to the industry, they did things that would not scale. I also like the fact that they primarily were trying to solve the problem in the local area. Doordash didn’t have any strong infrastructure in the beginning. They were using G-Drive to store elements, simple HTML and CSS for their website, and they built great relationships with restaurants. I can learn a lot from them. 

5. Instacart

Founders: Apoorva Mehta, Max Mullen, and Brandon Leonardo

Problem: The founders of Instacart were trying to solve the problem of inconvenience and time-consuming grocery shopping.

Solution: They aimed to create a more efficient and convenient way for people to purchase groceries, especially for those with busy lifestyles.

Things they did: 

• They started the company with limited funding, relying on their own savings and personal networks.

• Initially, they concentrated on serving the San Francisco Bay Area, a tech-savvy region with a growing population of busy professionals.

•  In the beginning, the founders and their small team handled all aspects of the business, from customer service to delivery.

• They focused on creating a recognizable brand and building trust with customers through reliable service and positive word-of-mouth.

Analysis: The way they got started is really appealing. They initially started with limited funding. But I realized I should not be confused by this because they are a company that requires a lot of funding as a fintech company. What interests me most is  how they got started despite that. They used branding to kick it off. Used personal networks of personal shoppers. These are great strategies that I can also use. I have created a possible customer acquisition plan for the local company and it involves a lot of strategies that are similar to other companies I reviewed here including Instacart.

6. Uber

Founders: Travis Kalanick and Garrett Camp

Problem: They were frustrated trying to find a taxi on a snowy night in Paris. They pondered, "What if you could request a ride simply by tapping your phone?". The obvious problem they were trying to solve was the inconvenience of finding a taxi, especially in busy or unfamiliar areas.

Solution: Uber's solution was to create a mobile app that allowed users to request a ride with just a few taps. The app connected riders with nearby drivers, providing real-time tracking of the driver's location and estimated arrival time.

Things they did: 

• Uber started with a very small operation in San Francisco, offering rides only in black luxury cars.

• The initial service was targeted towards high-end customers, with prices significantly higher than traditional taxis.

• Uber developed a mobile app that allowed users to request rides directly from their smartphones.

• The app provided real-time tracking of the driver's location and estimated arrival time.

• Uber partnered with local limousine companies to provide the initial fleet of cars.

• The company emphasized providing a seamless and convenient user experience, prioritizing customer satisfaction.

Analysis: Of all the companies that I;m currently reviewing, Uber is the most unique because it’s the only company that focuses on logistics. As I’ve mentioned, I am planning to add an integrated logistics application inside the store, so much like Grab and FoodPanda, so it will be competitive but also, I can lower the cost of deliveries. One thing that Uber did that might adapt soon is their pricing model. They initially targeted the high-end customers. This is something I have been thinking about- to target those in the edge of the ellipse of the Micro and Small companies. This is ideal so I only have to worry about making the service better and not so much on the cost. This is also how Tesla started. They made a product that is high-end then they scaled and made it more affordable compared to the cars in the market with the same features and efficiencies. So. I’m thinking about this. This is perhaps where Athena can help me decide on moving forward. Go high-end for the select few or go low-end and high volume customers? Which is better?

7. Wish

Founders:  Piotr Szulczewski and Danny Zhang

Problem: They saw a gap in the market where retail markup could be eliminated to reduce costs of goods. 

Solution: Their solution is to create an application that can connect manufacturers and buyers directly to reduce retail markup costs.

Things they did: 

• They began by focusing on a small niche market of Chinese manufacturers and American consumers.

• The founders initially funded Wish using their own savings and personal credit cards.

• Wish focused on targeted marketing campaigns to reach potential customers, particularly those interested in affordable products.

• As satisfied customers shared their positive experiences, Wish benefited from word-of-mouth marketing.

Analysis:  What Wish did was brilliant. At the time, when I was 9 years old, they already thought of removing the retailers in the equation. Although that is a bad thing in the economy in general, it is really good for the general consumers. I can use the same model where I am giving the manufacturers the chance to sell on my platform directly and initiate a relationship with them. This will possibly result in a higher traffic rate since Filipinos love affordable stuff. This is an action point for me. But just like any other companies, I need to personally build relationships with these manufacturers and invite them to the platform. Right now, my model is to help suppliers connect with retailers inside my application. 

8. Flexport

Founders:  Ryan Petersen

Problem: Flexport was initially founded to address the inefficiencies and complexities of international shipping. The logistics industry was fragmented, with numerous intermediaries involved in the process, leading to high costs, delays, and lack of transparency.

Solution: Peterson envisioned a platform that would revolutionize the international shipping industry. He believed that by leveraging technology and building strong relationships with carriers, he could create a more efficient, transparent, and cost-effective solution for shippers.

Things they did: 

• Built a proprietary software platform for shipment management, inventory tracking, and real-time visibility.

• Invested in data analytics for route optimization, rate negotiation, and issue identification.

• Formed strategic alliances with major shipping lines and airlines.

• Leveraged technology to provide carriers with valuable data and insights.

• Targeted small and medium-sized businesses underserved by traditional freight forwarders.

• Streamlined operations to reduce costs and improve turnaround times.

• Implemented lean manufacturing principles for process optimization.

Analysis: One thing I admire about what they did in Flexport is their guts to break into a very difficult industry. You have anything but big criminal names all around the globe. But to break all the intermediaries is a different level of courage. I think this is a very important model because over time we need to lower the cost, not inflate it, especially in logistics in order for other businesses like ecommerce to propel. Otherwise, ecommerce will also have to inflate their cost and end up losing customers. So, I think what I learned from them is grit and courage that despite this being a difficult industry to breakin, they persisted and avoided inflationary activities and entities between the suppliers and consumers.

9. Spotify

Founders:  Daniel Ek and Martin Lorentzon

Problem: The problem Spotify sought to solve was the cumbersome process of downloading and managing individual music files.

Solution: Spotify aimed to revolutionize this by offering a streaming service where users could access a vast library of music online, on-demand, and without having to download or own the files.

This would provide a more convenient and efficient way to listen to music.

Things they did: 

• Spotify formed crucial partnerships with major record labels like Universal Music Group, Sony Music Entertainment, and Warner Music Group.

• To attract a large user base, Spotify offered a free tier with limitations.

• For users seeking a more premium experience, Spotify introduced a paid subscription model.

Analysis: One of the startup stories out there that inspired me to just keep running and hitting the road is Spotify. The grit and dedication of Daniel at the beginning was tremendous and admirable. He believed in a solution that many people and big label companies ignored. They were also facing monetization issues at the beginning and lawsuits. But Daniel succeeded and is now thriving. What I learned from their experience is to keep pushing and go all in on things I believe will work. I might fail, which is probably true, but the chances of success are at least never zero. 

10. Yelp

Founders: Jeremy Stoppelman and Russel Simmons

Problem: The problem Yelp's founders were trying to solve was the difficulty of finding reliable, up-to-date information about local businesses.

Solution: They envisioned an online platform where users could write and share reviews about local businesses, creating a community-driven resource that would provide real-time, authentic feedback.

Things they did: 

• The initial platform allowed users to write reviews, search for businesses, and browse reviews by category or location.

• They focused on making the site easy to navigate and user-friendly, encouraging people to contribute their reviews and share their experiences.

• Yelp initially launched in San Francisco, focusing on building a strong base in a single city before expanding. 

• To kickstart the platform, Yelp invited friends, family, and contacts to write reviews, ensuring there was content available for new users to read and engage with.

• Yelp made efforts to engage early users by hosting events, recognizing active reviewers, and building a sense of community. 

Analysis: Yelp initial stages are inspiring. The way they started are the way I imagine my startup to begin as well. They started in one City, they asked friends and family to help, and make the UX excellent. Yelp’s efforts to engage and retain users is something I can do for the startup idea as well. I can create small communities or groups or Tribes per barangay where these communities will have some friendly engagements and games among them with each barangay having their own representatives and leaders. It’s more like Grab but more localized. Which Tribe is better in one area will get the perks and rewards for all in that area. 

11. SpaceX

Founders:  Elon Musk

Problem: Elon Musk founded SpaceX to address the high costs associated with space transportation. He believed that reducing these costs would make space exploration and colonization more accessible and feasible. By developing reusable rockets, SpaceX aimed to revolutionize the space industry and make it more sustainable.

Solution: Elon Musk's solution to the high cost of space transportation was to develop reusable rockets. Unlike traditional rockets that were discarded after a single use, reusable rockets could be refueled and launched again, significantly reducing the overall cost of space travel. SpaceX has successfully developed and launched reusable rockets such as the Falcon 9 and Falcon Heavy, making significant strides towards achieving its goal of making space exploration more affordable.

Things they did: 

• Musk provided a clear vision and strong leadership for SpaceX, inspiring his team to pursue ambitious goals. He was personally involved in the design and development of the company's rockets, ensuring that they were aligned with his vision.

• Musk invested significant personal funds into SpaceX to get it off the ground. He also secured funding from other investors, including venture capital firms and government agencies.

• Musk recruited a team of talented engineers and scientists to work on SpaceX's rocket development projects. He focused on hiring individuals with expertise in aerospace engineering, materials science, and other relevant fields.

• Musk encouraged innovation and risk-taking within SpaceX.

• SpaceX faced numerous challenges during its early years, including failed launches and technical difficulties. Musk and his team persevered through these setbacks, learning from their mistakes and making improvements to their designs.

• Musk used public relations to generate excitement and support for SpaceX. He frequently appeared in the media, sharing his vision for the future of space exploration and inspiring people around the world.

Analysis: I’m not a huge fan of SpaceX’s goal which is a space faring civilization up there among the stars. But I am a huge admirer and believer of his strategies and how he plans to get there. I have learned a lot from SpaceX. Some of the things I apply to my personal life. For instance, Elon advised us to think from first principles. Even before I heard this from Elon, I knew that I was already doing this even in elementary when I developed my first electric circuit design. Another one is his grit and persistence to try, his total investment to his company which proves how serious he is and easily invited some companies to invest, his engineering mind from a physics and economics background, and his ability to make things simpler, creative, yet, efficient. He is the most efficient man I know. And I am profoundly inspired by his engineering mind and the way he approaches and solves problems. I can implement tons of things from SpaceX experience alone but one highlight is to invite the brightest engineers to join and help me build the product. Elon didn’t know everything about Rocket Engineering when he started SpaceX. One engineer said that he would ask a lot of questions from the engineers and learn from them. Also, fiscal conservatism is very essential. Elon knows where to put the money very efficiently. For Tesla, they never did a single paid ads because they put most of the money to R&D which I’m quite skeptical is a good strategy for my startup idea. But the idea is to be fiscally conservative. 

What’s next?

Now that I have a clearer understanding of the problem I want to address, the next step is to conduct a more in-depth study of 10+ companies from YC and Crunchbase. I'm excited about this stage because it involves analyzing their best practices and understanding them from a foundational level, something I've been doing since my youth.