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People solve the problems they understand

Many of the highly valued startups today solve problems that is at best frivolous to more than seventy -five percent of the population in the world. Uber only makes life better for a small fraction of the people with enough disposable income and smartphones and living in cities by making it easier to get around cities. And it does this by hardly making an improvement (if any) to the lives of the drivers. Snapchat is a concept that I will find hard to explain to my parents and several other people.

The startup ecosystems all over the world today are structured to solve seemingly frivolous problems. The startups that get funded today are the equivalents of Apple in the mobile phone industry. Yes, they show great technological prowess and unquestionable design thinking and solve problems in an elegant way, but the people who have these problems are those with a high disposable income.

This is understandable, because this is the target audience that will return the money to the investors.

This isn't the fault of the investors. After all, they are just looking for a good return on the money. They don't really care so much about what problem gets solved or who is solving them. But, they are doing the equivalent of what companies do while hiring employees.

Companies, while hiring, look for certain indicators from candidates. These can be things like having graduated from a reputed college, or having worked at a company of repute. This narrows down the pool and makes it easier for them to then interview those who make the cut and select from among them.

Similarly, investors today look for indicators from startups that they are considering investing in. If the startup is based in the Silicon Valley, or London, or Berlin, or Bangalore, the possibility of attracting investment is high. It gets higher if the founders have successfully exited from a previous startup or have 'pedigree' in terms of having graduated from a reputed college or accelerator or have held senior positions in successful startups.

This is a great approach to take for investors. It reduces the risk from their end and increases the probability of returns. But it is a problem in terms of what these funds get channeled towards. We can have more Ubers and Snapchats and Airbnbs come up making their founders and investors richer and making several others poorer or put them out of jobs or force them to work minimum wage jobs that have no growth prospects. And we can have more people supporting candidates like Donald Trump who highlight these problems but may or may not have the solutions.

This scenario is what has lead to a lot of talk about universal basic income in the recent years.

When investors fund startups only in certain cities and founders with certain backgrounds, the problems that get solved turn more and more frivolous.

Because people only solve the problems they understand.

And people in cities like San Francisco and New York and London and Berlin and Bangalore understand problems that the likes of Uber and Snapchat are solving. And not problems that are related to climate change or depleting water tables or ill-effects of air pollution or abject poverty or social inequality.

It is a difficult problem to channel smart people towards solving problems that will make a difference to millions of people, the millions that aren't in the top one percent or five percent or ten percent of the population of the world.

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