3 Basic Human Needs Startups Meet

What’s its value to mankind?

I’ve seen a lot of discussion on Hacker News recently about the differences between startups like the recently acquired Mint (just sold for $170 million) and startups like Facebook or Twitter, both now valued in the billions.

So it’s clear what problem services like Mint are solving but just what problem or issue do services like Facebook and Twitter solve..? The answer is they aren’t solving any real problem of course. They’re meeting a basic human need. Take a look at Mazlow’s Hierarchy of Needs pyramid:

The 3 basic needs

So it seems that web startups are really only meeting 3 basic human needs in Mazlow’s pyramid, at least in their current iteration. Here they are with 3 examples each:

1. Safety/Profession/Finances/Resources

1. Mint: Helps people manage their personal finances
2. 37Signals: Helps small to medium sized businesses manage tasks, contacts, events, and more
3. Google: provides users with elegant solutions to common problems (finding information online, email, maps & directions etc…)

2. Social Needs/Love/Belonging

1. Facebook: Helps people keep in touch with loved ones, provide status updates on where they are and what they’re doing
2. Twitter: Real time status updates of what on eveyone’s mind. Precursor to the Borg which may put this in another need category eventually
3. Loopt: Real-time tracking of friends’ physical location using GPS enabled mobile devices

3. Esteem

1. Youtube: Helps users broadcast themselves and favorite snippets of whatever they want
2. Digg/Reddit: User submitted articles and stories
3. WordPress.com: Currently hosting over 200,000 blogs helping people to express themselves

Revenue Models

It seems that although the first need can favor both a direct revenue model, user directly pays the service provider, or an indirect one, i.e. eyeballs, the second and third needs seem to favor eyeballs in the majority of cases. I can’t think of a single successful startup meeting the second/third need that directly charges users for the main service provided. I’d be glad to hear of one however so feel free to comment on it.

Implications of being in one category or the other

It also goes without saying that Facebook will never be viewed as Google and vice versa even though both companies have tried to cross into the other one’s need level. FB has said it believes it will dominate search eventually and Google has made inroads with services like Orkut but it does seem the user’s mind is made up about which need each company meets.

Market size

It’s interesting to note that the first need, safety/profession/finances, is a more basic human need than love/belonging and esteem according to Mazlow. Logically speaking that should also mean the market for web startups at this level is larger, although I’m not aware of any research that has been done to verify that. At any rate, it certainly seems that way common sense wise.

Wrap up

I do think there exists a general bias in certain schools or tech communities towards one need or the other. It does seem that you find more open mindedness in Silicon Valley towards the second and third needs than you find in Boston for example but there are always exceptions..

That’s a wrap..