The Best Businesses Start With the Right Problems

By Gold Igwe | July 22, 2026

In 2023, Americans filed more than 5.4 million applications to start new businesses, the highest number on record U.S. Census Bureau, via Commerce Institute. Yet the history of business tells a different story. Data from the U.S. Bureau of Labor Statistics shows that of the private-sector businesses launched in 2013, barely a third (34.7%) were still operating a decade later. In other words, nearly two out of every three businesses fail before reaching their tenth anniversary.

The conversation around business failure usually begins in familiar places: funding, competition, leadership, or timing. CB Insights' 2024 analysis of 431 venture-backed startups that shut down since 2023 appears to support that view at first glance. Seventy percent of those companies ultimately ran out of capital. But CB Insights is explicit that running out of money is often the final symptom rather than the underlying cause. Looking deeper, poor product-market fit appeared in 43% of cases, making it one of the most significant drivers of failure.

Long before a company runs out of capital or loses market share, one critical decision has already been made: the problem it chooses to solve.

CB Insights identified another pattern worth noting. A disproportionate number of failed startups were concentrated in sectors that attracted enormous investor attention during the 2021–2022 funding boom, including blockchain, climate and energy, and food technology.

Companies such as New Age Meats and RECUR raised tens of millions of dollars, yet both ultimately shut down. Their experience illustrates an important distinction. Investment can accelerate growth, but it cannot replace sustained demand for a meaningful solution. Capital may amplify an opportunity, but it cannot create one where none exists.

Businesses rarely fail because they solved an important problem too well. More often, they solve an unimportant problem exceptionally well.

The temptation to build around trends is understandable. Trends attract headlines, investors, and attention. They create the impression that demand already exists. Real problems behave differently. They are often less visible because people have simply learned to live with them.

Cross-border payments remain slow and expensive. Access to education financing continues to limit opportunity for millions. Logistics across emerging markets remains inefficient despite decades of investment. These are not fashionable problems. They are persistent ones, and persistence is often where the greatest opportunities exist.

So what separates a trend from a problem worth building a business around?

A few questions provide a useful test. Is the market large enough and still growing, or is it simply benefiting from a temporary surge in attention? Is the pain persistent, affecting customers regularly rather than occasionally? What is the cost of leaving the problem unsolved? Is it a minor inconvenience, or does it repeatedly consume time, money, or resources?

Finally, is the problem rooted in a structural shift that will endure, or is it tied to market conditions that will change as interest rates, regulation, or market sentiment evolves?

Many climate technology, alternative protein, and NFT businesses struggled on this final question. Investment was abundant, but the underlying conditions proved less durable than expected. Businesses built around problems that pass these tests are far more likely to create lasting value because customers already recognise the problem and are willing to pay for a solution.

McKinsey's research on strategy reinforces this point. Companies operating with genuine industry and geographic tailwinds are four to eight times more likely to become top economic-profit performers than companies facing structural headwinds.

This is often interpreted as an argument for choosing attractive industries. It is equally an argument for choosing enduring problems. Industries evolve. Problems endure.

None of this makes execution secondary.

A landmark Stanford study of more than 12,000 firms found that superior management practices consistently drive long-term profitability, productivity, and growth. Execution determines whether a good opportunity becomes a successful company. But execution cannot rescue a business built around a problem that never truly mattered.

The order matters.

Choose the wrong problem, and even excellent execution produces limited results. Choose the right problem and every operational improvement compounds over time.

This is one reason many of the world's most enduring businesses were never built around trends. They were built around persistent human needs. People will continue to need healthcare. Businesses will continue to move money. Goods will continue to move through supply chains. Students will continue to seek access to education.

The technologies serving those needs may change, but the needs themselves will not.

That distinction is easy to overlook during periods of rapid innovation. It usually becomes obvious only in hindsight.

The BLS industry data points in the same direction. Agriculture, utilities, and manufacturing record some of the strongest long-term business survival rates because the demand beneath them, food, power, and essential goods, never goes out of fashion. Mining and information-sector businesses sit much closer to the bottom, reflecting greater exposure to commodity cycles and rapidly changing competitive environments rather than weaker entrepreneurial ambition BLS.

Markets rotate. Funding cycles rise and fall. Technologies evolve. Enduring customer problems do not.

For founders, investors, and company builders, choosing the right problem is not simply the first step in building a business. It is the first investment decision. Products will evolve. Technology will advance. Markets will change. But if the underlying problem is real, persistent, and worth solving, the business begins with something far more durable than a product or a trend: a reason to exist.

The businesses worth building, and the businesses worth building for the long term, tend to start in the same place: not with what is exciting this quarter, but with a problem that was never going away in the first place.

References

CB Insights. (2024). The top reasons startups fail (Research Report). https://www.cbinsights.com/research/report/startup-failure-reasons-top/

Commerce Institute. (2023, June 28). New business start statistics (updated). https://www.commerceinstitute.com/new-businesses-started-every-year/

McKinsey & Company. (2018). How to beat the odds: Trends and global forces affecting strategy. McKinsey & Company Strategy and Corporate Finance Practice. https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/how-we-help-clients/trends-and-global-forces

Sadun, R., Bloom, N., & Van Reenen, J. (2017). Why do we undervalue competent management? Harvard Business Review, 95(5), 120–127. https://www.gsb.stanford.edu/faculty-research/publications/why-do-we-undervalue-competent-management

U.S. Bureau of Labor Statistics. (2024). Establishment age and survival data: Table 7. Survival rates of private sector establishments by opening year. U.S. Department of Labor. https://www.bls.gov/bdm/bdmage.htm

U.S. Census Bureau. (2026). Business formation statistics (Active Series Release). U.S. Department of Commerce. https://www.census.gov/econ/bfs/pdf/bfs_current.pdf

User Intuition. (2023). Why startups fail for lack of market need: Structured customer discovery research (Reference Guide). https://www.userintuition.ai/reference-guides/why-startups-fail-no-market-need-research/