From Finding Problems with Market Potential to Breakthroughs: Crafting Problem Statements That Drive Startups
Inside the second session of Professors Eisenmann and Bernstein’s new HBS class.
In this session, Professors Eisenmann and Bernstein focused on the art of crafting problem statements. Every entrepreneur knows how critical they are—not only for fundraising presentations, but more importantly at the inception stage, where they guide a startup’s business and technology roadmap.
The Anatomy of a Problem Statement
A strong problem statement follows a clear structure: When [core task], we believe [insight about target customers] who want [desired outcome] are dissatisfied with[existing solution(s)] because of [shortcomings] and/or [constraints].
One of the most frequent challenges is that founders often skip or don’t pay enough attention to this step. Incomplete or vague problem statements lead to weak hypotheses and, ultimately, shaky roadmaps.
The Problem Definition Flywheel
To address this, Tom and Shai introduced the Problem Definition Flywheel—a structured process for refining problem statements. It starts with identifying problems, breaking them down into testable hypotheses, prioritizing those hypotheses, testing them, and finally looping back to revise and refine.
Guest Speaker: Ian Brady, Co-Founder of SoFi
We also heard from Ian Brady, co-founder of SoFi (short for Social Finance), a fintech company launched in 2011 at the Stanford Graduate School of Business (GSB). The founders set out to provide more affordable financing for students.
SoFi’s first pilot program at Stanford involved 40 alumni lending $2 million to about 100 students—roughly $20,000 each. Despite rejections from 103 Sand Hill Road VCs—who balked at the balance sheet requirements and long proof cycles—the team secured initial support from GSB alumni, professors, and others close to student financing.
From those early days, SoFi grew steadily. Today, it operates as a branchless bank, serves 12 million customers, and is the largest online lender in the U.S. What began as a student loan provider leveraging data science to lower rates has since expanded into personal loans, mortgages, auto loans, credit cards, investing, insurance, estate planning, and bank accounts. SoFi now licenses its technology platform to other financial institutions and became the first full-service fintech to earn a U.S. banking license.
Tools for “Haystack” Research
We then shifted to practical tools for customer discovery—what we call “haystack research.” This involves:
Building and refining customer personas
Sourcing customer and expert interviewees
Crafting effective interview questions
Mapping customer journeys to visualize pains and emotions across the entire experience—from initial awareness through repurchase
Several AI tools can streamline this process:
Apollo.io or ZoomInfo for identifying interviewees
Clay.com for building and personalizing outreach pipelines
Otter.ai or Fireflies.ai for transcription and tagging
Conclusion
This session underscored a core truth of entrepreneurship: great startups are built on clearly defined problems, not just big ideas. A well-crafted problem statement is the foundation for hypotheses, discovery interviews, and ultimately, a roadmap that aligns product, technology, and market needs. The SoFi story reminded us how persistence, structure, and disciplined problem definition can transform a rejected idea into a market leader. As we move forward, keep sharpening your ability to frame problems, test assumptions, and listen deeply to customers. These tools will not only help you discover opportunities in the haystack but also ensure that when you commit to a solution, it’s grounded in real, validated needs.