At AVANCE Global, entrepreneur and investor Fernando De Leon described a deceptively simple way he has found new businesses.
After repeatedly paying insurance premiums across his companies, he didn’t just look for a cheaper provider. He bought an insurance brokerage and eventually built two insurance carriers. “Anytime I get upset about paying for something,” he told the audience, “I try to build a business.”
It’s a memorable line. It also raises a useful question for any executive staring at a stubbornly expensive line item: Can frustration actually help identify a business opportunity?
Research suggests it can. But the expense itself is only the beginning.
Your Frustration Knows Something
MIT professor Eric von Hippel has spent decades studying what he calls user innovation: products and solutions developed by the people or organizations that need them, rather than by companies trying to sell to them.
One reason users can be unusually good at identifying solutions is what von Hippel and researcher Ralph Katz call “sticky information.” Information about what a customer truly needs can be costly or difficult to transfer because so much of it lives within the customer’s specific circumstances and experience.
A company repeatedly dealing with an inefficient vendor, expensive service, or clumsy process therefore possesses something potentially valuable: firsthand knowledge.
Being the customer can create an informational advantage.
Your Problem Isn’t Necessarily a Market
That advantage comes with an important caveat.
Von Hippel’s research on lead users has found that some users experience needs before the broader market does. Their solutions can therefore offer clues about products other customers may eventually want.
But solving your own problem proves only that the problem exists for you. It doesn’t prove thousands of other customers share it or that they will pay for your solution.
That distinction separates an internal fix from a potential company.
Research by entrepreneurship scholar Scott Shane adds another piece. Studying entrepreneurs presented with the same MIT-developed technology, Shane found that they recognized different commercial opportunities based on knowledge they already possessed. Prior experience shapes not only how entrepreneurs solve problems, but which opportunities they are capable of seeing in the first place.
In other words, opportunity recognition may be less about waiting for a brilliant idea than about being in the right informational position to notice one.
Before You Build It, Run Four Tests
So the next time a major expense makes you wonder whether you could do it better yourself, the research suggests four questions worth asking.
Is the problem recurring? Repeated exposure allows you to accumulate knowledge about where the existing solution falls short.
Is it shared? Talk to customers outside your company. Your frustration becomes more interesting when others independently describe the same pain.
Do you have an edge? Knowing a problem intimately matters more when paired with expertise, relationships, technology, or operating capabilities that allow you to solve it differently.
And finally: Would someone who isn’t you pay for it?
That last question matters because doing something internally isn’t automatically more efficient. Decades of research into the boundaries of firms show that deciding whether to make something or buy it involves real trade-offs; bringing an activity inside can create advantages while sacrificing efficiencies available through outside suppliers and competitive markets.
De Leon’s insurance story worked because the frustration ultimately pointed beyond his own companies. What began as a cost became a problem to solve, then a solution, and eventually a business.
That’s worth remembering the next time an invoice lands on your desk.
The expense itself isn’t the opportunity. The information hidden inside it might be.
