Blind Spots: The Most Underinvested Areas of Venture

One of the most rewarding, yet peculiar, learnings about working as an investor in venture capital is that you constantly see clusters of start-ups spring up around the same problem. Indeed, one of my proofs that Silicon Valley is an efficient market is that these problems are seemingly identified by everyone at the same time, and so the difficulty in investing is simply choosing the best of the breed and moving on.

In the past year, I have seen clusters form around loyalty cards in local businesses, analytics APIs for mobile, and new designs for resumes, just to name a few that come to mind. None of the founders I have met in these clusters are “me-too” – they seem to have legitimately all come to the same problem from personal experience or through asking the right questions to a target customer. That’s innovation working correctly.

The peculiar part of this observation is how many obvious problems don't seem to get a cluster of start-ups at all. Sometimes these problems, some examples of which I’ll discuss shortly, are not small at all. In fact, I would go so far as to say that these blind spots in the market are where all the future value will be made in innovation. Many of the category-defining companies of the past few decades were all built around problems most people didn’t even know they had.

Why do some problems get a bevy of start-ups, and others seem to languish untouched? I think there are several key reasons, including that some problems are actually quite difficult, and founders lack specific experience in that area.

The one that bothers me most though is blindness. There are problems that have been here for years, that lack high quality solutions, and that have huge markets. Yet, no one seems to touch them at all.

Let me give two examples:

1. Mental Health

The US economy spends roughly 1% of GDP on mental health every year, between therapies and pharmaceuticals. Millions of Americans today face debilitating mental illness, including substance abuse, depression, bipolar disorder, phobias, and the list goes on. Current treatments are lackluster at best, and actively harmful in the worst cases. And, the treatments we have are barely technological at all. For a great read on the subject, check out Anatomy of an Epidemic by Robert Whitaker.

I was really pleased to see that 7 Cups of Tea graduated from the most recent YC batch this summer. They are attempting to make it easier to get counseling online by connecting a patient with a therapist live through the internet. This is an important problem in this space, and I wish them the best of luck.

Yet, there are so many more problems to be solved in this space. How can we use computer vision and other graphics to help patients overcome their fear of spiders or heights? Is there some sort of simulation technology that can assist a returning soldier with the effects of PTSD? I realize the government has large research budgets in some of these areas, but that doesn’t mean Silicon Valley should ignore them.

2. Religion

There are many ways to describe religion, but one definition might be a community of believers, centered around some sort of belief system or ideology. Religion is one of the most powerful institutions in our society, and Islam and the Catholic Church each call more than a billion people as members (larger than the size of Facebook to make a point here).

Outside of Scientology, the Flying Spaghetti Monster, and ChristianSingles.com, there hasn’t been a lot of innovation around this area. That’s unfortunate, because in this social world, there seems to be a perfect opportunity to create a system of beliefs or at least some technology-based improvements to the way that religion can be ministered. Why isn’t there a “marketplace” for priests (yes, I just said that) where you can find a priest that matches your interests and religious preference? Could be entirely charity based, or could be free. Why are guided confessionals (a form of talk therapy which connects to mental health) not available over the web? The app Whisper only takes you so far here.

When I tell some of my friends about this, I actually don’t get blank stares – I think when these problem spaces are pointed out, people almost immediately see them. That is the blindness I am talking about. If you have other blind areas, I would love to hear them. Perhaps we need an AngelList for blind problems focused on discovery. God, I have been listening to too many pitches.