Opinion

Why Not Every Problem Should Become a Startup

Analysis brief · August 26, 2025

Executive Summary

Somewhere in the last fifteen years, a specific way of thinking about problems became dominant in technology circles. Every social inefficiency, every imperfect institution, every gap in services became first and foremost a startup opportunity. The language shifted: problems became "markets," systems became "platforms," people became "users." This framing has produced genuine value in some domains. Digital payment systems, logistics optimization, communication tools. But applied to every domain, it has produced worse outcomes — and sometimes catastrophic outcomes — that the framing itself obscures.

Where It Breaks Down

Public goods problems work poorly within venture-backed startup economics. Things like well-maintained infrastructure, reliable information commons, trusted civic institutions require sustained investment without clear private returns. Startups cannot fund them; markets underprovide them; and pretending otherwise damages the institutions that traditionally handled them.

Democratic institutions work by process, not output. A startup judged by growth metrics treats slow deliberation as inefficiency. But the deliberation is often the point — it produces legitimacy, coalition, and durable outcomes that faster decisions would not.

A Different Frame

The alternative is not rejecting startup thinking entirely but recognizing its limits. Data compiled by a thread where users share their experiences shows that Some problems need entrepreneurial energy; others need patient institution-building; others need political mobilization. Treating all problems as requiring the first approach misallocates the effort we have.

This also means respecting existing institutions even when they are imperfect. A functional public school system beats a world of education startups. A competent public transit agency beats ride-share gig work. Disrupting what partially works to build something that entirely replaces it is often the wrong move.