Finding Opportunity in Failure
How the Wrong Business Model Can Lead to the Right Product
The year was 2014. I was bright-eyed, ambitious, and about to launch my first company, 22 Laps—a digital marketplace for everything related to bicycles.
It failed. Horribly.
Looking back, the failure was inevitable. It wasn’t my first idea, nor was it a problem I was deeply passionate about. I was chasing an opportunity and a solution without a problem. But the real reason it failed was more subtle and painful. I had discovered that digital marketplaces were actually at the tail end of their popularity with my target customers: local bike shops. These marketplace platforms had become magnets for bargain hunters, conditioning customers to expect deep discounts and eroding the shops’ already thin margins. The very tool I thought would help bike shops was seen as a threat.
Sadly, I only discovered this fatal flaw after launch. Why? Because I didn’t know how to talk to customers. I didn’t know how to ask the right questions, to dig deeper than surface-level answers, and to truly understand their pains. It’s a skill I had to learn the hard way. (If you want to avoid my mistake, I wrote about learning how to interview customers properly here).
What stings, even now, is that I had a much better idea first. An idea born from genuine expertise and domain insight.
The Million-Dollar Idea I Had First
My first concept was a personal insurance comparison tool. This wasn’t a random whim; it came from a deep understanding of the market, forged for a few key reasons:
I was working at Suncorp, the second-largest insurer in Australia. My role involved building sophisticated competitor pricing and pricing optimisation systems. I was in the belly of the beast.
Through my work, I saw firsthand how wildly successful insurance comparison tools, like MoneySuperMarket in the UK, were for consumers. It was a proven, highly profitable business model.
Crucially, no one was doing this for consumers in Australia.
I knew this space inside and out. I understood the data, the pricing algorithms, and the complex mechanics required to build a system that could genuinely help people. I had a front-row seat to the end-users’ pain—the opaque pricing, the confusing policies, the nagging feeling that they were overpaying. Being a subject matter expert wasn’t just an advantage; it meant I could see the problem from every angle. I knew how to get the quotes, how to normalise the data, and how to present it in a way that was simple and empowering for the average person. The vision was crystal clear.
Why a Great Idea Isn’t Enough
But an idea, no matter how brilliant, must survive contact with reality. The biggest challenge was getting the insurance companies on board. In Australia, the market was (and still is) dominated by two giants: Suncorp and IAG. Together, they controlled about 70% of the retail market. Without their participation, my platform would be a ghost town. I spoke with various people, and the feedback was unanimous: they weren’t interested.
They saw a consumer-facing comparison tool as a race to the bottom. Just like the bike shops with marketplaces, they believed it would attract bargain hunters, commoditise their products, and relentlessly drive premiums down. And from their perspective, protecting their margins, they were right.
So, I gave up ever pursuing the idea.
The Power of a Different Business Model Lens
What I failed to recognise then was that the solution wasn’t dead; only the business model was. The exact same system, the same data, the same core engine could work—if I sold it to the insurers instead of the consumers.
Think about it. Insurers are desperate for competitor intelligence to offer competitive pricing.
There are entire businesses built around this need. They hire third parties to collect quotes online, reverse-engineer the complex rating algorithms, and sell that data back to the insurance companies. Despite having the internal capability to do this themselves, insurers happily pay a premium to outsource it. Why? Because it transfers the operational headache and, more importantly, the legal risk associated with scraping competitor data. They get the insights without getting their hands dirty. I had the keys to build that exact system, but my focus on a single business model blinded me to the real opportunity.
And this isn’t a hypothetical. A local Australian firm did exactly this. While I was chasing a failed B2C marketplace, the firm was quietly building an incredibly successful business catering directly to the insurers. They built a sophisticated platform to collect market data, analyse pricing trends, and sell those invaluable insights back to the very companies that had rejected my consumer-facing idea. They saw the real customer, understood their high-stakes problem, and productised the perfect solution for them. They built the business that I should have built.
So, what can we learn from this?
Key Lessons for Founders
1. There are opportunities waiting to be productised everywhere.
The world is filled with inefficiencies, workarounds, and repetitive tasks that people grudgingly accept as “the way things are done.” The need for competitor pricing data in the insurance industry was a known problem, but it was being solved through brute force. With the rise of AI, our ability to reimagine workflows and automate complex processes has exploded. We can now build intelligent systems that solve these nagging problems in entirely new ways. The key is to look for the friction in your own life and work. What tasks are consistently annoying, time-consuming, or just plain dumb? That’s where the opportunities are hiding.
2. There are many ways to productise a solution.
My mistake was falling in love with a single business model: B2C. I was fixated on building a tool for consumers and failed to see that the real value was in a tool for the enterprise. The core technology was sound, but the customer was wrong. Before you write a single line of code, map out every potential customer for your solution. Who else could benefit from this? Could you sell it to individuals, small businesses, or large corporations? Could it be a service, a data product, or a licensed technology? Don’t let your initial vision lock you into a single path. The most successful products are often the result of a pivot to a more lucrative, albeit less obvious, market.
3. Start noticing the pains and patterns around you.
The best product ideas don’t come from brainstorming sessions; they come from lived experience. Pay attention to the world around you. What are your friends, family, and colleagues complaining about? What repetitive questions do you find yourself answering over and over? These are signals of unmet needs. My insight into the insurance industry came from being deeply embedded in it. Your unique experience, your “domain expertise,” is your greatest asset. You see the problems that outsiders can’t. Start a journal of these observations. Every frustration is a potential product.
4. Partner with people who have experience productising solutions.
Ideas are cheap; execution is everything. As a technical founder, I knew how to build the product, but I didn’t know how to build the business. I lacked the experience to see the strategic pivot that was right in front of me. Find mentors, advisors, or co-founders who have been there before. These people have the pattern recognition that only comes from experience. They can help you avoid common pitfalls, identify new opportunities, and challenge your assumptions. Building a company is a team sport; don’t try to do it alone.
5. Work with people who see things through a different lens.
My technical background was both a blessing and a curse. It allowed me to see the solution, but it also narrowed my perspective. I was so focused on the how that I neglected the who and the why. Surround yourself with people who have different skills and backgrounds. Partner with sales, marketing, and design experts. These individuals will see your product and your market in ways you can’t. They will challenge your biases, question your assumptions, and ultimately, help you build a much better product and a more resilient business. The friction from these different perspectives is where true innovation happens.
Final Thoughts
So, as you look at your own ideas, I urge you to ask the hard questions I failed to. Don’t just fall in love with your solution; obsess over the customer and the business model. In an age where AI makes building powerful tools easier than ever, it’s not the technology that will set you apart. It’s the relentless search for a real problem, a willing customer, and the right way to bring the two together. Your next failure, or your greatest success, hangs in that balance.