Startup Diligence Guide: Nail the 'Hair-on-Fire Problem' + 10x Better Solution

Part 2 in the “Navigating Diligence: The Bling Capital Playbook” Series

Why We Start With the “Hair-on-Fire Problem + 10x Better Solution” Exercise

This is Exercise 1 in the Bling Capital Diligence Playbook.

We begin every diligence process by defining the “hair-on-fire” problem, mapping the step-by-step before and after user flows, and quantifying how the solution is 10x better. Done well, it forces precision and clarity. It tells investors:

  • Who are you solving for?
  • What critical pain do they face?
  • What is the step-by-step user flow of current behavior?
  • What is the step-by-step user flow of future behavior?
  • Why is your solution delivering a transformational, not incremental, improvement?

What This Exercise Includes

You’ll answer five focused questions. Each answer should be 1-3 concrete sentences. Avoid adjectives. Treat this as a mini “product spec” for your business, one that aligns everyone involved in diligence around the user, pain, step-by-step journey, product, and value proposition.

  1. What is the title of the buyer? (and if buyer is not user, repeat the same exercise for “user”)
  2. What is their “hair-on-fire” problem?
  3. What are they doing today? (the “instruction manual-level” user flow of the current behavior—what steps the user literally takes today to solve the problem)
  4. What will they do tomorrow with your product? (the future state user flow—what the user will do [or does] in similar detail, with your product in their life or workflow)
  5. Why is this 10x better?

Defining “Hair-on-Fire Problem”

A hair-on-fire problem is one that is urgent, painful, and high priority.

It can’t be ignored, deferred, or delegated. These are the problems that trigger user action, impulse purchases, budget approvals, and organizational momentum. If the problem doesn’t feel like a fire drill to the customer, you’re probably not solving the right thing.

Here’s an example, using the taxi use case for Uber:

“I need a ride right now, taxis are unpredictable, hard to hail, cash-only, and slow to arrive.”

Defining “Instruction Manual-Level” User Flow

The “Instruction Manual-Level” user flow is the step-by-step current and future state behavior.

This is where most teams go wrong. The goal is to show the messy, step-by-step reality of the user’s life today—and how your product meaningfully changes it tomorrow—in concrete user journey language. Avoid marketing terms, abstract language, and adjectives.

  • What are they doing today. What is the user doing today to solve the problem without your product? What are the steps they take? What tools are involved? What’s clunky, manual, error-prone, or expensive? Where do they get stuck, hand things off, or hack together a workaround? Articulate an “instruction manual” understanding of the user’s life today and show the inefficiencies and mess the user must endure.

    Here is an example of what users do, before Uber, written as an instruction manual:

    Step 1. Call a taxi dispatcher
    Step 2. Wait on hold for ~5 minutes
    Step 3. Provide current address and destination
    Step 4. Dispatcher quotes an ETA of 30–45 minutes
    Step 5. Hope the car shows up
    Step 6. Ride may require cash; driver often doesn’t accept credit cards

    This structure makes the user’s pain obvious and makes it easy for others to follow.

  • What will they do tomorrow. What is that same user doing tomorrow to solve the problem with your product? What’s automated? What’s faster, simpler, cheaper, or safer? This is your future-state user flow written with the same level of detail as the current state user flow. Articulate an “instruction manual” understanding of the user’s life tomorrow and show the delight and value the user gets with your product.

    Here is an example of what users do, with Uber, written as an instruction manual:

    Step 1. Open the Uber App
    Step 2. Location auto-detected via GPS
    Step 3. Tap “request” to order a ride
    Step 4. View real-time ETA (e.g., 4 minutes)
    Step 5. Driver arrives as shown
    Step 6. Ride is completed and paid automatically via the app with digital receipt

    Use the same step-by-step format to show how your product transforms the experience.

This isn’t positioning. It’s not using pitch language. It’s just a simple before-and-after journey of what the user does. If you can show the difference clearly, the “Hair-on-Fire Problem” and “10x Better Solution” becomes more obvious.

Defining “10x Better”

Not every “10x” leap is literal.

It can be:

  • Time saved (e.g., prototyping reduced from multiple days to <1 hour)
  • Cost reduced (e.g., overhead reduced from $10,000/month to $100/month)
  • Risk removed (e.g., compliance error rate drops by 99.9%)
  • Qualitative gains (e.g., verified reviews, UI reduced to one step).

Express the improvement with tangible metrics—not adjectives.

To sharpen the definition:

  • Quantitative benchmarks: “90% fewer manual steps”, “75% reduction in error rate”, “5x faster onboarding.”
  • Qualitative measures: “dramatically simpler UX”, “customer satisfaction scores jump from 6 to 9.”
  • Willingness to pay: Make sure the customer has budget or spends on this pain today, and is willing to pay a meaningful premium for the improvement.

Often, 10x emerges from a combination of improvements:

  • 2x cheaper + 10x faster + 2x easier to use = 14x total improvement
  • 50% time saved + 50% cheaper + 7x revenue growth = ~10x value overall

Think of it as value velocity: How much more value the customer gets per unit of time, cost, or effort.

Here’s an example with Uber

ETA drops from 45 minutes to under 5 (11x faster).
Guaranteed pickup vs. uncertain availability (~99.9% reliability).
Zero cash handling; lower risk of fare dispute.
Overall ride reliability and safety score jumps by 3x with GPS and a rating system.

Five Questions in Practice

We recommend answering each question in less than 2-3 sentences each:

Question Why We Ask
What is the title of the buyer? (and if buyer is not user, repeat the same exercise for “user”) Clarifies who feels the pain and controls the budget, and if they’re the same person
What is their “hair on fire” problem? Clarifies the urgency and if the problem is painful enough for someone to seek out a new solution.
What are they doing today? (format as Step 1, Step 2, etc to show clear instruction-level flow) This is where most teams go wrong. Clarifies the step-by-step, “instruction manual” view of how the user solves the problem today, including all the messiness, inefficiency, and workarounds.
What will they be doing tomorrow with your product? (format as Step 1, Step 2, etc to show improved workflow with your product) This is the future-state user flow. Clarifies how your product changes each painful step into something faster, simpler, cheaper, or safer—with the same level of specificity as the “today” user flow.
Why is this 10x better? Clarifies the order-of-magnitude gain over today’s baseline. Customers usually do not switch for “minor” improvements from their existing habits.

Checking Your Work

Use these prompts to pressure-test your answers:

Prompt What It Ensures
Have we captured every clear step in the user flow—and written it out in “Step 1, Step 2…” format? We make the user’s pain obvious, and everyone can follow the exact sequence of what they do today and what changes with your product.
Are buyer and user roles clearly defined? We map decision-making and budget accurately.
Do we know how people currently solve this problem? We map the landscape of solutions, workarounds, and competitors, and where they fall short.
Have we thought through key design tradeoffs? We’re prioritizing what matters most, not just listing features.
Is our 10x improvement quantified? We articulate a truly transformational leap, not incremental (e.g., time saved, money saved, risk removed—expressed with numbers, not adjectives).

Common Mistakes and Fixes

We often see mistakes emerge in five patterns—here’s how they show up, in the example of a pre-seed Uber, and how to fix them:

  1. Skips the user flow or too abstract
    Example: “Calling a taxi is a pain” or “Easily call a car using a mobile app”
    Mistake: No detailed picture of the real pain, no clarity around the step-by-step process the user follows today without your product, or tomorrow with your product. Reads like marketing copy.
    Fix: Skip broad claims. Write the user’s “instruction manual”—every step they take today. Then show how your product replaces or simplifies that flow, step-by-step.

  2. Assumes, doesn’t show
    Example: “Taxis are dirty and unreliable”
    Mistake: Broad claim without evidence. Assumes the reader agrees with the premise without showing what the user is actually experiencing.
    Fix: Describe the actual workflow in detail—what the customer literally does, sees, and feels. Let the pain emerge from reality, not from your assertion. Investors need to feel the problem through the user’s eyes, not be told it exists.

  3. Buyer / user confusion
    Example: “Taxi dispatchers and drivers are frustrated with inefficiencies”
    Mistake: Blurs who feels the pain and who pays to solve it.
    Fix: Explicitly state who feels the pain and who pays. If they’re different, run the full exercise for both.

  4. Incremental gains (e.g., not “10x”)
    Example: “Faster and cleaner.”
    Mistake: Lists small perks (“better UI”) that won’t move the needle.
    Fix: Quantify the improvement—minutes saved, dollars saved, steps removed, risk avoided.

  5. Missing budget context
    Example: “All SF commuters have the budget to hail a premium black car”
    Mistake: Ignoring whether user segments will pay.
    Fix: Research current spend on the problem and expected ROI.

The Bling Capital Method

We set up the “Hair-on-Fire Problem + 10x Better Solution” in a Google Doc so everyone can quickly view the answers to the five questions and collaborate.

We aim for short, direct, and focused answers.

A good response reads more like a field note than a pitch. It shows you’ve walked in the customer’s shoes—and can describe the before-and-after journey with precision. Here’s how we’d answer the five questions for a pre-seed Uber example, using our template:

  1. What is the title of the buyer?
    Everyday city commuter (user = buyer).

  2. What is their “hair on fire” problem?
    “I need a ride right now, taxis are unpredictable, hard to hail, cash-only, and slow to arrive.”

  3. What are they doing today (the full user flow)?
    Step 1. “Call a taxi dispatcher”
    Step 2. Wait on hold for ~5 minutes
    Step 3. Provide current address and destination
    Step 4. Dispatcher quotes an ETA of 30–45 minutes
    Step 5. Hope the car shows up
    Step 6. Ride may require cash; driver often doesn’t accept credit cards

  4. What will they be doing tomorrow with you (the full user flow)?
    Step 1. Open the Uber App
    Step 2. Location auto-detected via GPS
    Step 3. Tap “request” to order a ride
    Step 4. View real-time ETA (e.g., 4 minutes)
    Step 5. Driver arrives as shown
    Step 6. Ride is completed and paid automatically via the app with digital receipt

  5. Why is this 10x better?
    ETA drops from 45 minutes to under 5 (11x faster).
    Guaranteed pickup vs. uncertain availability (~99.9% reliability).
    Zero cash handling; lower risk of fare dispute.
    Overall ride reliability and safety score jumps by 3x w/ GPS and rating system.

Why It Matters

Completing this exercise is useful for focusing and aligning with investors around the user, the problem, the journey, the product, and the value proposition. It helps you:

  • Align with investors: Build a shared understanding of the user, buyer, and value prop.
  • Build from real behavior: Use the step-by-step user flow to ground every assumption.
  • Segment the market: Identify the users with the urgent pain and budget.
  • Prioritize roadmap: Focus on features that drive your 10x improvement.
  • Shape go-to-market: Inform messaging, pricing, and GTM with quantified gains.
  • Understand business drivers: Sales cycles, marketing needs, hiring plans.

What Investors Are Really Asking

This exercise gives investors a compressed view of the business, and helps them assess:

  • How well you know your user and their needs
  • The buyer of the product, and whether the buyer and user are the same (or different)
  • Where the user fits in the market and how you’re segmenting them
  • What customers are doing today and whether you’re solving a real, valuable problem
  • The product’s role in that context
  • The product design tradeoffs and choices made—and why
  • Whether the product delivers (or will deliver) a “10x” improvement over current solutions
  • Whether you understand the messy, step-by-step reality of the user’s life today—and can show how your product meaningfully changes it

This exercise helps the founders and investors get on the same page for the rest of diligence:

Diligence Area What It Helps Investors Understand
Market sizing Customer segmentation (who pays, how much, and why) and if solving the hair-on-fire problem for these users would result in a venture-scale outcome (e.g., $100M gross profit at a low total market penetration).
Go-to-market (GTM) Which customer segment(s) you are going after today, how you are finding them (if you’re live), and how you will find more of them.
Product roadmap What features and priorities for your current customer segment(s) will deliver the 10x better value prop.
Hiring Plan What you need, from a team perspective, to achieve product and GTM goals (and if fundraising, right-sizing the raise).
Financial Model What assumptions you are making on revenue, costs, burn, and how it ties to the round’s goals.
Cohort Analysis Are users in your customer segment(s) sticking around, are they actively engaged with the product, and is usage durable. Are the answers to the “Hair-on-Fire Problem + 10x Better” exercise matching reality?

And like we mentioned in our previous post, our exercises are also useful for company-building.

Final Takeaways

This is the single most important exercise in our diligence playbook. It gives investors:

  • A hyper-compressed view of the business and product
  • Evidence that you understand the user’s current behavior in detail—and can show exactly how your product changes it
  • Understanding whether you’re solving a valuable, urgent problem for a clearly defined customer
  • Clarity for all other exercises in our startup diligence playbook

Next Up: Market Sizing

In Part 3, we’ll translate your “Hair-on-Fire + 10x Better” answers into our market sizing exercise.

We’ll cover:

  • Why market size is critical to venture outcomes
  • Customer segmentation
  • How to calculate a bottoms-up total addressable market

Stay tuned!

Thanks to Gokul Rajaram, Melody Koh, Jared Fliesler, Jason Krikorian, Nevin Raj, Andrew Bocskocsky, Tyler Maloney, and Brandon Terry for reading drafts of this.