(this is a long one... but so important...)
I was at an investor event some time ago when one of the panelists said something that really stuck with me: " You don't need to know the industry - but you must know the pain."
It resonated because I think we too often expect founders to be heavily embedded in their industry. But I've come to believe it can actually be an advantage when you're not. Then you can challenge the status quo in a different way than if you're deep into it – as long as you really understand your customer's pain.
Here's the Thing
Many founders open their pitch with industry credentials. They list years of experience, previous companies, deep knowledge of the space. And there's nothing wrong with experience – but it's not what gets you funded.
What gets you funded is demonstrating that you understand exactly what problem you're solving and why it matters desperately to your customer. Industry knowledge without customer pain understanding is just a resume. Customer pain understanding without industry knowledge is a fundable company.
The Big Problem: Confusing Industry Knowledge with Customer Understanding
There's a dangerous assumption many founders make: if you know the industry well, you automatically understand the customer. But these are completely different things.
Industry knowledge means you understand the landscape, the players, the traditional approaches, how things have always been done. Customer pain understanding means you know what frustrates your customer, what costs them money or time, what keeps them from achieving their goals.
The problem is that deep industry experience can actually blind you to real customer pain. When you've been in a space for years, you accept certain frustrations as "just how things work." You stop questioning why processes exist. You assume customers care about the same things industry insiders care about.
But breakthrough companies are often built by people who look at industry standards and ask: "Wait, why does it work this way? This makes no sense for the customer."
How This Hurts Your Chances
You Lead with the Wrong Credibility
When you open with your industry pedigree, you're trying to establish credibility through experience. But investors are looking for credibility through customer insight. They want to know you've talked to customers, identified a real pain point, and validated that people will pay to solve it.
You Can't Answer the Most Important Questions
Investors will ask variations of these questions:
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Why does this problem matter to your customer?
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How do they solve it today and why is that inadequate?
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What would make them switch to your solution?
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How urgent is this problem for them?
If your answer comes from industry analysis rather than customer conversations, it shows. You'll talk about market inefficiencies instead of describing what a customer actually experiences. That's a red flag.
You Miss Opportunities to Differentiate
Everyone else in your space with industry experience will approach problems the same way – through the lens of how the industry currently operates. If you're doing the same thing, why should investors bet on you instead of a more established player?
You Struggle to Pivot
When you're deeply embedded in industry thinking, you have strong opinions about what will and won't work. But early-stage companies need to be adaptable based on customer feedback. Too much industry conviction can make you rigid when you need to be flexible.
Build Your Pitch Around Customer Pain
Open with Customer Reality, Not Your Resume
Your opening should immediately establish that you understand the customer's world. Instead of starting with your background, start with what you've learned from customers.
Structure: "I've talked to [number] [target customers] in the past [timeframe]. Here's what I learned: [specific customer pain point described in concrete terms]."
This immediately signals that you're building from real market insight, not theory.
Make the Pain Concrete and Specific
Pain shouldn't be described in abstract business terms. It should be described in ways that make it real and tangible.
Instead of talking about "inefficiencies" or "market gaps," describe what actually happens. What does the customer have to do? How long does it take? What goes wrong? What does it cost them?
The more specific you can be, the more you demonstrate true understanding.
Show Your Learning Process
One of the most powerful things you can do is demonstrate that you have a systematic approach to understanding customers. This shows investors you'll continue learning and adapting as you build.
Talk about:
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How many customers you've spoken with
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What questions you asked
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What patterns you discovered
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How you validated the problem
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What you learned that surprised you
This proves you're customer-obsessed, which matters more than industry experience.
Use Outside Perspective as Strength
If you don't come from the industry, frame it as an advantage. You can see things that insiders have stopped questioning. You can ask "dumb" questions that reveal real problems.
Position it like: "Coming from outside this space, I could approach it without assumptions about 'how things are done.' When I asked customers about [specific process], they told me they hated it – but everyone in the industry treats it as standard practice."
Address Industry Expertise Where It Actually Matters
There are industries where domain expertise is genuinely critical – medtech, biotech, highly regulated spaces. In these cases, you need someone on your team who understands the technical or regulatory requirements.
But that doesn't mean that person needs to be the founders. You can structure it as: "I understand the customer problem deeply. [Team member] brings [specific expertise] to ensure we can navigate [regulatory/technical requirements]."
The Bottom Line
Industry experience can be valuable, but it's not what wins investor confidence. Customer pain understanding is what wins investor confidence.
Here's what you need to remember: Investors fund founders who are obsessed with solving real customer problems, not founders who know a lot about an industry. Your pitch should make it crystal clear that you've identified a genuine pain point and that you're building your solution from deep customer insight.
If you can demonstrate that level of customer understanding, investors will trust you to figure out the industry details along the way.
That's all for today.
If you found this helpful - feel free to share with others.
See you next week!