Finding Structural Blind Spots: How Torch Dental Identified a Problem Incumbents Couldn’t Solve

Finding Structural Blind Spots: How Torch Dental Identified a Problem Incumbents Couldn’t Solve

Most founders hunt for market gaps. The smart ones hunt for structural blind spots—problems incumbents see but can’t solve without cannibalizing their entire business.

Khaled Boukadoum, Founder of Torch Dental, built a company processing $5 billion in patient transactions by identifying one of these rare opportunities. In a recent episode of Category Visionaries, he shared how he spotted a problem that dominant practice management systems had ignored for decades—not because they didn’t see it, but because solving it would require fundamentally disrupting how they built products and made money.

This is the story of how to find structural blind spots in crowded markets, and why they represent the best opportunities for venture-scale companies.

The Incumbent Landscape: Decades of Dominance

When Khaled entered the dental software market, the landscape looked impenetrable. Companies like Dentrix and Open Dental had been around for decades, deeply embedded in practice workflows. They handled scheduling, clinical records, basic billing, and served as the system of record for essentially everything happening in a dental practice.

Traditional startup advice would say: don’t compete with entrenched incumbents. The switching costs are too high, the sales cycles too long, the integration requirements too complex.

But Khaled noticed something curious. Despite their dominance, these platforms left practices struggling with massive operational inefficiencies. Specifically, dental practices were dedicating 30-40% of their staff purely to administrative tasks—not because they lacked software, but because their software didn’t actually solve the problem.

“What we realized is that the biggest problem in the space is actually what happens after the clinical visit,” Khaled explains. “So the patient gets the treatment done, and then we need to figure out how much the patient owes, how much the insurance owes, and then how do we actually coordinate the collection of that money.”

This wasn’t a gap in the market. It was a structural blind spot created by how incumbent platforms were built and monetized.

Why Incumbents Couldn’t Solve It

Understanding why incumbents ignore obvious problems requires examining their business model constraints and product architecture decisions made decades ago.

Practice management systems emerged as digital replacements for paper records and scheduling books. Their core value proposition centered on being the system of record for clinical information—treatment plans, patient histories, appointments. They made money through licensing fees, typically charged per provider or per practice location.

This business model worked beautifully for their original purpose. But it created several structural barriers to solving the patient financial experience problem:

First, their product architecture prioritized being comprehensive systems of record rather than specialized workflow automation tools. Adding sophisticated AI-powered revenue cycle management would require rebuilding core infrastructure.

Second, their go-to-market motion optimized for selling to practices through traditional software licensing. Building genuinely valuable financial automation would likely require different pricing models—perhaps transaction-based or outcome-based—that would cannibalize existing revenue streams.

Third, and most critically, solving the post-treatment financial problem properly would require massive R&D investment in an area orthogonal to their core competency. These companies built their reputations on clinical workflow management, not financial automation and AI.

“The practice management systems are really systems of record. They’re systems that track your clinical information, your operational workflows, your schedule, things like that,” Khaled notes. The problem wasn’t that they couldn’t see the patient financial experience problem—it’s that solving it would require becoming a fundamentally different company.

This is what makes structural blind spots so valuable: the incumbent’s inability to address the problem isn’t temporary or fixable through feature development. It’s built into their DNA.

The Three-Way Transaction Complexity

To understand why this blind spot matters so much, you need to understand the unique complexity of dental payments.

Unlike medical care, where providers typically bill insurance companies directly, dental practices navigate a three-way transaction. The patient pays upfront for treatment. The practice submits claims to insurance. Insurance reimburses the practice later—sometimes weeks or months later.

This creates cascading operational complexity. Practices must verify insurance eligibility before treatment, estimate out-of-pocket costs, collect patient payments, submit claims with proper documentation, post insurance payments when they arrive, reconcile accounts, and chase down unpaid balances from both patients and insurance companies.

Each step involves manual work, phone calls, forms, and coordination across multiple systems. Multiply this across dozens of patients daily, each with different insurance plans and treatment scenarios, and you have an operational nightmare.

The incumbent practice management systems provided basic tools for tracking this information, but they didn’t automate the workflows. They gave practices a place to record what happened manually, not a system that made it happen automatically.

This distinction is everything. Recording information is a system of record problem. Automating workflows is an operational infrastructure problem. Incumbents built for the former. The market desperately needed the latter.

The Opportunity Recognition Framework

Khaled’s approach to identifying this opportunity offers a framework any founder can apply when evaluating markets:

Look for problems where customers are dedicating massive operational resources despite having software that supposedly solves the problem. If practices are spending 30-40% of staff time on tasks their software should handle, something is structurally wrong.

Ask why the incumbent hasn’t solved it. Not whether they could technically solve it, but whether doing so would require fundamentally changing their business model, product architecture, or core value proposition.

Identify whether the problem is getting worse over time. The complexity of dental insurance has increased dramatically in recent years. More plans, more restrictions, more prior authorizations. The gap between what incumbents offered and what practices needed was widening.

Evaluate whether solving the problem properly would create a different category of value. Torch didn’t just make existing workflows faster—they eliminated entire categories of administrative work. That’s category creation, not feature competition.

The Strategic Entry Point

Once Khaled identified the structural blind spot, he made a crucial strategic decision: don’t compete with incumbents, complement them.

“We sit on top of the practice management system and we’re really focused exclusively on everything that happens post clinical treatment,” Khaled explains. This positioning was brilliant for several reasons.

First, it eliminated the need to replace incumbent systems. Practices kept their existing infrastructure and simply added Torch to handle what their current system couldn’t. This dramatically reduced sales friction and switching costs.

Second, it allowed Torch to focus exclusively on solving the hard problem—patient financial experience—without trying to be a comprehensive practice management system. Specialization creates excellence.

Third, it positioned Torch as non-threatening to incumbents in the early days. Torch wasn’t trying to steal market share; they were solving a problem the incumbents had never prioritized. This bought time to establish market position before potential competitive responses.

From Blind Spot to Category Creation

The most powerful aspect of identifying structural blind spots is that solving them often creates new categories rather than competing in existing ones.

Torch didn’t become a better practice management system. They became the patient financial experience platform—a category that didn’t exist before because incumbents couldn’t create it without disrupting their core business.

“Our bread and butter at Torch is really using AI to take all these manual workflows and automate them,” Khaled shares. This automation-first approach represents a fundamentally different value proposition than what practice management systems offer.

Category creation solves the comparison problem that plagues most startups. When you’re creating a category, customers don’t evaluate you against incumbents—they evaluate you against the status quo of manual work and operational inefficiency.

The Long-Term Vision: Becoming Infrastructure

The ultimate validation of identifying a true structural blind spot is when your solution becomes the new infrastructure layer that everyone builds on top of.

“Our ambition is really, again, to be the operating system, to be that piece of connective tissue that connects the insurance companies with the patients and with the practices and sits at the center of all those relationships,” Khaled explains.

This vision is only possible because Torch addressed a structural blind spot rather than a feature gap. If they’d just built a better version of what incumbents offered, they’d always be competing on features and price. By solving a problem incumbents structurally couldn’t address, they created space to build entirely new infrastructure.

The Founder’s Playbook

For founders evaluating opportunities in crowded markets, Torch Dental’s story offers a clear playbook:

Don’t just look for gaps in competitive matrices. Look for problems where solving them properly would require incumbents to fundamentally change their business model or product architecture.

Pay attention to operational inefficiencies that persist despite software adoption. If customers are throwing headcount at problems their software supposedly solves, there’s a structural blind spot.

Ask why the problem exists rather than assuming incumbents are incompetent. The best opportunities come from understanding the constraints that prevent incumbents from solving obvious problems.

Position to complement rather than compete initially. This reduces friction and buys time to establish category leadership before triggering competitive responses.

Structural blind spots represent the rare opportunity to build venture-scale companies in seemingly saturated markets. The incumbents aren’t ignoring these problems because they’re blind—they’re ignoring them because solving them would destroy the foundation of their business. And that’s exactly what makes them perfect opportunities for founders willing to build something new.