startup secrets - building a compelling value proposition
TRANSCRIPT
Proprietary and Confidential
START UP SECRETS
An insider’s guide to unfair competitive advantage
Building a Compelling Value Proposition
@underscorevc startupsecrets.com
Proprietary and Confidential
Agenda
Evaluate Build
Gain Pain Value Prop
Define
startupsecrets.com Building a Compelling Value Proposition
Ideas
Problem
Solution
2@underscorevc
Proprietary and Confidential
For (target customers) Who are dissatisfied with (the current alternative) Our product is a (new product) That provides (key problem-solving capability) Unlike (the product alternative)
Value Prop
3startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
For Mobile Enterprises Who are unable to deliver Apps to users bringing their own
devices to work Our Enterprise App Services Environment (EASE) Provides for users to securely access Apps and Information Unlike (MDM), our patented Cloud based (MAM) solution is
instantly turned on and scales to tens of thousands of users
Example – Apperian (simplified)
4startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Where might you start?
Evaluate Build
Gain Pain Value Prop
Define
Ideas
Problem
Solution
5startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Ideas… free floating?
6startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Evaluate Build
Gain Pain Value Prop
Define, Qualify
Agenda - Problem
Ideas
Problem
Solution
7startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Unworkable Unavoidable Urgent Underserved
Problems worth solving are usually 4U …
Problem
8startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Broken business process Consequences ?
If the consequences are costly or painful, so much the better. E.g. who gets fired if this doesn’t work?
Unworkable
9startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Accounting Regulation
Is the problem so fundamental you can’t avoid it and just have to comply?
Unavoidable
10startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Relative to other needs … Priority
• Determines resources allocated
If you’re not at the top of the list, are you at least in the top 3? If not will you get moved up or down over time and why?
Urgent
11startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
You will compete in a zero-sum game Finite:
• $ • Time • People• Attention
Underserved – business…
12startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Examples… Social
• Find• Connect• Communicate• Meet• Share• Entertain• Date
Needs…• Social• Security• Physical• Economic• Recognition• Responsibility• Achievement• Growth
Underserved – consumers…
13startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Is it “blac” & white? Blatant Latent Aspirational Critical
Blatant
Latent
Aspirational Critical
BlatantCritical
Qualify the problem
14startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Is it addressing a “white space” in the market?• an open area of opportunity• which you can capture• Uniquely well
• AND defend with a moat NOT just technology, business model too
Startup Secret: create a moat
15
Sunset of the Forbidden City, Beijing |Source=original creation by Wikipedian |Date=June 09 2006 |Author=User:kallgan |Permission=GFDL |other_version
moat
startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Is it 4 U?• Unworkable• Unavoidable• Urgent• Underserved
Is it blac and white?
Problem - Summary
16startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Ideas… can now be applied!
17startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
4 U
Blatant Critical
Ideas – fit to problem...
18Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Evaluate Build
Gain Pain Value Prop
Define
Ideas
Problem
Solution
Agenda - Solution
19startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Solution
20Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
• Faster • Cheaper• Better
Startup Opportunity?
21startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
What is your compelling breakthrough?
3 D
Break something!
22startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Discontinuous innovation Defensible technology + Disruptive business
modelA breakthrough that COMPELS people to ACT !
23
Breakthrough opportunities
3 Dstartupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
It’s often as much work going after a small fight… Big problems often = big opportunities
Startup Secret: Pick a BIG fight!
24startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
It’s often as much work going after a small fight… Big problems often = big opportunities
Start small (Execution), think BIG (Vision), develop a ROADMAP• See Roadmap to Success on startupsecrets.com
• EG Uber An app…. with the potential to disrupt an industry
At Underscore.VC we look for bold, brave entrepreneurs with big vision
Startup Secret: Develop A Roadmap
25startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Evaluate Build
Gain Pain Value Prop
Define
Ideas
Problem
Solution
Agenda - Evaluate
26startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Before
After
Acute Pain
Absolute Joy
Qualitative evaluation
27startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Before
After
Acute Pain
Absolute Joy
Vitamin vs. Morphine
Qualitative evaluation
28startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
UTEST* EXAMPLE
(*Later renamed APPLAUSE)
Proprietary and Confidential
For companies with web or mobile apps Who are dissatisfied with apps that work as expected
in the QA lab, but not in the hands of end users Our in-the-wild testing Enables them to test their apps under real-world
conditions Unlike outsourced testing, which merely moves the
QA lab to a cheaper part of the world, but doesn’t actually improve app quality
uTestBefore & After uTest
32startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Before: Test In The Lab & Hope
Testing inside the lab is vital. But today’s web & mobile apps require a new approach to augment lab testing: in-the-wild testing
After: Test Where Your Users Are
Before & After Before & After
33startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Introducing the gain/pain ratio
Quantitative Evaluation
Gain Pain
34startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
The gain delivered to the customer vs. The pain and cost for the customer to
adopt
“Gain/Pain ratio"
Gain Pain
35startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
• Revenue • Cost savings• Time• People• Competitive advantage• Reputation• Etc..
Gain
Gain Pain
36startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
• Find (See)• Try• Buy• Implement• Deploy• Own – eg TCO
Pain
Gain Pain
37startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Gain from uTest:• Scale infinitely and immediately
From 3 testers, to 30, to 300, and back to 0• Lower total cost of testing
EG: SMBs - unlimited testing for ½ the cost of one FTE• Test under real-world conditions
Live testers, real devices, imperfect conditions… in-the-wild Pain from uTest:
• More testing reports, creating more work Takes time to re-produce, vet and rate 50+ bugs
• More collaboration, creating more oversight Coordination between in-house & crowd testers
Goal: • Maximize in-the-wild testing, while minimizing overhead
38
uTest: Gain vs Pain
38startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
• Switching costs?• Default = do
nothing• Alternatives?• Good enough =
good enough!• RISK on a startup
Inertia,RISK
Inertia
Gain Pain
39startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
What’s the right ratio?
Inertia,RISKGain Pain
40startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
> 10 to overcome• Inertia • RISK
“Gain/Pain ratio”
Inertia,RISK
Gain
Pain
>10
41startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
ACTIFIO EXAMPLE
Proprietary and Confidential
Gain/Pain Ratio Average of 30:1 benefit
• $34m vs $1.2m • Recovery used to take 8 1/2 hours v 2
minutes
Inertia,RISK
Gain
Pain
>10
startupsecrets.com Building a Compelling Value Proposition @underscorevc 43
Proprietary and Confidential
Customer view = Gain/Pain• Revenue • Cost savings• Time• People• Competitive advantage• Reputation• Etc.
• Inertia• Switching costs?• Default = do
nothing• Alternatives?• Good enough =
good enough!• RISK on a startup
• Find (See)• Try• Buy• Implement• Deploy• Own – e.g.TCO
Inertia,RISKGain
Pain
45startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
“An order of magnitude”
Customer view = Gain/Pain• Revenue • Cost savings• Time• People• Competitive advantage• Reputation• Etc.
• Inertia• Switching costs?• Default = do
nothing• Alternatives?• Good enough =
good enough!• RISK on a startup
• Find (See)• Try• Buy• Implement• Deploy• Own – e.g.TCO
Inertia,RISK
Gain
Pain
>10
46startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
UTEST* EXAMPLE
(*Later renamed APPLAUSE)
Proprietary and Confidential 48
• Tough to quantify precisely, but here’s what we’ve learned
Gain vs. Pain Ratio
Gain Pain
Cost Savings: 10X
Lower Escape Rate by 75%
Make Testing Mirror User Base
Launch Confidence
Higher Quality Apps
vs.Increased Overhead
5:1 on cost basis
20:1 on cost + value basis
Customer Gain vs Pain Ratio
48startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential 49
• Test latest version of Google Chrome across 300 highest trafficked URLs on the web
Traditional Outsourcing vs. uTest
Testers 8 Testers 30
Hours / Tester 40 Hours / Tester 10
# of Days 5 # of Days 2
# of URLs Tested 300 # of URLs Tested 300
# of Discovered Issues 19 # of Discovered Issues 129
Price $15,000 Price $10,000
Price-per-Issue $789 Price-per-Issue $78
Sample Customer ROIGain vs. Pain Ratio Sample Customer ROI
49startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
APPERIAN EXAMPLE
Mobile Application Management
Proprietary and Confidential
Increase revenue by 40% at counters Roll out 17,000 iPads Deliver worldwide no IT touch
required Saved $2.5M+ in direct IT costs
Example - Apperian
51startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Disruptive innovation
Yet..
NON disruptive adoption
Startup Secret…
52startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Agenda - Build
Evaluate Build
Gain Pain Value Prop
Define
Ideas
Problem
Solution
53startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
For (target customers) Who are dissatisfied with (the current alternative) Our product is a (new product) That provides (key problem-solving capability) Unlike (the product alternative)
Value Prop
54startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
What problems do you understand uniquely well?
What solution can you deliver uniquely well?
What kind of disruptive business model can you bring?
Build around – YOU…
55startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
1. Define, • 4U Need (Unworkable, Unavoidable, Urgent, Underserved)• 3D Solution (Discontinuous, Defensible, Disruptive)
2. Evaluate• Gain/Pain >10
3. Build• Around YOU!
Summary
56startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
START UP SECRETS
An insider’s guide to unfair competitive advantage
Building a Compelling Value Proposition
@underscorevc startupsecrets.com
Proprietary and Confidential
T 617.303.0064 @underscorevc
53 State Street, 10th Floor, Boston, MA 02109, USA
Proprietary and Confidential
1 2 3
HOW DISQUS WORKS
Easy install for all platformsSites are part of the Disqus network
Sites integrate Disqus Users engage with Disqus Users discover new content &sites across Disqus
Sites see tangible benefits, including increased traffic on their pages
Audience development made easy.Millions of users use Disqus to participate online and we make that valuable for publishers in a way that they can measure.
61startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
THE DISQUS ECOSYSTEM
A COMMUNITY ECOSYSTEM is the foundation of our business.
USERSGOALS
DiscoveryCommunity
ADVERTISERSGOALS
AcquisitionRetention
PUBLISHERSGOALS
EngagementGrowth
Revenue
62@mjskok startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
DISQUS – Value prop for publishersFOR
· Publishers, like online media or bloggersWHO CARE ABOUT
· Building more engaged, loyal audiences directly on their sitesOUR PRODUCT IS
· The most widely used discussion platform onlineTHAT PROVIDES
· An “engagement management platform” for publishers, and· direct reach into millions of engaged community participants online
UNLIKE· Social networks, which don’t properly serve the needs of publishers· Or white-label software, which doesn’t provide the wide network reach of users
63@mjskok startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
For those in the developing world Who are dissatisfied with limited access to diagnosis Our product is a patterned paper-based diagnostic technology That provides low-cost, easy-to-use, point-of-care diagnostics Unlike no diagnosis
Diagnostics For All - Alok
64@mjskok startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
Before
Need
After
Solution
53%of Rwandan women
cannot afford healthcare
26%of Rwandan women
live too far from a hospital
[1] National Institute of Statistics of Rwanda (NISR) [Rwanda], Ministry of Health (MOH) [Rwanda] http://www.measuredhs.com/publications/publication-fr259-dhs-final-reports.cfm
Point-of-careMinimal training required
Cost = 1¢Diagnosis by telemedicine
Image: http://www.trust.org/alertnet/news/alertnets-top-20-big-ideas-that-dont-cost-the-earth/
DFA
65@mjskok startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
NO current solution => huge NO infrastructure required NO training required NO time required
Customers Gain/Pain ratio = ∞
DFA Gain/Pain
66@mjskok startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
At-risk pregnancy
Liver function• 8 million affected globally• conducting ~700 person trial in Vietnam• test for ALT/AST enzymes• cost: $14 v. 1¢ (DFA)
Child nutritionSmall farmer support
Customer ‘pain’ is real pain
DFA Example
67@mjskok startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
How thoroughly should you define?A little and then iterate?or A LOT and then execute?
68@mjskok startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
How thoroughly should you define?
“A problem well stated is a problem half solved”
Charles Kettering
A little and then iterate?or A LOT and then execute?
69@mjskok startupsecrets.com Building a Compelling Value Proposition @underscorevc
Proprietary and Confidential
• Case studies– Actifio– Apperian– Disqus– DFA– uTest
Follow onlinewww.startupsecrets.com
@mjskok
/mjskok
linkedin.com/in/mjskok
bit.ly/mjskok-google
bit.ly/mjskok-youtube
Thank you…
70@mjskok startupsecrets.com Building a Compelling Value Proposition @underscorevc