Startup Secrets - Building a Compelling Value Proposition
1. Proprietary and Confidential
START UP
SECRETS
An insiderâs guide to unfair competitive advantage
Building a Compelling Value Proposition
@underscorevc
startupsecrets.com
3. Proprietary and Confidential
ď˝ For (target customers)
ď˝ Who are dissatisfied with (the current alternative)
ď˝ Our product is a (new product)
ď˝ That provides (key problem-solving capability)
ď˝ Unlike (the product alternative)
Value Prop
3startupsecrets.comBuilding a Compelling Value Proposition @underscorevc
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ď˝ For Mobile Enterprises
ď˝ Who are unable to deliver Apps to users bringing their own devices to
work
ď˝ Our Enterprise App Services Environment (EASE)
ď˝ Provides for users to securely access Apps and Information
ď˝ Unlike (MDM), our patented Cloud based (MAM) solution is instantly
turned on and scales to tens of thousands of users
Example â Apperian (simplified)
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Where might you start?
Evaluate Build
Gain Pain
Value
Prop
Define
Ideas
Problem
Solution
5startupsecrets.comBuilding a Compelling Value Proposition @underscorevc
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Evaluate Build
Gain Pain
Value
Prop
Define, Qualify
Agenda - Problem
Ideas
Problem
Solution
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ď˝ Unworkable
ď˝ Unavoidable
ď˝ Urgent
ď˝ Underserved
Problems worth solving
are usually 4U âŚ
Problem
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ď˝ Broken business process
ď˝ Consequences ?
If the consequences are costly or painful,
so much the better.
E.g. who gets fired if this doesnât work?
Unworkable
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ď˝ Accounting
ď˝ Regulation
Is the problem so fundamental
you canât avoid it and just have to comply?
Unavoidable
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ď˝ Relative to other needs âŚ
ď˝ Priority
⢠Determines resources allocated
If youâre 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
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ď˝ You will compete in a zero-sum game
ď˝ Finite:
⢠$
⢠Time
⢠People
⢠Attention
Underserved â businessâŚ
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ExamplesâŚ
⢠Social
â Find
â Connect
â Communicate
â Meet
â Share
â Entertain
â Date
NeedsâŚ
⢠Social
⢠Security
⢠Physical
⢠Economic
⢠Recognition
⢠Responsibility
⢠Achievement
⢠Growth
Underserved â consumersâŚ
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Is it âblacâ & white?
ď˝ Blatant
ď˝ Latent
ď˝ Aspirational
ď˝ Critical
Blatant
Latent
Aspirational Critical
Blatant
Critical
Qualify the problem
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ď˝ Is it addressing a âwhite spaceâ in the market?
⢠an open area of opportunity
⢠which you can capture
⢠Uniquely well
⢠AND defend with a moat
ď˝ 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.comBuilding a Compelling Value Proposition @underscorevc
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ď˝ Is it 4 U?
⢠Unworkable
⢠Unavoidable
⢠Urgent
⢠Underserved
ď˝ Is it blac and white?
Problem - Summary
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4 U
Blatant
Critical
Ideas â fit to problem...
18Building a Compelling Value Proposition @underscorevc
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Evaluate Build
Gain Pain
Value
Prop
Define
Ideas
Problem
Solution
Agenda - Solution
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⢠Faster
⢠Cheaper
⢠Better
Startup
Opportunity?
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What is your compelling
breakthrough?
3 D
Break something!
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ď Discontinuous innovation
ď Defensible technology +
ď Disruptive business model
A breakthrough that
COMPELS people to
ACT !
23
Breakthrough opportunities
3 D
startupsecrets.comBuilding a Compelling Value Proposition @underscorevc
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ď˝ Itâs often as much work going after a small fightâŚ
ď˝ Big problems often = big opportunities
Startup Secret: Pick a BIG fight!
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ď˝ Itâs often as much work going after a small fightâŚ
ď˝ Big problems often = big opportunities
ď˝ Start small (Execution), think BIG (Vision), develop a ROADMAP
⢠See Roadmap to Success on startupsecrets.com
⢠EG Uber
ď˝ An appâŚ. 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.comBuilding a Compelling Value Proposition @underscorevc
26. Proprietary and Confidential
Evaluate Build
Gain Pain
Value
Prop
Define
Ideas
Problem
Solution
Agenda - Evaluate
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27. Proprietary and Confidential
Before After
Acute Pain
ď
Absolute Joy
ď
Qualitative evaluation
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Before After
Acute Pain
ď
Absolute Joy
ď
Vitamin vs. Morphine
Qualitative evaluation
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30. Proprietary and Confidential
ď˝ For companies with web or mobile apps
ď˝ Who are dissatisfied with apps that work as expected in the
QA lab, but not in the hands of end users
ď˝ Our in-the-wild testing
ď˝ Enables them to test their apps under real-world conditions
ď˝ Unlike outsourced testing, which merely moves the QA lab to
a cheaper part of the world, but doesnât actually improve app
quality
uTestBefore & AfteruTest
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31. Proprietary and Confidential
Before: Test In The Lab & Hope
Testing inside the lab is vital. But todayâs web & mobile apps require a new approach to
augment lab testing: in-the-wild testing
After: Test Where Your Users Are
Before & AfterBefore & After
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ď˝ Introducing the gain/pain ratio
Quantitative Evaluation
Gain Pain
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ď˝ The gain delivered to the customer
vs.
ď˝ The pain and cost for the customer to adopt
âGain/Pain ratio"
Gain Pain
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34. Proprietary and Confidential
⢠Revenue
⢠Cost savings
⢠Time
⢠People
⢠Competitive advantage
⢠Reputation
⢠Etc..
Gain
Gain Pain
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35. Proprietary and Confidential
⢠Find (See)
⢠Try
⢠Buy
⢠Implement
⢠Deploy
⢠Own â eg TCO
Pain
Gain Pain
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ď˝ Gain from uTest:
⢠Scale infinitely and immediately
ď˝ From 3 testers, to 30, to 300, and back to 0
⢠Lower total cost of testing
ď˝ EG: SMBs - unlimited testing for ½ the cost of one FTE
⢠Test under real-world conditions
ď˝ Live testers, real devices, imperfect conditions⌠in-the-wild
ď˝ Pain from uTest:
⢠More testing reports, creating more work
ď˝ Takes time to re-produce, vet and rate 50+ bugs
⢠More collaboration, creating more oversight
ď˝ Coordination between in-house & crowd testers
ď˝ Goal:
⢠Maximize in-the-wild testing, while minimizing overhead
38
uTest: Gain vs Pain
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⢠Switching costs?
⢠Default = do nothing
⢠Alternatives?
⢠Good enough =
good enough!
⢠RISK on a startup
Inertia,
RISK
Inertia
Gain Pain
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Whatâs the right ratio?
Inertia,
RISKGain Pain
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ď˝ > 10 to overcome
⢠Inertia
⢠RISK
âGain/Pain ratioâ
Inertia,
RISK
Gain
Pain
>10
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Gain/Pain Ratio
ď˝ 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.comBuilding a Compelling Value Proposition @underscorevc 43
42. 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 â e.g.TCO
Inertia,
RISKGain
Pain
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âAn order of
magnitudeâ
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 â e.g.TCO
Inertia,
RISK
Gain
Pain
>10
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⢠Tough to quantify precisely, but hereâs what weâve 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
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⢠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
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ď§ Increase revenue by 40% at counters
ď§ Roll out 17,000 iPads
ď§ Deliver worldwide no IT touch required
ď§ Saved $2.5M+ in direct IT costs
Example - Apperian
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Disruptive innovation
Yet..
NON disruptive adoption
Startup SecretâŚ
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Agenda - Build
Evaluate Build
Gain Pain
Value
Prop
Define
Ideas
Problem
Solution
53startupsecrets.comBuilding a Compelling Value Proposition @underscorevc
51. Proprietary and Confidential
ď˝ For (target customers)
ď˝ Who are dissatisfied with (the current alternative)
ď˝ Our product is a (new product)
ď˝ That provides (key problem-solving capability)
ď˝ Unlike (the product alternative)
Value Prop
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52. Proprietary and Confidential
ď˝ What problems do you understand uniquely well?
ď˝ What solution can you deliver uniquely well?
ď˝ What kind of disruptive business model can you bring?
Build around â YOUâŚ
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1. Define,
⢠4U Need (Unworkable, Unavoidable, Urgent, Underserved)
⢠3D Solution (Discontinuous, Defensible, Disruptive)
2. Evaluate
⢠Gain/Pain >10
3. Build
⢠Around YOU!
Summary
56startupsecrets.comBuilding a Compelling Value Proposition @underscorevc
54. Proprietary and Confidential
START UP
SECRETS
An insiderâs guide to unfair competitive advantage
Building a Compelling Value Proposition
@underscorevc startupsecrets
.com
56. Proprietary and Confidential
1 2 3
HOW DISQUS WORKS
Easy install for all platforms
Sites 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.
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THE
DISQUS
ECOSYSTEM
A COMMUNITY
ECOSYSTEM is the
foundation of our business.
USERS
GOALS
Discovery
Community
ADVERTISERS
GOALS
Acquisition
Retention
PUBLISHERS
GOALS
Engagement
Growth
Revenue
62@mjskok startupsecrets.comBuilding a Compelling Value Proposition @underscorevc
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DISQUS â Value prop for publishers
FOR
¡ Publishers, like online media or bloggers
WHO CARE ABOUT
¡ Building more engaged, loyal audiences directly on their sites
OUR PRODUCT IS
¡ The most widely used discussion platform online
THAT PROVIDES
¡ An âengagement management platformâ for publishers, and
¡ direct reach into millions of engaged community participants online
UNLIKE
¡ Social networks, which donât properly serve the needs of publishers
¡ Or white-label software, which doesnât provide the wide network reach of users
63@mjskok startupsecrets.comBuilding a Compelling Value Proposition @underscorevc
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ď˝ For those in the developing world
ď˝ Who are dissatisfied with limited access to diagnosis
ď˝ Our product is a patterned paper-based diagnostic technology
ď˝ That provides low-cost, easy-to-use, point-of-care diagnostics
ď˝ Unlike no diagnosis
Diagnostics For All - Alok
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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-care
Minimal 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
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ď˝ NO current solution => huge
ď˝ NO infrastructure required
ď˝ NO training required
ď˝ NO time required
ď˝ Customers Gain/Pain ratio = â
DFA Gain/Pain
66@mjskok startupsecrets.comBuilding a Compelling Value Proposition @underscorevc
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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 nutrition
Small farmer support
Customer âpainâ is real pain
DFA Example
67@mjskok startupsecrets.comBuilding a Compelling Value Proposition @underscorevc
63. Proprietary and Confidential
How thoroughly should you define?
A little and then iterate?
or
A LOT and then execute?
68@mjskok startupsecrets.comBuilding a Compelling Value Proposition @underscorevc
64. Proprietary and Confidential
How thoroughly should you define?
âA problem well stated is a
problem half solvedâ
Charles Kettering
A little and then iterate?
or
A LOT and then execute?
69@mjskok startupsecrets.comBuilding a Compelling Value Proposition @underscorevc
65. Proprietary and Confidential
⢠Case studies
â Actifio
â Apperian
â Disqus
â DFA
â uTest
Follow online
www.startupsecrets.com
@mjskok
/mjskok
linkedin.com/in/mjskok
bit.ly/mjskok-google
bit.ly/mjskok-youtube
Thank youâŚ
70@mjskok startupsecrets.comBuilding a Compelling Value Proposition @underscorevc