Startup Secrets - Building a Compelling Value Proposition

Proprietary and Confidential

START UP SECRETS

An insider’s guide to unfair competitive advantage

Building a Compelling Value Proposition

@underscorevc startupsecrets.com


Agenda

Evaluate Build

Gain Pain Value Prop

Define

startupsecrets.com Building a Compelling Value Proposition

Ideas

Problem

Solution

2@underscorevc


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


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)



Where might you start?

Evaluate Build


Define

Ideas

Problem

Solution



Ideas… free floating?



Evaluate Build


Define, Qualify

Agenda - Problem

Ideas

Problem

Solution



Unworkable Unavoidable Urgent Underserved

Problems worth solving are usually 4U …

Problem



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



Accounting Regulation

Is the problem so fundamental you can’t avoid it and just have to comply?

Unavoidable



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



You will compete in a zero-sum game Finite:

• $ • Time • People• Attention

Underserved – business…



Examples… Social

• Find• Connect• Communicate• Meet• Share• Entertain• Date

Needs…• Social• Security• Physical• Economic• Recognition• Responsibility• Achievement• Growth

Underserved – consumers…



Is it “blac” & white? Blatant Latent Aspirational Critical

Blatant

Latent

Aspirational Critical

BlatantCritical

Qualify the problem



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

https://commons.wikimedia.org/wiki/User:Kallgan


Is it 4 U?• Unworkable• Unavoidable• Urgent• Underserved

Is it blac and white?

Problem - Summary



Ideas… can now be applied!



4 U

Blatant Critical

Ideas – fit to problem...

18Building a Compelling Value Proposition @underscorevc


Evaluate Build


Define

Ideas

Problem

Solution

Agenda - Solution



Solution

20Building a Compelling Value Proposition @underscorevc


• Faster • Cheaper• Better

Startup Opportunity?



What is your compelling breakthrough?

3 D

Break something!



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


It’s often as much work going after a small fight… Big problems often = big opportunities

Startup Secret: Pick a BIG fight!



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


http://www.startupsecrets.com/roadmap-to-success


Evaluate Build


Define

Ideas

Problem

Solution

Agenda - Evaluate



Before

After

Acute Pain

Absolute Joy

Qualitative evaluation



Before

After

Acute Pain

Absolute Joy

Vitamin vs. Morphine

Qualitative evaluation



UTEST* EXAMPLE

(*Later renamed APPLAUSE)


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



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



Introducing the gain/pain ratio

Quantitative Evaluation

Gain Pain



The gain delivered to the customer vs. The pain and cost for the customer to

adopt

“Gain/Pain ratio"

Gain Pain



• Revenue • Cost savings• Time• People• Competitive advantage• Reputation• Etc..

Gain

Gain Pain



• Find (See)• Try• Buy• Implement• Deploy• Own – eg TCO

Pain

Gain Pain



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



• Switching costs?• Default = do

nothing• Alternatives?• Good enough =

good enough!• RISK on a startup

Inertia,RISK

Inertia

Gain Pain



What’s the right ratio?

Inertia,RISKGain Pain



> 10 to overcome• Inertia • RISK

“Gain/Pain ratio”

Inertia,RISK

Gain

Pain

>10



ACTIFIO EXAMPLE


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


Customer view = Gain/Pain• Revenue • Cost savings• Time• People• Competitive advantage• Reputation• Etc.

• Inertia• Switching costs?• Default = do



• Find (See)• Try• Buy• Implement• Deploy• Own – e.g.TCO

Inertia,RISKGain

Pain



“An order of magnitude”

Customer view = Gain/Pain• Revenue • Cost savings• Time• People• Competitive advantage• Reputation• Etc.

• Inertia• Switching costs?• Default = do



• Find (See)• Try• Buy• Implement• Deploy• Own – e.g.TCO

Inertia,RISK

Gain

Pain

>10



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


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



APPERIAN EXAMPLE

Mobile Application Management


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



Disruptive innovation

Yet..

NON disruptive adoption

Startup Secret…



Agenda - Build

Evaluate Build


Define

Ideas

Problem

Solution



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



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…



1. Define, • 4U Need (Unworkable, Unavoidable, Urgent, Underserved)• 3D Solution (Discontinuous, Defensible, Disruptive)

2. Evaluate• Gain/Pain >10

3. Build• Around YOU!

Summary



START UP SECRETS

An insider’s guide to unfair competitive advantage

Building a Compelling Value Proposition

@underscorevc startupsecrets.com


T 617.303.0064 @underscorevc

53 State Street, 10th Floor, Boston, MA 02109, USA


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.



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


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



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



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



NO current solution => huge NO infrastructure required NO training required NO time required

Customers Gain/Pain ratio = ∞

DFA Gain/Pain



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



How thoroughly should you define?A little and then iterate?or A LOT and then execute?



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?



• Case studies– Actifio– Apperian– Disqus– DFA– uTest

Follow onlinewww.startupsecrets.com

@mjskok

/mjskok

linkedin.com/in/mjskok

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bit.ly/mjskok-youtube

Thank you…


http://www.mjskok.com/

Education

Startup Secrets - Building a Compelling Value Proposition