1. E245 Value Proposition Ann Miura-Ko January 2012
Give me your elevator pitch – take 2-3 teams (do they describe value proposition or product?) – for whom? Is their view of the ecosystem wide enough?

2. Some Announcements Asking for Email Introductions. Send the following:
Name of person to whom you want an intro
Why you’d like to speak to them (e.g. they lead the IT security team at HP and we believe they might be an early adopter of our technology)
What questions you’d like to ask (not the interview guide but topics to cover)
Blurb about your company

3. Where we are…

4. Key Questions for Value Prop
Problem Statement: What is the problem?
Ecosystem: For whom is this relevant?
Competition: What do customers do today?
Technology / Market Insight: Why is the problem so hard to solve?
Market Size: How big is this problem?
Product: How do you do it?

5. Problem Statement What is the problem?
How do you justify your existence?
Try it out with a few teams – toy team – what is the problem? What if you were to explain this to your users? What about your customers? What about a education blogger? Decision maker and economic buyer are the same
Parkpoint Capital – government, payment processors, who else?
Oral light – suppliers, channels (schein), contract manufacturer, etc.
Use board to map out these different parts of the ecosystem – we will deep dive in the next 2 slides.
WHO IS THE AUDIENCE? Is it an investor? Is it a customer? Is it a user?

6. The Ecosystem (“Customers”)
Day to day users
May actually have zero influence in buying process
End User
Influencer / Recommender
Preferences and decisions influence or impact buying decisions
Economic Buyer
The person who controls the purse strings or is in charge of the budget
Decision Maker
The buck stops here

7. The Ecosystem (The Rest)
Suppliers
Entity that provides parts or services needed to manufacture your product
Channels
Group or organization that installs, distributes or sells the product in your place
Government
Organizations responsible for monitoring trading and safety standards related to your product
Partners
Other entities that provide products related to delivery of your final product

8. Key question to test: Is your map of the ecosystem correct and complete?

9. Competition What are customers doing today?
Are competitors threatening to offer better price or value?
How saturated is our market?
What alternative does the customer have right now? How aware are they of the problem?
Important context for value proposition – how new is this idea? – Market type

10. Market Type Existing Resegmented New Customers Known Possibly Known
Unknown
Customer Needs
Performance
Better fit
Transformational improvement
Competitors
Many
Many if wrong, few if right
None
Risk
Lack of branding, sales and distribution ecosystem
Market and product re-definition
Evangelism and education cycle
Market Type determines:
Rate of customer adoption
Sales and Marketing strategies
Cash requirements

11. Existing Market Characteristics:
Customers are always hungry for better performance
Incumbents exist
Usually technology driven
Positioning driven by product and how much value customers place on its features
Risks:
Incumbents will defend their turf
Network effects of incumbent
Continuing innovation

12. Resegmented Market Characteristics Low cost provider or unique niche
Eliminates factors on which the industry competes
Raises certain factors well above industry standards
Risks:
Incumbents will see this as their turf
Continuing innovation

13. New Market Characteristics: Customers don’t exist today Risks
“Life as is” is good enough
Sizing the market
Accessing potential customers and getting effective feedback
Based on this, what types of markets are you attacking?

14. Key question to test: How aware is your ecosystem of the existence of the problem?
But sometimes, awareness isn’t as important as how compelling your market or technical insight might be. This is how entrepreneurs often times create the illusion of “changing reality”.

15. Technology and Market Insight
Technology Insight
Moore’s Law
New scientific discoveries
Typically applies to hardware, clean tech and biotech
Market Insight
Value chain disruption
Deregulation
Changes in how people work, live and interact and what they expect
Market insight is becoming more and more a requirement

16. Examples of Market Insight
People want to play more involved games than what is currently offered
Facebook can be the distribution for such games
Masses of people are more likely to micro-blog than blog
The non-symmetric relationships will allow companies and individuals to self-promote and will impact distribution
Generally impacts some part of your business model diagram (usually NOT the product component)
European car sharing sensibilities could be adopted in North America
People, particularly in urban environments, no longer wanted to own cars but wanted to have flexibility.

17. Examples of Technical Insight
Topological analysis enables highly dimensional data to be analyzed without predetermining number of feature sets
Mass produced components can be used to create a miniaturized fluorescence microscope
Generally a product / value proposition question

18. Insight Characteristics
Wrong
Right
Biggest Potential Wins
Non-Consensus
Mindless Competition
What insight to I have that is not yet conventional wisdom?
Insight is important because it helps us to identify the type of value that the product will deliver… What type of value do you think Market Insight brings? What about Technical Insight?
Consensus

19. Types of Product Value Comes from Technical Insight
Comes from Market Insight
More Efficient
Lower cost
Better Distribution
Better Bundling
Smaller
Simpler
Others: Brand/Status, easier to access (distribution); fun; bundling (phone + camera) faster, simpler, smaller, lower cost, more efficient
Faster
Better Branding

20. Key Question: Is there a reason this idea is uniquely poised to take off today?

21. How do I test value proposition hypotheses?
First – how would you define product? (go through different teams)

22. Define Product
Hardware
Service
Knowledge
Resources
Networks
Data

23. Minimum Viable Product (MVP)
A product that solves a core problem for customers
The minimum set of features needed to learn from earlyvangelists
Avoid building products nobody wants
Maximize the learning per dollar spent

24. The Art of the MVP A MVP is not a minimal product
“But my customers don’t know what they want!”
At what point of “I don’t get it!” will I declare defeat?

25. Testing the MVP Smoke testing with landing pages using AdWords
In-product split-testing
Prototypes (particularly for hardware)
Removing features
Continued customer discovery and validation

26. The Value Proposition Pivot
Originally: Craigslist for colleges
Became: Textbook rentals
Originally: Video dating site
Became: Video uploading site
Originally: The Point (Collective action site)
Became: Mass couponing site