Value Props: Create a Product People Will Actually Buy

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value props is one of the most important
things that we could possibly spend time
on because the number one reason that
companies fail is because they're not
solving a valuable enough problem and
therefore they don't create the value
that's worth investing in and therefore
they fail in their basic form of
meeting a need so what we intend to do
today is to both help you understand how
to define the problem you're addressing
or the opportunity you see and then
actually evaluate it and then finally
create it and this is one of the few
workshops where I'll tell you that we do
have an answer usually you hear me say
there are no answers that I'm going to
ask a whole bunch of questions of you
the only answer I'm giving you though is
a framework and it's a framework for
where we're going to go so let me jump
right in and get you there so you can
hear exactly from the beginning how this
framework set of activities is going to
come together so as I said first of all
we're going to Define then we're going
to evaluate then we're going to build
one of the things I want to tell you
right off the bat is that I want to get
rid of the idea of ideas
it's a terrible thing but most people
come to me and they say I've got an
incredible idea for X Y and Z well ideas
are to a penny sorry I should say two
Ascent but what they really are is free
floating they don't actually have
meaning until you can address some kind
of a problem or opportunity with them so
that's why that first part is so
important and then of course once you
start building a value proposition we
want to be able to evaluate it so you
yourself not me or anybody else can
judge whether you've got something that
is really going to be compelling and
cause people to buy and finally if you
have then of course you want to build it
and get it into a form that's really
crisp so it's an easy thing for you to
do and everything from an elevator pitch
to literally going to a full-on pitch
for example to get a customer over the
line or raise money in every instance
though this framework a set of
Frameworks should help you get there
so I said we'd give you an answer this
is the end of the session we want you to
be able to actually build this framework
and say for who
that is dissatisfied with what due to
some unmet need or problem you offer a
product that solves that and it provides
some key benefits that are compelling
enough that people actually want to
engage with you
so that's where we're headed this
evening
first thing in the value prop that we
want to do is Define and the first
statement sounds so obvious which is for
who so I'm going to jump right in
because I know that they've got a good
starting point connect ed gulnas tell me
for who is your value problem
so this isn't connected as a non-profit
so we Bridge the digital divide for
people in Kazakhstan
but we have to deliver I feel like the
value proposition for organization that
donate their computers and devices to us
and those who can fund us okay so you
went long way down into that but I want
to make sure we really understand the
who so if you could say who it was for
is it everybody in Kazakhstan
primarily children okay so we want to
say children
okay
what else could you say about them
from marginalized communities and rural
areas in Kazakhstan
okay marginalized what else
who don't have basic digital literacy
skills Okay so
basic
digital literary skills
and you said the last thing is and they
don't have equipment and they don't have
equipment
so this is why I picked gulnas because
I've been lucky enough to have her in
the class before she didn't say my
proposition is for everybody which would
be very terrifying if it was by the way
because then you how do you even pick
where you go to market or how you reach
that customer Etc so it's got very
specific I didn't write Kazakhstan
because that's pretty obvious but it's
children with marginalized who are in a
marginalized situation don't have basic
digital literacy and they don't have the
equipment now we can find out later how
she's going to address their needs but
that's pretty clear right
so anyway one of the teams at the iLab
who put their value prop in for tonight
was comprofacial and they very openly
said they've got a product which is
going to help people who are
dissatisfied with current credit
products due to high interest rates get
through a credit Marketplace better
comparison capabilities
makes total sense but they didn't say
for who
now that's a massive problem when you
are building a business because if you
don't know who your customer is you
don't know what the Persona is of that
you're selling to and how to focus or
Target on them Etc and it just is the
beginning therefore of why the value
proposition statement is so important
I will underline it by saying the
following if you don't know who your
customer is and you think it's everybody
I can tell you you're going to fail
by default because trying to boil the
ocean and sell To The World At Large is
a very big undertaking for any company
even the largest companies in the world
get very crisp about it
yeah and Tata
yeah I had a question and I think
related to Gomez's business if your user
is different from your customer who do
you put on the for who great question so
user versus customer
what do you think is the answer first of
all
Gomez will answer
anybody can answer does anybody in the
room have an answer to this this is a
terrifically good question by the way
this is the kind of thing that we really
need to deal with too it doesn't
the user say more
why the user
well because customer is just the person
who's paying it the user is who's
benefiting from what you're creating
great
now does it mean it one or the other
or are both important anybody else want
to comment on this yes go ahead I think
when your user is not your customer you
actually have to satisfy two different
value propositions you have to provide
value to the initial funder whether
that's philanthropy or government but
you also have to provide value to the
user so you have uptake
okay so this is really important the
switches I'll just use the word pull you
need to pull from the user if the user's
not using it nobody's going to pay for
it but even if the user is using it the
person who's got to pay for it whether
it's you know a government if it's a
non-profit situation or it's somebody in
it for example who's the gatekeep of
something they still are going to need
the user to convince them that there is
a payoff that makes it worth them
investing in this product or service so
both are important but I really agree
with Victor by the way you've got to
start with the user like if the user is
just not getting the value from your
value proposition that's the whole point
of this class then we're in the wrong
place
so this piece of definition is what
we're trying to get to with The Who and
you've when you see and by the way I
don't think we have it this semester but
the startup Secrets class on go to
market
which by the way is on the iLab YouTube
channel you will see we talk about
personas and this is one of the things
that we talk about is how do you get to
all parts of the Persona that is going
to be the champion for your product or
service in whatever Enterprise or
government or uh non-profit that you're
selling to so very important question
thank you very much for that any other
questions on who before we move on
all right good the key word here is
ultimately segment
so if we're not going to sell to
everybody we need to find a segment of
people that we're going to sell to and
the trick of this is actually in your
workbook so I'm not going to pitch it to
you tonight because it's a significant
thing to go and spend some time looking
at and that is to Define your minimum
viable segment I'll just Define it for
you as simply as this which is to say
you're all going to get to learn about
building the smallest product you
possibly can your MVP
and if the whole Market out there the
whole world was where you went and
targeted that then this would very
quickly get pulled in all sorts of
different directions for all the
potential users that could use your
product or service and they all have
different needs the mvs simply says you
want to find one path where you get the
same needs for the same users that
allows you to sell the same product over
and over and over and over and over
again without you having to change the
product
you can learn a lot more about that in
the workbook but that's the notion of a
segment and if you do this right
then you end up with a minimum viable
segment
which is
a good dance partner as I call it your
minimum viable product now does anybody
in the room not know what these two
terms are because they are terms that
have been built in startup Legacy for
the last decade or so but it doesn't
mean to say everybody knows them anybody
have any questions on those
all right good so
only secret I want to give you here is
one simple one which is you want to
evaluate this part of your uh who you're
selling to Through The Eyes of the
customer
so we talked about who this is let's
just focus on the user if the user can
identify with the product you're selling
you're on the right track
and what's the best way to find that out
what's happening
yeah absolutely all of you can do this
without spending a single penny
just go out and talk to them
and if you're not clear that your user
is identifying when you talk to them
with what you're trying to sell them
they say well that's not me I don't buy
that or I don't need that or that's not
a problem I identify with
keep asking until you find the person
who says oh yeah that's the problem I
have
and keep asking until they say not only
do I have it but then that's where we'll
start to get into more of the value
proposition but it's the pain there is
big enough for me to actually start to
engage with you but everything you do
should be looked at from your users eyes
not from yours in other words don't
pitch them anything ask them everything
makes sense I see a lot of nodding heads
good
all pretty obvious so now that we've
we've talked about defining who it's for
we're going to Define what we're going
to solve for them what problem we're
going to Define for them
so there's a famous statement here and
it's one of my favorite which is a
problem well stated is half solved
and the reason that's true is that if
you can really clearly identify what the
pain or need or opportunity is that
you're going to address becomes very
easy to start getting your team to focus
on well what product or service will you
build
but imagine if you get in the room and
the opposite is true there's five
Engineers you've heard for argument's
sake or five people you're working on a
service building a service for and you
can't even agree what it is you're
building
and or if you didn't do the first part
who you're building it for that's where
a lot of startups go wrong by the way is
they can't get that crisp to say we need
to solve this particular pain point this
hair on fire pain point for people first
so now the question is what's the best
way to go about doing that
here are a few Frameworks for you
first of all this one is a very simple
one it's for use
think about problems that are unworkable
unavoidable
urgent and underserved
so those of you with boards I'm going to
recommend you put up just four years and
just take a moment to think about as you
are thinking about for example Vivian
framing your idea what about it is
unworkable unavoidable and underserved
and Urgent and I'm going to take you
through each of these I just want you to
capture the four years on your board so
Celine if you do this I'm sorry Stella
if you do the same for Celine Health
just put them up on the board for the
moment
it's going to get us used to kind of
creating the basis for what we can go
through and you're all going to build
out your value propositions on your
board so just to be clear so um the only
person I didn't meet is Sharon
hi welcome good to have you here
um I know
I know you're building a
new kind of bike seat can you just tell
us what it's about yeah
um I do not yet have a name hence just
the word bike seat but I'm specifically
looking at solving the problem of some
of the long-term health issues that are
caused through for women through biking
and I'm doing that through looking at
how to design a bike seat that reduces
pressure and friction
that's perfect I don't even need to go
any further so I'm going to just ask you
to put up these four years and tell me
why in your own words for the moment
just one example of something that you
think is either unworkable unavoidable
or urgent or underserved you don't need
to tell me right away but I'm going to
take you these Frameworks and I'll come
back to you so I'm giving you a heads up
that I'll come back to you and ask you
great
now that you've got this let me take you
through them
so unworkable is sort of obvious
but it's really interesting
some people think they've got an
unworkable problem but the real
definition of something that's
unworkable is that it is going to cause
a problem that when this happens the
consequences are so great that somebody
could get fired for it
so let me give you an example because
it's a very interesting one and you
might have all lived through it so when
the iPhone first got introduced
people were lining up to buy them that
was the great news the bad news was when
they got them they couldn't get them
activated
and worse still when they did get them
activated all the iCloud services to do
things like download their contacts and
their calendars weren't working either
so that problem was so bad so unworkable
a lot of people got fired in fact Steve
Jobs was quite famously on a tirade
about it and it was a problem that was
created by a brand new technology in a
mass market and with a lot of people
that obviously were very unhappy about
it and today guess what when you buy an
iPhone it's pre-provisioned you already
have all of that worked out and that
took years actually to figure out I
happened to be one of the investors in a
company that solved that problem for the
carriers on the other side of this like
at T it was worth tens of millions of
dollars just fixing that workflow and
making it possible for you to just pick
up an iPhone and turn it on and
effectively get your new number working
so these unworkable problems do get
people fired they're that painful and
they cause all sorts of things now
ideally
they're much more interesting than that
so for example we've got social problems
where you've got things that are causing
people to get sick or for example not
able to get education or like connected
not able to get the right resources that
will help them in a desperate situation
then that also is unworkable you will
have your own way of saying it Google
Nows would you say what you think is
unworkable about connected
if I understand it correctly if so if we
teach digital literacy skills that kids
cannot use yeah that's useless kind of
well no let's put it the other way
around what happens if you don't solve
the problem oh if we don't solve the
problem so we are trying to close the
socio-economic
Gap in Kazakhstan that is also caused by
educational inequality
okay but what if hap what happens in
Kazakhstan if we don't solve the
socio-economic gap
what happens to Kazakhstan
yeah I mean the one example is like
people protest this year and there was
like a huge wave of unhappy people
great so I mean this
it's it's important and I want to make
sure that we give gave you air time for
this not every problem that comes
through the iLab is a problem that's
technology like the iPhone's not you
know getting to to work it can be a
social problem like this is a really big
challenge for a nation that's trying to
develop its people that they can't get
the education and the resources they
need it causes huge unrest great
unhappiness and guess what that
population is not going to get out of
their third world status unless they get
the education they need this is a really
unworkable problem this is one of the
biggest problems of our time is that we
have huge social divide so thank you for
addressing it and thanks for taking that
mission up that's an example of an
unworkable problem anybody got any
questions or an idea of where their
particular thing is unworkable today so
I don't know whether let's see who have
I not talked to so far uh cohort
is there anything about what you're
doing that's unworkable
we're looking largely at the improving
the graduation rates for black students
right
what happens if we don't do that if we
don't do this 20 of
um students won't graduate from high
school
okay so yeah I don't even need to say
any more than that that's a big problem
20 of students have you got the data on
that already can you show that show that
with to people
yes is public
um data record yeah so you're in a great
place because you're already starting
the problem that's unworkable you can
give data behind it and there are real
consequences for that which is again
inequality in our society through not
being able to educate people
interestingly enough you guys should be
talking about how do you connect Aaron
yourselves about how do you make sure
that your value prop comes to life in
that way but thank you for sharing that
anybody got any yeah go ahead Vivian
sure Facebook for instance what
unworkable problem did they solve so the
good news about this is
you asked what will open up
a whole thread here there's B2B versus B
to C
and Facebook
is obviously very much a b2c company and
they're very different sets of problems
when you start talking about b2c
generally speaking they're not about
unworkable or unavoidable they're much
more about what we'll talk about which
is latent problems that are aspirational
and that ultimately become blatant and
critical so we're going to get there but
don't don't worry it's coming up any
other questions on unworkable first
yeah go ahead
how do you know that you're not actually
hypothesizing that this is unworkable
because I can give an example but a lot
of times what you think is unworkable
could just be something else and I'll go
ahead and give an example just to
contextualize that
for example oral cancer if you think
that oh you may just need to raise
awareness but the problem may not be
related to awareness the problem may be
related to
axis of care there's lack of access so
you could say you know what's unworkable
is that there's no awareness and you
would be blaming patience but in fact
there's just lack of care access to care
so yeah
you answered your own question by the
way
which is great because you said quite
rightly it might be this or it might be
that and so what would you do you'd keep
drilling on the the question you asked
yourself until you found what is the
root cause of it
and so the honest answer is many times
the reason customers are sorry um
startups fail is because they don't do
what you were doing which is to say well
it could be this it could be that who
should you go to to ask the question
it's on the board
yeah just go and ask the user okay tell
me what the real problem is here tell me
what's at the root of this is it lack of
awareness or is it lack of availability
or is it my inability to use the product
or the service or whatever it might be
does that make sense
again the answer is going to be so
obvious when I say ninety percent of the
time it's going to be back to what I
said here which is ask the user get to
the customer's Viewpoint of this and let
them tell you where their pain is what
the problem is and why they're not being
able to get the solution to it
sounds so obvious but the more you do
that the better uh better off your value
propositions get defined
all right so next to you unavoidable the
good news is that everybody in this room
faces two completely unavoidable things
what are they
taxes and death absolutely right one of
the joys about our lives is that it it
does eventually have to come to an end
uh and so taxes and death or I put a bit
more graciously aging a part of the
reality of Our Lives but guess what
because of that there's a whole lot of
money that gets made in both those
Industries
like the aging and the care that goes
around that is a huge industry likewise
paying tax is a massive industry and I'm
not just talking about QuickBooks and
TurboTax and all those things that that
help out with that it's actually a whole
accounting industry that is spawned as a
result of the fact that we have to pay
taxes we have to account for what we
spend and we have to do all the things
that relate to that so why like this
unavoidable plot is there are actually a
lot of things that are that are not so
obvious right up to your point earlier
uh at the at the sort of outset that
seem unavoidable until you start to dig
and you think about actually you know
what I do need to get my kids educated
because if I don't get them educated
they're not going to be able to pay for
themselves and get you know
self-sufficient and be able to go and
build their own lives Etc so guess what
education is pretty much unavoidable too
so you know both of you have good uh
basis to talk about that it's it's
unavoidable also for almost all
societies to address that issue at some
level if they're going to be socially
and sorry economically viable and so
governments do care about it so again
you can get these things to work for you
if you can find the right ways to
address them now one of the other things
I always love to do here is Give an
example that is pretty obvious but
how many of you have had covert
at one point it was pretty unavoidable
right
so what did we do
we all went got vaccinated well maybe
not everybody there was a choice but the
point is some health things are also
unavoidable and some challenges like
that are unavoidable and they give rise
to all sorts of opportunities some of
you are even wearing masks in here
totally appropriate guess what that's a
whole business that didn't exist
beforehand and don't just think about
the mask think about every piece of the
supply chain that builds a mask
it's a huge business that came up now we
have testing
testing has become a huge business
because of covid
etc etc so you see where I'm going with
this it's not necessarily something that
you face immediately and say oh that's
unavoidable but when you start to think
about all the implications of it then
you realize there's lots of businesses
that come out of it
okay
this one is easy
urgent so I do actually want to get
another group involved here so space
Health Midori
tell me a little bit about what your
business is or your idea is and why it
might be urgent
okay yeah thank you um space Health has
a goal of providing the commercial space
sector with a medical professionals for
the future just with the expectancy that
um this industry is going to blow up and
you know people that are going to space
for space tourism are going to need
medicine in space
very cool
no I'm going to challenge you though is
that urgent like does everybody in this
room feel like they are going to need
health as one of the first things that
they spend money on
in space I mean Health in space
at least not now okay so and I'm not
trying to take your idea down but it's
one of the most important criterias to
think about now
let's just challenge that for a second
and say but to your point anybody is
going to space so that's the space user
the customer if you like who's coming
out to space I'm sure they feel like
they want to track their health before
they go and they're going to need help
and safety when they're up there so I'll
eat my words and say if you can find the
right user if you can get in touch with
whether it's the space agencies or the
people who are actually you know doing
the experimentation up there I'm sure
there's a tremendous opportunity for
space health so this is where parts of
the value prop need to tie together
and so you've got a tremendous
opportunity if you can pick that segment
that's the for who that really clearly
sees this as urgent and I'm sure they
will so thanks for sharing
okay so what is a tip here for all of
you
is the following
urgency is all relative so for those of
you not going to space you could care
less about this right
so relatively for you it's not important
now let's take a reality in business
which is
if you're selling to somebody
whether you intend to or not you're
going to compete with something or
somebody and their time
so lots of you all think you've got a
unique solution but here's the bad news
there is finite amount of time money and
resource people and everything else that
goes around
what you're trying to sell into
so you're always going to have to be
something that is at the highest
priority if you're going to get people's
attention because guess what they won't
spend time with you otherwise
so it's no good for example trying to
sell a low-income family a very high
definition television set when they
haven't even got the basics of their
food and water running
uh or they aren't educating their family
it's just obvious when I say that well
it's the same and true in business too
if you're going to try and Pitch
somebody something for example that's a
nice to have new extension for example
to their existing workflow system but
they haven't got basic security in place
and they've just been hacked you're not
going to get any attention
so you have to think about what their
priorities are now what's the best way
to find this out
ask we're back to the same old question
now I'll give you a little clue here
what you want to do here is say rather
than even introduce what you do whenever
you talk to a potential user or customer
ask them what their number one priority
is right now
don't ask them about or don't tell them
anything about you just say what's your
number one priority if you get up in the
morning tomorrow what's the number one
thing you need to focus on
and why
and then if they tell you
say when do you think you're going to
get to number two and then let them tell
you number two oftentimes they won't
even get to number two what you'll find
out is that there's some pain point that
they really have that's really so
compelling that's what they're focused
on and obviously if you can address that
you're in a good spot if you can't
expect to get delayed and to get
de-prioritized and to be spending time
waiting to get engaged on your value
problem
so that's why urgent is so important
now let me give you another startup
secret which is pretty obvious which is
that sometimes certain shifts in the
market create urgency
so a good example right now is how many
of you have mobile phones duh all of you
right but if I'd ask that question 20
years ago
it would be none of you
that shift has been totally dramatic so
what has it done to every industry it's
created urgency for people to respond to
it
where do you bank today
using your phone
pretty obvious you don't need to go to a
bank for most of the things because you
can do it all on your phone
again 20 years ago that wasn't the case
and so Banks had a very very Urgent
Response that they had come up with to
be able to make it possible for all the
users that now said I don't want to go
to a bank and deal with the teller I
just want to do it on my phone and the
first banks that moved there were
actually not the existing incumbents
there were a lot of new banks that got
started as a result of that Trend so you
want to look for shifts that create
urgency things like mobile I'll tell you
there's another major one that's going
on right now which is AI
AI is going to be involved in everything
and so everybody's scrambling to figure
out well how do I engage AI to make my
process more effective more efficient
and save time and money for people so
urgency can be something that you also
ride based on shifts in the marketplaces
so I'm going to ask because I don't know
anything about it what is crsp design
essentially we make low cost so
affordable robotics toys
um for children starting out in South
Africa
and to use the framework that we've got
up here why is that urgent
so
when the idea originally started was a
personal problem I had 20 years ago when
I was a child and I wanted to get into
the space but growing up in a low-income
family nothing was affordable enough to
be able to like for me to access it and
then
um now if you fast forward to like 2010
2015 the world was moving towards the 4r
4th Industrial Revolution and
specifically for Africa we were lagging
behind so this was an urgent like issue
for me personally being an engineer at
the time realizing that our schooling
systems weren't actually solving for
this and I think we also went forward to
creating a sense of urgency by helping
the government create a curriculum
for this so what this eventually did is
now schools have started scrambling
looking for resources exactly like this
so there are times when as the startup
you can actually identify the problem
before the users even I don't know know
they have it and then push forward
policy or whatever that then creates a
new market then the issue becomes how do
you capture value okay so we will I'll
hold that thought because I call that a
latent need to to a framework that comes
up later and it's interesting the way
you described it too but I would say
that's you're going to be challenged
with exactly the thing that I'm
describing which is how do you get
people to say this is more important
than 10 other things that we could be
spending our resources on do you agree
yeah so that's why the Urgent is piece
is so important all right last year is
underserved
and this one is pretty obvious I already
gave it away there's only finite time
money and resources for you to be able
to engage on things and so you have to
help people understand why they should
prioritize you but the underserved piece
is an interesting thing particularly in
b2c marketplaces so anybody got a b2c
value proposition in here they're
selling to Consumers
yeah of course you do taste of Kenya so
tell me about what do you think's
underserved in the market for uh T well
it's a coffee market right essentially
yeah so at the moment Kenyan coffee
consumers can't afford the Kenyan
products in the market so they buy
instant coffee which is from Brazil so
Nano Kenyan coffee consumer swallow
income can afford the coffee that's
being sold in the market so actually the
beauty of your solution is not only is
it underserved in that people can't get
the coffee from their own local market
but it's also too expensive so you've
got two problems that you're addressing
you know both a pain it's unworkable for
people who can't afford it and it's
underserved in the sense that literally
there's no supply for it at the moment
which is great thank you Zapora so now
that you've all heard the four years I
want you to just take a moment in your
group
and put down the four years and take a
moment for example on Taste of Kenya and
put what one criteria is that you think
we just gave you two uh makes your
product unworkable unavoidable urgent
and underserved let's take a few minutes
on that in each group
almost everybody's come up with some
four use if not all of the four years
like I only have to look around the
boards to see that so um I'm going to
just take one or two boards and just ask
for the rest of you to volunteer so
first of all I was lucky enough to
listen to Celine health
and Stella and Scarlet are serving a a
market for women who obviously have an
unavoidable problem Stella and Scarlett
do you want to just talk about that sure
so Celine house going to provide
personalized menopausal management for
mid-aged women or whoever enters uh
menopause even though they entered early
so the unworkable part is that when the
climataric symptom hits like hot flash
uh night sweats and it hits it just
really decrease their functionality uh
like among this woman so they cannot
work
so our solution can help them work
that's perfect and unavoidable
menopause is just unavoidable every like
half of this room is going to enter this
part of what we were talking about
earlier aging it's just a reality for
women yep urgent
just when the symptoms hits when you are
not feeling comfortable
it is urgent that you it's just like you
get a flu and you need to take medicine
or you need to do something you stop
going to work so that is an urgent
problem you need to fix right and
underserved So currently if you search
online to find uh articles or research
dedicated to pregnancy uh this age you
have so many million billions of
research we results coming out but for
menopausal age this population you find
barely uh like a hundred like one in a
hundred of them yeah that little so only
two percent of the research funding are
devoted to this population so this
population is underserved
thank you very much so
I had no idea about any of that although
without revealing who it is in my family
I have somebody in my family who would
say this is really a critical issue and
it does cause her to be literally unable
to function at certain period of time
and there's way too little information
about it and way too few Solutions
around it and many women go through this
so all those four years felt very real
to me as I was listening to that and I
see a lot of women in here who are
nodding their heads around it so
congratulations on finding such a great
for you problem all right just because
of time I don't want to go around and do
every board there's too many boards here
but I would love to give anybody a
chance you had a to say who had an aha
moment I know you guys did for example
but I want you to volunteer anybody have
an aha moment when they were going
through their four years and care to
share
yep go ahead
so Hannah just left but
um interestingly enough we started off
with a bit of a debate and it turns out
with some ideas and I think with our one
it could maybe be solved by just having
a new policy in place not even having a
business or a startup you know so in
those cases I don't know what that means
in terms of the problem you're solving
um is it one if it's too social focused
that you actually can't solve it as a
business and you're better off joining
government and lobbying internally well
that's a big aha by the way so one of
the things that I always want to say
when I Mentor at the iLab is don't be
afraid to recognize that what you're
trying to do is not a good thing to do
uh really seriously because you you know
this is your life so you don't want to
spend it on something that's not a real
problem that you can solve as a startup
and so what you just identified I think
is a great example of that you might
realize that actually this is a problem
that needs to be solved in government
first with policy so I actually want to
give you a round of applause for being
that honest about it I think that's huge
that was a big aha anybody else want to
share and aha we'll do one more
yeah go ahead Dan
for terraflow um it's a it's a software
that helps pharmaceutical companies
understand why the same drug Works in
some patients but not in others so
normally when I talk about terrify I
talk about like cancer and they need to
get the right drugs to the right
patients but I think really the problem
we're trying to solve is that
usually our client is a scientist that
has kind of stuck their head out by
convincing the Pharma to fund this
expensive clinical trial and they have
an unavoidable problem because they have
to prove to their vice president that
this experiment was worth it and what
our software does is basically provide a
very clear interpretable report that
shows to other stakeholders that what
they're doing is important and if they
didn't how much money would they lose
potentially
um
well if if the drug fails to go to
market because they didn't discover the
right biomarkers it would be billions
there you go so this is what we want to
try to do and thank you Dan it was a
brilliant example is we want to try to
identify the problem in a way that your
user or your buyer is going to say well
of course I need to do this if I don't
do this I'm going to lose billions my
drug may not get to Market because I
can't even identify the right biomarkers
now you're going to get people's
attention now you're going to build
something that is compelling that causes
people to act and want to buy that's why
these four years are so important great
example all right next framework is a
fun one it's actually one of my
favorites because it addresses this
question that came up with b2c so I
think it was you Vivian who asked about
Facebook so how many of you use Facebook
or any of its derivatives like Instagram
or Whatsapp
good pretty much everybody
now if I was to say to you why I would
argue that every one of you has what
some people call Maslow's hierarchy of
needs or some other you know form of it
social needs security needs physical
needs emotional needs you know economic
needs Etc these are all needs we have
and basically if we don't have the met
we end up in a bad place
so what is it that Facebook addresses
for us what need is it
connection people it's a huge need
do you know what the number one cause of
unhappiness in the world is
loneliness
the number one finding of the longest
study at Harvard ever since 1938 of
happiness is one thing
connection
when people have social connection they
are happier so this is a very big need
that's what Facebook addresses and by
the way social networks in general
address now there's lots of other things
to do I always joke about it on the
other side which is you know guess what
we all want to meet people and date and
eventually you know find somebody to
partner with and get married have kids
whatever it is not all but generally
speaking that's a huge need so that's
why things like Bumble took off or at
the Other Extreme why Facebook in the
first place took off because people just
wanted to connect to get together on on
different things that they had similar
interests around
huge huge things built from that so
anyway b2c if that makes sense different
approach different framework but some
similar principle at some point it
becomes unworkable for people for
example that are in you know foreign
Nations to stay in touch with their
families back home without a social
network WhatsApp took off for that very
reason way too expensive to pick up the
phone and call home tremendously cheap
to do it on WhatsApp for free basically
that's why I took off
that was actually a critical need for
people there are whole industries that
are built on that for example Financial
Services in the third world is still
incredibly expensive to do things like
do basic payments and send money around
the place but on social networks weibo
and and tencent in China for example
that was enabling of that and solving of
that problem
all right
so I have an example here that brings it
all together and hopefully it will be a
useful one for you to see because it's
sort of B to B and it's sort of B to C
has anybody used Rent the Runway
it was a Harvard startup so yeah a
couple of you have okay
um just because you've talked uh Vivian
let me ask this young lady at the back
why do you use Rent the Runway
I used it once like 10 years ago because
I was going to um
I forget what event in DC and it was
easy and I knew I would never need to
wear that like whatever I wore I knew I
would take a lot of pictures in and not
want to wear it again okay great so a
few at the moment it was urgent in that
moment you had to go to this event
Vivian why did you use it same I am a
foreigner I have basic clothes with me
in the states only and as I can see as
you can see and I was invited for like a
nice event and I couldn't show up in my
ex-boyfriend hoodie
actually I think you should have done it
would have been a real winner but that's
a whole nother story
so this is a fun story and for those of
you who don't his name is
[Laughter]
that particular garment should go and
Rent the Runway that would make a lot of
money all right so the thing is this is
a good example of something that sort of
crosses between B2B and B to C in lots
of different regards so
um Rent the Runway in many ways is
unworkable is an unworkable problem for
people who can't afford to go and find a
dress or or an outfit or something for a
particular occasion which they're going
to go to sometimes it's a basic thing
like a graduation party and they want to
show up it's also underserved in the
sense that people can't afford to get
access to those things let alone uh you
know do it for one particular thing and
it's really interesting by the way it's
unavoidable for certain people who feel
like they've got to show up not in their
boyfriend's hoodie but actually looking
smart for their parents for example when
they're going to an event there's so
many reasons why this is something that
just was underserved as a result because
the only Pro alternative solution to it
was going and spending a lot of money on
a one-off basis that just made it
completely unworkable so anyway lots of
views about Rent the Runway and one of
the things that's interesting about it
by the way is it's really struggled as a
business despite that and that's because
its business model is tough and that's
why we did the session last time so
working with a great value prop is not
the only part of a business that's
important it's one part of it if you
can't make it economically viable which
is what we talked about last session
it's still not going to be sustainable
so that's how to think about these two
workshops that we just did last time and
this time together
the second thing I promised to do was to
talk a little bit about the uh latent
need that you brought up so there are
oftentimes needs that start out as
latent meaning people don't think about
them day to day they're not like at the
top of their mind and aspirational
we just gave you an example which is a
latent need is to look good you don't
necessarily think of it every day but
you do want to get up and feel good and
it's aspirational also in the sense that
when you're looking good and feeling
good guess what you can probably feel
like more confident to do your job or
your work or you know play your sport or
whatever else it is
but certain needs evolve to becoming
really critical and blatantly so
so let's take an example how many of you
have an iPad
do you think that's blatantly critical
or is it latent and aspirational
creative tell me more
tell me more
yeah
okay so it's turned into your main thing
that you take notes and everything else
with right yeah okay good so there are
people by the way who have the Other
Extreme
anybody here feel like they're on the I
just use it when I need to to watch a
movie or whatever
interestingly enough I had an iPad for a
long time then I wasn't using it that
much I got to Harvard and then I was
like oh snap I need a new one because
everyone is using it then I got into HPS
classes and they're like no technology
allowed so I sent back the one I just
bought so it went from like it wasn't
critical then it was critical then I
didn't need it anymore
well let me let me tell you why I use
the iPad as an example because there's a
vast array of people use them for a lot
of different things and some people
would say yeah I kind of it's nice and
other people say no I Gotta Have It
and when it was first announced people
joked about the name and they said oh
it's just a big iPhone why would I want
one of those
and it really didn't take off for a long
time until people started building
applications for it and they became
really critical for certain people so
for example if you're a pilot today
you might use this for navigation and
trust me it's critical it's not like
you're not going to take it with you
this is what you use to make sure you're
going to get home
so it depends on the application it's
also true in medicine for example that
has become critical in certain
situations where it's too difficult to
use a keyboard and people just need to
write and they just want to for example
touch something to actually activate a
particular function in an operating room
so it depends on the application so what
I try to say about this framework is as
follows try to understand your use case
is it something people think is just ah
nice to have or is it really critical
and if you can identify the difference
between something that's nice to have
and must have guess which one you want
to be in
duh you want to be in the top right
there
but again
ask your user find out what they're
doing with it if the iPad had never made
its way into medicine or you know flight
navigation or all those other critical
applications probably wouldn't have
taken off but it's maybe it's went to a
lot of those things and then for some
users in the b2c class they critically
consider their entertainment to be like
I gotta have entertainment this is a
super important thing to me I don't need
a television I just have an iPad and
there are people who've gone to YouTube
as their basis for education I mean for
entertainment so that's their interface
for it
anyway fun fun thing for you to play
with I encourage you to put your diagram
out there and when you talk to users map
where they're telling you they are ask
them how critical this is what else is a
priority instead what else would they do
to would they spend their money on if
it's not on what you're offering them
any questions on that before I move on
yeah Victor
just follow me up on that when they
built the iPad they didn't know they are
going to need to build that many
applications on it right yeah so
they didn't really solve a critical
problem at the time of building the
application so how would you think about
um if you have the chicken at first or
the Egg first so let's take a moment to
answer Victor's question because it's a
very important one which is you know the
chicken and egg question comes up a lot
so you've got an idea
and you think that some opportunity out
here in the market
I realize I've just drawn the same
diagram I've drawn above but anyway it's
starting afresh
the answer is that one of the most
amazing things about Steve Jobs is he
was somebody that people said never talk
to users he's famous for it he's like it
was his idea to come up with the iPad
but what he was brilliant at was
identifying he had great vision for what
this thing could be
and then he built the important piece
which is a whole business opportunity
for many markets which is a platform
that said anybody in here
can take my device here use my platform
and build the application they
particularly need
and so guess what
hundreds then thousands then tens of
thousands now millions of applications
have been built for that platform
and this is a business model that is
really fascinating and whole studying of
itself that we could get into it's a
very viable way to build products what
it really says is as follows you've got
to make this platform easy enough for
your idea to be adopted by the users and
to solve their own problem for example
you remember in the last session I told
you that open source works this way it
says that anybody can take the code that
you offer for example to create and I
mentioned websites in acquire and Drupal
the idea of a website and extend it any
way they want to make their website
capable of integrating Instagram at one
extreme and at The Other Extreme
Salesforce to be able to do things like
give people a great experience when they
go to the Grammys and take photographs
and upload them to the site and at The
Other Extreme have a close relationship
with all those customers so they can
keep selling them other things like
records and merchandise and everything
else
that is a whole industry now experience
management
and it was built on a platform an open
source platform just like the iPad was
an open platform for people to develop
applications
a counter example would be Pebble right
right they came up with stuff like
now they're not so great so what was
wrong with pebble
anybody know this this particular
product what do you do so what what do
you think was wrong with it
I don't know I think if it's the
framework like it answers all the views
and black and white question but then
really
was it urgent
it's as urgent as an Apple Watch what
was it open
I think it runs Android what's that so
very interesting though I I don't want
to get drawn into this too much but I
will tell you I read an article you can
find it on LinkedIn when I bought my
first Apple watch I offered it to
anybody who wanted to tell me why there
was a reason to keep it because I didn't
think there was a need for it
it actually was a useless Gadget when it
first came out
it was like it didn't even stay on I had
to do this to be able to look at the
time I mean it was like and there were
no applications for it to speak of so I
think it was a bit like the pebble and
what worked was that they had a
development platform again and they had
a large developer user base who started
to create applications now there's no
way I would give up my Apple watch
uh it's now used for some critical
things like my health I monitor my sleep
with it all sorts of other things my
blood pressure all sorts of things so
it's become critical to me and by the
way actually for time keeping which is a
big part of my job that I need to get
back on time it is actually the thing
that keeps me on time
so with that I'll I'll just simply say
let's talk afterwards because it's a
great discussion it's like a lot of
things there aren't answers but there
are questions you could ask in the
Frameworks that would reveal to you why
pebble would be successful and why Apple
watch sorry wasn't successful why Apple
watch was successful some of which by
the way is marketing too
all right
when you start building your product
there are a whole set of things that are
basically dependencies
that you want to be aware of and I talk
about this in the workbook because you
need to get a couple of Concepts clear
and they basically are how your product
actually fits into the solution that the
customer has
and so I will say it
and then you can go and look in the
workbook
the first concept is that your product
is very unlikely to be the whole
solution
that a customer has
and we started talking about smartphones
so I'll just give you an example
why is a smartphone its own not a whole
product
what what do you need with a smartphone
to make it useful
go ahead
apps yep what else
yeah absolutely it's absolutely useless
to you unless you have a carrier and
unless you have some apps for it
although I'd say one of the apps is
built in which is the phone but the
point is that almost every product if
you look at it has some aspects of it
that need to make it a whole solution
for the customer
so that's the first concept you'll find
in the workbook the second one is once
you realize that you realize well
actually you have dependencies on your
product being successful like if there
weren't networks and I gave you the
example that when the phones couldn't be
provisioned on networks they were just
bricks they were useless or if you don't
have the app that solves your particular
problem it's also useless to you so what
you want to do is figure out what are
those dependencies those external
factors that you need to work with in
order for your product to meet the needs
end-to-end the solution if you will and
if you don't pay attention to those
again you'll be selling something that
can't really solve the problem that
you're trying to address
so it's in the workbook you can go look
it up there's some examples including
Apple pay which is quite a fun one and
also Tesla which is another fun one
which is still to this day having a big
dependency on charging stations and the
availability of Electrical uh you know
access for people to really say oh I'm
definitely going to buy a Tesla I know
lots of people who won't because they
just know they can't rely on it
so debt is an important thing to think
about
next up is what we want to make sure
happens in a positive way for you which
is how do you make sure you really do
cut through the noise
so
every startup I know will say that they
are some way faster better cheaper
you're all nodding your heads and I'm
sure that that's true for a lot of your
things so anybody think that they are
not faster better or cheaper it's
probably not in this room they're
probably like decided oh I'm really not
in the right place David you're having a
good laugh about this
so uh are you working on something that
you think is faster better cheaper
tell me more about it
we're going to help David get Beyond
this by the way
so I'm in the the travel space so what
I'm doing is I'm developing
um an app that would help customers
um
find
outrageously cheap airfares
so we're dealing with um
at least you know I mean it can vary but
30 to 90 percent off okay
good I'm going to hold that for a second
is there any other thing about it that's
that's better because you said cheaper
basically but is it better because it's
faster or it's um
so that would probably be the
um
the tech behind it right so the sauce
behind it was I would call it
but to the customer is there any reason
why they say oh this is way better it's
a better experience is it easier than
Travelocity or uh you know pick effects
so it it works in a totally different
form so basically
um the customer tells me where they want
to leave from yep but they never tell me
where they want to go to necessarily so
this is this sounds interesting I'm just
going to put it destinationless
it's definitely different
so by the end of this class
I want you to come up and tell me
whether we can get rid of faster better
cheaper and come up with a better
framework for you
and I'm going to start talking a little
bit about why I think it's a dangerous
thing so the reason I hate faster better
cheaper is that there are people out
there have more resource than you do as
a startup so if kayak or Travelocity or
pick your favorite decided to come after
you David they're going to have more
resource to try to put whatever it is
the tech behind what they do and so
there's probably something in your
secret source that is more than just
faster better cheaper maybe it's
something that's defensible maybe it's
some IP maybe it's something beyond the
tech it's a network the way you actually
connect to people to get the data for
your FS there may be a whole bunch of
things but in the end we want to make
sure that you end up there and here's
why
if you can get to what we call a 3D
breakthrough something that's truly
disruptive truly discontinuous and
really defensible then you as a startup
have a chance even with small resources
in fact it's the story of why startup
succeed is that they make these big
breakthroughs they punch through the
noise with something that's just
completely disruptive like a business
model like Google had to use advertising
and selling instead of selling software
to give away their office suite where
Microsoft was having to get you to pay
for it it was totally disruptive it
caused Microsoft to be a dial tone as a
stock for many years
that's what we mean by this so let's get
into these 3DS and see if we can
identify some for you
so first of all disruptive is as I said
sometimes a technology but often a
business model like Airbnb changed the
travel industry
they didn't actually invent anything
they don't even own the homes that you
go and visit well the places you're
going to stay at what they created was a
means to connect people and give them
experiences by sharing resources that
other people were not using
genius
right that could have been invented
sitting here tonight
and that's one of the things that's so
exciting about business models is why we
spent time on it last time
but then there are also Technologies so
I would argue multi-touch is one of
these
multi-touch was such a game changer
because the minute you could use that
interface now instead of having to have
a dedicated user interface for every
single thing you did so remember that
example of in the operating theater
imagine if you had all the uh all the
instruments that you needed to work with
on a one single interface that could
change during the operation as you were
going through various different stages
of it I'm describing a real thing by the
way
as opposed to you have to go to every
single instrument learn that interface
and figure out when you go and find you
know how to use it no it just flows for
you and actually it's monitoring the
patient at the real in real time too so
you can actually see what you need to
spend time on where you need to focus
that's what multi-touch did it can save
lives it's that critical it's not just
for playing games on phones
but by the way it's a very big industry
too
so that's what we want to try to have
you find so that's what we mean by
disruptive
now I'm going to use an example
was Amazon A disruption when it first
came out no no why not because Tesco did
the same in the UK it was the first in
the United Kingdom who did e-commerce to
my best knowledge okay very good anybody
else think it was a not a breakthrough
nothing new in the way of products but
why is why is the success of Amazon then
uh been so great
and by the way I want to hear why you
think it wasn't like a breakthrough too
I'm just as interested somebody over
here I think said it wasn't
yeah go ahead David well I think Amazon
because just of the
success in marketing right or just being
user friendly you know just getting to
the customer because what I what I'm
discovering is a lot of these big
companies that people kind of like in a
way idolize that just older ideas that
other people had before
you know that's all it is there's
nothing really new but they just happen
to blow up
and not everyone know their name okay so
they became bigger they had more scale
they became faster they became better
and they became cheaper
which is why it's really dangerous to
try to compete with them
but yet they succeeded so I would argue
the reason they succeeded was
and there was in Jeff brazos's quote you
all see this this these trucks driving
around
no other business gave you these two
things
it wasn't do you want low prices or do
you want fast delivery you can have both
by the way there was actually a third if
you read his quote to go backwards which
was choice and in fact it was it was how
they first got going Amazon succeeded as
a bookstore to start off with because
you couldn't get access to the long tail
of books that people wanted literally
physically you couldn't get access you
had to go find those books and
bookstores and suddenly they said nope
we'll find you any book on the ISBN code
or wherever it is in the world that you
need to get access to so it was it was
first and foremost selection but then
when they really focused in it became
actually not even selection but fast
prices I mean sorry fast delivery and
low prices so it is actually a
breakthrough
it's a breakthrough that they managed to
do because they built huge scale and
they got the economies of scale to put
behind that
it's also a fascinating example for
another d
so that's the disruption they first had
it was discontinuous what came next
continuous is something that you
couldn't do before this next thing
what is that
yes AWS
cloud computing was invented by Amazon
and why did they why were they able to
invent it because they got such scale in
their operations that their compute
resources
became accessible
at a price that was so marginally
efficient to sell to other people that
now people could start using the cloud
as it became known as a basis to build
their own business they rented their if
you will their Hardware infrastructure
their storage and their compute to
people who wanted to use it and they had
such economies of scale that it was
actually extremely effective for them to
do that we're actually leveraging
something they'd already built the huge
data centers Etc to do that that story
by the way was told right here in this
iLab by the guy who got behind it or
actually created it Andy jassy who's a
donor to this iLab and it's an
interesting story to listen to so it's
something that started out as a
disruption it became a discontinuous
Innovation it gave rise to cloud
computing anybody here using the cloud
I'm sure teraflow must be yeah almost
all of you are
huge game changer I mean and what's
interesting about it and this is where I
want you to think about discontinuous
things is you couldn't do certain things
today without the cloud
so pretty much everything we do on our
mobile phones couldn't do without the
cloud
and anything that you're thinking about
in terms of for example how we solved
this problem of working after covert
how would we have done that if we hadn't
had the cloud we'd have all disappeared
and been unable to communicate and
connect and do zoom and all those other
things
so these are discontinuous Innovations
but that's what those things are about
and then finally the third D is how does
it become defensible
so there are lots of ways things can
become defensible here are a few
examples
you can have
great IP that's the typical one some
breakthrough Innovation so I'm going to
guess here that Dan you would say
something about teraflow is going to be
protectable as IPM right
okay are you going to go after a patent
for it perhaps even
possibly so if you don't is there some
effect that you think you'll have that
will cause customers to get to say that
hey we will not take teraflow
out of our business once we've got
working it I've got it working with us
will it become part of their
end-to-end way that they bring drugs to
market for example yeah
okay and once it does will they take it
away
it's the way they're used to
interpreting the data and communicating
internally so that gets to what I call
switching costs it's a whole discussion
at uh MBA level that we talk a lot about
once something becomes adopted by your
customers and it's proven to be very
effective it's really difficult to take
it away from them
and actually I will say the same keep
using the same example if I gave you a
brand new spanking you know Best in
Class phone
but I told you you had to give up your
phone number for it and you had to
change carriers for it
would you adopt it
you would
okay most people would say no there's a
couple that say yes so it's not a an
always absolute thing but the point is
there are switching costs associated
with everything
similarly like if I said to you you
could go to another University but it
doesn't teach your course
well of course even if that University's
way less expensive and maybe easier to
get to it doesn't teach what you need so
it's what you're being delivered and how
you're being delivered it and how
difficult it is to adopt it that is
important when you start to think about
defensibility so think about Network
effects think about switching costs
think about IP think about things that
give your your customer a basis to work
with you that causes them to say I
wouldn't want to switch I wouldn't want
to go anywhere else this is something
that I've got used to and then my
favorite example of this as follows
so if I came up with a much better
social network
like you love the way that you could
post photos it was way easier
but nobody else was on the network
would you adopt it
of course not there's nobody to share
anything with that's why there's such
huge defensibility in the networks that
have been built like Instagram and
WhatsApp Etc so networks is a very good
example of it and then data is a
fascinating part of it so Vivian's
building a uh an actionable data product
for marketers
if your data gets broadly used
everywhere and more and more marketers
contribute to it so it becomes better
and better what's your competitive
advantage in what's your mode
that I am gonna be the person who
understands the human face the most
there you go you will have more data on
why people are doing things what it is
and by the way uh what Vivian's doing is
really fascinating she's giving people
the ability to read what it is that
users are responding to
and if she has better data on that than
everybody else guess what that's
incredibly powerful for marketers and
the more people that use it the more
data she'll get the stronger a network
effect will be the bigger her moat will
be
you're nodding but I'm I'm making this
up as I go is that true
good all right so now it's your turn I
want to have each of you take your value
prop and tell me what you think could be
I'll go back to the 3DS defensible
disruptive and also discontinuous about
it
and let's help you to all do that so
I'll walk around and make sure you do it
so get your 3DS up and let's get some
help for those
I'm going to just tell you that
everybody's coming up with very good 3DS
so first of all I was most surprised by
taste of Kenya because consumer products
are very difficult to create
defensibility with but
um zipporah and her team have got a
great answer to this and if I get this
wrong tell me they've got 10-year
contracts that they're writing with
people which is locking them into a
situation sorry go ahead
with the farmers which is locking them
into a place where other people won't be
able to compete as I understand it and
then over here I was really excited when
I heard a little bit about space health
and why is it disruptive
pretty obvious space in of itself is a
whole disruptive industry it like
changes the notion that we're actually
bound to our planet very disruptive and
it's actually becoming an industry
because of that and there are a whole
bunch of things that are changing
because of the fact that we can access
space
very very interesting I mean we're
thinking about all sorts of new
Industries as a result of that new
materials that we might create new forms
of for example life that we might
explore Etc so it's very disruptive okay
so I was also very excited when I heard
about cohort first thing I heard from
them about what's disruptive sorry
discontinuous is what used to be an
education an analog is now being turned
digital by them that's a great example
very disruptive things going from analog
to digital perfect example of discontent
a discontinuity
all right then we came to Sharon's new
bike scene
I was thinking oh bike seat that can't
be that you know defensible but then I
heard that what she's doing is actually
measuring all the data in use while the
bike seat is being ridden and the form
of the bike seat is changing on the fly
as a result of that data
now the question that I didn't get to
hear is why is it defensible
uh the fans of all IP with the
technology and then
the other thought was like long-term
contracts with Bike Share companies
don't you think your data will become
defensible at some point too that as
well and
it's important because women
specifically in a lot of issues but in
bike health issues or understudied as
well so there's actually not enough data
about that right
all right so I could keep going around
the room but just the time I won't I
will encourage you all now to start
thinking about instead of talking about
better faster cheaper what do you do
that's disruptive discontinuous and
defensible
because that's going to set you up for
success and look at all the great ideas
you have you've all got a great basis to
go defend your business and to to make
it really stand out in this breakout way
so well done very very exciting
okay so we're on to the last leg and
this is the piece that hopefully will
help you decide whether you've got a
business that's worth pursuing and
that's how you evaluate it
so your business or your value
proposition needs to be something that
is going to last and endure and be
sustainable
and so there are only a few Frameworks
here but they're quite important the
first one is
something I've already been testing with
you as we've been going through this
evening what was the situation before
your product
and what is the situation after your
product
so for argument's sake Celine health
if people don't get any cure for the
Chan the challenges they address in with
going through menopause they're going to
be out of work a lot and dysfunctional a
lot and they're going to obviously have
personal health issues on top of all of
that that may lead to other
complications in their life so that's
pretty clear what the before is the
after is what would you say
higher productivity
among those women
they just they just function normal and
give back their life that like a high
quality of life they should have so
literally you could say acute pain or
absolute joy and there might be a whole
bunch of other things that you might
expound on this and I'd encourage you to
really go to the absolute extreme if you
possibly can say if they're mothers for
example that they might be able to look
after their families and sustain that
their livelihoods as mothers Etc or if
they're workers obviously that they're
you know they're supporting their
Community Etc there's a lot of things
that could could be great if they get
their health back whereas if they don't
they're dysfunctional in their their
situation in life so try to bring those
things out the other interesting thing
about this is where you get challenged
is
when you are a consumer product and I I
put um Taste of Kenya up here which is
sometimes people will say something is
well it's nice to have it's like a
vitamin versus you know a morphine so I
have a question for you because I know
you've got the answer which is why do
you think the before and after in uh you
know Taste of Kenya is so powerful
promise if we don't
serve them they're going to cut down
their coffee trees so coffee is going to
be extinct in Kenya
for the consumers
they're never going to have a have to
drink ever gonna get to drink Kenyan
coffee okay so it's pretty much a
national issue at some level the way you
just described it which is great so
anyway the before and after we want to
make sure that you can say it in a way
that this is something that's not a nice
to have vitamin but it is really a
necessary penicillin or morphine or
something that is actually vital to
their health
now it's not always going to be the case
but the more you can Define it in those
terms which is so critical to people
they say okay yeah I've got to have that
then the more likely you are to be able
to say great I'm on to a good track
so just because I'm again going to keep
us on time I encourage you to just do
this as a t diagram when you're doing
your your value prop just do the before
and after and you can do that anytime
obviously very easy exercise to do the
more you can speak to your customers
again back to this whole approach to
don't ask
this in a vacuum speak to your your user
your customer and say tell me all your
problems before and remember you want to
get them to list those all as long as
you can and then if we deliver this for
you what will it look like afterwards
what will be all the things that you'll
be celebrating that you can now do that
you couldn't do before whether it's
getting your health back or it's whether
it's drinking your favorite coffee or
whether it's being able to for example
get access to the engineering talent
that you didn't have before or whether
it's making sure your data actually is
delivering the right insights that you
need as interflow there are all these
things that you'll be able to do and
that's critical to put out on your value
prop makes sense
one question
how do you actually make sure that that
is something you could measure
that's what this next framework is
so the gain pain ratio is incredibly
simple and yet very powerful and what it
is is it's measuring the gain you
deliver to your customer versus the pain
for them to actually adopt what you do
now I'm almost certain that all of you
could tell me all the gain that you
deliver
but I'm almost certain that you probably
couldn't tell me all the pain and the
challenges of adopting it so let's talk
you through an example
so how many of you use venmo
great me too became really obvious to me
that first of all you know just sending
money for to pay for basic things and
services why on Earth would I write a
check ever again
totally the most dumb thing it's become
so convenient it was very easy to use
from the minute I started using it
however it wasn't always that way
and the pain that first went on as venmo
got first adopted was it was yet another
app for users to use they had to connect
it to their bank and they weren't sure
whether it was really secure and to
start off with not everybody had it so
it wasn't really that useful
because the network didn't exist
and this is sort of the cold start
problem that a lot of you might have
with your idea
so you've got to think about all that
and you've also got to remember all
those things so here's my tip for you
which is super easy which is when you go
to talk to your customer
don't pitch them your idea again ask all
the reasons why they have pain but then
ask them this one question
what are all the reasons you would not
buy my product
so why would you not buy this product
tell me all the reasons and keep asking
that question over and over and over
again until you get them to tell you all
the pain points they would have I can
give you a clue about some of them
number one is well I don't really need
it that badly so guess what I could use
the alternative well that's a bad
starting point so you're gonna have to
figure out you know why and what is it
that they don't like about the
alternative that actually if you gave
them something way better they might use
it the second might be cost that's
always an easy excuse but then there's
other things that are not so obvious
like for example training
how do I retrain people to use this new
approach to doing things or if you're
selling a bike seat it might be as basic
as well my Supply Chain's already in
place and I don't want to change and
disrupt that it's too easy for me to
just buy all the component parts I have
they're already cheap and you'd slow it
all down I've had to design this new
bike seat in and get all this new data
you know flowing into this new device
and that be a new complication for you
for me to worry about how is that all
going to fit with this thing I sell
already very effectively called the bike
I'm making it up but it's the kind of
thing you want to pull out before you
you know end up saying okay I've got my
value prop nailed so let's keep going
with the venomo example
the other thing that's always there as a
startup in the middle of this equation
is inertia and the risk of you as a
startup being something that a customer
is going to rely on so
do I really need this is one of the
things but also what happens if I put my
money in this network and this startup
fails I just lost whatever money I was
sending to people that's a huge risk
people don't want to do that unless they
feel like oh this is like Bank like
security
so these are things that you have to
think about up front by the way there's
some things that you know these products
often don't think of initially such as
well how can I split the bill and do the
tips
then I figured that out and eventually
they got through that issue so whatever
it is that you have assume that there's
a reason why people will initially
resist you even if it's just that you're
a startup and they don't want to take a
risk on you and think about how you'll
overcome that
so now the question is what's the right
ratio
of gain to pain before somebody will
take a risk on you
anybody want to take a guess yep go
ahead no pain well that would be awesome
so it'd be infinite so your ratio is
infinite I love it all right
go ahead Don
why ten to one
because you got to get people over that
activation energy yeah I mean get
excited about your product and make it a
priority yeah so what's interesting
about bigger faster better sorry cheaper
better faster is do you think 30 to 90
percent cheaper is going to cause people
to do something
to change how might they might use for
example that travel and what it caused
David's business to take off
we're not asking David so we're asking
you anybody what does anybody think
yes
yep I would say for certain users it
would yeah so
why I always say this there are not
answers here
I would agree with both viewpoints so
for certain classes of user for example
if you are selling to a Pharma company
and they're you know doing
experimentation I would say tender one
is probably right because it's very
expensive for them to go change their
workflows to develop new drugs but for a
consumer if you can offer a 30 to 90
percent cheaper solution David might
really be onto something I would want to
send you know save that money maybe even
10 would be enough at the threshold
Maybe not maybe 20. maybe anyway you get
my point you've got to measure this and
you've got to ask your user and you've
got to be clear what's the threshold
view on the gain pain ratio where you
would make a change that would make you
take the risk at get over the inertia
that's why this is such a useful formula
can I ask a question about of course an
example
um
because I feel like there's the pain of
maybe like switching platforms you
normally use to look for travel but it
strikes me that with that particular
example there's another pane of changing
the way you travel
because you're not putting in a
destination so I'm wondering how you
think about those two because one seems
like more a longer term
Chef that you're trying to prom so I'm
going to let you and David debate that
afterwards but because it's it's
specific to him the principle though is
still the same which is what you're
asking David to do is say David why
would I take this risk
and why would I use your service versus
what I'm already doing
and I'll give you an answer that I think
is important to sort of use in a general
sense so that it's not about David's
business which is if the customer has
something that they're comfortable with
and you really are not giving them at
least an order of magnitude Improvement
in something or a significant gain in
something they're not going to do
anything Life's Too Short they're too
busy they'd rather just carry on doing
whatever they're doing the greatest
inertia and the greatest reason that
people fail is because they're not
solving a valuable enough problem that
where the gain pain ratio is big enough
that somebody will make a change
well that'll adopt something and it can
be on either side of this equation too
by the way for example let's use a case
in point that we've all experienced
which is it's incredibly easy to
download an app it's Point click
download the app
so that pain if you will of trying
something is incredibly low but then if
you start using it and it's no good it's
also incredibly easy to just point click
delete
so you've got to find something that is
really valuable on a sustainable basis
for somebody and ideally make it so easy
for them to adopt it that it's going to
be a very successful go to market motion
for you when you start selling it
and that's what this pain gain ratio is
all about so by the way venmo did some
very clever things they added all these
security measures they made sign ups so
easy for example you could just scan a
QR code to pay it in certain situations
uh and there are a whole set of things
that became obviously so simple that
we've all adopted it and it's now
friction free and because the Network's
there we talked about that too it's
obviously got huge defensibility because
nobody else is going to just disrupt
that because all the people that you
already pay on venmo it's just one click
for you to pay them
obvious stuff right
so let me make sure that you get a clear
idea of what are the things to look for
on Gamepad so first of all on on the
game's pretty obvious you know how much
money do you make people how much time
do you save them all that stuff you're
getting you're going to nail that I know
that's not the problem
on the pain side don't forget how you
are going to help to help people find
you try you buy you adopt you get
trained into your system and everything
else that's associated with owning you
all of that is pain
all of that has to be factored into your
gain pain ratio and in the middle don't
forget all these things that are
associated with what ultimately come
down to risk and are inertia for people
to change anything if you do that you
have the basis to evaluate your value
prop and you're in the power seat at
that point because you can keep telling
yourself your things great but until you
see that tipping and customers are
pulling you to Market and saying yup
this is really something I've got to
adopt you know you haven't got it right
so terraflow was easy for me to to pick
that I would say you have work to do on
your your game plan
because the way you expressed your value
prop is very clear like for you know
translational scientists and we know the
who is for with traditional r package
you know ours for those of you don't
know hugely widely adopted language
that's used for statisticians
um due to you haven't quite got the
unmet needs yet so that's great you'll
probably can figure that out I might say
based on what I've learned the inability
to gain the insights necessary to define
the data data path for them teraflow
offers the platform but allows
scientists to extract clinical
breakthroughs now you're gonna have to
decide how will you declare that as at
least an order of magnitude since that's
the term you came up with better than
the alternative of doing nothing
because otherwise they will do nothing
makes sense
okay good
so I will just simply say we got to the
end naturally otherwise which is you
already know where we're headed I
already told you what the value prop is
I gave you the statement up front now
what I'm going to just just put it all
together for you which is this value
prop statement is actually built by all
the Frameworks we just took you through
and again this is in the workbook so the
four piece
defining who it is for use this minimum
viable segment again that's in your
workbook I drew it very briefly here and
talked about how do you find the same
needs that you can address with your
first product don't get pulled all over
the place find a set of users for whom
you have the same needs your minimum
viable segment check that they are
blatant and critical needs ideally
rather than latent and aspirational
that's the black and white framework or
if they start latent and aspirational be
clear how you're going to get them the
question that Victor asked from just
using something that was just a basic
platform a basic product like an iPad to
a place where it becomes Mission
critical
and then how do you define what's urgent
and underserved and unworkable Etc
that's the four use if your audience
tells you that if your customer tells
you that then you know you're dealing
with the right customer and you've
identified the right pain points for
them
same with what are they dissatisfied
with things that are unworkable
if they really are unworkable they're
not going to put up with it
and if they're underserved in other
words they're not being able to get for
example the coffee they need or for
example the Comfort they need or the
travel access they need or the safety
they need or the health they need Etc
then spell it out that's where it'll go
in your value prop and then don't just
say it's faster better cheaper tell
people why it's disruptive and it's a
discontinuous Innovation it's gone
digital as opposed to used to be analog
or it's now online and accessible
and then it provides something which you
want to make sure they are very clear is
an order of magnitude breakthrough and
that's where you use the game train
ratio you don't just say it's X you say
it's 10x
and here's why because for you to adopt
it even with the pain of you know
retraining Etc you're going to get this
enormous gain that is compelling and
then finally it's unlike the things that
at the moment are also unworkable for
one reason or another or are not
addressing your need are underserved
to a value prop
so with that we're finishing one minute
early now
any questions before we wrap up
yeah go ahead Sephora
could you please walk us through the
block again
so
a lot of products might start out as
being something that in this framework
are latent
and aspirational
in other words
people would like to have this is a nice
to have
but really where you want to get to is a
place where it's blatant
and critical
so this is a must-have
so I don't need to tell any of you this
but all the things that are subsistence
for you are must-haves food water health
anything that enables you to do your job
they're all must-haves
all the things down here like well
depending anything you like but you know
what you spend your money on is your
business but
entertainment might be a nice to have in
certain circumstances compared to health
it's pretty obvious to state that or
fashion might be a nice to have versus
conf I mean versus
um you know
it's winter in Boston so uh things that
protect you from the cold I mean that's
just basic ways to Define things that
are nice tabs versus must-haves the more
you can understand how you move from the
nice tab to the must-have the better
does that make sense great
okay so I'll let you come up and ask any
questions you like but I want to finish
now on time so thank you very much for
for joining in on this I will say that
the most important thing in all of this
is that it's built around you so if you
don't uniquely understand the problem
you're addressing then why are you doing
it because you're going to face a lot of
competition from people who do know
better than you then which case
what can your solution deliver uniquely
well is what we've been spending all
this time on based on what you know that
also can be built around you and finally
if you can bring that all together
around what we talked about last time
around a disruptive business model then
it's going to be sustainable
and so this is oftentimes what people
refer to as founder market fit it's why
you are uniquely in a position to solve
this particular value prop and and do it
in a way that is sustainable with a
business model that we talked about last
week so in summary have fun defining it
have fun evaluating it and make sure
it's built around you and you'll have a
great company thanks very much been a
pleasure
foreign
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