Value Props: Create a Product People Will Actually Buy

[Music] [Music] 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 [Music]