Engr245 session 02 value proposition
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The document discusses key concepts for developing a startup value proposition including: 1) Defining the problem the product solves, determining the potential market size, and understanding existing competition. 2) Developing insights into technology and market trends that address how the problem can be solved. 3) Creating a minimum viable product to test hypotheses about the product-market fit and learn from early customers.
Engr245 session 02 value proposition
- 1. E245 Value PropositionAnn Miura-KoJanuary 2011
- 2. The Business Model CanvasTest Hypotheses:Product
- 3. Market Type
- 4. CompetitionHow to Build A StartupIdeaSize of the OpportunityBusiness Model(s)Customer DiscoveryCustomer ValidationTheoryPractice
- 5. We start with the theory…
- 6. Key Questions for Value PropProblem Statement: What is the problem?Technology / Market Insight: Why is the problem so hard to solve?Market Size: How big is this problem?Competition: What do customers do today?Product: How do you do it?
- 7. InspirationWhere do these ideas come from?Flickr Image: Jeff Kubina
- 9. Technology and Market InsightMarket InsightValue chain disruptionDeregulationChanges in how people work, live and interact and what they expectTechnology InsightMoore’s LawNew scientific discoveriesTypically applies to hardware, clean techand biotech
- 10. Examples of Market InsightPeople want to play more involved games than what is currently offeredFacebook can be the distribution for such gamesMasses of people are more likely to micro-blog than blogThe non-symmetric relationships will allow companies and individuals to self-promoteEuropean car sharing sensibilities could be adopted in North AmericaPeople, particularly in urban environments, no longer wanted to own cars but wanted to have flexibility.
- 11. Insight CharacteristicsRightWrongBiggest Potential WinsNon-ConsensusMindless CompetitionConsensus
- 12. Key ThoughtWhat insight do I have that is not yet conventional wisdom?
- 13. Market TypeMarket Type determines:Rate of customer adoptionSales and Marketing strategiesCash requirements
- 14. Existing MarketCharacteristics:Customers are always hungry for better performanceIncumbents existUsually technology drivenPositioning driven by product and how much value customers place on its featuresRisks:Incumbents will defend their turfNetwork effects of incumbentContinuing innovation
- 15. Resegmented Market Low cost provider (Southwest)Unique niche via positioning (Whole Foods)What factors can you eliminate that your industry has long competed on?Which factors should be reduced well below the industr’s standard?Which factors should be raised well above the industry’s standard?Which factors should be created that the industry has never offered? (blue ocean)
- 16. New MarketCustomers don’t exist todayHow will they find out about you?How will they become aware of their need?How do you know the market size is compelling?Which factors should be created that the industry has never offered? (blue ocean)
- 17. The ProblemThe “problem” justifies why the product is valuable to someone The Problem Statement:For whom?What issue do they face?Note: Doesn’t reference the product
- 18. Potency of the Problem
- 19. CompetitionAre substitute products and services available?Are competitors threatening to offer better price or value?How saturated is our market?How likely are customers to defect?
- 20. The Ecosystem (“Customers”)Day to day usersMay actually have zero influence in buying processEnd UserInfluencer / RecommenderPreferences and decisions influence or impact buying decisionsEconomic BuyerThe person who controls the purse strings or is in charge of the budgetDecision MakerThe buck stops here
- 21. Types of Product ValueLower CostFasterMore SimpleMore EfficientSmaller
- 22. The Ecosystem (The Rest)SuppliersEntity that provides parts or services needed to manufacture your product ChannelsGroup or organization that installs, distributes or sells the product in your placeGovernmentOrganizations responsible for monitoring trading and safety standards related to your productPartnersOther entities that provide products related to delivery of your final product
- 23. Wait! I thought this lecture was about products?!?
- 25. Minimum Viable Product (MVP)A product that solves a core problem for customers The minimum set of features needed to learn from earlyvangelistsAvoid building products nobody wants
- 26. Maximize the learning per dollar spentThe Art of the MVPA MVP is not a minimal product“But my customers don’t know what they want!”At what point of “I don’t get it!” will I declare defeat?
- 27. Testing the MVPSmoke testing with landing pages using AdWordsIn-product split-testingPrototypes (particularly for hardware)Removing featuresContinued customer discovery and validationSurveysInterviews
- 28. Testing the MVP (Web Example)Can you get customers to pay for a product that doesn’t yet exist (or barely does)?Interview customers to make sure they have a matching core problemSet up web site landing page to test for conversionSee what offers are required to get customers to use the product (e.g. prizes, payment)Use problem definition as described by customers to identify key word list – plug into Google search traffic estimator - high traffic means there is problem awarenessDrive traffic to site using Google search and see how deep into a registration process customers are willing to go through
- 29. Example: Chegg
- 30. Testing the MVP (Non-Web)Can you get customers to pay for a product that doesn’t yet exist (or barely does)?Interview customers to make sure they have a matching core problemSet up web site landing page to test for conversionSet up a Lighthouse Customer Program where potential customers pay to get early access to product prototypes
- 31. The PivotThe heart of Customer Development
- 33. Fast, agile and opportunisticThe Value Proposition PivotUK-92480Problem: Angina (chest pains)Selectively blocking an enzyme called PDE5 could expand blood vessels and treat angina. Nuf said
- 34. The Value Proposition PivotTextbook rentalsCollege students have unique sets of goods and services they need to trade, buy and sell at a local levelCraigslist for CollegesCollege students have unique sets of goods and services they need to trade, buy and sell at a local level
- 35. Test these hypotheses for next week:Problem Statement: What is the problem? For whom?Technology / Market Insight: Why is the problem so hard to solve?Competition: What do customers do today?Product: How do you do it? Is this valuable or unique? What is the MVP? TEST THE MVP!
Editor's Notes
- #8: Erin founded Wordnik (funded by among others MDV and Floodgate) in early 2009. The idea for Wordnik is to create a database of all the words and everything we know about them.What was her inspiration for working on this idea? What unique insights did she have? Where did she get these unique insights?Exercise – take a moment to think through your passions, write them down and list if it is linked to your current project in any wayCan you imagine Erin working on anything else? Perhaps the next Zynga?
- #9: Market insight is becoming more and more a requirement
- #20: Example – work through video games; Pacemaker; Consumer solar rooftops
- #21: Others: Brand/Status, risk reduction (financial products)
- #22: Example of partners – payment providers, academics, content providers (authors/musicians)
- #24: Resources are people/ physical (e.g. retail chain)/ brand / Financial / IP
- #32: Only stayed in body for a limited amount of time and needed to be taken 3 times a day – leading to a lot of side effectsIt also could make your blood pressure drop too low