Value Props: Create a Product People Will Actually Buy

The transcript outlines a workshop focused on developing effective value propositions, emphasizing the importance of addressing significant problems to prevent business failure. Participants are guided through a framework to define, evaluate, and build value propositions, with a focus on identifying target customers and the specific problems they face. The session highlights the necessity of understanding customer needs and the competitive landscape, encouraging participants to move beyond generic claims of being "faster, better, cheaper" to creating disruptive, defensible, and discontinuous innovations. The workshop also covers evaluating value propositions through customer feedback and understanding the gain-pain ratio.

• Value propositions are critical as they address significant problems, making businesses worth investing in and preventing failure.
• The framework for developing a value proposition involves defining the problem, evaluating it, and creating a solution.
• Ideas are insignificant without addressing a real problem or opportunity.

"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."

• Highlights the importance of solving valuable problems to ensure business success.

"Ideas are two a penny... they don't actually have meaning until you can address some kind of a problem or opportunity with them."

• Emphasizes that ideas need to be tied to solving a problem to have value.

• Clearly defining the target audience is crucial for crafting an effective value proposition.
• Understanding the specific segment or persona helps in focusing marketing efforts and product development.

"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."

• Stresses the importance of knowing your specific target audience to avoid failure.

"The key word here is ultimately segment... Define your minimum viable segment."

• Discusses the importance of narrowing down to a specific segment for effective targeting.

• Differentiating between the user and the customer is essential, especially when they are not the same.
• Both user and customer need to find value in the proposition for successful product uptake.

"If your user is different from your customer, who do you put on the for who?"

• Raises the critical question of distinguishing between user and customer in value propositions.

"You actually have to satisfy two different value propositions... provide value to the user so you have uptake."

• Explains the necessity to cater to both user and customer needs in the value proposition.

• A well-defined problem is half-solved; clarity in identifying the problem is crucial.
• Frameworks like the "Four U's" (Unworkable, Unavoidable, Urgent, Underserved) help in evaluating the problem.

"A problem well stated is half solved."

• Highlights the importance of clearly defining the problem for effective solution development.

"Think about problems that are unworkable, unavoidable, urgent, and underserved."

• Introduces the "Four U's" framework for evaluating problems effectively.

• Unworkable problems have severe consequences if not solved, often leading to significant negative outcomes.
• Addressing unworkable problems can prevent major disruptions and losses.

"These unworkable problems do get people fired; they're that painful."

• Illustrates the severity of unworkable problems and their potential impact.

"This is one of the biggest problems of our time... huge social divide."

• Discusses the societal impact of unworkable problems like educational inequality.

• Unavoidable problems are inherent and persistent challenges, like aging and taxes.
• These problems create opportunities for businesses that can address them effectively.

"Everybody in this room faces two completely unavoidable things: taxes and death."

• Identifies common unavoidable problems that affect everyone.

"Education's pretty much unavoidable too... governments do care about it."

• Highlights education as an unavoidable issue that societies must address.

• Engaging with users and customers to understand their needs and pain points is essential.
• Continuous questioning and validation help in refining the value proposition.

"Ask the user; get to the customer's viewpoint of this."

• Emphasizes the importance of user feedback in understanding problems and needs.

"Everything you do should be looked at from your user's eyes, not from yours."

• Stresses the need to prioritize the user's perspective in developing solutions.

• Certain health challenges are unavoidable and can lead to new business opportunities.
• The COVID-19 pandemic created new industries, such as mask production and testing services.
• Unavoidable challenges can lead to the development of entire supply chains and business ecosystems.

"Some health things are also unavoidable, and some challenges like that are unavoidable, and they give rise to all sorts of opportunities."

• Unavoidable challenges can create new markets and business opportunities.

• Urgency is relative and depends on the target market's priorities.
• Businesses need to address urgent needs to capture attention and resources.
• Understanding the customer's top priorities is crucial to creating a compelling value proposition.

"Urgency is all relative... if you're selling to somebody, you're going to compete with something or somebody and their time."

• Businesses must align their solutions with the customer's most pressing needs to gain attention and resources.

• Market shifts, such as the rise of mobile technology and AI, create urgency for businesses to adapt.
• Companies that quickly respond to these shifts can gain a competitive advantage.
• Identifying and leveraging market shifts can create new business opportunities.

"A good example right now is how many of you have mobile phones... that shift has been totally dramatic."

• The rise of mobile technology created an urgent need for businesses to adapt, leading to new opportunities.

• Identifying underserved markets can provide significant business opportunities.
• Addressing affordability and accessibility can unlock new customer segments.
• Understanding the specific needs of underserved markets is crucial for success.

"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."

• Addressing both affordability and accessibility can create opportunities in underserved markets.

• The Four U's framework consists of Unworkable, Unavoidable, Urgent, and Underserved.
• Businesses should evaluate their value propositions against these criteria to identify opportunities.
• The framework helps in understanding customer needs and creating compelling solutions.

"Now that you've all heard the four U's, I want you to just take a moment in your group and put down the four U's."

• The Four U's framework is a tool for evaluating business opportunities and understanding customer needs.

• Latent needs are not immediately obvious but can become critical over time.
• Aspirational needs can drive customer behavior and create business opportunities.
• Businesses should identify and address latent and aspirational needs to capture market share.

"There are often times 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."

• Identifying and addressing latent and aspirational needs can create new business opportunities.

• Having a great value proposition is not enough; the business model must be economically viable.
• Economic viability is crucial for the sustainability of a business.
• Understanding and addressing business model challenges is essential for long-term success.

"Despite that, and that's because its business model is tough... it's still not going to be sustainable."

• A compelling value proposition must be supported by a viable business model for sustainability.

• The success of a product often hinges on whether it is perceived as a "nice to have" or a "must-have" in its application.
• Products like the iPad became essential in fields like aviation and medicine due to their ability to meet critical needs.
• Identifying whether a product is a necessity or a luxury for users can guide its development and marketing strategy.

"Try to understand your use case. Is it something people think is just nice to have, or is it really critical?"

• Emphasizes the importance of distinguishing between essential and non-essential applications for a product's success.

• The dilemma of whether to develop a product or its applications first is a common challenge.
• Steve Jobs is noted for his ability to envision the potential of the iPad and create a platform for applications, which led to its widespread adoption.
• Building a platform that allows users to solve their problems can drive the success of a product.

"He built the important piece, which is a whole business opportunity for many markets, a platform that said anybody in here can take my device here, use my platform, and build the application they particularly need."

• Highlights the strategy of creating a versatile platform to encourage application development and drive product success.

• A product's success often depends on external factors, such as networks and applications, which complete the solution for the customer.
• Understanding and managing these dependencies is crucial for delivering a complete solution to customers.
• Examples like smartphones needing carriers and apps illustrate the importance of external dependencies.

"Your product is very unlikely to be the whole solution that a customer has."

• Stresses the need to recognize and address the dependencies that affect a product's utility and success.

• Competing solely on being faster, better, or cheaper can be risky, as larger competitors may have more resources to outperform startups.
• Startups should focus on unique, defensible aspects of their products to stand out in the market.
• Developing a 3D breakthrough—disruptive, discontinuous, and defensible—can provide a competitive edge.

"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."

• Encourages startups to seek unique innovations that provide a sustainable competitive advantage.

• Disruptive innovations can be business models or technologies that change the industry landscape.
• Examples include Airbnb's business model and multitouch technology, which revolutionized user interfaces.
• Disruptive innovations often lead to new ways of operating and significant industry shifts.

"Airbnb changed the travel industry. They didn't actually invent anything...what they created was a means to connect people and give them experiences by sharing resources that other people were not using."

• Illustrates how innovative business models can disrupt traditional industries without inventing new products.

• Discontinuous innovations introduce capabilities that were previously impossible, such as cloud computing.
• These innovations enable new business models and operational efficiencies.
• Amazon's AWS is an example of a discontinuous innovation that transformed computing and business operations.

"AWS cloud computing was invented by Amazon...people could start using the cloud as a basis to build their own business."

• Highlights how discontinuous innovations open new possibilities and transform industries.

• Defensibility can be achieved through intellectual property, network effects, switching costs, and data advantages.
• Creating high switching costs or strong network effects can protect a product from competition.
• Data can be a powerful moat if it provides unique insights or capabilities that competitors cannot easily replicate.

"The more people that use it, the more data she'll get, the stronger her network effect will be, the bigger her moat will be."

• Emphasizes the strategic value of building defensibility into products to sustain competitive advantage.

• Consumer products often face challenges in creating defensibility.
• Zapora and her team address this by writing 10-year contracts with farmers, locking them into exclusive agreements.

"They've got 10-year contracts that they're writing with people which is locking them into a situation."

• This strategy prevents competitors from easily entering the market by securing long-term partnerships.

• Space health is considered disruptive due to its novel and expansive nature.
• The industry challenges the notion of being bound to Earth, opening possibilities for new materials and life forms.

"Space in of itself is a whole disruptive industry... it changes the notion that we’re actually bound to our planet."

• The potential for innovation and exploration in space health drives its disruptive impact.

• Cohort is transforming education by converting analog processes to digital.
• This shift represents a significant discontinuity in traditional educational methods.

"What used to be an education analog is now being turned digital by them."

• The transition from analog to digital exemplifies a disruptive change in the educational landscape.

• Sharon's new bike seat innovation involves real-time data measurement and adaptive design.
• The technology focuses on addressing understudied issues in women's bike health.

"The form of the bike seat is changing on the fly as a result of that data."

• The adaptability and data-driven design contribute to the defensibility and uniqueness of the product.

• A business must offer a value proposition that is sustainable and enduring.
• The evaluation framework involves assessing the 'before' and 'after' scenarios of a product's impact.

"What was the situation before your product and what is the situation after your product?"

• Understanding the transformative impact of a product is crucial for determining its long-term viability.

• The gain-pain ratio measures the benefits provided to customers against the challenges of adoption.
• Identifying both gain and pain points is essential for understanding customer motivations.

"The gain you deliver to your customer versus the pain for them to actually adopt what you do."

• A favorable gain-pain ratio can drive customer adoption and success in the market.

• Startups face challenges of customer inertia and perceived risk.
• Customers need significant incentives to switch from existing solutions.

"What happens if I put my money in this network and this startup fails?"

• Addressing concerns about security and reliability is vital for gaining customer trust.

• A clear value proposition involves identifying the target audience and addressing their critical needs.
• The proposition should highlight how the product is disruptive and offers significant improvements.

"Don’t just say it’s faster, better, cheaper; tell people why it’s disruptive and a discontinuous innovation."

• A well-articulated value proposition aligns with customer needs and market demands.

• Products should transition from being perceived as nice-to-haves to must-haves.
• Understanding customer priorities and critical needs is key to this transition.

"The more you can understand how you move from the nice to have to the must have, the better."

• A must-have product addresses essential needs, increasing its adoption and market success.

• Successful businesses are built around unique insights and solutions.
• Understanding the problem deeply and offering a disruptive business model ensures sustainability.

"If you don’t uniquely understand the problem you’re addressing, then why are you doing it?"

• Leveraging unique knowledge and building a sustainable business model are critical for achieving product-market fit.