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START UP SECRETS
An insider’s guide to unfair competitive advantage
Turning Products into Companiesby Design & Architecture
@underscorevc startupsecrets.com
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Startup SecretsSeries
Company Formation CultureHiring
Value Proposition Go-To-Market Strategy
Strategic (Brand, Positioning, Segmentation etc.)Tactical (Driving your Marketing and Sales Funnel)
Business ModelTurning Products into CompaniesPerfect PitchRaising Funding
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The problem…We get MVP
We get product market fit
YETWe don’t get enough momentum…
To build a company
We have a product company GAP!
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The Product Company GAP
GAP
Company
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The Product Company GAP
GAP
Company
startupsecrets.com Turning Products Into Companies
Go to MarketBusiness Model
Execution
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The Product Company GAP
GAP
startupsecrets.com Turning Products Into Companies
Go to MarketBusiness Model
ExecutionGAP
Solidworks
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Your product…
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It’s all about the product right?
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Your expenses will flipFrom All R&D, engineering…
Development
STARTUP Sales & Marketing
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Your expenses will flipFrom All R&D, engineering…
to prove market acceptance, gain, repeatability
Development
Market Acceptan
ce
Sales & Marketing
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Your expenses will flipFrom All R&D, engineering…
to prove market acceptance, Then repeat & scale using Sales & Marketing
Development
Sales & MarketingSCALE
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Your expenses will flipFrom All R&D, engineering…
to prove market acceptance, Then repeat & scale using Sales & Marketing
Sales & Marketing = 2-3x (!) Development
Development
Sales & MarketingSCALE
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So, why not plan where you want to be when you get there?
EG look at CARC, your Business Model, GTM and how your PRODUCT will influence it?
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Software & Services Model
62%61%
53%43%48%
29%21% 19%
43% 50% 45% 44%19% 14% 11% 11%
L/T Model based on profitable subscription based software company
62%
48%
43%
19%
51%
29%
65%
14% 11%
45%
21%
53%44%
19%
44%
11% 10%35%
15%25%
Sales & Marketing = 3x Development
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What if…You thought about this upfront!
LET’S DO IT!
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Closing the Product Company GAP:by Design & Architecture
• Design• Product Go To Market Fit
• PVP• MVP• MVS• MRP
• Architecture• Business Model
• SLIPPERY Products• Russian Doll Pricing and Packaging• Whole Product• Services
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Design for Go To Market fit
PVP – Primary Value Proposition
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Value PropositionBEFORE you build
-- What problem are you solving?-- Who are you solving it for?
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Focus your value prop!Find a PRIMARY value prop for a single audienceMulti faceted are harder
-- Chicken and Egg problems-- Serving too many masters
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PRIOR to MVPCheck, recheck and triple check your Value Prop
-- If you’re not solving a valuable problem…
-- YOU’RE NOT SOLVING A VALUABLE PROBLEM !
-- And unsurprisingly you won’t build any value
-- VIABLE does not always mean VALUABLE !!
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Qualitative Evaluation
Before
After
Acute Pain
Absolute Joy
Vitamin vs. Penicillin
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Value Prop: Recap & Intersection
- 3D Solution• Discontinuous• Defensible • Disruptive
- 4U Need • Unworkable• Unavoidable• Urgent • Underserved market (For targeting,
Segmentation)
Unique
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Qualify the need
Is it “blac” & white?- (B)latant- (L)atent- (A)spirational- (C)ritical
Blatant
Latent
Aspirational Critical
WhiteSpace
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Qualify the need: B2B vs. B2C?Is it “blac” & white?- (B)latant- (L)atent- (A)spirational- (C)ritical
Blatant
Latent
Aspirational Critical
BlatantCritical
B2C
Best for B2B
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It’s just a big iPod…
Is it “blac” or white? (L)atent (A)spirational
Blatant
Latent
Aspirational Critical
BlatantCritical
iPad
visionexecution
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Example - Apperian
• Increase revenue by 40% at counters
• Saved $2.5M+ in direct IT costs
• Roll out 17,000 iPads• Deliver worldwide no IT touch
required
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Example - Apperian
• Increase revenue by 40% at counters
• Saved $2.5M+ in direct IT costs
• Roll out 17,000 iPads• Deliver worldwide no IT touch
required
GAIN
PAIN
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Design for Product Go To Market fit
MVP and introducing MVS, MRP
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The Product Market Fit
MarketProduct
Fitstartupsecrets.com Turning Products Into Companies 31
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MarketMVP
The Product Market Fit
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Adding to Lean Startup thinking…Minimum Viable Product (MVP)
MVP
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The Product Market Fit Problem
here?
here?
here?
here?
Fit ? Stretch
?
MVP
MVP ++
here?
Market
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The Product Market Fit SolutionMarket
not here
not here
not here
not hereFitMVP
MVS
MVP
MVP
MVP
= same NEEDS
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MVS
MVP
Adding to Lean Startup thinking…Minimum Viable Product (MVP)
+ Minimum Viable Segment (MVS)
Repeat?
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MVS
MVP
Adding to Lean Startup thinking…
Minimum Viable Product (MVP) + Minimum Viable Segment (MVS)
Repeat for …
= same NEEDS
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MVS
MVP
Adding to Lean Startup thinking…Minimum Viable Product (MVP)
+ Minimum Viable Segment (MVS) = Minimum Repeatable Product (MRP)
MRP
Repeatable
MRP
= same NEEDS
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MVS
MVP
Adding to Lean Startup thinking…Minimum Viable Product (MVP)
+ Minimum Viable Segment (MVS) = Minimum Repeatable Product (MRP)
Smaller target to reference lead, dominate
MRP
Repeatable, Referenceable
MRP
= same NEEDS
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Minimum Viable Segment…
Maintains MVProduct footprint• Same functionality needed by all customers
People reference according to the same NEEDS • Customers can compare solutions
Potential for leadership, domination• At least initial Beachhead
Segment according to the same NEEDS
MVS
MVP
= same NEEDS MRP
MRP
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vs. Office Worker
vs. White Collar
vs. Sales
vs. Office Equipment
vs. Medical Clinics
vs. Diagnostics
+ Blatant Critical need if possible:
Mobile ProfessionalsField Workers
Services
Hospitals
Critical Care
Medical Equipment
Targeting, Segmentation
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No longer just Product Market Fit It’s about Product Go To Market Fit
• Narrow your target• Segment it by need• Focus your product
Vital for• Positioning, Messaging, Communication• Packaging and Pricing• Channels & Distribution, Partner Alignment
Enables• Reference selling, network effects, virality• Overall Business alignment
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Narrow as possible to start!• Think small targets to dominate
Which would you rather…• Expand on success?• Contract on failure?
Balance Vision vs. Execution• See post on startupsecrets.com
NUMBER ONE Startup SecretDon’t be afraid to FOCUS!
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Closing the Product Company GAP:by Design & Architecture
Design• Product Go To Market Fit
PVP MVP MVS MRP
Architecture• Business Model
SLIPPERY Products Russian Doll Pricing and Packaging Whole Product Services
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Architecting for Business ModelSLIPPERY Products
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Gain/Pain ratio• Revenue • Cost savings• Time• People• Competitive
advantage• Reputation• Etc..
• Inertia• Switching
costs?• Default = do
nothing• Alternatives?• Good enough =
good enough!• RISK on a
startup
• Find (See)• Try• Buy• Implement• Deploy• Own – eg TCO
Inertia,RISK
Gain
Pain
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Gain/Pain ratio• Revenue • Cost savings• Time• People• Competitive
advantage• Reputation• Etc..
• Inertia• Switching
costs?• Default = do
nothing• Alternatives?• Good enough =
good enough!• RISK on a
startup
• Find (See)• Try• Buy• Implement• Deploy• Own – eg TCO
Inertia,RISK
Gain
Pain
>10
Product Lifecycle
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Get To Market – product facilitation
What if you could literally slip into the lead?
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• Simple• Low to no initial cost• Installs easily• Proves value quickly• Plays well with others• Easy to use• ROI is obvious• Your customers can’t live without it – it’s
stickY
Friction Free, SLIPPERY products
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Simple
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SimpleComplexity
Simplicity
FIRST PRINCIPLES
Advantage
Disadvantagestartupsecrets.com Turning Products Into Companies 51
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SimpleAdvantage = Innovation / Complexity
Complexity # Simplicity
Advantage = Innovation * Simplicity
Advantage # Disadvantage
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Even Simpler = Less is More!Microsoft APPLE
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ExampleKnowledge Management vs. Note Taking
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Simple Simplify to your C.O.R.E. value [link on
startupsecrets.com]• Create a whole product with partnerships• And or Open Source etc
CapabilitiesOfReallyExceptionalValue
Focus on it!C.O.R.E.Value
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Low to no initial cost Potential for
• Frictionless trials• Lower initial CARC• Self identifying Freemium prospects
http://www.wired.com/techbiz/it/magazine/16-03/ff_free
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“Freeconomics"
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Low to no initial cost Potential for
• Frictionless trials• Lower initial CARC• Self identifying Freemium prospects
Free-fall, free-fail ?• It’s worth what people are paying for it = nothing
= no proof of value• And perceived value can also be zero• Ultimately have to upsell
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Low to no initial cost
• Value
• Network
• Monetization
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Installs easily, integrates well Slippery not Trip-up-ery!
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Installs easily, integrates well Reducing the Pain for customers to try, adopt,
deploy
Inertia,RISK
Gain
Pain
>10
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• Integrates well– “Embrace & Extend”
Open & Extensible…
Installs easily, integrates well
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• Integrates well– “Embrace & Extend”
Open & Extensible…
• Assume– Change = risky, painful, time consuming & costly
Incumbents far and wideApplicationsOperating environmentsBusiness processesHuman skills
Installs easily, integrates well
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Products that integrate, play well with others…
Encourage others to play with them…
®
LINK Technology Partners
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LINK program
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Proves value quickly
Consumer• Instant gratification
Enterprise, • Rapid payback
≤3 months is great >12 months is bad
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For example• If your product is about improving a process…
Provide proof as part of the product!• Baseline current before the product usage• Provide key metrics, visibility into progress • Integrate analytics, dashboards• Clearly surface reports that prove the value
Self proving value
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Package and progressively disclose value
VS.
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Package and progressively disclose value Example: Acquia, Drupal Gardens
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Package and progressively disclose value Example: Acquia, Drupal Gardens – results…
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Easy to use and apply “OOBE!”
• Out Of the Box Experience• Delight & entrance users
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Example Salesforce.com vs SIEBEL
VS.
Easy to use and apply
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ROI is Obvious Quantifiable
• Increase revenue• Reduce time, resources, costs
Or• Reduce risk• Drives competitive advantage
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ROI is Obvious(Supported by Self Proving Value)
Example: Unidesk
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StickY Your customers can’t live without it! Fulfills a real need Leaves customers
wanting more !
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Friction Free, SLIPPERY products• Simple• Low to no initial cost• Installs easily• Proves value quickly• Plays well with others• Easy to use• ROI is obvious• Your customers can’t live without it – it’s stickY
Think of how this improves the
Gain/Pain Ratio in our Value Proposition
Workshop
Gain
Pain
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