Building a Compelling Value Proposition - Competitive Advantage for Startups

Hi Harvard innovation : Michael J Skok : Startup Secrets : Value Proposition Harvard innovation lab lab @mjskok START UP SECRETS An insider‟s guide to unfair competitive advantage Building a Compelling Value Proposition MICHAEL J SKOK North Bridge Venture Partners twitter: @mjskok mjskok.com 1

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Agenda Problem Value Solution Gain Pain Prop Ideas Define Evaluate Build 3

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Value Proposition Template • For (target customers) • Who are dissatisfied with (the current alternative) • Our product is a (new product) • That provides (key problem-solving capability) • Unlike (the product alternative) 4

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Apperian (simplified) • For Mobile Enterprises • Who are unable to deliver Apps to users bringing their own devices to work • Our Enterprise App Services Environment (EASE) • Provides for users to securely access Apps and Information • Unlike (MDM), our patented Cloud based (MAM) solution is instantly turned on and scales to tens of thousands of users 5

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Where might you start? Problem Value Solution Gain Pain Prop Ideas Define Evaluate Build 6

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Ideas … free floating? 7

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Agenda - Problem Problem Value Ideas Solution Gain Pain Prop Define Evaluate Build 8

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Problem • Unworkable • Unavoidable • Urgent • Underserved Problems worth solving are usually 4U … 9

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Unworkable • Broken business process • Consequences ? If the consequences are costly or painful, so much the better. EG who gets fired if this doesn’t work? 10

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Unavoidable • Accounting • Regulation Is the problem so fundamental you can’t avoid it and just have to comply? 11

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Urgent • Relative to other needs … • Priority – Determines resources allocated If you’re not at the top of the list, are you at least in the top 3? If not will you get moved up or down over time and why? 12

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Underserved – business… • You will compete in a zero-sum game • Finite: – $ – Time – People – Attention 13

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Underserved – consumers… • Needs… • Examples… • Social • Social • Security – Find – Connect • Physical – Communicate • Economic – Meet • Recognition – Share • Responsibility – Entertain • Achievement – Date • Growth 14

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Qualify the problem Is it “blac” & white? • Blatant Blatant Blatant Critical • Latent • Aspirational Latent • Critical Aspirational Critical 15

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok & white… • Is it addressing a “white space” in the market? – an open area of opportunity – which you can capture – and defend – uniquely 16

DISQUSis the most ubiquitousdiscussion platform on the web. 897MM monthly audience (uniques) 353MM monthly active users (participating) 5.8 Billion monthly page views 1.8MM web properties in network 75% marketshare for commenting platforms #1 distributed social application (comScore, Quantcast) TECH BUSINESS POLITICS NEWS ENTERTAINMENT SPORTS MUCH MORE

HOW DISQUS WORKS1 Sites integrate Disqus 2 Users engage with Disqus 3 Users discover new content & sites across Disqus Easy install for all platforms Sites are part of the Disqus network Sites see tangible benefits, including increased traffic on their pages Audience development made easy. Millions of users use Disqus to participate online and we make that valuable for publishers in a way that they can measure.

THEDISQUS USERSECOSYSTEM GOALS Discovery Community PUBLISHERS ADVERTISERS GOALS GOALS Engagement Acquisition Growth Retention RevenueA COMMUNITYECOSYSTEM is thefoundation of our business.

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok DISQUS – Value prop for publishers FOR · Publishers, like online media or bloggers WHO CARE ABOUT · Building more engaged, loyal audiences directly on their sites OUR PRODUCT IS · The most widely used discussion platform online THAT PROVIDES · An “engagement management platform” for publishers, and · direct reach into millions of engaged community participants online UNLIKE · Social networks, which don‟t properly serve the needs of publishers · Or white-label software, which doesn‟t provide the wide network reach of users 20

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Problem - Summary • Is it 4 U? – Unworkable – Unavoidable – Urgent – Underserved • Is it blac and white? 21

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Ideas… can now be applied! 22

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Ideas – fit to problem… Blatant 4U Critical 23

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Agenda - Solution Problem Value Ideas Solution Gain Pain Prop Define Evaluate Build 24

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Solution 25

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Startup opportunity? • Faster • Cheaper • Better 26

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Break something! What is your compelling breakthrough? 3D 27

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Breakthrough opportunities… 3 • Discontinuous innovation D‟s • Defensible technology • Disruptive business model 28

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Startup Secret: Pick a BIG fight! • It‟s often as much work going after a small fight… • Big problems often = Big opportunities At North Bridge we look for “Game Changers” 29

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Agenda - Evaluate Problem Value Ideas Solution Gain Pain Prop Define Evaluate Build 30

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Qualitative evaluation Before After Acute Pain Absolute Joy   31

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Qualitative evaluation Before After Vitamin vs. Penicillin Acute Pain Absolute Joy   32

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskokDISQUS – Value Prop for PublishersBEFORE AFTER· Generic or white-label community software · Community platform that is connected in a network· Or using social networking integrations · Publisher-centric platform that allows for max controlNEED SOLUTION· A way for publishers to own their users · Easy to use Disqus integration· Control, privacy, and monetization ability · Community platform plus revenue potential 33

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok uTest • For companies with web or mobile apps • Who are dissatisfied with apps that work as expected in the QA lab, but not in the hands of end users • Our in-the-wild testing • Enables them to test their apps under real-world conditions • Unlike outsourced testing, which merely moves the QA lab to a cheaper part of the world, but doesn‟t actually improve app quality 34 34

Before & AfterBefore: Test In The Lab & Hope After: Test Where Your Users AreTesting inside the lab is vital. But today‟s web & mobile apps require a new approach toaugment lab testing: in-the-wild testing |

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Quantitative Evaluation • Introducing the gain/pain ratio Gain Pain 36

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok “Gain/Pain ratio” • The gain delivered to the customer vs. • The pain and cost for the customer to adopt Gain Pain 37

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Gain • Revenue • Cost savings • Time • People • Competitive advantage • Reputation • Etc.. Gain Pain 38

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Pain • Find (See) • Try • Buy • Implement • Deploy • Own – eg TCO Gain Pain 39

uTest: Gain vs. Pain• Gain from uTest: – Scale infinitely and immediately - From 3 testers, to 30, to 300, and back to 0 – Lower total cost of testing - EG: SMBs - unlimited testing for ½ the cost of one FTE – Test under real-world conditions - Live testers, real devices, imperfect conditions… in-the-wild• Pain from uTest: – More testing reports, creating more work - Takes time to re-produce, vet and rate 50+ bugs – More collaboration, creating more oversight - Coordination between in-house & crowd testers• Goal: – Maximize in-the-wild testing, while minimizing overhead | 40

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Inertia • Switching costs? • Default = do nothing • Alternatives? • Good enough = good enough! • RISK on a startup Inertia, Gain RISK Pain 41

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok What‟s the right ratio? Inertia, Gain RISK Pain 42

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok “Gain/Pain ratio” • > 10 to overcome – Inertia – RISK Pain Inertia, RISK Gain >10 43

Gain vs. Pain Ratio• Tough to quantify precisely, but here’s what we’ve learned Lower Escape Rate by 75% 20:1 Make Testing Mirror on cost + value basis User Base Launch Confidence Higher Quality Apps 5:1 on cost basis Cost Savings: 10X Increased Overhead Gain vs. Pain | 44

Sample Customer ROI• Test latest version of Google Chrome across 300 highest trafficked URLs on the web Traditional Outsourcing vs. uTest Testers 8 Testers 30 Hours / Tester 40 Hours / Tester 10 # of Days 5 # of Days 2 # of URLs Tested 300 # of URLs Tested 300 # of Discovered 19 # of Discovered 129 Issues Issues Price $15,000 Price $10,000 Price-per-Issue $789 Price-per-Issue $78 | 45

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Gain/Pain ratio • Revenue • Inertia • Find (See) • Cost savings • Switching costs? • Try • Time • Default = do nothing • Buy • People • Alternatives? • Implement • Competitive advantage • Good enough = • Deploy • Reputation good enough! • Own – eg TCO • Etc.. • RISK on a startup Pain Inertia, RISK Gain >10 46

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Example - Apperian  Increase revenue by 40% at counters  Roll out 17,000 iPads  Deliver worldwide no IT touch required  Saved $2.5M+ in direct IT costs 47

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Startup Secret… • Disruptive innovation Yet.. • NON disruptive adoption 48

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Akiban - Value Prop • For Software-as-a-Service (SaaS) providers • Who are dissatisfied with their DB performance and its inability to manage new and complex data • Our product is a unique database leveraging a patented „SQL‟ and „NoSQL‟ architecture • That provides 10-100X performance, compelling new search features and real-time actionable insights. • Unlike NoSQL solutions that require a re-write, 49

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Akiban – Gain Pain • 10x -> 100x performance improvement • NO change to applications • NO risk deployment (replicated data) • Customers Gain/Pain ratio = 10 to 100 – Case study: • Doubling revenue with Akiban • Unworkable alternatives – rewrite and lose revenue, with unsure outcome 50

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Agenda – Build Problem Value Ideas Solution Gain Pain Prop Define Evaluate Build 51

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Value Prop • For (target customers) • Who are dissatisfied with (the current alternative) • Our product is a (new product) • That provides (key problem-solving capability) • Unlike (the product alternative) 52

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Diagnostics For All (DFA) • For those in the developing world • Who are dissatisfied with limited access to diagnosis • Our product is a patterned paper-based diagnostic technology • That provides low-cost, easy-to-use, point-of- care diagnostics • Unlike no diagnosis 53

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok DFA Before After 53% of Rwandan women cannot afford healthcare 26% Point-of-care of Rwandan women Minimal training required live too far from a hospital Cost = 1¢ Diagnosis by telemedicine Need Solution Image: http://www.trust.org/alertnet/news/alertnets-top-20-big-ideas-that-dont-[1] National Institute of Statistics of Rwanda (NISR) [Rwanda], Ministry of Health (MOH) cost-the-earth/[Rwanda] http://www.measuredhs.com/publications/publication-fr259-dhs-final-reports.cfm 54

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok DFA Gain / Pain • NO current solution => huge • NO infrastructure required • NO training required • NO time required • Customers Gain/Pain ratio = ∞ 55

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok DFA Example At-risk pregnancy Liver function • 8 million affected globally • conducting ~700 person trial in Vietnam • test for ALT/AST enzymes • cost: $14 v. 1¢ (DFA) Child nutrition Small farmer support Customer ‘pain’ is real pain 56

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Build around - YOU... • What problems do you understand uniquely well? • What solution can you deliver uniquely well? • What kind of disruptive business model can you bring? 57

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Summary 1. Define, – 4U Need (Unworkable, Unavoidable, Urgent, Underserved) – 3D Solution (Discontinuous, Defensible, Disruptive) 2. Evaluate – Gain/Pain >10 3. Build – Around YOU! 58

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok Thank you… Follow online • Apperian www.mjskok.com • Akiban @mjskok • /mjskok Disqus linkedin.com/in/mjskok • DFA bit.ly/mjskok-google • uTest bit.ly/mjskok-youtube 59

Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Value Proposition @mjskok 60End Note Most of the value of this presentation is in the talk track on www.mjskok.com in the resource http://www.mjskok.com/resource/building- compelling-value-proposition Comments and questions are welcome on the site. 60

Hi Harvard innovation : Michael J Skok : Startup Secrets : Value Proposition Harvard innovation lab lab @mjskok START UP SECRETS An insider‟s guide to unfair competitive advantage Building a Compelling Value Proposition MICHAEL J SKOK North Bridge Venture Partners mjskok.com twitter: @mjskok 61

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Building a Compelling Value Proposition - Competitive Advantage for Startups

by Michael J Skok

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