You have developed a great product, but how do you build a successful company around that product?

1. Proprietary and Confidential
START UP
SECRETS
An insider’s guide to unfair competitive advantage
Turning Products into Companies
by Design & Architecture
@underscorevc
startupsecrets.com

2. Proprietary and Confidential
Startup
Secrets
Series
Company Formation
Culture
Hiring
Value Proposition
Go-To-Market Strategy
Strategic (Brand, Positioning, Segmentation etc.)
Tactical (Driving your Marketing and Sales Funnel)
Business Model
Turning Products into Companies
Perfect Pitch
Raising Funding

3. Proprietary and Confidential
The problem…
We get MVP
We get product market fit
YET
We 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.comTurning Products Into Companies
Go to Market
Business Model
Execution
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The Product Company GAP
GAP
startupsecrets.comTurning Products Into Companies
Go to Market
Business Model
Execution
GAP
Solidworks
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Your product…
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It’s all about the product right?
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9. Proprietary and Confidentialstartupsecrets.comTurning Products Into Companies
Your expenses will flip
From All R&D, engineering…
Development
STARTUP
Sales &
Marketing
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10. Proprietary and Confidentialstartupsecrets.comTurning Products Into Companies
Your expenses will flip
From All R&D, engineering…
to prove market acceptance, gain, repeatability
Development
Market
Acceptanc
e
Sales &
Marketing
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11. Proprietary and Confidentialstartupsecrets.comTurning Products Into Companies
Your expenses will flip
From All R&D, engineering…
to prove market acceptance,
Then repeat & scale using Sales & Marketing
Development
Sales &
Marketing
SCALE
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12. Proprietary and Confidentialstartupsecrets.comTurning Products Into Companies
Your expenses will flip
From All R&D, engineering…
to prove market acceptance,
Then repeat & scale using Sales & Marketing
Sales & Marketing = 2-3x (!)
Development
Development
Sales &
Marketing
SCALE
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13. Proprietary and Confidentialstartupsecrets.comTurning Products Into Companies
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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14. Proprietary and Confidentialstartupsecrets.comTurning Products Into Companies
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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15. Proprietary and Confidentialstartupsecrets.comTurning Products Into Companies
What if…
You thought about this upfront!
LET’S DO IT!
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16. Proprietary and Confidentialstartupsecrets.comTurning Products Into Companies
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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17. Proprietary and Confidentialstartupsecrets.comTurning Products Into Companies
Design for Go To Market fit
PVP – Primary Value Proposition
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18. Proprietary and Confidentialstartupsecrets.comTurning Products Into Companies
Value Proposition
BEFORE you build
-- What problem are you solving?
-- Who are you solving it for?
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19. Proprietary and Confidentialstartupsecrets.comTurning Products Into Companies
Focus your value prop!
Find a PRIMARY value prop for a single audience
Multi faceted are harder
-- Chicken and Egg problems
-- Serving too many masters
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20. Proprietary and Confidentialstartupsecrets.comTurning Products Into Companies
PRIOR to MVP
Check, 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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21. Proprietary and Confidentialstartupsecrets.comTurning Products Into Companies
Qualitative Evaluation
Before After
Acute Pain

Absolute Joy

Vitamin vs. Penicillin
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22. Proprietary and Confidentialstartupsecrets.comTurning Products Into Companies
Value Prop: Recap & Intersection
- 3D Solution
• Discontinuous
• Defensible
• Disruptive
- 4U Need
• Unworkable
• Unavoidable
• Urgent
• Underserved market(For targeting,
Segmentation)
Unique
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23. Proprietary and Confidentialstartupsecrets.comTurning Products Into Companies
Qualify the need
Is it “blac” & white?
- (B)latant
- (L)atent
- (A)spirational
- (C)ritical
Blatant
Latent
Aspirational Critical
White
Space
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24. Proprietary and Confidentialstartupsecrets.comTurning Products Into Companies
Qualify the need: B2B vs. B2C?
Is it “blac” & white?
- (B)latant
- (L)atent
- (A)spirational
- (C)ritical
Blatant
Latent
Aspirational Critical
Blatant
Critical
B2C
Best for B2B
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25. Proprietary and Confidential
It’s just a big iPod…
Is it “blac” or
white?
 (L)atent
 (A)spirational
Blatant
Latent
Aspirational Critical
Blatant
Critical
iPa
d
vision
execution
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26. Proprietary and Confidential
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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27. Proprietary and Confidential
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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28. Proprietary and Confidential
Design for
Product Go To Market fit
 MVP and introducing MVS, MRP
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29. Proprietary and Confidential
The Product Market Fit
MarketProduct
Fit
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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
?
MV
P
MVP
++
here?
Market
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The Product Market Fit Solution
Market
not here
not here
not here
not here
Fit
MV
P
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34. Proprietary and Confidential
MV
S
MVP
Adding to Lean Startup thinking…
Minimum Viable Product (MVP)
+ Minimum Viable Segment (MVS)
Repeat?
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35. Proprietary and Confidential
MV
S
MVP
Adding to Lean Startup thinking…
Minimum Viable Product (MVP)
+ Minimum Viable Segment (MVS)
Repeat for …
= same NEEDS
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MV
S
MV
P
Adding to Lean Startup thinking…
Minimum Viable Product (MVP)
+ Minimum Viable Segment (MVS)
= Minimum Repeatable Product (MRP)
MR
P
Repeatable 
MR
P
= same NEEDS
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37. Proprietary and Confidential
MV
S
MV
P
Adding to Lean Startup thinking…
Minimum Viable Product (MVP)
+ Minimum Viable Segment (MVS)
= Minimum Repeatable Product (MRP)
Smaller target to reference
lead, dominate
MR
P
Repeatable, Referenceable 
MR
P
= 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
MV
S
MV
P
= same NEEDSMR
P
MR
P
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39. Proprietary and Confidential
vs. Office Worker
vs. White Collar
vs. Sales
vs. Office Equipment
vs. Medical Clinics
vs. Diagnostics
+ Blatant Critical need if possible:
Mobile Professionals
Field Workers
Services
Hospitals
Critical Care
Medical Equipment
Targeting, Segmentation
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40. Proprietary and Confidential
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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41. Proprietary and Confidential
 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 Secret
Don’t be afraid to FOCUS!
#1
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42. Proprietary and Confidential
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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43. Proprietary and Confidential
Architecting for Business Model
SLIPPERY 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
>10
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45. Proprietary and Confidential
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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Simple
Complexity
Simplicity
FIRST PRINCIPLES
Advantage
Disadvantage
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Simple
Advantage = Innovation / Complexity
Complexity # Simplicity
Advantage = Innovation * Simplicity
Advantage # Disadvantage
Disadvantage = Innovation * Complexity
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Even Simpler = Less is More!
Microsoft APPLE
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Example
Knowledge 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
Capabilities
Of
Really
Exceptional
Value
Focus on it!
C.O.R.E.
Value
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54. Proprietary and Confidential
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
startupsecrets.comTurning Products Into Companies
“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 wide
Applications
Operating environments
Business processes
Human 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
startupsecrets.comTurning Products Into Companies
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
(ties to fast payback)
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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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72. Proprietary and Confidential
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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73. Proprietary and Confidential
T 617.303.0064
@underscorevc
53 State Street, 10th Fl
Boston, MA 02109
75