01. Value Proposition

Estimated Time

  • Reading: ~10 minutes
  • Video: ~52 minutes
  • Activity

Activity

1. Generate a list of 'action' questions for user interviews

2. Identify your products single value proposition

3. How to Build in Bubble: https://bubble.io/how-to-build [or start creating your own]

Insights

  • Every startup and product idea is unique
  • There are no cookie-cutter templates that you can simply apply and expect success
  • The Lean Startup Method offers principles to improve the success rate amongst the uncertainty of building a startup
  • Validate your idea by talking to potential users and running tests
  • Use the Build-Measure-Learn feedback loop as soon as possible
  • Incremental improvements are the key to success - get a little bit better every day
  • 5 markers of a great product
  • In the Qualities of a Winning Founder section, you analyzed why YOU are the one to solve the problem in front of you
  • Another key component is to understand why NOW is the time that users need your solution
  • Eric Ries author of The Lean Startup has an approach to building startups that highlight where founders can potentially prevent common failures
  • Ries defines a startup as "an organization dedicated to creating something new under conditions of extreme uncertainty"
    • He does not sugar coat the risk of creating a startup, but rather points to ways to work through the uncertainty
  • Revisit your idea that you are about to build and ask yourself:
    • Does my idea solve a problem?
    • Do my skills and experience align to solve it?
    • Is there a need?
    • Who are the customers?
  • How do you know the answers to these questions?
    • Simply assuming the answers based on your assumptions is not enough
    • You need to talk to users, test your ideas, and collect feedback
  • Jason validated the impact Eric Ries was having on companies who implemented his method
It seems like The Lean Startup really was about product-market fit and getting people to build the product that consumers actually want and getting there quicker. That is my personal experience over the last couple of years. And I think you played a good role in this — people are actually making better and better products that are connecting with audiences. - Jason to Eric Ries

Episode Date: December 1, 2015

Jason Calacanis | TWiST |

  • Why does The Lean Startup resonate with so many people?
    • We can't predict the future, but that is what people are often expected to do with startups
      • What feature is going to be the most important to add long term?
      • How many customers will you add month over month?
      • What will your revenue be in 3 years?
      • Trying to guess the answer to these questions early on is part of the uncertainty that Eric Ries hoped to address
    • So how do we make forecasts and plans when we can't predict the future?
    • There is value in staying focused on the truths and the facts
      • Build-Measure-Learn
      • Take your idea and build a product
      • Measure the data
      • Learn from the data
    • What good is building a product on time and within your anticipated budget if the data shows users don't want to use it?
    • When possible base your decision making on little facts in the near term over best guesses in the long term
  • There are efficient ways to test ideas, features, and products early to determine what users want - and if they are willing to pay for it
    • Set up a basic landing page that gathers emails and gauges interest
    • Talk to potential users and show what you are building
    • Gather feedback and learn from the results
  • Founders ask all the time... do I really need to test my ideas?
    • Why wouldn't you?
    • Even if you are confident that you know what customers want
    • Why not double-check?
    • If your idea is perfect you'll be able to validate it quickly and move on
    • Eric makes a great point:
      • If "everyone will love/want the product" that means 10 people will love/want your product
        • Since you stated everyone will love/want it - that means the first 10 will love/want it
        • So all you need to do to prove you are right is verify with the first 10 people you talk to about it
      • This way of thinking about who will buy your product offers great perspective and lends itself to the need to interview customers and gather feedback
  • Steve Jobs regularly gathered user feedback when demoing products
    • And as Eric and Jason point out - you are not Steve Jobs - you are not above gathering user feedback
  • Asking potential users does not need to be overly complicated
    • Ask someone next to you at the coffee shop if they'd take a look at what you are building
    • Strike up a conversation on the bus or train on your way to the office
    • Present and ask for feedback at a local meetup
      • If you can't talk to a stranger about your product in a coffee shop or on a train this probably is not the right career for you
      • There are going to be a lot harder conversations in your future than asking a stranger for their opinion
        • It will be harder to pivot your company and explain the reason to your team
          • Especially if some will no longer have a role based on the new direction
        • It will be harder to fire someone because you aren't going to make payroll
    • Talk to people early and gather their feedback throughout the entire process
  • Conduct usability tests and listening labs early and often
    • You can not be afraid of the feedback you'll get
    • A paper prototype is an okay place to start
      • It is valuable to understand the initial user experience (UX)
      • As a few people about the design you created in No Code intro
      • Feel free to start a discussion in the Conversations and work as a community to give and receive feedback
    • Know that most people are hesitant to give critical feedback
      • Generate questions that they can't simply answer with a yes or no
      • Asking the user "would you use this product" will not get you the insights you are looking for
      • Instead of asking "Do you like what I'm building?" ask "How do the main features abc solve your problem xyz and what are we missing?"
      • Instead of asking "Would you pay for this product?" ask "How much would you pay to use this product each month?"
      • Make them take an action with your questions
        • When the user says "Wow, this product is great!" - don't be satisfied and leave it at that...
        • Follow up by saying something like "Oh you love this, can I sign you up for our first trial when it goes live? Can I put you down for our $5/month plan when it launches? Would you be interested in paying in advance at a discount to have access?"
        • Notice that these questions are being asked before the product is even live; before the product even launches
          • Gather feedback early!
      • Create your own 'action' questions to ask users
      • The insights you gain from these conversations are going to help paint a picture for the demand of your solution
  • It is important to remember that each startup is fundamentally unique
    • No template that guarantees success because one founder did it that way
    • There is no mandatory step-by-step guide to create the next Uber, Calm, or Robinhood
    • Even a course like Founder.University is about providing guidance not cut in stone steps
      • We provide tools, resources, and best practices to help you make informed decisions
    • Ultimately, as a founder, you have to consider all these learnings and be willing to think for yourself
      • Then make the decisions in the best interest of your vision
  • What role does delusion play in creating a startup?
    • Based on how few companies succeed, how hard the work is, and the uncertainty associated with creating a startup it is safe to say that a certain level of crazy is required
    • However, that delusion can become a liability as you build if you don't keep it in check
      • Often you'll see companies with co-founders who supplement each other in this regard
  • Incremental improvements are key to success
    • When building a product you won't go from zero to perfect
    • Jason often says that done is better than perfect
    • And Reid Hoffman has a great quote on this line of thinking:
      • "If you're not embarrassed by the first version of your product, you've launched too late!"
    • Build the initial version and then improve
    • Then always make progress... just 1-5% better each day will compound into huge gains
  • Thinking about growth as a lean startup
    • Value hypothesis vs Growth hypothesis
      • Value hypothesis being the assumptions about why someone will use your product
      • Growth hypothesis being the assumptions about how you can get more people using your product
      • Both of these are equally important and the same effort should be put into both
      • Often founders spend a lot of time understanding whether a customer actually wants the product
      • It is just as important that once you have a customer to figure out how do you get another
    • One key way to do this is to make sure everything you do is creating value for users
    • Sustainable growth
      • Sustainable growth is when new customers come from the actions of past customers
        • This doesn't mean you found an SEO trick that provides a big influx
        • It is not a big PR spike or viral tweet that brings in an unexpected number of customers
      • Sustainable growth is when you make $1 from gaining a new customer and it only cost $0.50 to acquire them
        • You can then reinvest that money to get new customers
        • In this example, every customer you get will get you two more
      • Once you get this flywheel growing you have sustainable growth
    • Viral Growth
      • Viral growth is commonly mistaken for word of mouth
        • Anyone can ignore word of mouth
          • Eric uses TiVo as an example
            • No matter how great he tells everyone that TiVo is — it is still ultimately up to them if they will give it a try
      • Viral growth is when one person using a product almost forces others to use it
        • Eric uses PayPal as an example here - if he owes you $10 and pays you on PayPal you have no choice but to get an account if you want your money
      • Viral growth was a powerful player when people would tag each other in photos on Facebook - the only way to see the photos was to sign up
    • Sticky Growth
      • Sticky growth is more about increasing how much a user interacts with the product
      • These products tend to be higher in retention, lower in churn, and something the user feels like they can't live without for the long-term
      • A product like Dropbox is a great example of sticky growth
        • The longer you stay on Dropbox the more storage you'll need to use, but you are unlikely to go anywhere else because all your content is already there
  • It is important to become an entrepreneur for the right reasons
    • To solve an important and burning problem that you are passionate about
    • Solving a problem for a specific group of people that would benefit from your product existing
  • It is common to ask why anyone would buy from an unknown startup?
    • One of the first responses is that they are desperate to have their problem solved
    • Find someone desperate for your solution and you have identified your ideal customer
  • It is important to keep perspective and not try to get too big too fast
  • Every big thing started out small
    • Don't over-focus on market size
    • You are better off with a relatively small number of people who love your product
      • Better off with people who need it, crave it, and desire it
    • Then you are with a large number of people who feel relatively indifferent about it

Additional Conversation

  • There is a Q&A session at the end of this episode that covers the following
    • We don't have a lot of time left to do a lot of iterating. How do you manage something like that?
    • We are a young startup, and we've had more demand overseas than domestically in the US would you launch, would you spend more time overseas?
    • Why raise a round of funding? Do you find an inherent contradiction between the concepts that you have to incrementally build?
    • How would you think about an MVP that needs a certain scale to be usable?
    • What is the impact of network effect?
    • What 2-3 things would you change about your book, Lean Startups?
  • Find Eric's full interview here E600 on This Week in Startups

Episode Date: March 24, 2015

  • You joined Founder.University to create a great product
  • So let's take a minute and ask ourselves what makes a great product?
  • First, you need to define great because that word can be a bit subjective
  • Jason and Jeff Weiner dive into what are five markers of great products
    • Feel free to add to this list when thinking about what great means to you
  • Five Markers of Great, World-Class Products:
    1. Great products have a single value proposition
      • They stay laser-focused on one thing and doing it extremely well
      • Google is the ultimate example
        • Initially, Google was only a search box and that was it
        • They focused all their energy on being the absolute best search engine
      • Calm is another great example of being locked in on one proposition
        • Meditation and mindfulness is their single focus and they do it better than anyone
    2. Great products are simple, intuitive, and anticipate customers needs
      • This sends a signal to the user that the product understands them
      • It builds a strong impression over time and builds trust
      • Waze is a great example
        • The app is super easy to use
          • Simply tell it where you want to go
        • It is intuitive by the nature of its function
          • It tells me how to get to where I want to go in the fastest way based on the other info it has
        • It anticipates where I want to go when I travel to the places in a pattern
          • When I'm ready to go home at 5 o'clock it asks if I want the fastest route there
    3. Great products exceed user expectations
      • It does not matter where a user's expectations are at... great products exceed them
      • You never forget a product that is better than you thought it would be
      • There are additional advantages to exceeding expectations
        • If a bad experience happens in the future users tend to give the product the benefit of the doubt
      • Exceeding exceptions can go beyond an exceptional product
        • It could also be exceptional customer support that sounds out
    4. Great products resonate emotionally with the users
      • It is more than a utility
      • It is more than creating value
      • Resonating emotionally is how it makes you feel when using the product
    5. Great products change your life in a positive way
      • Big or small great products ultimately impact your life in a meaningful way

Additional Conversation

  • Jason and Jeff touched on several other topics during this discussion such as:
    • Rearchitecting a platform
    • The role of technical debt and how to address it
    • How a CEO thinks about adding product features
    • The role of APIs and skill ranking at LinkedIn
    • The importance of engagement in a social media app
    • Tracking the right metrics

Find Jeff's full interview here E527 on This Week in Startups

Activity Details

1. Generate a list of 'action' questions for user interviews

2. Identify your products single value proposition

3. How to Build in Bubble: https://bubble.io/how-to-build [or start creating your own]

Additional Resources