Some of the Value Proposition (VP) Sessions I have facilitated recently have made me realise that too many founders are starting from the wrong place. It’s completely understandable that a startup founder would be deeply immersed in thinking about their business and how it can be brought to life. The problem is that this leads founders to condiser the jobs, pains and gains they are trying to address from their point of view and not from the customers’ point of view.
As a facilitator it’s really important to keep reminding founders that the problem they are solving is the most important issue and not the features they want to implement. Thinking like the customer can help founders turn what might seem to be a pain for their product into a gain for the customer.
As an example, I have been working with a startup that wants to help farmers manage their crops by combining images with intelligence to improve the planning, inspection and lifecycle of those crops. As we progressed through the Value Proposition Session the founder expressed the opinion that a potential problem for his solution was that, by using it, farmers would spend more time away from their desks. He felt that he would be putting a burden on farmers because they would feel pressure to spend more time out and about on the farm managing the practical aspects of their business.
It occurred to me that, far from being a pain, this would be a positive gain for the farmer. Most people get into farming because of a love of the land and a feeling of familiarity with their crops and the business of nurturing them. It is only my opinion, but having known a farmer or two I felt that many farmers would like nothing better than to be freed from their desks to spend more time doing what they love. What felt like a pain for the founder - that farmers would feel pressure to spend more time outside - could then be turned into a gain: ‘Free yourself from the desk and spend more time on the farm doing what you know best’
This is a simple but representative example of the kind of advantage that can be missed if you approach these sessions with your solution too much at the front of your mind.
So, how do we avoid missing opportunities by being stuck in the wrong mindset?
Think like a customer to create a successful business
I’m making a brave claim here, but I believe that the best businesses achieve their success by always being aware of what the customer actually wants. In other words, they always think like a customer.
Of course, it’s perfectly possible to be a successful business by being in the right place at the right time. It’s also possible to solve a really expensive problem with a poor solution which is, nonetheless, preferable to continuing to experience the problem. Such circumstances are, however, few and far between.
To give you an idea how few and far between these circumstances are I’d like to share some statistics. I recently discovered nugget.io and as part of the joining process the site owner shared a video with me. The following statistics come from that video.
Every year, 2 million US Teams seek Venture Capital funding (disclaimer: the source of this data is said to be David S. Rose of Rose Tech Ventures but I couldn’t find the original reference). Of these 2m companies, 1.5K get funded by VCs and 50k by Angels. This means that 1.95 million teams give up: 97% of those US teams that sought funding didn’t get it.
In addition to this, a study by Harvard Business School found that 75% of startups that succeeded in raising funds will fail. Combining a 3% chance of getting funding with a 25% chance of succeeding if you get it gives an overall chance of success of 0.7%
According to Y Combinator by 2018 42k startups applied to their programme, 3% (1,280) were accepted, 85% were operational and 2.55% were in their ‘funnel’. The overall failure rate for Y Combinator startups is 97.45%
In the face of these odds, I would suggest that anything you can do to increase your chances is worth trying!
What does she want?
How, then, do we put our heads in the right space for a VP session? A good place to start is with an Empathy Map. Think of an Empathy Map as a ‘really simple customer profiler’. It helps you go beyond a customer’s demographic characteristics and develop a better understanding of their environment, behaviour, concerns and aspirations. Ultimately, it helps you better understand what the customer is actually willing to pay for.
It consists of several sections:
- What does she see? Describe what the customer sees in her environment. What does it look like? What’s around her? Who are her friends/colleagues? What problems does she face?
- What does she hear? Describe how the environment influences the customer. Who and what are influential in forming her opinions?
- What does she really think and feel? Have a go at describing what’s going on in her mind. What is really important (that might not be said publicly for a variety of reasons). What moves her? What might cause stress or keep her up at night?
- What does she say and do? How might she behave in public? What is her attitude? What could she be saying to others?
- What is the customer’s pain? What are her biggest frustrations? What obstacles prevent her from achieving her goals?
- What does the customer gain? How might she measure success? How might she achieve her goals?
So how do you get the answers to these questions? You can start by brainstorming all the possible Customer Segments you might want to serve. Choose 3 promising candidates and select one for your profiling exercise.
Give the customer a name and demographic, characteristics like income, family status, hobbies etc. and then start answering the questions from above.
Once you’ve created the empathy map for your target customer(s) print them out and share them around before coming into the VP session. Think like them and you might just have a better chance of making them into a real customer.
If you still can’t decide what she’s seeing, hearing, thinking, feeling and doing… get out there and ask her!