Harvard i-lab | Startup Secrets Part 1: Value Proposition – Michael Skok

In seven years on the concert use it for everything you know personally right by Michael Scott who if you never followed either brave dozen well reviewed material on Fedora for venture capital whooping and packing for a stage of development I cycle amazing years working too much time pilot I will introduce the second but excited changers thank you come on over I’m kidding so thank you all for coming I will start with a very informal introduction gracious yes but half my lifetime ago and which is sitting audience probably kind of figure out which we’re trying to figure out which is helps our company and having done it a number of complexes in which the company would sit down with me and share some other things that doesn’t get caught out of the textbook that what’s helped along it’s hard forever condemned all those into a series or even four five wrenches so what we decided we do is kind of make it more of a workshop circle directed so do not feel like there’s any old battle but you have a question is does it make sense to you or you have come particular entitled you want to bring this that great in fact for me and the best thing I’ve learned as I go over is that the older I get the more I have learned and the best way to learn me is to try to patience so this is a learning experience that it’s the way I would put it so I’m looking for the learning from you just the question hope you learn something for me so with that I have one positioning statement for myself it’s sort of my value 12 in people and I’d like to get my entrepreneurs on pet and headed to the bondage that your idea behind this special district if we manage to work together well we’ll figure out how to give you some unfair competitive advantage if you go out to start your business and that’s really what’s the idea behind the subsequent steering work I put pianos hopefully none of us will get secret and so it will give you about how I’m not no this is missionary put as Jody and I worked out here is how to break things up if you want the big picture contact with it at some point you’re gonna have to put all this together to pitch it if you’re going to raise money and probably even if you’re not you can put it in a pitch that’s going to be what you sell the cuts and so forth and so on the website that is currently I would describe it in data on campus website you will find the pitch that was put together for the law definitely Department which is is the perfect pitch and that actually contains all of this in a pitch form with some notes that are sort of getting behind another pitch how you put it together but that would be big people compacts where do I get that best money on campus life so that’s correct and a brief description basic content up in tribal nor sure a proper site in a couple weeks time which is going to complete the content preferably but I have one pleasant surprise for you you’re going to find that I’ve been a student myself of a great teacher and his name is Jeffrey Moore and so I invited Jeffrey he join us for bonus sessions and Jeffrey’s going to come on May 17 which is great news in the fiber speaker he has some of the best advice you could wish for in the process of building a company peguin coax markets okay and you’ll come for workshop in May and it’s already quote-unquote scrolled up with our own entrepreneurs but so what we’re going to do here is try to find a way to have join it with the Hobbit program code or whoever the winners of the redbones stefaned and you’ll see what really means later on had to meet with Jeffrey Moore and joined where that session on May 17 and hopefully lots will be around and we’ll figure out how to get the bulk of you to attend up there just to get you started I’m going to make an obvious observation about the order of this and we felt like starting with company formation be the wrong thing to do you don’t have an idea value called you know why start a company so that’s why we put this one up needless to say once you figure out what you want to do figuring out how you then start building a company comes second then this will call and go to market follow and then the idea here has constituted pitch at the state wind at that point zero an opportunity into a weapon Jeff during a full session so let’s start with a value proposition what is a valuable well the members statement that you know people with simple which is if you’ve got a incredibly compelling value crops then you know like having a great Mouse covered with it going to be cop your goal it doesn’t work that way I’m pushing in the real world doesn’t matter how great your value prop is there are a lot of other aspects to it but it does start with hanger value opera is you know hopefully absolute preventative self and that causes people to say wow okay that’s the company I want to engage with that’s the product or service I want to buy and the college is possible works good fundamentally we’re going to get into how to define and evaluate and build up but I have got other pen just to feel the answers and I’m lucky enough to have a lot of great on stairs what I weapons when I brought some along with these nights I’m gonna introduce some of those first we’re gonna help both in the fashion and also the workshops so I wanted reduce until you’re comfortable Adam very aware that in the back is a sort of stand up for second down Adam is an e I are at Northridge and multi-time spirit Walker himself very skilled in the marketing area so it will be very helpful in trying to figure out things by positioning and messaging become very helpful and play some of this together I’ve also got the team from a period so just want to have a quick introduction to Alan and Tim and call up and now here in course because I’m going to use a period of the tape W today it’s a wealthy new company we invested in about a year ago they’re actually doing unbelievably well that just got preempted in a series B which is always a design being full of them plans that every quarter since they started and doing great things and so you can feel for real what it’s like to have gone from zero to fifty which is what we’ve done we’ve done in the last year we’ll bring them in hit right but I said go through and break out as well and it’s tough to find real breakup products that just change the game and we love to adapt in 10 pages so I’ve also got an entrepreneur with me here David McFarlane if you’d like to stand up who’s the co-founder of aquiline and we’ll introduce even in this tube and hopefully some of you don’t transfer cooks who will who are david and the other two guys here about what they’re doing and there’s a real breakthrough the keepers bringing to their marketplace which will also introduce music so with that said let’s get started and try to help you figure out how to build a value proposition going in three stages I’m going to talk about how to define it and then how to evaluate it and then obviously in the real world what you do probably go off at that point and iterate on it and figure out how to refine it improve it but in this world when your workshop will break off and have some team that can actually go off and figure out how to build that value clock and you can do your own evaluation hook Google tools are given to you so you know the old saying goes what I’m really trying to do is give you the tools so you can fit yourself rather than me honey you’re into everyone so that’s what be evaluated peaceful done but let’s start with the define piece the first thing that Jody did this evening was a set up so where do you raise your hands I want you to raise it again anybody who’s got an idea what they’d like to build a value prop around and I’ll show you hopefully a business around please raise your hand again okay I’m going to pick from three people rated in racer I need a can of you so let’s see one two five point shooter Peter hand up three four five six seven eight any more any two more nine over the slide 10 okay we’ve got ten of you so just remember at the end of it I’m gonna ask you to come up here and just stare in one line what your idea is less inclined to think that what that in one line should be more likely to be perfect I can call the idea if your basement was any widget right but you’ve got your idea as a starting point and then we’re going to break into groups and give you a chance to build a value pop around it so the pair of you should be thinking about as I take you through this you get help on the rest of the Roosters here in the workshop the speaker can build your valuable so thank you for them so what is the body clock I want to start with the end in mind here and that is basically it’s almost a particular statement this is sort of a simplified version of in fact of the Jeopardy more conditioning statement for company and it’s it’s defining perfume you do one uniquely well is probably the best way to simplify ups so this framework I’ll give you it there where you never can write this down and it will subside and now if you get his hand up teenage is really all about defining them and what I’m going to do here is half the period to give you a sense of what their value prop is by challenging them to come up with this in real time for me so skin who is our private customer appearing businesses big school are they enterprises related mediums big okay okay notice and even I might simplify that okay are they any kind of business home do they have to have a particular profile like the days control of a mobile or a local of a retail or okay okay so we might send a mobile large businesses or enterprises what is it that they’re satisfied with right now okay there’s a bunch of very culture there what’s the one thing for example they just can’t do right now and they get their apps for these employees that they fill them so how many people are mobile Python student everybody but will it take you down too much media question good everybody don’t one party doesn’t we’ve needed to help us so you probably know that if you have an iPhone capable you can write chamber we can download an app very easily wiper to do that will enterprise so those are the scheme as president okay so we kind of help enterprises who having a problem getting their apps the Predators is that the idea so I’ll take one of those very crops because of the motels and what is the corner what we do okay what would it do like if I’m and enterprise what is the product cool what is it visiting I’ll pick em priceless its intranet you see how challenging it is and I’m having a dialogue with with something really good by the way exactly won awards for the waited four days it’s just challenging to get across what you do uniquely welcome who in a sports paper crime and yet oftentimes you’ll find that that’s as bad as much time as we get is the classic things in an elevator between floors you’re going to get from your elevator pitch so we’ve got the first couple of things so from mobile enterprises who are trying to get apps for their users we’ve got an enterprise app store peach okay and what did it provide what key called them to the soul okay I think that’s a very empowering thing to save her I will come back and see whether I’ve got this right myself instead what is it the thing enterprise I see organizations are afraid all today today very much care you’ll get around that one of the programs one two or three thing okay so security is an issue and then there are local parent institutions in pretty much every market adapter in all markets what’s the category of other solutions yourself I’m going to cap you do it yourself because I didn’t think of that when I was preparing this but it’s a big part of what comes into the market and pretty much every technology situation that’s though is there a category that other people you know typically put around or feel kind of it um okay so do we like that category why is that do enterprises like we’re running it’s a very difficult dialogue that goes on all the time by the way I run is this a good investment to witches there are a lot of alternatives people will try to make descon better than the other one in the end you have to come up with a statement that said why we are uniquely able to solve a problem otherwise we’ll get into a constant challenge about what you slightly better a little bit better here or whatever so I’m going to just reveal what I wrote had Cubs who did not have a guy’s nuts for real what I wrote was they’re valuable Nixie I’ve been digging the witness little bit here I admit that let’s here I did I said for mobile enterprises so you were saying large companies and if you drew them to the mobile world after critical who are unable to deliver apps their users and and those users are bringing their own devices work which is really the script that’s happened in the marketplace am i right okay because in the old world corporations gentrified the game app blackberries and things like that and said you know we only provide the vector witness fill that we’re going to lock it down that’s a big for what that could happen since the iPhone the iPad came out people bring around great debate and there’s a full trend but it’s called deep BYOD service so for mobile and providers who are unable to deliver app users having over lights in their control an angle our regular work Enterprise after all which is yeah an enterprise version of iTunes think of it that way provides for users this is curious the key word it is the number one thing that I keep worried about the writer Bible you bring your own device in that’s something on there is an insecure by using my training virus of the anal you may have a hack you know that and to access those those ants and their information that they have because it is not secure you’ll bring in as divisive of a big corporate information to each other so that they’re really worried about this and I actually needed this before I ever approached the period that could be done a lot of work to come up with a mobile pieces if you come to kill update them and goodi’m quote we’ll try to figure out how to help you get that in actually go to market sessions throughout on stage you really want to end up with something that says unlike everybody else we do company agree well so this is unlike the NBN I don’t expect it ok to know what MDM is so this is granite some great Thank You day we’re walking down the device and that’s the way people control the devices identify the years before our patented and I get a little technical here cloud-based come back to either people the minute man and that’s a new category that we’re creating we’re getting funny that’s became with evolution is it for being turned on and tail to 10,000 users and I’m going to back and challenging what was that last important why the unlike closes quickly evolve are getting this really quickly and easily so like take an example from Alan can you pick any customer that has grown out for that no MBA in there I feel kind of design work because it doesn’t scale in the example either it could be or in the cloud you think you gave us content among them you know is there anything – in school great so I can tell you that when we were doing our investment pieces to the fundamental people you had to go spend tens of thousands of dollars in school lot of infrastructure take a look a lot of time overdoing it and they were 14 years of the lockdown devices none of it was what you wanted and they couldn’t get out at any pace and I’m not going to be as rested to name a couple of us it was different and they were struggling to get their self all for that difference with things as farming Edwards and the sweatiest nation he comes in there pie crust which need to be kept up-to-date and the later product information and so the very real consequence here which is that you didn’t have so people and power to the right information because they’ll read products bring in a top line and even in some cases they will turn the wrong product with the wrong price that’s a problem now if you’ve got something that literally will take your very proposition all the way down to we can uniquely serve a customer like Cisco by delivering something that affects their top line and in Cowes them to you know actually solve that problem really very welcome very up in a very controlled way be down business and so that’s pretty little expensive price risk with the brand to do but thank you clearing guys from but having me handles when you hear this is not and this is not perfect right here I you know I’m currently in a corporate confident suddenly them for the point should be whatever the value prop is these key elements of commenter’s so we’re gonna be working for this tonight when we go off to your workshop this is the template I’m gonna ask you to clean up you put in but how do we build it and how do people find it well it’s really not that difficult first of all you obviously want to start with a problem you want understand what is this problem out there often referred to as an eagle hanging on sword or I will challenge the people who prefer a dressing but should it be any kind of problem no and this is where I want to give you some of the insights that I’ve gained from you know doing this for 30 or 20 years little ski-e-o kind of building strength and then Pena’s and the VC watching people succeed when they get this right and a girlfriend I’m allow these cubes by style trying to come up with mnemonics for everything so I could remember everything that I was ever taught unless I came up with some way of having a micro so all the way through my tape I’m going to cut you be mnemonic now which doesn’t make it terribly difficult remember these things but hopefully little bit of person either for use you need to learn for use to figure out a problem find a problem that’s unworkable culpable find one that is unavoidable so it’s not a nice to have find something that it was really urgent and then most importantly a copy that’s under service obviously the thousands people solving the problems that’s not a great place to start now except that each of these same five aspects that I want you to understand so another mnemonic for you in deep black I actually borrowed from some great thinking that that Adam was doing for me on the whiteboard when we were going through this and he made a great point which is grow lots of different types of needs so is the need or problem that you’re trying to stall back look at how do I need better well I put it on a diagram everybody was like to buy cubed harvester and come up with one the bottom left is a latent operational leader and Adam I’m going to call on you for this because you have such a great example of it we’ll be talking about mobile so what’s an example in the mobile world of a latent operational means Thank You Belong sir slight lunch so when people talk about me is a good salt I’m all you’ve got customers for baby you know and then they’ll tell you what they either then you go build it and you selling your eggs on money from filthy rich and all that you buy an island in the Caribbean all that nice stuff um but order the island in the Caribbean it turns out that when you have people to meet um they only give you it in flight that if you use your needs that they know they have that’s not particularly interesting might be helpful might be valuable it might be helpful if you’re trying to go from life you know version 5 version 6 but when you get the release innovations is when you discover late leads these are people have but they don’t really particulate them and in clear way so the crack example DISA in core good one is the iPhone so get you job they’re doing market research that non-automatic market research but if you have a profound understanding of late knees for consumers yes so if you have people do you need a computer in your pocket that will help you point where you are tell you what restaurants to go to lengthen picture your girlfriend and also play a game with birds and paste good enough tell any one of those like you here in my pocket have heard of that and so useful but if you want to do you think about here we go bloody lost never lost they may not be thinking that I really need a handheld thing to find where I am you know do they need to find restaurants yeah take it forward you want to be entertained while they’re on the road after half is there Lexus pin stuff their friends what happens to those are always late knees or not you know people aren’t expressing nose is like loud now so big burning all of my out right now but if you notice the council talking to them then then you could be creatively about really compelling solutions to those needs for their problems or device thank you sir I think the fabulous example because none of us could have probably put a need out there and define what four cameras be you know a will dominating product put Leah near the numbers 37 million iPhones last quarter alone and could papal the number one smartphone edition in the world that was not something that came out of somebody thing back about that oh I thought a pain or a need that I can identify that I’m going to immediately have a product for so this little foundry thing however I’m actually not going to try to solve that problem for you by getting you to think about latent or operational need that’s out there that’s a really hard thing to do and for every Steve Jobs there are thousands of entrepreneurs that unfortunately don’t make it into the Hall of Fame and part of the reason why is that they find it difficult to really define whether a need is actually something that you can take an aspirin for Buster’s what you really need which is something so painful that people need either antibiotics will move to you know whatever it is to get through the pain and that’s what I’m looking for so I will just describe that as we’re looking in today’s presentation for needs that are related and ladies so it blatant and that are critical meaning they’re absolutely immediately obvious to people and they are scho and that’s the greatest and they’re critical and that if you literally can’t in a scholar for something’s going to go constantly yes would stay having knowing whether the drawer we have a pressure on what is single when a vehicle a critical need as a person I love this we’re going to capture that a little later on I think that could be a critical need I’m married and I’m a happy married so I’m I’m definitely gonna get thrown into the conversation three o’clock but it falls into a category of community that’s very high comes up you go through I waited for my presentation you’ll think I’m the number one on the nice list but we’re going to work so that’s said we’re going to keep that and I’m going to come back to it but yeah for some people that’s going to be considered a blatant critical need start and we’ll see why they call so what we’re looking for we’re looking light and critical needs like have visuals described over here in the different world it’s going to be something as simple as a broken business ball so it might give a mission-critical proton Studies programs I gave you an example of one that’s not quite mission-critical for free quote which is imagine being a large and quite complex tripped over Scott you know tens of thousands so people out there and they’re getting the wrong prices and they haven’t got the latest product information will never they’re not serving a customer way and maybe losing competitive bids and so forth because of that so that’s not necessarily making critical but it’s certainly a broken business be kind of stuff people cannot get it done for you that is true by the way of pharma companies is true of insurance companies it’s true pretty much anybody in the enterprise world that have excelled for the needle a destination interior trainer trip you could have had them effective so the mobile case value appearance is an issue one when we go down one step program we will talk about that with another example in a moment because they are very much in that as the typical Cutler goggles so we’ve got lots and lots of itself customers asking that same physical vehicle how can you give me something that immediately make our code more records so if I’m a I’ve been going to them cause they’re protecting and check in and stay but it will get what I mean by a broken ISM problem for the very questions we have a good sense about good okay it’s pretty important because you can find lots of problems but if they really are gonna be critical something process as well blow the broken order something permanently in our work individually can you check that my kana anybody any ideas about how you might check whether something is broken yeah but without side view yeah for a community type of your customer is take your cup no that’s a great example if you had call before the company’s customer service yeah any examples or anybody in the room right they are brighter you know and and I’ll bet you that the broken business crisis behind us somewhere along the line they don’t know their customer they haven’t figured out what your need is the room fight basically the aren’t connecting the dots the cream cheese lava Hamas kept telling you and what you find up or there’ll be something in there the program and customer from the classic one so the Eagle question to ask is what are consequences if there are consequences like you’ve got an unhappy customer decides to split from Verizon to AT&T that’s painful that cost you money that cost you and have serious consequences in terms of everything from the top line electorate in a year’s time energy but it isn’t be choosing five hack riskiest you taste Verizon or some you live they don’t get or the ruling simply put into a hot model so it was the client receives it as well here’s well said very well said that’s in the blatant after blatant if they don’t believe it it’s in the latent category and you’ve got a challenge if you’ve got them get them to understand it now but also subscribing techniques that help people understand lady needs that right leg knee but you’re much better off if they really know it so I’ll give you an example for my portfolio that that is anything in exactly this computer here pull up Verizon it’s not actually done and say Ginty so a TN t–‘s customer handling is a tremendous challenge that I want to bring a newcomer on and there’s an enormous amount of process associated with that and so the company active entrance built an entire process using what an effective a tool to model the process and ensure that it’s very fluid that it doesn’t break and that all the way along the lining is mega how long will it take from somebody for example taking out the parent competent service for getting a new account set up and then make that whole flow all the way through and they can see all the way through that flow whether the customers gangster correctly and indeed they can measure not any weather them are being served correctly but whether they return later on you know how they come back in the system with what problems and where they go in circles there’s a lot of detail in it but it is mental that was a lately it became blatant when the iPhone forgot because they couldn’t find customers out fast enough so oftentimes came the start line become blatant because of some market changing condition itself is perfectly and you’re in the right place the right time like active endpoint boards that sound into a several million dollar order and this is pretty company by the way that doesn’t have any outside salespeople so all your needles is they a very profitable compliment for them and it’s being repeated with other companies coming through in our same way bring it to the comment that you want to find from your broken and you want to key and has been broken by figuring out on a really significant consequences and if they’re not if it’s like well people get pissed off Club Khalid widow maybe technology content but if you’re actually losing confidence or losing revenue or you’re losing the competition or you’re painting for example 16 been entering some modified probably pigment okay so that’s the first year the second one is unavoidable so I’m giving few examples of unavoidable thank you whether we like it or not in a dent and taxes of hot aligned once they’re backing up your business you have to account for anything it floated option if you’re in business you have to account your business simpler does so it’s an unavoidable need it evening you know when you decide to do it on Excel or in QuickBooks or whatever you type that you have to do it because otherwise you will get trapped down that’s nonverbal need great place to be therefore because you always been hunted with them what’s another example now I put up regulating here it’s not a great statement one because people don’t get up in the in in the morning will be regulated they don’t have to deal with regulation but it’s very real one and so you know for all you can think of regulations but in a business world there are increasingly challenges for people to operate around regulations by which I mean not avoid them they have to you have to represent me but they have to obviously maintain operations in a very fluid stance and so it’s something that you could do very manually but if you can automate your compliance if you were here then it’s a very profitable business I’m going to give you an example of this hook them up on the web address pit and more ecommerce one of our companies that the company called rebound REE al and it’s a company that manages and accountable for the good things derivative of our derivatives well you don’t need to get in system too much tea cup realize those come to corner if you’re a big company and you trade all over the world do a trade in multiple currencies and unfortunately if you’re the typical company you will only have one exchange for example you know the neither of the Nasdaq which Craig on a sudden the upper port everything goes and if you’re finding extreme variations like to have been in the last couple years we going up and down like crazy the starting upon for example in southern Europe collapsed this is the European crisis or were still in Greece then you won’t be able to take risk on that and so you buy kind of is forward and oftentimes you get as an option or derivative and those kind of trace help you to offset the risk I think right the currency going crazy now what happens if you get that rip blown obviously could be very clever what I’m going to going to come for it right so you’ve actually bought a bunch of things that are forward options capture and you miscalculate how you’re actually you know in a taking response times I can get in trouble you’re accounting and you’ll end up actually against the regulations the spirit of regulations and you’ll end up getting into the principal situation so it comes up all Fortune 1000 companies have to deal with a problem turns out the way to deal with it is on itself largely it’ll clip end up with this rebar got into this business there’ll be some really painful consequences to companies so if you have a restatement in 2005 but with 343 million dollars just from derivatives accounting being wrong that’s funny the painting a critical need for them so the light bulb went on these guys and they founded companies which has continued to solve that problem invariably nated way doesn’t get spread pieces that they’re nice temples absolutely this and it turns out they have now discovered that 94 percent of the global 500 use derivative and it’s on extremely profitable business if I can tell you too much about them because they’re getting ready to go public but just by the very fact that that’s happened in the last year tell you that enough to be a great business a real unavoidable you need with major consequences just around accounting and regulation so you’ll find plenty of those but now they’re connect come let’s say you found a blatant critical need it really only need to company house unlikely or didn’t only we the consumer have I doubt the only thing you can consider you could not as welcome so even though we all might go at something there are always other needs will allow consumer needs or the business and so the challenge is to figure out relative Lebanese what is the priority of what you’re putting forward is available and all if you’re number three you might get consideration but if you’re not in the top three I will almost invariably say you’re unlikely to get considered in any kind of reasonable cycle and so obviously what you want to be is number one you can identify very quickly you know where those priorities are and how you’re going to be number one you’re going to set yourself up success with your valuable ok brings in the fourth and final news and that’s understood and I split this purposely into business and into consumer on the business side is so different you can see I’m largely focused on PTV stuff I did consumer stuff when I was working with some annotation getting them going and I loved it it was a lot of fun that’s very different and I’m very reflective in fact in are all positive there are people who are much younger and much smarter than me that’s understanding how the consumers evolving because it’s even generationally different as you will know you know thinking about Gen X Gen Y and you know comparing that for example to the movement so in business I would simplify things in stage you really want to be able to focus on how you get understand when a business has finitely focus and have always dollars time people and attention and oftentimes attentions a big challenge because listening to getting their attention of the start of the pump and so you’ve got to figure out how I’m going to get their attention what is it that is going to get them commit in a dollars finding people to use and if you’ve done really use what i just described you doesn’t jump you’ll get their attention could be identified a really critical problem of broken problem that they see is really open so hopefully approach enabled right but in your name i can tell you the number of times company can die in the process of getting the company to make these poses that actually kind of pick the problem is huge so I brought that you get believable because I will kind of coordinating on Friday and I hope that three times so David did you give us my example of maybe for example if you don’t mind me mentioning the company the preparing the board meeting you know name media what problems have you closed them and then how long did take this if they realize you can solve it I can get them to do something hope I can somebody over here than here technology agrees I’ve created a unique generation relational is that allows you a shoes and run equal queries 10 to 105 Parker has a big impact in terms of problems a problem area for a decade relative and you can do it you have to rewrite in your application x9 video they have is that they would have to keep those calls for corner so it will come to that website on the Excel median any price and you might take it easy for them to actually use your debt over but what we could have to do they look really impressive but it is still taken down two months before the venoms inevitable all the little things but they have soldiers with great staging the nails but they give you the time and the attention that you need at any putting those behind now actually working lyrical momentous decision within production yet but in our situation is that we’re very early stage we’re not even a complete said ëi but they are thank you so we’ll come back to that in a minute recover thing you had 10 400 times which is kind of breakage we’re looking for you will commence initial things about the kind of publishing consultant the most restricting is available dealing with the colors which is the main media Ted we solve this problem for us and right but it will double already so there was a downside which is if you desk over gonna lose compliment and if you do so that there’s an upside you’re going to double up we’re going to double our revenue so there are a lot of good people and yet it still take them two months you think of a company hood they could double their revenue that like the jump point but if this is the reality of what you’re dealing with when you have large enterprises and it’s a major improve very but very rarely miss Patterson canyons in technology it’s got an enormous amount to do with things like incomes politics for the first book by which if you get your staging and QA and everything else get a production today it’s a great questionnaire because every audience has a different reason why they will value context so I’m not going to get into tonight but what do things you’re going to hear when we get to do go to market sessions is segmenting and defining who your audience is tense for you okay so that was the business side finally we’re going to get cooking about the love life which is been very – about your love life is exactly not a surprise merely because everybody who studied em you’re digging stuff you know Maslow’s hierarchy of needs will tell you the social security physical Belladonna circles at the top we all have these fundamental needs and exactly why poker is such a big investment out there right now analyst it’s not an accurate version in a Facebook is a phenomenal business because guess what we will need to funny people connect with them communicate them meet them scare them and save them and guess what bait them how could fill dinner so it’s not a surprise and in fact if you really are good in the consumer world you can almost invariably Rick people out on the same kind of spaces that that other person is writing in a in a business world so this is very very much that even why’d you scream the first uses of the Internet has been spoken and what dating place was so successful and why obviously in many instances social networking sites are successful this is anything to look at the local success within LinkedIn but payphones you know Lincoln staying well that’s comping anywhere near as well as paper because in a spiritual spreading business people want to connect but it doesn’t feel like England ears going to need as people wanting to connect nice date and so forth so that’s really wrote to be taking the staining basis but I would go to state you you should evaluate your value copper if you’re going on to consumer is figure out again all the different rooms now is it at the top of the list how is it prioritized is it for example critical or resistance nice is it latent or blatant as we’re talking on and again pro camera like this even a consumer world you can use the same for use and you find it’ll work for you have they got come on work with the problem is it literally impossible to connect this come design is different three if you’re starting approach for application in solving that problem is unworkable there’s no way to do it that’s white cake / cottage life you think about a lot of services for the plate out because people for example in in underdeveloped countries didn’t even have internet and so in mobile came along not for him net cost internet and e-commerce and many other things is it unavoidable but I probably talked about these are regulation and accounting is it urgent and it really deprived part of the cover left and then design a service so hopefully the poor you can get easy do you remember as I said these mnemonic that because over poor student you had to find way to remember things hopefully they’ll work for you alright in our agenda we’re making good program within the define stage we hope they provide getting a sense of how to define the problem really understand it and indeed paratransit River for you but now what’s the pollutant well most people think about that pollutant per when I steal occurs the biggest challenge I have is on walk-in agenda but its breakthrough idea but they haven’t really thought about the solution so I perfectly protected and also I would encourage usual always put etcetera to if you can’t describe the needs really well or the problem really well develop it I think you’re going to struggle to come up with a really compelling solutions nevertheless when you do obviously what you want be able to do is to find it as a compelling break bridge something that just feels like data stood up with passion and decide that he’s clearly viewing it as a great group and I’m going to try to help you understand what does that mean what is a compelling break through what makes it compelling what makes it a breakthrough there are three DS back to my mnemonics ICD he’ll continue disruptive and defensible I could come up with a bunch more if I want to get going but these are rule that the most important ones different areas innovation is incredibly important because what people typically do is think about problems in terms of how they actually evolve a business in a very of this way which would probably make things a little bit faster a little bit cheaper that we always view that had really very little filled me as investor module intrusions and things are very difficult to investment because you’ve always got competitors because there could be market and you’ve always got comparison which are therefore inevitably something that somebody else can come and improve to you know catch up with you on but if you come up with something that they completely discontinuous innovation and an example would be eaten up by broken headlight they came up with a way actually join data to organize data in a way that liquid had never been done before and inhabited it makes the web Brett is orthogonal that they’ll be on a criminal database for that word book invented by these guys but it comes up it really works in a course if you will be able to access transformations and to a hundred times faster that’s without changing anything that’s a discontent innovation that’s a fundamental disruption what if the mother examples of that well we’ve got a change completely it’s fear the fear here and thought about it now energy the major need in the world that if you will realize that look another four major engines work through hard oil those kind of the tram you could go down a little bit of oil is that be getting Chris comes out the challenge there is grilling turns out a son point point even diamonds aren’t hot a knuckle drill through certain times in wrong and so we have a company to even also that we invested in that uses lasers the drill that’s a discontinuous innovation it turns out you can go miles deeper you can also climb corn to actually go down to substrates on a long to get some oil field and adds a big disruption to it means that we can go out the oil that you just put even Patrick or so clearly we paid attention to that and it’s like investment it’s a great company it’s called for if you look up forf but they’re also star just continuous innovations that happen in physics or logic technology and probably use one every day without thinking about it Google Google with a bit unfinished immigration just around the business ball they basically filled we’re going to get software away free so we’re going to charge for advertising around church and applications etcetera so that’s the third thing I put on here not just if it’s not in any category but because it’s very rarely pumping people think about turns out there are lots of disruptive business well we have a second on that relate to some of us spent too much time on it but I will take you through a series of prison falls are disruptive and includes things like open schools from crime schools near many other things so whether you thank multiples have been around so thank you very much I stay with the great on tonight by the way and if you get even a slight chance of culture at evening we’ll find out you give you a lot more than that what I would start by which is really huge was the fact that in technologies almost invariably just like you know to do the crafts and simple examples in architecture if you have to change the architectural foundations of a product is very hard to come and compete with somebody so it turns out that if you’re on the existing database business you literally have to rewrite the database to come and compete with it even if you have to change your entire architecture can come and complain that game and since they patented it because it’s one thing to obviously do and there contains build innovation on it there’s a good chunk of be in a very defensible spot it’s a great on paper in object if you go to building on a foundation that would mention two stories and something from this is going increase quarries actually I need five actually I need an elevator actually kind of any further eat up my point it’s very difficult to and that was happy to data when people talking about large dangerous gigabytes and maybe terabytes announced atomize it should you know orders of magnitude more data out there and they need much greater execute as much possible speed so the problem change the architect has changed the approaches changed a patented income to pencils that’s the kind of thing we like to invest in and when you think about your ideas and building value composition trying to figure out what is it going to be just a pencil and I can tell you right now that coming out with faster cheaper better is not advisable it’s what you want to be one of the benefits but if you’re going to need a scribe it a spark and sugar better it ain’t going to cut it you’ve got to be able to divide it is uniquely able to solve a problem in a way that nobody else and find an approach to without crops and it rebuilding from scratch or or we’re approaching it but again this purpose we emphasize this there’s a simple mnemonic which I’d say is picture the 3ds of fruit continuously comfortable and destructive with your approach until you’ll come up with all sorts of other ones like differentiate it and God knows what up good stuff yep counter and keeper is different than what units charge is now but I’m not only helped various different well I guess what I’m really saying it’s fun to keep a bad little things you might use it with purpose but it isn’t enough to make it a real compelling breakthrough innovation so it could have stood up instead kind of embarrassed he did but he could have stood up and said Akira has a faster cheaper better database and hey we get a lot of you the workout has gone right Michael investments because it’s me it is I conclude always saying the truth but it wasn’t enough for me to say wow that’s compelling and it confined to the differentiated defensible and you know it across the lobby of this convenience does that answer your question okay a better volunteer statement that you want it’s just not enough you know I actually use the struggle that the stuff but I’m beginning to realize that like a lot of things that you take hard an auditor copy is lamentable but for different reasons and this is why I really think the concordantly in our business not most options and so I never go to our is immediate EMS day you know hey why is this compensable of technology standpoint if I roll up try to understand the business and what I learned about that businesses the fiscal can come from different games or goggles and come from the network effect it comes from durability correct endanger on people and our daily use that data it will be comfortable things like the business model which in their case again is advertising supported and so here for I think probably if you were to look at local networks or pushing mediation fine you’re going to find it the people that are wing and you can take those business in examples have figured out how to capture some next a business canary viral affairs when people send you something you want to either see the photo that they cuz of you and you’ve been tagged in and you actually sign up in and get to see it and that’s kind of a natural need we all have which is like oh I’m a car do I need to find out you know what so kind of happened in there so that’s a network effect very quickly becomes ultimately a social graph if you have the social graph and somebody else comes up a new site and says hey me too I’ve got away you can share your present but nobody’s on that network now like okay so you traineeships you can share what 800 million people are here with absolutely no work or you go invite 800 million people over here well that’s a pretty big variance so I think there are things that are going to play out in the social world just as going but there’ll be things like the social graph or the data you have on people the connections in circles let’s come to presentation great any questions before I move on yeah for each item entertainment backgrounds a any movie any you know piece of intellectual property ecology David time to use the games yep sync now that the doesn’t fall storage structure if it doesn’t have the chipmunks Alvin comes with if it doesn’t have you know your Marlon Brando or whoever’s around can’t break set it will be equal continuous is it have to be priests a movie successful country successful whatever into what is headed into distant English word wearing the gray area between experimental and industry as another powder especially I’m not an entertainment expert but I’ll give you my take on that again sponsor even observing what was big in in the relative in terms of Technology and I change the only thing that had lots of reasons why people obviously call it and it calmly depended on in who date the demographic is but if you look at the broad entertainment people obviously and get hooked into in Spain with things like cereals right you know soap operas traffic update the American how do you think critical still doing and I’m so corporate leak over the time here and because they get to know the characters and they get to know the story and they get hooked interest around chose never to estate guys so that’s a very in a natural continuous thing from France handler the lens Rodney company comes along with something called reality TV where did I come from nobody there before that that we can totally my view discontinuous innovation and you didn’t know it was going to be obtained and negatives actually sometimes incredible odds about that but doing rhythm I wouldn’t read that into discontinuous innovation and it’s change TV comfortable and it’s got a whole new industry with it if you look at what I would say is that for the example for you know grow out of that it’s that there are still things that you can find that maybe that was a labels need that you know report eyetality the mule has to see ourselves in our real world the party being you have met before but the minute was there very much mouse that’s actually really interesting there is a long way from Survivor to Real Housewives of you are having the turtle reality but yeah you know you just uploaded with them that’s the fun button before you that it’s low aggregated but it’s well we can get to the small tonight but in the future tech with it you always have to figure out meet your audience when you’re thinking about a need because you know I’m not know it’s very difficult to find an ink that is so Universal but one for Madrid example anything is going to work for everybody that’s what you have dozens of panels in any lighting and dozens of putting it that’s that’s the hope you can use comes with damping rope okay once you’ve a contract with some getting to point where you I need to get you involved in doing your own workshop this is the one thing I want to point out about the way I approach things on a switcher simply put if you’re going to take a fight take a big one because untipped with much work to build a small company is it in a big way so why not find a problem that is really difficult and that is really comparing go out there and that’s how we think about things a comfort we think about this we gain changes and we’re very specific about that corrupt it means it could be a big enough I hear it probably has a billion-dollar market behind it we have complex development not just a simple minimal Viable Product that you can get marketed by we say that could be a great starting point but we really like complex problems we’re going to invest in companies that take many times years build a product and give you an example which will bring us light for use when mobile phones took off picking that theme what happened was everybody thought oh boy traffic can go up yeah boy traffic could go up or really took off second squad phones with data traffic and a very smart on finality fact action multiple kind of decided that that will get much of a problem you need to change the network portal like data tracking he started a company called scar Starnes built use something heavy great doctors that spit in networks that you’ll never seen in places like Verizon and AT&T a verdict on all over the world to carry that data target it took them two years to get their first product really working and pulmonic west and by the way carriers then took in many instances in months and even years catch they’re dolphins but some point it became impossible for them to handle the traffic those coming through from mobile friends the data and people doing things as simple of instant messaging and then starting to share photos real and we know we do and that company became unfamiliar about a billion dollar exit from and is now cost is current isn’t a part of all the infrastructure but if you have looked at that as anything other than a big problem and have thought about is anything other than a billion dollar market opportunity or more people and going on opportunity you would have literally of the investment if you thought about it as event something that you have to get product out in if it leaves will increase risk and as a minimum viable product is going to be that we can show you can move a bit through the network you would never pay any money in that business so we are I think in this industry off you hearing about you know how to get something to market quickly one favorite that’s that’s great this one’s great literature and it’ll show some you’ve read read this book on these stuff that’s a great way to go to certain things like your team across we have the purpose on the other end of it maybe they do describe as game changes and we ultimately think that that’s true other thing that I’ve give me a pencil here should be that much big mantra so strong IP protections to date opinion sense of that and compare you can always in a business model so I’ll get his legs off with that when it comes with business model session – okay a lot part of the session before you get going how do you evaluate your value coefficients how do you make sure you when you put it together exactly pumpkin coloring I need to give us triple coiler and I’m a big believer that if you can’t measure something you can’t imagine you can’t manage it so this formula is simple is game pain and I’m going to describe it you as the business found its measure the game you deliver the customer versus the pain and the cost the customer goes through the doctors what painting might this truck in large enterprises and speaker always have pain associated adopting anything dependent Elyas consumes do changing our habits is a pain but the point is I’m going to give this example in a way that studying repeated in world is very measurable so one of the kinds of games you could be looking for there’s more gift one can we’ve talked a lot about them tonight revenue that you can give your customers you can help them in a guide their revenue up Octavian’s you might be able to bring ramp those are the two most public ones left measurable calm times of refining my statement but in the business present value subscribing area for hnt that academic relationship is running we took the purses down from what would minutes seconds well that makes a big difference when you’re very comfortable holding on the lines gone yeah thousands of miles away trying to get their accounts are working and so found Highness recorded equally respectful if you can reduce on to the labor involved and paste are critical so this is protest a little more excuse me where I’m actually spend a bit of time about this a lot of crimes for those of you who read Jeffrey Moss book your unstylish work a lot of times in early market you have didn’t raise a million dollars and even people who are looking for a great for something and then people look like you forgot them and even people like me might be there the extra would run the latest I need edges I’ve gotta go put them and it’s it’s pivoting and people like the visionaries become what breakthrough might represent the Bible postcards in the marketplace they actually don’t care about any of the things I just mentioned well they care about the company that’s genuinely new and different than at the breaker and the early markets that’s what you’re looking for is something that gives them a competitive advantage something that makes them feel like either they’re the cool kid on the block they’ve got the latest gadget and they can be something that’s keyword or an enterprise world is coming with fun level that they can actually go out and compete for a customer segment but they just couldn’t repeat it for the pool because they’ve got some new class database for the navel zones filled their customers might pretend we have an example from a few them which again David you bent my knees because I know they have in geographical so I was in the board when it came to pitch and I was struck by the guy walking out the room screen basically look we are going to be able to offer some services the dating that will help people find each other much softer much closer to where they are and much more like them and that’s competitive advantage in the dating world that’s going to give you companies that other people 110 so in every market that’s probably the most important game is engine and how will occur to spend water time clowns can wipe Great America donors who stops attending product for the multi I just really think about them reputation will be example other if you talk about customer service if you can improve your customer service annual engage with your customers it should occur your education knack to be valuable whatever they are they’re kids a list of these games when you get your exercise tonight you know think about lifting knee pain cut eagle things that are the good news the bad news is there’s always tendon associated in fighting these things the first one I’ll bet you you never think of but it turns out to be Cobra one of the most expensive ones to start up but it’s called an Academy I wish them eat whole because you had 30 years ago when I was growing my first company and that is the pain of finding you think very protective you’re a completely new company’s unknown you have a business card that carried IBM or apples or whatever it is this we have facebook you will now kind of find your first customers it was going to find you how about they figure it out it’s a very painful thing to learn so they had spend a lot of time finding you or you have become spend a lot of time playing and that’s an expensive thing to do so finding out openings have finding approach to reducing that is big part of what we’re going to provide in a good market – yes everything is powering you imagine it what you have to do was go through week one week of evaluating your cell phone before you bought it I mean you’re going to do that you will be in a school you pen it on you click a few buttons when you figure out where component with it feel intuitive or not that’s the consumer world well identified world is a lot more complex than that people frequently think writing performance testing scalability you know specialist but things like Security Center so then came the today to rule that if you can figure out how to practically ox that you can just literally try it in hopefully minutes put a little day but not week or months you’re gonna have to reduce the pain to cover now we have another great accomplishment right thank you call I do uj– credit because the code we looking at converters that you knew it was too high a years ago things that we tell a goals like 13 cycle of being what they called light and 5 which is getting cut from a live in five minutes or less and they’ve actually achieved it they now call that their marketers into the goal so you can instantly go up as minus sign on and create an app store and absolutely the other day has a great story because you know any filter times in this book burn so do one okay good well it turns out the filthy for the goal to run tests for the one person liberal makers aren’t that you and they’re using the most labels to you know help people on the course in real time you know what should be places governor cortex well now with all the people who are documented will get the apps out then quickly keep them up the data just forget the new plays on time they rang up appearance they put up an app store in less than two hours and they’re bored and we’re done and distributed that new apps in their tables in two hours and with a few our sales records there’s no way that would happen for would have taken up two weeks to get to the evaluation that’s why the stock matters so good think about this there the by P by the figis it you know written on case study to you to figure is that it takes people a long time to get for financial touches you obviously got to think about that in a more fundamental way large enterprises things that are probably over $5,000 cont’d on a credit card over $15,000 you preach words then go to effect and sale over five hundred thousand dollars of which was now in the process over a million bucks you and procurement you doing with lawyers and you know spur pricing can make every cotton escape people will find ways and again with the bugs can go to market more but the packaging so that people by mistake if you want reduce the pain of that implantation in this case the example about it it takes a long time it’s kind of lay you and deployments same thing so take by those things when we’re building your game pain equation but then that’s the one last piece which very people very few people ever think oh this is unique we’ve got us going how are you hi doesn’t people in the middle that is unfortunately very important even though the court and that is the people is do nothing and unfortunately that’s almost unbearably the greatest competitive response because if you’ve got their attention then thinking about well okay it’s startup and that means I probably taking some kind of with and so I’m afraid we want to do that skip what others do nothing and that happened probably more than you could possibly imagine as the biggest cause of problems is got us so you want to think about this now if they’ve already go to pollution they also get me thinking about switching costs that white that is runtime containers under stubs that is in the solution there’s already an alternative already using something then they’re going to take that out that cost money retraining people change business processes etc so that’s why I was am prescribed going to come up with something that’s unique that hasn’t been done before that expertly different and then good enough is good enough and unfortunately and thank you just to about earlier quite new ways yeah good enough result from do-it-yourself which is okay well we could find a way to do this will go go right now flow and how many times we hope that what’s a good customer problem area which was empty in one of those the first kind of customers oh and they were very hard themselves for fear they would go grow they tried it out Yale ten different steps plenty of people have ult ultimately didn’t follow directions so we found something that was work and variable data center 70 blocks all the directions so when they came to us directly legends Kibo we were acting pre-release set ones we’re derivate after particularly watch this move all this out and you know you have that leaves follow that Mount Teide or the tempeh they came back and forward right upwards but the pumpkinator would filter themselves and you’re going to find out a lot in technology so people were just quite a find tunnel kind of table those episodes but thanks for coming paraded at them my favorite I love point on this is something that again David is even is idat2 the answer which is how could you imagine doing something highly disruptive but that is non-destructive to actually adults so then what you think about the answer to why are you in that position Annina doesn’t okay it doesn’t but there are lots of things you can do that are destructive it’s very hard to find something that highly discontinuous and disruptive but it’s really easy for people to change to it to enroll an example in a very technical world for those of you who follow the the big script that’s happening in you know some technology well today’s everything st.

Cloud and you probably never knew because I try to give example you needed right but comes up cloud is enabled by something that was a good continuous innovation called virtualization it made a comfortable people for run full scope of different capabilities on single machines that were much more efficient and it was made possible people that scale resonance form of this other vehicle tyranny is so good for our nation was an exact example of a very disruptive innovation in took efficiency on Slavic call him being a low team today and high $is that loaded up if they wanted three all over that so it’s sometimes come to call deficiencies or more on a server it made a couple people to get confused amok low-cost and offer the details either way for example people rather than an apple and are doing but the great thing about customization really really cooking is because you don’t have to change anything if you were rying whatever it was some HR application that was you know doing all your benefits and you decided you wanted to take advantage of that reservation to all you did would you put that copper in a virtual container and you ran more and more and more of them on spanish games find more Bible questions of it then change anything software tools so with the greatest disruptive innovation in in the impact it had that it was non-destructive ago you can find things in your page even standard headaches so conclude that these crocks we didn’t question can get any of my application is ready to keep these no no you don’t review by anything replication that we are Kentucky doesn’t regenerate over and what take my equation down so that really caught my attention when we were looking at the way the convention can we go to mark because nobody wants to take our application down you’re serving you know a dating site we’ve got 20 million users put it put it on your form is 4 million 4 million users uncle don’t get reviews there we go 4 million you’re not going to study get them down let’s say for you nobody can say for the next hour while we actually take up further down for this new technology no can happen so the brilliant thing that these guys doing do they don’t have to change their applications but they can plug this thing in alongside automatically started replicating the data and enable people to get the advantage that really caught my attention that is very very tough to do in that world so again think about how when you’re building a value prop you could approach ground ok I want to know how many people pick it out in the game pain ratio what is the right ratio how much pain you have power to overcome a pain as if you know greater than 1 throw them to anybody any ideas ten punches yeah it does up it really isn’t worth bothering you are coming to a major market place and compete and left you’ve got at least and for one in other words an order of magnitude directory at least and it’s capable if you can say what data set which is you start at 10 go on and we can take you up there two orders of magnitude a hundred to one per form its improvement why preferable because we put it in a blunt defensive stance or if more companies are not easy for people to deal with and there’s a risk that grippers goes barrel you probably put in a job online to bring you in typically and let you can find clever ways where david has take a risk of epsilon comes in Carlo for the pointers but with enough with the worthlessness there’s always obtain to find tried bottle strategy and so you need at least an order of magnitude improvement to start in your game pain ratio to be invisible so I’m going to give you this apparent back you don’t need to write it all down so this is what I want to go up do in the workshop is just lift up what your idea is that kind of you that step of your hand that are going to be team leaders come up with your own game pain ratio just write down what you think about this up it’s obviously very rough on the whole point is it infant depends if you’re acting a real welding what this really represents is a great set of questions is there are compliment and I find it amazing how many times on first go out and do their market research in it that he did you buy this the great question but it doesn’t address off of these things and by the way is really easy to tell me extend yes but then you say we pull out your tech will provide the check when they say no why is that probably because you didn’t integrate their right and you’d be shocked how many times people do all with great market research then they come to market and there are no buyers and it’s almost been very because this rage that isn’t work true so I encourage you to do it all the other way around going off all these questions go off your compliment are we really to person early adopter getting some competitive advantage what is the breakthrough going to get how much money we’ll just ad how would you implement this how much is that gonna cost you who can earn that delivery the question for us easy to avoid connecting if you can answer them upfront will really help you okay so might a study I’d like to have let’s have how many on that obstacle the left flag which is the example this appearance one of the key customers can you stand up and become an example of how your value crops played out how your game can rate the paid out and one of your customers and the average with a why is that well here in support we won but we don’t make a color for color they are but they don’t really Michael and so in case you’re not have service law this a we don’t like so this was the baby and it actually went for the intercept will be home just to help you working on for innovation great decision these competences by the base user and new regional airports are your mobile in the world great thank you very much thanks the apparent Inga they’re all going to be available to help you virtual and the viewer that it for real customers real story we prefer revenue out this is what their costs down the net result is a big win win for them and you can measure it in terms of Hoffman and it would stage but probably much more important we didn’t get that numbers but the fullness and uplift and Rohde those are very very close obviously that you can bring them into code we make a difference by the way if you were pitching me you brought the county pocket are you paying attention it’s caught the attention of our investment spoken very quiet but insists that jump in on the back of this how when they sold us you you

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