Original subtitles

[Music]

a seral entrepreneural

thanks

J so thank you all for coming I will

start with a very informal uh

introduction which is you know about

halfway long time ago I would have been

sitting in the audience probably trying

to figure out which we're trying to

figure out which is how to start a

compaign and having done it a number of

times I just just wish that somebody

down with me and share some of the

things that we don't get taught out of a

textbook that help along it's hard to

ever condense all those into a series of

even four five lectures uh so what we

decided we do is try to make us more of

a workshop so it's interactive so do not

feel like uh there's any um hold back at

all if you have a question at some of

doesn't make sense to you or you have

some particular Insight that you want to

bring to this that's great in fact for

me um best thing I've learned as I got

older is that I get the more I have to

learn and the best way to learn for me

is to try to teach so this is a learning

experience for me it's the way I always

put it so I'm looking forward to

learning from you just as much hopefully

you'll learn something for me so with

that um I have one positioning statement

for myself which is sort of my value

prop if you will and that's I'd like to

give my entrepreneurs unfair competitive

Advantage uh so the idea behind this set

of sessions is that 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 idea

behind the startup secret exp was of

course by the end of this hopefully none

of this will get secret and so it'll

just be about how to get started and on

that note um this is the series that

Jody and I worked out here as to how to

break things up um if you want the big

picture context of this at some point

you're going to have to put all this

together to pitch it if you're going to

raise money uh and probably even if

you're not you're going to put it in a

pitch that's going to be what you sell

the custom and so forth and so on the

website that currently desited in beta

on Cap's website uh you will find the

pitch that was put together for the last

at har which is you the perfect pitch

and that actually contains all of this

in a pitch form with notes that are sort

of getting behind the startup pitch how

do you put it together so that'll be big

piece of context if you want to get that

that's on the on site so that site been

B just the basic content up in fact

we'll laun a proper site in a couple of

weeks time which is going to keep press

for you but uh I have one pleasant

surprise for you you're going to find

that I've been a student myself of a

great teacher and uh his name is Jeffrey

Moore and so I invited Jeffrey to join

us for a bonus session and Jeffrey is

going to come on May

17th uh which is great news he's a Cate

speaker he has some of the best advice

uh that you could wish for in the

process of building a company taking

products market and

Workshop in May and it's already uh

quote unquote sold out with our own

entrepreneurs but so what we're going to

do here is try to find a way to join it

with the Harvard program whoever the

winners of the session and you'll see

what the winning means later on to meet

with Jeffrey Mo and join for that

session on May 17th and hopefully lots

of you'll be around and we'll figure out

how to get uh the bulk of you to to

attend

that so um just to get you started I'm

going to make an obvious uh observation

about the order of this we felt like

starting with company formation be the

wrong thing to do we don't have an idea

and a value called you know why start a

company so that's why we put this one

first needless to say um once you

figured out what you want to do figuring

out how you're going to start building a

company come second then uh business

model go to market follow and then the

idea is that you all get a chance to

pick and as I say win at that point your

own opportunity into work je in a full

session so let's start with a value

proposition what is a value well

uh the tremendous statement that you

know people always think of which is you

if you've got a an incredibly compelling

value C then you know it's like having a

great M trap everybody's going to be a

cast Feld door it doesn't work that way

unfortunately in the real world doesn't

matter how great your value C is there

are a lot of other aspects to it uh but

it does start with having a value prop

that is you know hopefully a break

through in of itself and that causes

people to say wow okay that's a company

I want to engage with that's the service

I want to buy and that obviously start

theable Ro so fundamentally we're going

to get into how to define and evaluate

and build that but I have got as I said

just a few of the answers and I'm lucky

enough to have a lot of great

entrepreneurs that I worked with and I

brought some along with me S so I'm

going to introduce some of those folks

who are going to help both in the

session and also the workshop so I want

to introduce to you first of all Adam

Barry um where is Adam in the back just

want to stand up for a second Adam Adam

is an e at North Bridge and multi-time

stere himself um very skilled in the

marketing area so we'll be very helpful

for those you who are trying to figure

out things like positioning and

messaging be very helpful in putting

some of this together I've also got the

team from the Ping um so I just want to

have a quick introduction to

Alan and

Sim and Carlos and now here in Port

because I'm going to use Aion as a page

study today uh it's a weth of the new

company we invested in it about a year

ago uh they're actually doing

unbelievably well got preempted in their

series B which is always a good sign

beat all of their uh plans for 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 50 which is what these guys have

done in the last year and we'll bring

them in case study but I said

breakthrough and breakout as well and

it's tough to find real breakout

products that just you know change the

game and we love to invest in Game

Changers so I've also got an

entrepreneur with me here um David mcfar

if you'd like to stand up uh who's the

co-founder of a Kean and we'll introduce

a Kean in this too and hopefully some of

you get a chance to talk to to David and

and the other guys here about what

they're doing and there's a real

breakthrough that kean's bringing to

their Marketplace which will also

introduce so with that said let's get

started and try to help you figure out

how to build a value proposition we're

going to do in three stages we're going

to talk about how to define it and then

how to evaluate it and then obviously in

the real world what you do is probably

go off at that point and iterate on it

and figure out how to refine it and

improve it but in this world uh we're

going to do a workshop we'll break off

and have some teams that can actually go

off and figure out how to build their

value pop and you can do your own

evaluation hopefully with the tools that

I give you this evening so you know the

old St goes what I'm really trying to do

is give you the tools so you can fish

yourself rather than you having to feed

you every time so that's what the

evaluate Pie about but let's start with

a Define piece the first thing that jod

did this evening was a setup so those

you raise your hand I want you to raise

them again anybody who's got an idea uh

that they'd like to build a value pop

around and ultimately hope to be a

business or a start around please raise

your hand again I'm going to pick from

please keep them raise keep them rais I

need uh 10 of you so let's see one two

if I pointed you just keep your hand up

three four five six seven eight any more

I need two more

nine over this side 10 great we've got

10 of you so just remember uh at the end

of this I'm going to ask you to come up

here and just share and one line what

your idea is you got some time to think

about what that one line should be not

be perfect I just want the idea it could

be as simple as a new widget fine 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 prop around it so the 10 of you

should be thinking about as I take you

through this how can you get help from

the rest of the group that's here uh in

in the workshop this evening to build

your value so thank you for that so what

is a valley prop I want to start with

the end in mind here and that is

basically it's almost a positioning

statement this is sort of a simplified

version of in fact the Jeffrey Mo

positioning statement for a company and

it's it's defining for whom you do work

uniquely well is probably the best way

to simplify it so this framework I'll

give you it don't worry you don't have

to write this down and it'll be on the

website and I'll give you as a handout

feing is really all about defining that

and what I'm going to do here is ask

theion to give you a sense of what their

value prop is by challenging them to

come up with this uh in real time for me

so uh s who is our prate customer

appearing businesses big school are they

Enterprises or are they Med medium to

Big okay not okay not SB I might

simplify that yes okay uh are they any

kind of business or do they have to have

the profile like are they social are

they mobile are they local are they

retail are

they okay

good okay so we might say that mobile

large businesses or

Enterprises what is it that they're

dissatisfied with right now

okay so there's a bunch of value CS in

there what's the one thing for example

that they just can't do right now can

they get their apps to these employees

if they've built

them so how many people have Mobile sign

onum everybody but well let's say who

doesn't much easier question good every

there's only one person who doesn't we

need to help

out uh so you probably noticed I mean if

you you have iPhone for example you just

go and you can download uh an app very

easily why can't you do that with an

Enterprise so those are consumer apps

okay so we're trying to help Enterprises

who are having a problem getting their

apps distributed is that the

idea okay so I'll take one of those di

props start there's a lot that is our

product what do we

do okay but what does it do like if I'm

an Enterprise what is this product

called what does it do for me

I'll take end prise as

um it's it's interesting though you see

how challenging this is and I'm having a

dialogue with with somebody who's really

good by the way um who's actually won

awards for the way he presents uh it's

just challenging to get across what you

do uniquely well for who in a short

space of time and yet often times you'll

find that that's about as much time as

you'll get as you know the classic thing

in an elevator between floors you got to

get some of your elevator pitch uh so

we've got the things so mobile

Enterprises who are trying to get apps

for their users we've got an Enterprise

App Store okay um what does it provide

what key problems does it

solve this is a real

Workshop okay I think that's a very

anything to say but um I I will come

back and see whether I've got this right

myself in a second um what is it that

the uh Enterprise I organizations are

afraid of they do they worry about

security or is that

irrelevant is that one of the top one

two or three

things okay so security is an issue uh

and then there are lots of alternative

Solutions in pretty much every Market is

that true in our Market AB what's the

category of other Solutions or alna

okay I'm G to cat and 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 in pretty

much every technology situation uh so uh

is there a category that other people

you know typically put around what the

alternatives are

okay so

um do we like that

category why is

that okay but do Enterprises like

it okay so we're running into very

typical dialogue that goes the time by

the way I run system as an investor too

which is there are lots of Alternatives

people will try to make their time

better than the other on in the end

you're going to have to come up with a

statement that says why we are uniquely

able to solve a problem otherwise we'll

get into a constant challenge about

whether are you slightly better or you a

little bit better here or whatever so um

I'm going to just reveal what I wrote I

purposely did not tell you guys that's

for real what I wrote was there value

you see I've been leaving the witness a

little bit here I admit uh but let's see

how I did

I said for mobile Enterprises so you

were saying large companies I think we

drew the mobile word app critical who

are unable uh to deliver apps to their

users and and those users are bringing

their own devices to work which is

really the shift that's happened in the

marketplace am I right okay uh because

in the old world corporations

Enterprises gave out laies and things

like that and said you know we own this

device so therefore we're going control

lock it down because that's a big shift

to what's actually happened since the

iPhone and the iPad came out people

bring own basically there's this whole

Trend that is called D bod so so for

mobile enterprisers who are unable to

deliver app users who bring their own

devices in they don't control them

anymore our you gave me the word

Enterprise after which is you know an

Enterprise version of I can do it that

way provides for users so securely and

this is the key word it is the number

one it worried about they're worried

about when you bring your own devic that

something on there is insecure about it

you might bring viruses in or you may

have it hacked you may not even know

that um and to to access those apps and

their information that they have because

if it's not secure and you'll bring in

those devices obiously corporate

information you go so they're really

worried about this and I actually knew

this before I ever approached the period

because we've done a lot of work to come

up with the mobile pie but here comes to

killer statement it's really we'll try

to figure out how to help you get that

uh in actually the go to market session

rather than today you really want to end

up with something that says unlike

everybody else we do something uniquely

well so this is unlike mdn I don't

expect anybody here to know what MDM is

so I'll just explain it simply it's

basically a way of locking down the

device and that's the way people

controlled the devices that enterpris

was using before our patent is and I get

a little technical here

cloud-based come back to why that's

important and that's a new category that

we're creating won't get into that

either think solution is instantly

turned on and scales to 10, years now

I'm going to go back and challenge

you why is that last thing important why

is the unlike important it's not

so can I take an

example uh Alan can you pick any

customer that has thrown out or said no

MDM isn't going to work the Alternatives

AR going to work because it doesn't

scale me example

any can I get you just in case people

can't hear on this SL stand up project

that way

because we were in the cloud we

basically just could turn them

on is there anything to

install great so I can tell you that

when we were doing our investment pieces

it was just fundamental people need had

to go spend tens of thousands of dollars

and sto lot of infrastructure taking off

a lot of time over doing it and there

were forc users for lock down devices

none of which was what users wanted and

they couldn't scale out at any pace and

I'm not going to be as um rant to name

the customer you are it was and they

were struggling to get their Salesforce

productive with uh things as fundamental

as and this is where the information

fece comes in their price list which

need to be kept up to date and their

latest product information and so there

was a very real consequence here which

is that you didn't have sales people

empowered with the right information to

go sell their products bringing the top

line and even in some cases they were

selling the wrong product at the wrong

price that's a problem now if you've got

something that literally will take your

value proposition way down to we can

uniquely serve a customer like to go by

delivering something that affects their

Top Line and empowers them to you know

actually solve that problem really very

very in a very compelling way you're

going have a business and so that's

really all this exercise was was

designed to do so thank youing guys for

for having me headle with you here this

is not this is not perfect actually I I

you know I purposely you know forced

myself to do it separately to that but

the point should be whatever your value

prop is these key elements should come

into it so we're going to be working

towards this tonight when you go off to

your Workshop this is the temp that I'm

going to ask you to put

that but how do we build it and how do

people find it Well um it's really not

that difficult first of all you

obviously want to start with a problem

you want to understand you know what is

this problem out there often referred to

as a need or pain or or or challenge

that people are addressing but should it

be any kind of problem no and this is I

give you some of the Insight that i'

I've gained from you know doing this for

30 years 20 years as a CEO trying to

build these things and then 10 years as

a DC watching people succeed when they

get the Stray and your friend that I

allow these students myself so I had to

come up with pneumonics for everything

so I couldn't remember everything that I

was ever taught unless I came up with

somewhere having neonic for it so all

the way through my pick I'm going to try

to give you pneumonics which doesn't

make it terribly uh difficult to

remember these things but hopefully this

will be the first of them these are four

us

you need to learn for use to figure out

a

problem find a problem that's unworkable

first of all find one that is

unavoidable so it's not and nice to have

find something that is really urgent and

then most importantly probably that's

undisturbed obviously there thousands of

people solving this problem that's not a

great place to start now having said

that each of these same Ty aspects that

I want you to to understand so um

another neonic for you is it

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 there are lots of different

types of needs so is the need or problem

that you're trying to solve black what

the hell do I mean by that well let's

put it on a diagram everybody was like

two by two but har so I had come up with

one um the bottom left is a latent

aspirational need um Adam I'm going to

call on you for this because you had

such a great example of it

uh we've been talking about mobile so

what's an example in the mobile world of

a latent aspirational

need uh I the long answer so when people

talk about needs like all the time oh

you have to go ask customers what do

they need you know and then they'll tell

you what they need and then you go build

it and you sell and you make a lot of

money and you become Filthy Rich and all

that you buy an island in the Caribbean

all that kind of stuff um but short of

the island in the Caribbean it turns out

that when you ask people their needs um

they only give you an inight for that

they give you the need they know they

have that's not particularly interesting

it might be helpful might be valuable it

might be helpful if you're trying to go

from like you know verion five to

version six but when you get the really

exciting Innovations is when you

discover late needs needs that people

have but they don't really articulate

them in a clear way so the CL example of

this I think or good one is the iPhone

so yes the job they doing any market

research not I don't have to do any

market research do you have a profound

understanding of late needs for

consumers yes ask people do you need a

computer in your pocket that will help

you find where you are tell you what

restaurants to go to let you send a

picture to your girlfriend um and also

play a game with sort of Sly birds and

and and pigs no I don't really need one

of those like computer in my pocket

haven't heard of that it's not useful

but if you watch people you think about

people you go well are they lost yeah

they're 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 they get bored

they want to be entertained while

they're on the road yeah that happens

they like to send stuff to their friends

well that happens too so those are all

in a sense late needs they're not you

know people aren't expressing those as

like wow that's a big burning problem I

have right now but if you notice that

that's what's happening to them then

then you can start to think creatively

about really compelling solutions to

those needs to those problems that they

fa thank you so I think it's a fabulous

example because none of us could have

probably put a need out there and Define

what became obviously you know a world

dominating product

uh those of you didn't hear the numbers

37 million iPhones last quarter alone

put Apple the number one smartphone

position in the world that was not

something that came out of somebody

saying exactly that said oh I've got a

pain or a need that I can identify that

I've got to immediately have a product

for so this is a challenging thing

however I'm actually not going to try to

solve that problem for you by getting

you to think about lat or operational

need 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 f uh and part of the reason why

is that they find it difficult to really

define whether a need is actually

something that you could take an aspirin

for versus what you really need which is

something so painful that people need

either antibiotics or morphine or

whatever it is to get through the pain

and that's what I'm looking for so uh I

will just describe this as we're looking

in today's presentation for needs that

blatant and latent sorry blatant and

critical meaning they're absolutely

immediately obvious to people and they

are so and that's the blatant piece and

they're critical in that if you

literally can't um you know solve this

problem something's going to go wrong

con

yesing

as 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 happily married

so I'm definitely not going to get drawn

into the conversation too far but it

falls into a category of consumer needs

that's very high it turns out you go to

you know a few pages for my presentation

you'll see comes out number one on the

needs

list so that 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 so we'll see why later on

so that's what we're looking for we're

looking for these latent critical needs

like we've just described over here in

the business world it's going to be

something as simple as a broken business

part so it might be a mission critical

process that is broken I gave you an

example of one that's not quite Mission

critical but pretty close which is

imagine being a large Enterprise compan

like got you know tens of thousands of

sales people out there and they're

getting the wrong prices and they

haven't got the latest product

information and therefore they're not

Ser serving their customer right and

maybe losing competitive bids and so

forth because of that that's not

necessarily Mission critical but it's

certainly a broken business problem you

can't have S people productively selling

for you that is true by the way of

farmer companies it's true of insurance

companies it's true of pretty much

anybody in the Enterprise world that has

a sales forces they need the latest

information to train them have them

effected so the mobile case study of a

perian is an interesting one when we go

down one step further we'll talk about

that with another example in a moment

because they are very much uh seeing

that as the typical customer example uh

so we've got lots and lots of of

customers asking that same phys be St

how can you give me something that

imediately makes myself more effective

so if I may I'm going to um uh just

pause here for a second and check in and

say do people get I mean by a broken

business problem there any

questions you have a good sense of that

good okay it's pretty important because

you can find lots of problems but if

they really are going to be critical

something's broken there's there's A's a

flow that's broken or there's something

fundamentally not work in the bus how do

you check that my C up anybody got any

ideas about how you might check whether

something is

broken yeah outside yeah or if you're a

customer guess if you're a customer

that's a great example have you ever had

problems with a company's customer

service yeah any examples of it anybody

in the room Verizon yeah Verizon you

know and and U basically there's a

broken business proc that's behind

that you know somewhere along the line

they don't know their customer uh they

haven't figured out what your need is

they really basically aren't connecting

the dots between for example how much

they're billing you and what you signed

up for there'll be something in there

that's broken um andom the classic one

so the easy question to ask is what are

the consequences if there are

consequences like you got an unhappy

customer decides to swiit from Verizon

to AT&T that's painful that cost you

money that cost you uh and has serious

consequences in terms of everything from

the top line all the way through to you

know your stand doesn't

the

have or put the cost model so unless the

Cent receives it as problem who cares

well said very well said that's in the

latent V is latent if they don't Perce

it it's in the latent category and you

got to challenge with you got them get

them to understand it now there's all

sorts of selling techniques that that

help people understand blatant needs but

sorry latent needs but you're much

better off if they already know it so

I'll give you an example for my

portfolio that that is interesting in

exactly that since you you brought up

Horizon it's not actually done

uh it's AT&T um so AT&T's um customer

handling is a tremendous challenge when

they want to bring a new customer and

there's an enormous amount of process

associated with that and so this company

active endpoints built an entire process

using what in effect is a a tool to

model the process and ensure that it's

very smooth that it doesn't break and

that all the way along the line you can

measure how long it would take from

somebody for example picking up the

phone customer service to getting their

new account set up and they measure that

whole all the way through and they can

see all the way through that flow uh

whether the customer is being served

correctly and indeed they can measure

not only whether they're being served

correctly but whether they return later

on you know how they come back into the

system with what problems and where they

go and so forth there's a lot of detail

in it but to give you a sense of that

was a latent need it became blatant when

the iPhone took off because they

couldn't sign customers up fast enough

so often times things that start lat

becomes lat because of some changing

condition and if you're in the right

place at the right time like acent point

was that turned into a several million

dollar order and this is for a something

by the way that doesn't have any outside

sales people so obviously Le is there

very profitable customer for them and

it's being repeated that other customers

come through in that same way so anyway

to to summarize this you want to find

something that's broken and you want to

see test that it's broken by figuring

out are there really significant

consequences and if they're not if it's

like well people get pissed off but you

kind of live with it maybe that's not a

big conf but if you're actually losing

customers you're losing revenue or

you're losing to competition or you're

failing to for example succeed in

entering some Marketplace probably

that's a significant

enough okay so that's the first View the

second one is

unavoidable so I given two examples of

unavoidable things here whether we like

it or not you know death and taxes are

part of L uh one step back from that if

you're in business you have to account

for everything it's not an option if

you're in business you have to account

for your bus simple as that so it's an

unavoidable need it it means you know

whether you decide to JT on Excel or in

QuickBooks or whatever you Ty you have

to do it because otherwise you will get

shut down that's an unavoidable need

great place to be therefore because you

always don't find business there what's

another example uh I put up regulation

here it's not a very exciting one

because people don't get up in the in

the in the morning to be regulated they

just have to deal with the regulation

but it's a very real one and so you know

I'm sure all of you can think of

regulations but in the business World

there are increasingly um challenges for

people to operate around regulations by

which I I mean not avoid them they have

to they have to you know work within

them 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 um your

compliance with the keyword here then

it's a very profitable business so I'm

going to give you an example of this

look them up on the web if you're

interested in more detail this companies

is a company called Ral

R and it's a company that manages and

accounts for for the first thing

derivatives what the hell are

derivatives well uh you don't need to

get into system too much deep help to

realize that it becomes importantance if

you're a big company and you trade all

over the world you will trade in

multiple currencies and unfortunately if

you're um the typical company you will

only have one exchange for example you

know the ner or the NASDAQ which you

trade on and so you have everything in

dollars and if you're finding exchange

variations like they have been in the

last couple years going up and down like

crazy you're selling a fund for example

and suddenly the Euro collapses the

European crisis or worst B in gree uh

then you obviously don't want to take

risk on that and so you buy currencies

forward and often times you do it as an

option or a derivative and those kinds

of Trades help you to offset the risk of

things like your currency going crazy

now what happens if you get that risk

long obviously can be very expensive if

you don't account for it right so you've

actually bought a bunch of things that

are forward options protect and you

miscalculate how you're actually you

know um you know taking risk off sounds

like you're going to trouble with your

accounting and you'll end up actually uh

against the regulations a series of

regulations and you'll end up getting

into a very difficult situation so it

turns out all 41,000 companies have to

deal with that problem turns out the way

they deal with it is on Exel largely it

also turns out that since re got into

this business um there have been some

really painful consequences for company

so GE had a restatement in 2005 that was

343 million dollar just from derivatives

account being wrong that suddenly became

a blatant critical need for them so the

like went on these guys and they founded

a company which um has continued to

solve that problem in a very automated

way doesn't use spread ni Simple

Solution this and it turns out they've

now discovered that 94% of the the 500

used derivative and it's an extremely

profitable business that I can't 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 few year tells you that turned

out to be a great business uh a real

unavoidable need with major consequences

just around accounting regulation so

you'll find plenty of those but now

here's the next count let's say you

found a blatant critical need is it the

only need the company has unlikely or is

it the only need the consum has

I doubt the only thing you could cons

you could on is so even though we all

might feel that sometimes uh there are

always other needs whether they're

consumer needs or their business needs

and so the challenge is to figure out

relative to other needs what is the

priority of what you're putting forward

as a value problem and honestly if

you're number three you might get a

consideration but if you're not in the

top three I would almost invariably say

you're unlikely to get considered in any

kind of reason

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 value

for okay that brings me to the fourth

and final U uh and that's undisturbed

and I split this purposely into business

and into consumer on the business side

it's so different to Consumer I'm I'm

largely focused on B2B stuff uh I did

consumer stuff when I was working with

SM man and getting them going and I

loved it one but it's very different and

I'm very respectful of it in fact uh in

our partnership we have people who are

much younger and much smarter than me at

at understanding how the consumer

evolving because it's even

generationally different as you all know

uh you know thinking about Gen X Gen Y

and and uh you know comparing that to

for example the bo so in business I

would simplify things and say you really

want to be able to focus on how you get

to understand when a business has finite

resources and that's always

time people and attention and often

times attention is the Big Challenge

because literally just getting their

attention is a startup

as um and so you've got to figure out

how are you going to get their attention

what is it that is going to get them to

commit you know dollars time and people

to you and if you've done all the other

three use that I just described to you

there's a chance you'll get their

attention because you've identified a

really critical U problem that's broken

for them that they see is really urgent

so hopefully you're approaching the

right but even then I can tell you the

number times companies gets stuck in the

process of getting the company to commit

resources to actually try to fix the

problem is huge so I brought David here

for a reason because I W out of this

board meeting on Friday and I heard that

three times U so David could you give us

one example of maybe for example if you

don't mind me mentioning companying the

board meeting uh you know name media uh

what problem did we solve them and then

how long it taken so they realize we

could solve it actually get to do

something

pause for second somebody over here

didn't

he technology we've created a Next

Generation relational database that

allows you allow to SC applications and

run seq queries 10 to 100 times faster

has a big impact in terms of

problem devel can do it

without

particular that they have is that they

would have these of of of for so people

come to their website and they sell

media Nam space and it might take

15 for to actually resp

we exive

buts but have they given you the time

and the attention that you need and

they're putting dollars behind now

actually working with you to put the C

decision yeah our situation is we're

very ear St not

evened but they are us

into thank you D so we'll come back to

that in a minute because obviously you

heard 10 to 100 times which is you know

the kind of breakthroughs we're looking

for you also heard some interesting

things about the kind of problems we can

solve the most interesting thing I

actually heard in the board meeting was

as follows which is that main media said

if you solve this problem for us and I

it will double our

Revenue so there was a downside which is

if you don't solve it we're going to

lose customers and if you do solve it

there's an upside that you're going to

double we're going to double our Revenue

so there were a lot of good things and

yet it's still taking them two months

you'd think if a company heard they

could double their revenue they' like

just jump on it but this is the reality

of what you're dealing with when you

have large Enterprises and it's

amazingly true to say that very rarely

this has anything to do with technology

it's got an enormous amount to do like

internal politics or the process by

which you have to go through staging and

QA and everything else to get in

production it's a great question there

because every audience has a different

reason why they will value something so

I'm not going to get into it tonight but

one of the most important things you're

going to hear when we get to the go to

market session is segmenting and

defining who your audience is and

so okay so that was the business side

finally we're going to get talking about

your love life which you've been very

pass about um your love life

is actually not a surprise to me at all

because everybody who studied any of the

you know Ma's hierarchy of needs will

tell you that Social Security physical

blah blah blah social's up the top we

all have these fundamental needs and

it's actually why social is such a big

uh investment right now I mean it's not

an accident that you know Facebook is a

phenomenon it is because guess what we

all need to find people connect with

them communicate them meet them share

them entertain them and guess what dat

them hopefully

so uh it's not a surprise and in fact if

you really are good in the consumer

world you can almost invariably W um

people on the same kind of basis that

that I was just describing in a in a

business world so uh this is very very

much the reason why you see um the first

uses of of the internet as being spal

and why dating sites were so successful

and why obviously in many instances the

social networking s this is anting to

look at the RO things like LinkedIn

versus Facebook you know linkedin's

doing well but it's not doing anyone

near as well as Facebook because in a

social stating business people want to

connect but it doesn't feel like

anywhere near as strong a need as people

wanting to connect me date and so forth

so that's reallya relativ be seing the

same basis that I would I would say to

you you should evaluate your value C if

you're going off to Consumer is figure

out again all the went through you know

is it at the top of the list how is it

prioritized um is it for examp or is it

just nice is it latent or blatant is we

were talking about and again just to

summarize this uh even a consumer world

you could use the same four us and you

find it all work for you U have they got

some unworkable problem is it literally

impossible to connect with some because

they're in a different country if you're

signing a social application you soling

that problem it's unworkable there's no

way to do it that's why skyp took off

it's why if you think about a lot of uh

services that have played out it's

because people for example in the

underdeveloped countries didn't even

have internet mobile came along that PR

that their path to connect and to do

Commerce and many other things uh is it

unavoidable so that's why we talk about

things like regulation and accounting uh

is it urgent can it really be

prioritized to the top list and then is

it underserved so hopefully the four

years will be easy for you to remember

as I said he's pneumonic but if because

I was a core student who had to find way

to remember things hopefully they work

for you all right in our agenda we're

making good progress we're still in the

defined stage we hopefully at this point

giving a sense of how to define the

problem really understand it and indeed

characterize it before you but now

what's the

solution well most people think about

that solution first when I see o the

biggest challenge I have is I'm walking

say this breakthrough idea but they

haven't really thought about the

solution so I perfectly put a second and

also I would encourage you to always put

a second too if you can't describe the

needs really well or the problem really

well start I think you're going to

struggle to come up with a really

compelling solution nevertheless when

you do L what you want to be able to do

is Define it as a compelling

breakthrough something that just feels

like David stood up with passion and

thebe that he's clearly uh viewing as as

a breakthrough and I'm going to try to

help you understand what does that mean

what is a compelling breakthrough what

makes it compelling what makes it a

breakthrough there are three Deeds back

to my pneumonics nice and

easy

discontinous disruptive and defensible I

could come up would a bunch more if I

wanted to get going but these are really

the the most important ones this

continuous innovation is incredibly

important because what people typically

do is think about problems in terms of

how will I actually evolve a business in

a very you know obvious way which is how

will I make things a little bit faster a

little bit cheaper a little bit better

to be honest with you that has really

very little appeal to me as an investor

marginal improvements in things are very

difficult to invest in uh because you've

always got

because they're a disne market and

you've always got comparisons which are

therefore inevitably something that

somebody else can come and improve to

you know catch up with the but if you

come up with something that's a

completely discontinuous Innovation and

an example would be a keep and that's

why I brought them here tonight they

came up with a way to actually join data

to organize data in a way that literally

has never been done before and they

patented it they the the word for it is

orthogonal there's never been an

orthogonal date

that word was invented by these guys uh

but it turns up it really works you know

causes people to be able to access their

information 10 to 100 times faster and

that's without changing anything that's

a discontinuous Innovation that's a

fundamental disruption what are some

other examples of that well I'm going to

change completely his fear to give you a

thought about it uh energy is a major

need in the world I think you all

realize that we also know that the major

energy source you all have is oil we

also know that the challenge if you go

down a little bit of is actually getting

turns out the challenge there is

drilling turns out a certain point in

time even diamonds aren't hard enough to

drill through certain times of rock and

so we have a company believe or not that

we invested in that uses lasers to drill

that's a discontinuous Innovation it

turns out you can go miles deeper you

can also turn Corners to actually go

down through substrate and along to get

new oil field and that's a big

disruption too it means that we can go

up the oil that you just could even C

before so clearly we paid attention to

that and decided to invest in it's a

great company it's called for if you

want to look up F but there are also

discontinuous innovations that happen in

in business worlds not just technology

and uh probably you use one every day

without thinking about it Google Google

was a discontinuous Innovation it's just

it was around the business model they

basically said we're going to get

software away free but we're going to

charge for advertising around search and

applications Etc so um the third thing I

put on here um not just because it's not

in any particular order but because it's

very rarely something people think about

turns out there are lots of disruptive

business models we have a CH on that

later so I'm not going to spend too much

time on it but I will take you through a

series of business models that disrupted

and includes things like open source and

Cloud sourcing and many other things so

those are good things multiple St you

got to hear about that the last one I

have on here is the fible technology

databases since we' started that have

been around for a long time so David why

do we think

stand

up so thank you very much I I David is a

great entrepreneur by the way and you a

slight chance to talk to him this

evening you'll find out you give you a

lot more than that what I was struck by

which was really huge was the fact that

uh in technology almost invariably just

like you know to use a cftp and simple

example in architecture if you have to

change the architectural foundations of

a product it's very hard to come and

compete with somebody so it turns out

that if you're in the existing database

business you literally would have to

rewrite your database to come and

compete with

you you'd have to change your entire

architecture to come and and play in

that game and since they've pented it

which is a smart thing to obviously do

and they continue to build Innovation on

it there's a good chance they'll be in a

very defensible spot and it's just like

architecture I mean obviously if you

built a building on a foundation that

was meant for two stories and suddenly

somebody says well I need three stories

actually I need five actually I need an

elevator oh actually by the way I need

you get my point it's very difficult to

do and that's what's happened with data

data went from people talking about

large data as gigabytes and maybe

terabytes

database it's just you know orders of

magnitude more data out there and they

need much greater access to it as much F

speed so the problems changed the

architecture has changed the approach

has changed they patented it becomes

suable that's the kind of thing we like

to invest in and when you think about

your ideas in building a value

proposition try to figure out what is it

going to be sual and I can tell you

right now that uh coming up with faster

cheaper better is not

defensible it's you obviously wanted the

benefit but if you can only describe it

as faster cheap or better it ain't going

to cut it you've got to be able to Def

fde it is uniquely able to solve a

problem in a way that nobody else can

find uh an approach to without perhaps

you know rebuilding from scratch or or

re approaching

it but uh again just to reemphasize this

there a simple pneumonic which I'd say

is you know think through the 3DS of

discontinuous defensible and destructive

with your approach I'm sure you'll come

up with sorts of other

like else

good is different than what youed now

but I'm not how better is different well

um I guess what I'm really saying is f

the cheaper better things you might use

with the cryptons but it isn't enough to

make it a real uh compelling

breakthrough of a solution so David

could just could have stood up and said

um out vir he did could stood up and

said a Kean has a faster cheaper better

database and I would guess a lot of you

walked out G why did micro invest U

because it is actually true all of those

things are true but it wasn't enough for

me to say wow that's compelling and it's

compelling differentiated defensible and

you know it drops the market it's

discontinous in that regard does that

ask a

question okay but better is obviously a

statement that you want it's just not

enough go ahead

you know I actually used to struggle

that stuff but I'm beginning to realize

that like a lot of things if you think

hard enough about it it probably is the

but for different reasons and this is

why I really think it's important in our

business not make assumptions so I never

go to our digal media team and say you

know hey why is this dispensible from

technology standpoint I rather try to

understand the business Lear about their

businesses defens ability comes from

different things for example it comes

from the network effect it comes from

durability to collect the data on people

and be able to use that data it also

come from things like the business model

which in that case again is advertising

support uh and so here's what I think

probably if you were to look at social

networks or social media you're going to

find you're going to find that the

people that are winning and you can take

Facebook as an example have figured out

how to capture some Network obviously

viral effect when people send you

something and you want to um you know

see the photo that they put you and

you've been tagged in it you have to go

sign up to you know get to see it and

that's kind of a natural need we all

have like oh somebody Tagg me I need to

find out you know what Happ uh so that

uh Network effect very quickly becomes

ultimately a focal graph if you have the

focal graph and somebody else sets up a

new site and says hey me too I've got a

way you can share your photos but

nobody's on that Network It's Kind like

Cas who you sharing them with uh you can

share them with 800 million people over

here with absolutely no work or you've

got to invite 800 million people over

here well that's a pretty big barrier so

I think there are things that are going

to play out in the sociall world just as

strongly but there'll be things like the

social draft or the data you have on

people or the connections and so forth

does that ask a question great any

questions before I move on yeah um

coming from the entertainment background

any movie

the Chipmunks comes with if it doesn't

have you know your Mar whoever around it

can't

whatever the between experimental and

that's another question so I'm not an

entertainment expert but um I'll give

you my take on this again on sort of you

know observing what we see in the Rel of

um interest of technology in

entertainment you know entertainment has

lots of reasons why people obviously

call it and it entirely depended on you

know who the the demographics is but if

you look at sort of broad entertainment

people obviously get hooked into

entertainment with things like spals um

sorry you know soap offerers trying to

think of the the American terms of these

things but they're called so probably

the turn here and because they get to

know the characters and they get to know

the story and they get hooked into it

shows yeah network shows there you go so

that's a very you know natural

continuous uh thing for for

entertainment but then suddenly comes

along with something called reality TV

where did that come from nobody ever

thought of that that was a totally in my

view discontinuous Innovation and you

didn't know it was going to be

entertaining and maybe it isn't actually

sometime um the question marks about

that but we want go I would describe

that Innovation and it's changed TV

that's for sure and it's it's brought a

whole new industry with it um if you

look at what I would say is therefore

the example for you know out of that

it's that there are still things that

you can find that maybe that was a

latent need that uh you know was into

that category that we all had to sort of

see ourselves in our real world uh that

just hadn't been you know met before but

the minute it was there everybody went

wow that's actually really interesting

it's a long way from Survivor to Real

Housewives new yor they're both reality

TV but yeah that's different Audi that's

the point

about it's well we we going to get to

this not tonight but in a future session

with is you always have to figure out

who's your audience uh when you're

thinking about a need because no I'm not

know it's very difficult to find a need

that is so Universal that one format for

example entertainment is going to work

for everybody that's why we have dozens

of channels too many in my opinion and

dozens of so but anyway that's that's

hopefully give me a of

okay want to keep us on track we're um

getting to the point where you I need to

get you involved in doing your own

Workshop um this is the one thing I want

to point out about uh the way I approach

things at least which is simply put if

you're going to pick a fight pick a big

one because it's just as much work uh to

build a small company as it is a big one

so why not find a problem that is really

difficult and that is really compelling

to go after and that's how we think

about things at North we talk about this

with game changers very specific about

that for us it means it's got to be a

big enough idea that probably has a

billion dollar market behind it it has

complex development not just a simple

minimal viable product that we could get

to Market in five weeks but say that

couldn't be a great starting point but

we really like complex problem we're

willing to invest in companies that take

many times years to build a product uh I

give you an example which will bring it

light for you when mobile phones took

off speaking with that theme what

happened was thought oh voice traffic is

going to go up yeah voice traffic did go

up what really took off with the

smartphone was data traffic and a very

smart entrepreneur we backed actually

multiple times decided that that was

going to be such a big problem you need

to change the network to SP all that

data traffic you started a company

called staren starren built huge uh

thumping heavy great boxes that sit in

networks that you'll never see in places

like Verizon and AT&T and ver all over

the world carry that data traffic took

them two years to get their first

product really working and for

Marketplace and by the way the carriers

then took many of months and even years

to actually adopt them but at some point

it became impossible for them to handle

the traffic that was coming through from

Mobile phes for data of people doing

things as simple as instant messaging

and then starting to share photos and

other things we know we do and that

company became ultimately about a 2.8

billion at is now part of Cisco and a

part of all the infrastructure but if

you had looked at that as anything other

than a big problem and had thought about

it as anything other than a billion

dollar market opportunity or

multibillion dollar market opportunity

you would have Miss the the investment

if you thought about it as you know

something that you have to get a product

out in you know six weeks and three

Sprints and you know the minimum bable

product is going to be that we can show

we can move a bit through the network

you you would never have paid any money

in that business so we are I think uh in

this industry often hearing about you

know how just get something to Market

quickly all in favor of that that's

great uh there's some great literature

around it I'm sure some of you read um

re's book on Le startups that's a great

way to go through certain things like

consumer CS we happen to focus on the

other end of it Mainely what we describe

as game changers and uh we ultimately

think that there's two other things that

I've given you a sense of here that

should be there not just big markets but

um strong it protection so David's

giving a sense of that uh and compelling

economics and the business model so I'll

give you some example of that when we

come to the business model S

okay uh last part of the session before

you get going how do you evaluate your

uh value proposition how do you make

sure that you when you put it together

it's actually something

to I'm going to give you a simple

formula and I'm a big believer that if

you can't Meine something you can't me

you can't manage it so this formula is

simple it's gain pain and I'm going to

describe it to you as simply as it's

found it's measure the gain you deliver

to the customer versus the the cost the

customer goes to to adopt it what pain

you might say trust me large Enterprises

in particular always have pain

associated with adopting only it turns

out even we as consumers to you changing

our habits is a pain but the point is

I'm going to give you this example in a

way that studing the B2B world is very

measurable so what are the kinds of

gains you should be looking for there

obious ones here we've talked a lot

about them tonight Revenue that you can

give your customers um you help them you

know Drive their revenue up cost datings

you might be able to bring them those

are the two most ones less um measurable

sometimes is the time you might save

them but in the business process I was

describing earlier for AT&T that active

is running we took the process down from

what was minutes seconds well that makes

a big difference when you got a customer

holding on the line from uh you know

thousands of miles away trying to get

their account working and so um time is

important people are also important if

you can reduce obvious the labor and

things that critical so this is where it

gets a little more obus and where I'd

actually spend a bit of time it turns

out that a lot of times uh for those of

you who've read Jeffrey Moore's book

you'll understand this work a lot of

times in early Market you have

Visionaries and early adopters and these

are the people who are looking for a

breakthrough at something and they're

the people who are most rightly to adopt

it and these are people like me the

Geeks the always like the latest shiny

Gadget U I've got hold draw for them and

it's it's typically people like The

Visionaries who can see what a

breakthrough might represent that buy

the first products in the marketplace

they actually don't care about any of

the things I just mentioned what they

care about is something that's just

genuinely new and different than it's a

breakthrough and in the early Market

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 coolest kid on

the Block because they've got the latest

gadget and they can do something that's

g- whiz or in the Enterprise world it's

something with fundamental but they can

actually go compete for a customer

segment that they just couldn't have

competed for before because they've got

some new faster database that enables

them to serve their customers much

quicker and we have an example from a

which U Again David you met my new

sharing example which is a dating play

we talked about it who's one of your

customers or potential customers you

don't have to name if you don't wanted

so what was the competitive advantage

that we were giving them because I know

that when people come online how they

connect is very very

ask

they' able to ge

ge so I I was in the board meeting when

it came to pitch and I was struck by the

guy walking out the room saying

basically look we are going to be able

to offer some services for dating that

will help people find each other much

faster much closer to where they are and

much more like them and that's a

competitive advantage in the dating

world that's going to give you customers

that other people w't tell so in the

only Market that's probably the most

important gain you're going to give

people and I would encourage you to

spend a lot of time trying to understand

why it's a great PA in that regard then

there are some softer things but I put

them up here just so you think about

them reputation Mar be example obviously

we talk about customer service if you if

can improve your customer service and

your engagement with your customers it

could improve your reputation that could

be valuable whatever they are there

should be a list of these things and

when you get to your exercise tonight

you know think about listing these

things first these are all the things

that are the good

news the bad news is there's always

associated with inting these things uh

the first one I'll bet you you never

think of but it turns out to be probably

one of the most expensive ones to start

off but this in the category I wish

somebody C me because you know 30 years

ago when I was starting my first company

and that is the pain of finding

you think about it for a second you're a

completely new company unknown you don't

have a business card that carries IBM or

apple or whatever it is that you have

Facebook you're now trying to find your

first customers they you how about Earth

do they figure that out uh it's a very

painful thing sometimes so they have to

spend a lot of time finding you or you

have to spend a lot of time finding them

that's an expensive thing to do so

finding out um excuse me finding an

approach to reducing that is a big part

of what we're going to talk about in the

go market session here the next thing is

triing you um imagine if what you had to

do was go through weeks and weeks of

evaluating your cell phone before you

bought it I me you're not going to do

that you walk in a store you know turn

it on you click a few buttons and you

figure out does it work or doesn't it

does it feel intuitive or not that's the

consumer World well in the entprise

world it's a lot more complex than that

people ping through things like

performance testing scalability you know

Assurance for things like security Etc

so there's pain effect is all of that if

you can figure out how to practice your

product so that you can literally try it

in you know hopefully minutes but hours

or days but not weeks or months you're

going to pain the now we have another

great example from our case study

tonight at appearance so I don't you or

Sim or maybe hav had you talk you talk

to this um how long did it take us when

we first launched the uh the Enterprise

app and our first prod for customer

and what was the result of that

so the inv Call engineering as the

investor and the guys thinking about the

numbers I'll I'll give you the exact

answer to that our conversion

ratio was half less than actually what

it is now what have we done what have we

changed how long the trial

ESS thank you so I give this team huge

credit because as I Bo we were watching

this conversion RTI show we knew it was

too high we knew it was things and we

set a goal or I say the team set a goal

of being what they called live in five

which is getting a customer live in five

minutes or less and they've actually

achieved it they now call that they

Market it at instant on so you can

instantly go and sign sign on and create

an app store and at the bo me the other

day heard a great story since you know

any Celtic FS

here

no at least one okay good well it turns

out the Celtic for adulted iPad for the

one person that the I

uh and they're using them as as

playbooks to uh you know help people on

the court in real time you know work

with plays and stuff and a CO things

well uh with all the people that were

adopting the get the apps out there

quickly keep them up to date distribute

the new plays on time they rang up a

peran they put up an app store in less

than two hours and they bought and were

done and they distributed their new apps

and their playbooks in two hours that

was a two-hour sale cycle there's no way

that would have happened before it would

have taken us two weeks to get through

the evaluation that's why this stuff

matters so you got to think about those

things the buy pce I just gave you you

know a good enough case study you to

figure this out if it take people a lot

of time to go through an actual purchase

you you've obviously got to think about

that in a more fundamental way in large

Enterprises things that are probably

over you know $5,000 can't go on a

credit card over $50,000 you're pretty

sure it's going to go to a second sign

off over $500,000 I'm pretty sure it's

now in a process over a million bus

you're in procurement you're

and you know so pricing can make play a

big part of this so people always find

ways and again we talk about to go to

market more packaging so that people can

buy easily but you want to reduce the

pain of that implementation I just gave

an example about it it takes a long time

it's going toay you and deployment same

thing so think about all those things

when you're building your game pain

equation but then there's the one last

piece which very people very few people

ever think of this is unique in

startups um not entirely but a PE in the

middle that is unfortunately very

important uh even though it's boring and

that is the de is do

nothing U and unfortunately that's

almost invariably the greatest

competitor for St because if you've got

their attention they're thinking about

well okay it's a startup and that means

I'm probably taking some kind of risk

and so I'm not sure I really want to do

that guess what uh I'll just do nothing

and that happens probably more than you

can possibly imagine the biggest cause

of problems for startups so you got to

think about this now if they've already

got a solution they're also going to be

thinking about switching costs that's

why I said you try and find something

that's undisturbed where there isn't a

solution there's already an alternative

and they're already using something then

they got to take that out that cost

money retraining people changing

business places Etc so uh that's why I

always emphasize you know come up with

something that's unique that hasn't done

before that makes the difference and

then good enough is good enough and

unfortunately thank you to to uh uh the

earlier point that was raised here good

amount go do it

yourself which is okay well we think we

can find a way to do this we'll build

our own outle uh and how many times have

you heard

that what's a good customer example

that was in one of those exomer

fig so when they came to us we were

actually like a we were actually

pre-release that

can we launch this we roll this out and

you know solve that problem

were so turns that they came back and

bought right afterwards but the first

thing they did was build it themselves

and you're going to find out a lot in

technology people were just try to find

some alternative themselves so thanks to

somebody for raising that my favorite

and last point on this uh is something

that again David and he is IDE the

answer which is how could you imagine

doing something highly

disruptive but that is

non-disruptive to actually

adopt so D while you think about the

answer to why are you in that

position

I okay uh it turns out that there are

lots of things you can do that are

disruptive it's very tough to find

something that's highly discontinuous

and uh disruptive but is really easy for

people to change

adult an example in a very technical

world for those of you um who follow the

the big SHP that's happening in you know

in sort of Technology world everything

going cloud and and you probably know

because you know iph you're hearing

Apple use like what turns out cloud is

enabled by something that was a

discontinuous Innovation called

virtualization it made a possible people

to run all sorts of different

capabilities on single machines much

more

and it also made it possible people to

scale those insurance or this in the

audience so verticalization was an exact

example of a very disruptive innovation

it took efficiency on server from being

in the low team to being in the high in

many cases 80 90% people loaded up if

they wanted to even more that so it

sometimes can tupled efficiencies or

more on the server and it made it

possible for people to get compute a

much lower cost and offer it as utility

the way for examp what I do but the

great thing about specialization and the

reason it really took it is because you

didn't have to change anything if you

were running whatever it was some uh HR

application that was you know doing all

your benefits um and you deciding you

wanted to to take advantage of

virtualization all you did was you put

that software in a virtual container and

you ran more and more and more of them

on the same machine five more five more

process didn't change anything in the

software at all

so it was a very disruptive innovation

in in the impact it had but it was

non-disruptive to adult and if you can

find things in your value that work that

way they're going to be much easier for

customers to approach so can you explain

why keep for that

category yeah

so do I have to change anything in my

application and do I have to take my

application down start using

so that really caught my attention when

we were looking at the the way this

Innovation is going to be brought to

Market because nobody wants to take

their application down if you're serving

you know a dating site you've got 40

million users was it 40 million or 4

million 4 million I think four million

users I'm still don't get

to there we go

so four million users you're not going

to suddenly take them down and say sorry

nobody can date for the next hour while

we actually take up thly down put this

new technology not going to happen so

the brilliant thing that that these guys

did was not only do they not have to

change their applications but they could

plug this thing in alongside

automatically started replicating the

data and enabled 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 that okay I want to know

how many people have figured out in the

gain paying ratio what is the right

ratio how much you have to have to

overcome the pain is it you know greater

than one greater than two anybody any

ideas 10 to one yeah it turns out it

really isn't worth bothering to come

into a major Market uh and compete

unless you've got at least 10 to one in

other words an order of magnitude

breakthrough at least and it's trable if

you can say what David says which is you

start at 10 to1 and if he take you up to

two ORD of magnitude performance

Improvement why is that well because

just to put it in a blun expensive

startups are a r small companies are not

easy for people to deal with and there's

a risk that whoever's done bed on you

probably putting a job online to bring

you in unless you can find clever ways

like David has to take the risk out of

it so you can run things in power but

the point is there's always this in

there's always this risk there's always

this pain to find try buy you and so you

need at least an order of magnitude

Improvement uh in your uh gain pain

ratio to to be invisible so I'm going to

give you this as handout you don't need

to write it all down but this is what I

want you to go off to do in in the

workshop is just list out what your idea

is those P of you that stuck up your

hand that's going to be team leaders

come up with your own game pen ratio

just write down what you think the

benefits are it's going to be obviously

very rough and the whole point is to get

you think about it if you're actually in

the real world thing what this really

represents is a great set of questions

to you go ask customers

and I find it amazing how many times

entrepreneurs go out and they do their

market research and they say hey did you

buy

this a great question but it doesn't

address half of these things and by the

way it's really easy for somebody to say

yes but then you say will you pull out

your checkbook and write the check and

they say no why is that probably because

you didn't get this ratio right and

you'd be stopped how many times people

do all this great market research then

they come to Market and there are no

buyers and it's very this ratio isn't

work through so I encourage you to just

do it all the other way around go and

ask all these questions go ask your

customer are we really this an earlier

doctor giving you some competitive

Advantage what is the Breakthrough

you're going to get how much money would

this save you how would you implement

this how much is that going to cost you

who's going to own that all those

questions easy to avoid but actually if

you can answer them up front will really

help you okay so for my case study I'd

like to have um let's have Alan

y the which is the example of this

appearan one of that key customers can

you stand up and just give us an example

of how your value C played out how your

game plan R could play that with one of

your early customers

you inter with the IP answer questions

how old are you how much you get are'

they

don't I

great thank you very much thanks for the

appity of being here they're all going

to be available to help you with the

workshop and the beauty is that it's a

real customer it's a real story we took

their revenue up took their cost down

the net result is a big win-win for them

and measure it in terms of the 2 half

million that was St but probably much

more important we don't get their

numbers but the 40% upli those are kind

of value CS obviously when you can bring

them in really make a difference by the

way if you were pitching me and you

brought this value poet I'd be paying

attention uh it caught the attention of

of our investor in Spen kind of per that

that jumped in on the back of this when

they saw

this okay we're done

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