Transcript: Value Props — Create a Product People Will Actually Buy

Speaker: Michael Skok Format: Live workshop with Harvard i-lab student startups

MICHAEL SKOK: Value props is one of the most important things that we could possibly spend time on because the number-one reason that companies fail is because they’re not solving a valuable enough problem. And therefore, they don’t create the value that’s worth investing in, and therefore, they fail in their basic form of meeting a need.

So what we intend to do today is to both help you understand how to define the problem you’re addressing or the opportunity you see, and then actually evaluate it, and then finally create it.

And this is one of the few workshops where I’ll tell you that we do have an answer. Usually you hear me say, there are no answers. And I’m going to ask a whole bunch of questions of you. The only answer I’m giving you, though, is a framework, and it’s a framework for where we’re going to go.

So as I said, first of all, we’re going to define, then we’re going to evaluate, then we’re going to build.

One of the things I want to tell you right off the bat is that I want to get rid of the idea of ideas. It’s a terrible thing. But most people come to me, and they say, I’ve got an incredible idea for X, Y, and Z. Well, ideas are two a penny. Sorry, I should say two a cent. But what they really are is free floating. They don’t actually have meaning until you can address some kind of a problem or opportunity with them.

So I said we’d give you an answer. This is the end of the session. We want you to be able to actually build this framework and say for who that is dissatisfied with what due to some unmet need or problem. You offer a product that solves that, and it provides some key benefits that are compelling enough that people actually want to engage with you.

DEFINE: For Who?

Connect-Ed example (Gulnaz): Children from marginalized communities in rural Kazakhstan who don’t have basic digital literacy skills and don’t have equipment.

Key lesson: If you think your customer is everybody, you’re going to fail by default. Even the largest companies in the world get very crisp about who they serve.

User vs. Customer: When your user is different from your customer, you actually have to satisfy two different value propositions. But start with the user — if the user isn’t getting value, nobody’s going to pay for it.

Minimum Viable Segment (MVS): Find one path where you get the same needs for the same users that allows you to sell the same product over and over without having to change the product. A good dance partner to your minimum viable product.

Secret: Evaluate through the eyes of the customer. Ask the user. If the user can identify with the product you’re selling, you’re on the right track. Don’t pitch them anything. Ask them everything.

DEFINE: What Problem?

“A problem well stated is half-solved.”

The Four Us Framework

Unworkable: Problems so severe that somebody could get fired for them. Example: When the iPhone first launched, people couldn’t get them activated, iCloud services weren’t working. Steve Jobs was on a tirade. The company that solved provisioning for carriers like AT&T made tens of millions just fixing that workflow. Social problems count too — Connect-Ed addresses educational inequality in Kazakhstan, which causes social unrest.

Unavoidable: Taxes and death — two things everyone faces. Education is pretty much unavoidable. COVID was unavoidable and spawned entire industries (masks, testing, supply chains). These unavoidable realities create business opportunities.

Urgent: All relative. For people going to space, space health is urgent. For the rest of us, not so much. You’re always competing with something or somebody and their time. Ask customers: what’s your number one priority right now? If you can’t address that, expect to get delayed and deprioritized.

Market shifts create urgency — mobile phones created urgency for banks. AI is creating urgency for everyone now.

Underserved: Taste of Kenya example — Kenyan coffee consumers can’t afford Kenyan products, so they buy instant coffee from Brazil. Both underserved (no supply) and unworkable (can’t afford it).

Selene Health example (menopausal management): Unworkable — symptoms decrease functionality, women cannot work. Unavoidable — menopause happens. Urgent — when symptoms hit, it’s immediate. Underserved — only 2% of research funding devoted to this population.

B2C Framework: Needs

Facebook addresses the need for connection. The number-one finding of Harvard’s longest happiness study (since 1938): when people have social connection, they are happier. That’s what social networks address. WhatsApp took off because it was too expensive to call home from foreign nations.

Latent vs. Blatant Needs

Products may start as latent and aspirational (nice to have) but need to become blatant and critical (must have). iPad example: started as “just a big iPhone,” became critical for pilots (navigation), medicine (operating rooms), and daily productivity. Depends on the application and the user.

Platform thinking: Steve Jobs built a platform that let anyone build the application they needed. Hundreds, then millions of applications followed. Pebble watch failed where Apple Watch succeeded — partly because of the developer platform and ecosystem.

DEFINE: Your Breakthrough (The 3Ds)

Stop saying “faster, better, cheaper.” Anybody with more resources can beat you on that. Instead:

Disruptive: Sometimes technology, often a business model. Airbnb didn’t invent anything — they created a means to connect people and share unused resources. Multi-touch changed interfaces across medicine, gaming, and everything else.

Discontinuous: Something you couldn’t do before. Amazon started as a disruption (selection, then fast delivery + low prices), then created AWS — cloud computing. You couldn’t do mobile apps, remote work during COVID, or modern infrastructure without the cloud. That’s discontinuous innovation.

Defensible: IP and patents. Switching costs — once TerraFlow is embedded in how pharma companies interpret data, they won’t take it out. Network effects — a better social network with nobody on it is worthless. Data moats — Vivian’s marketing data product gets better with more users.

Taste of Kenya’s defensibility: 10-year contracts with farmers. Sharon’s bike seat: IP on the technology, data from in-use measurements, long-term contracts with bike share companies.

EVALUATE: Before and After

What was the situation before your product? What is it after?

Selene Health: Before — acute pain, dysfunction, out of work. After — higher productivity, quality of life restored.

Taste of Kenya: Before — farmers cutting down coffee trees, consumers drinking Brazilian instant. After — local coffee industry preserved, consumers drinking Kenyan coffee.

The more you can define it as penicillin (must-have) rather than a vitamin (nice-to-have), the better.

EVALUATE: Gain/Pain Ratio

Measure the gain you deliver versus the pain of adoption.

Venmo example — Gain: no more checks, instant payments, convenience. Pain: yet another app, connecting to bank, security concerns, network didn’t exist at first, cold start problem.

Ask customers: “What are all the reasons you would NOT buy my product?” Keep asking until you get every pain point — cost, training, supply chain disruption, risk of relying on a startup.

What’s the right ratio? For B2B pharma, maybe 10:1. For a consumer getting 30-90% cheaper airfares, maybe less. The greatest reason startups fail is that they’re not solving a valuable enough problem where the gain/pain ratio is big enough.

Venmo overcame pain by: adding security measures, making sign-ups easy, QR codes for payment, building network effects.

On gain side: How much money do you make people? How much time do you save them? On pain side: Finding you, trying you, buying you, adopting you, training, ownership costs. In the middle: Risk and inertia.

BUILD: The Value Prop Statement

“For [who] that is dissatisfied with [what] due to [unmet need/problem], [your product] offers [solution] that provides [key benefits] that are compelling enough that people actually want to engage with you.”

Built from all the frameworks:

Define WHO — minimum viable segment
Check needs are blatant and critical (not just latent and aspirational)
Define WHAT’s urgent, underserved, unworkable, unavoidable (Four Us)
Show WHY it’s disruptive, discontinuous, defensible (3Ds) — not just faster/better/cheaper
Prove gain/pain ratio is compelling enough to overcome inertia

Founder-Market Fit

If you don’t uniquely understand the problem you’re addressing, why are you doing it? What can your solution deliver uniquely well based on what you know? Combine that with a disruptive business model, and it becomes sustainable.

Have fun defining it. Have fun evaluating it. Make sure it’s built around you.