Solution
With the investors you’re pitching feeling the pain, you can present your solution and wow them with the technology and insights that drive your approach to meet your customers’ real and pressing needs.
Use this framework to 
EVALUATE the Solution you’ve come up with and ensure you’re articulating why it’s a 
3D breakthrough, that they can’t afford to ignore!
However you describe your value proposition , ensure your audience really “gets it” before proceeding. Check in with them and ask them if they do. Be careful not to make assumptions that may come out of your familiarity with the opportunity. Instead, be explicit about what could simply not be done without the solution you are proposing and why that is so compelling.
- What is unique about your approach?
- Why are you uniquely qualified to solve this problem?
- How are you solving it?
🎙 Hear how Michael taught it the lecture, cleaned & woven in
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With that in mind, the next thing to do is start to frame your value proposition. We have a whole section on this; it’s one of the key workshops. But to give you a sense of what we mean by a value proposition, at the base of it is your solution: how do you address the pain and the need? What is your product or service?
Here it’s not about pitching us immediately the ten features. The things we’re looking for are:
- What’s unique about it? How are you describing this in a way that makes it obvious this hasn’t been done before?
- What’s defensible about it? Is there something here that can’t be replicated easily, because of the way you’ve built a process, or the way you’ve patented this approach?
How do you get to a breakthrough, and how do you know it’s a breakthrough? A breakthrough can be measured, believe it or not. Usually the word “break” being in “breakthrough” gives you a clue: you’ve probably broken some approach that’s been there before and come up with a completely new way of doing something. If you’ve got something that is an obvious breakthrough, it will be compelling. What we’re looking for when we hear this is to understand what you’ve done that would cause a customer to say, “I’m going to throw the old approach out, take a risk on a startup, and do this.” If you think about most of the great companies that have been started, they’ve almost invariably broken a traditional approach and created something compelling enough.
One example I often use is VMware. Not only a very successful company, but I think they’re disrupting the whole stack, from the bare metal of the machine all the way up to the applications that people run. And yet they did it with something completely different to traditional approaches. They came up with a way of running many different workloads in virtual machines on a single machine to get much greater utilization out of it. That was a breakthrough in thinking, a fundamentally different way of thinking about things. The problem there was obvious: people had many resources not being fully utilized. The solution was not obvious: instead of just trying to run more programs side by side, put them in containers effectively alongside each other and find a way to manage those containers. The genius there is very compelling when you think about the economics: suddenly going from utilization typically in the teens on machines to 80 or 90% utilization. So if you can talk about your approach with those kinds of compelling attributes, then we will be paying attention.
Check in with your audience: what was the before, and what’s the after? One of the things I love to do is test the audience. Do they get it? Do they get that what you just said is compelling? There’s an easy way to do this: what was the before, and what’s the after?
On the wall, this is kind of obvious. So much of the wall is walked upon so often, and it’s so old, that it’s constantly being rebuilt. It’s the classic problem: you’ll never have finished it. If you look here, the before and after was: here are the old bricks, and here are the new bricks. By the way, “new” is in many instances hundreds of years old. What’s fun is that as I take you through the walk, you’ll see the wall has literally dynasties’ worth of different materials all the way along it.
Your before and after should be as simple as what I said with VMware: before, server utilization was in the teens percentage-wise, 15, 16, 17%; after, it was 85, 90%, or whatever you wanted to run it at. And the impact was you could run dozens of applications on the same set of resources where you might only have been able to run one. It’s very obvious what the before and after is, and what the benefits are: you can save money, make it much easier to manage, and much more. So you should have a simple before and after. The more simple it is, the more obvious it will be.
Startup Secret: Vitamin versus painkiller. One of the best ways to characterize this: how painful the subject is before should cause people to think, “Oh my god, this is such an acute pain, I’ve got such a serious problem here that I can’t live with it any longer.” That’s a problem you wouldn’t take a vitamin for; you’d take an antibiotic or penicillin. The contrast we’re looking for is that you’re addressing a problem where there’s such acute pain that a vitamin is not going to solve it; you need penicillin, something really significantly powerful. And the after is that you’re an absolute joy: you’ve gone from being incredibly sick to being incredibly well and able to tackle your life.
In medicine this is an easy example to use, but how do you think about it in a business context? I’d say the following. If you could live with it before, then it’s not acute. If you really couldn’t live with it, things kept breaking, then it’s acute. So we’re looking for problems where people are running into challenges every day as a result. In some of my companies, the starting point of the problem is maybe painful but not really mission-critical, in the sense that the business process can still carry on. We’re looking for the ones where it’s genuinely acute.