Value Proposition

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Before you do anything, before you spend a dime, triple-check your value proposition. This may be a little bit of review, but it is critical: if you are not solving a valuable problem, nobody will pay for it, and you will not build a valuable company. Viable just means you can build it and deploy it and the software works. It does not mean people will pay for it. Viable does not mean valuable. They are two very distinct things. I see way too many people caught up in “I’ve got a great MVP,” and when you ask what problem it solves, they do not know. A minimum viable product is irrelevant if it does not solve a valuable problem.

Remember when we first heard Greg’s invention: we went “Wow, 3D, that’s huge, it must be enormous.” We all inherently think things must be 3D because we live in a 3D world. Yet 12 years later he was still seeking the market. And Greg made a crucial point about visual products: you could not get meaningful feedback with a paper prototype, because everyone would imagine liking a hologram, but their answers only became meaningful once they actually saw it. So do not fall in love with a breakthrough before you know what problem it solves and that the problem is valuable.

The frameworks for value. Is this a product that addresses a need? Look at the four U’s: is the problem unworkable, unavoidable, urgent, or is the market underserved? Underserved is a big one: where is the marketplace not being well served for a problem you could solve? Then the three D’s for the solution: is it discontinuous, is it defensible, is it disruptive?

BLAC and White (blatant, latent, aspirational, critical). We have a 2x2 for whether a need is blatant, latent, aspirational, or critical. A good example of latent and aspirational is Gucci; it is obviously aspirational, and you see products like that more on the direct-to-consumer side. You can build gigantic multi-billion-dollar companies with something latent and aspirational, so the bottom-left quadrant is not bad at all. But products can also move up over time. Those of you old enough remember when the cell phone came out, it was a status symbol, first in the car with cords, a way to flex on your friends, and the phones were so big you held them with two hands. It did not take long, with the iPhone and mature Android devices, for it to become absolutely blatant and critical: kids get phones at 10, 11, 12 because you do not even know how to pick them up from the bus without one. Blatant and critical for consumers and for business.

Another example: VR / Oculus glasses. Right now you might argue it is still sitting in that lower-left aspirational quadrant, a toy. But it is clearly going to move up and to the right, not just because of the metaverse, but because of industry: checking the skin of an aircraft with VR goggles that detect what the eye cannot, operating factory machinery, and, not a pleasant subject, drones. Every day on TV with what is going on in Ukraine, everyone piloting drones is wearing VR goggles; it is now a common part of warfighting. [Audience, India] We have a defense incubation center called Forge, and weaponizing drones is deeply rooted in AR/VR and camera-based drones. At any point a pilot is flying that drone to neutralize targets, and even a latency lag of a microsecond can result in someone else being shot. It is literally life and death. The broader point: think about where your product sits in this matrix as part of envisioning your value proposition, so you understand whether you are building something valuable, and something that may become even more valuable as you grow into it.

Before and after. The simplest way to qualitatively value your proposition is a before-and-after scenario. If someone did not have a 3D display before and then had it afterward, what did that mean? Did they just get a little bit of joy, or did they relieve some incredibly chronic pain and end up with incredible joy? Greg did end up focusing on a marketplace (medical, removing brain tumors) where that could genuinely pan out.

Gain-pain validation. Understand not just the gain you give the customer but the pain they have to go through to get it. If 3D displays were $100 and incredibly easy to plug into everything, we would all use them. The gaming market effectively did that: they made it easy and cheap enough on a Nintendo to give some value, whether just fun or entertainment. If Greg could have reduced the pain of producing that display down to $100, he probably would have opened up a whole bunch of markets.

Multifaceted value props: pick one. People often have multifaceted value propositions. One company that pitched us sells security and password solutions, on one hand to e-commerce sites and banks that need secure login, and on the other hand the real customer is the consumer who logs into those sites. They have to get both the consumers excited and the merchants or banks enabled. That is tough. What if instead you could just pick one problem and one customer? If you have multiple audiences, pick one, and find one starting value proposition.

Mirage markets and real validation. Selling is an important piece of validation, but how you sell and who you sell to matters. Greg sold to researchers, and that turned out not to be a big market. Lots of small companies find what I call mirage markets, and research labs are the classic one. You do not really have a market until customers are paying for something. Even if you think free is a great strategy, in the end your validation needs to be dollars. And even more important than the fact that they paid: ask why they paid, what problem they decided to spend money on. Until you understand that, you have not done any validation. My favorite validation tool is prepaid customers: if a customer is willing to write you a check to deliver something, they probably have a real pain. Kickstarter is, in effect, a crowdfunded form of the same thing.