Startups, we need to talk about your value proposition
Startups, startups everywhere.
Spend a few minutes scrolling on Instagram and you’ll see a strong contingent of your followers promoting their side hustle, startup or other vague entrepreneurial venture. And that’s amazing. Thirty years ago if you called yourself an “entrepreneur” you were probably characterized as a sketchy businessperson or someone who couldn’t hold down a “steady” job.
But, today? If you don’t know someone who’s starting a business, who’s an early employee in a startup or using the word “hustle” in their social feed, something’s awry.
And that’s because over the years it’s become easier than ever to test and launch a project... so people have. The barrier to entry is lower so the uptake rate is higher and the risk is lower. Gone are the days of needing to spend $100,000 to even try to make something work. Today, a weekend, a computer and $200 will do.
The bottom line is that startups and entrepreneurship has been legitimized, and with that comes venture capital. Funding. The talent you need to make your innovation a reality.
So how do you...get that funding? Aside from endless outreach, Linkedin messages, calling in favors and networking events, you need a solid story to tell prospective clients and investors. You need a pitch deck. But if they’re so important, why do so many pitch decks...well...suck?
Often, it’s not the pitch deck that sucks. It’s the company’s weak value proposition that sets up that pitch deck.
So, how do you craft a killer proposition that can have your potential investors writing checks instead of scratching heads?
Before we ponder that question, let’s back up.
What’s a value proposition and why does it matter so much?
In short, a value proposition is:
A simple, clear statement that states why your customer should buy your product or service. The value proposition seeks to succinctly describe how your offering delivers value to your customers, and what specifically makes your product unique.
Your value proposition should be your company’s North Star. It should be your “gut check” when you’re contemplating an initiative. It should help guide all of your company’s activity.
How do you craft it?
While there are a few methods you can use to develop your value proposition, we prefer the simplicity of the Steve Blank formula. Blank is a former Google employee (It’s a tiny startup. Heard of it?) and he now runs the Lean Startup Circle. He created this formula after he noticed companies were highlighting product/service features in their value propositions rather than the benefit to the customer. His formula puts customer benefits front and center, and distills everything into one sentence:
Easy enough, right?
Not so fast. Your value proposition, when articulated for public consumption, is your company’s first impression of your offering. Your value proposition forces you to succinctly describe what you do, to explain it in a way that your Grandma could understand. And it differentiates you from your competitors. It describes the reason for your company’s existence. All in a few lines.
Phew. Sorry for making it sound so daunting, but that’s because we think it’s important for people to nail down. After all, if you can’t clearly articulate what you do, how do you expect others to understand it and buy in? And more importantly, what’s driving your business strategy without it? How do you market to your customers without it?
But don’t worry; after both writing and reading a lot of these, we’ve found that most successful value propositions have a few similar characteristics:
Who’s doing it well?
A company whose value proposition we love is Slack.
If you don’t know what Slack is, it’s an easy-to-use collaboration tool that allows you to work on projects together openly, communicate with team members, and integrate with existing enterprise tools seamlessly. Every feature Slack rolls out is driven by their value proposition:
Slack makes users’ working lives simpler, more pleasant, and more productive by tearing down communication and system silos.
And if you’ve used Slack, you know their value proposition is reflected in their platform. They make corporate collaboration and communication...fun. How many of their competitors can claim that?
What should you avoid?
Now that we know the good, it’s important to know the other side of the coin— why some value propositions fall short. What we’ve found is that:
Now what?
You know the good and the bad; now it’s time to get writing! As we mentioned, we recommend following the Steve Blank method to start. And once you’ve drafted it, it’s time to put it through its paces:
Test with a few people in your target audience.
While friends and family will give you lots of praise no matter what your value prop states, you’re looking for honest feedback. We recommend practicing your value proposition in virtual networking platforms like Lunchclub. You get to pitch your business idea to a complete stranger with little to no downside, and you have the opportunity to collect honest feedback. Do that a few times and make tweaks as needed.
Check your length.
Value propositions are not the same as mission statements. When crafting your value proposition, evaluate whether it’s short enough to boil into a tweet. The longer it gets, the more muddled your message becomes. Would a kid understand it?
Does it reflect your company roadmap? Does it solve a customer problem?
Did you write a killer value proposition...that you’re not equipped to deliver on? Writing your statement is only part of the equation. If it doesn’t reflect your company’s activity or vision for the business, you’re setting yourself up for failure by violating customer expectations and losing them as customers once that happens
And as always, we’re here to help. In fact, if you want a second set of eyes on your value prop, just shoot us an email and we’ll give you some feedback, for free!