Essential Basic Concepts for Startups I Didn’t Fully Grasp While Reading #1: Value
The following contribution comes from Medium, which defines itself as follows: Medium is a space for human stories and ideas. Here, anyone can share knowledge and wisdom with the world, without needing to build an email list or a following. The internet is noisy and chaotic; Medium is quiet but full of valuable ideas. It’s simple, engaging, collaborative, and helps you find the right readers for what you have to say.
The author is Gadi Evron, former founder and CEO of Cymmetria, chair of global working groups (WEF RISCC), threat hunter/criminal beater, science fiction enthusiast, and dance teacher.
If I had truly grasped the key terminology of entrepreneurship when I started, my life as a founder would have been easier. The problem is that, no matter how hard we try, reading about it doesn’t necessarily translate into understanding.
My goal in this post is to explore one of these terms and how it changed my perspective on it, so that when you think you understand it in the future, you can reread my post and reconsider your conclusions. Notice what you’ve learned since the last time you analyzed it and how it influences your actions.
Then, repeat this process at every stage of your company, from investor pitches, through customer value proposition and sales, to product development.
It’s a constant struggle. The first trick to overcoming it is to be aware of it.
In short: create something people want.
Step 0: Value Proposition
Some of your first pitches will be to investors. While it’s best to minimize risk, when seeking seed funding you won’t be able to back up all your claims.
The advantage of seed funding is that you’re not expected to explain everything; after all, it’s about taking a chance in the market. The goal is to demonstrate something, whether it’s that the technology works, that your team works, or that a market exists.
Therefore, you must choose a value proposition from the many available, based on the one that best fits your objectives and/or presents the least risk.
Uber, for example, could have chosen several value propositions at the beginning, from reducing inequality by providing additional income to anyone to simplifying the process of ordering a taxi.
The important thing is a coherent, compelling story with minimized risk. Your investors aren’t fools; they want to see that you aren’t either.
Let’s move on to the customers.
Step 1: Technical Value: What vs. Why
I remember, when I was much younger, seeing an interview with Wozniak. He mentioned that before, you could show people what a product did, while today you can show them what it does for them.
Value begins by asking yourself what your solution will do for your customer. You may have the best solution in the world or the most technologically advanced. The question you must ask yourself is:
What problem does my technology solve for my customer?
And continue to analyze precisely who that customer is and what they currently use to solve that problem.
Step 2: Technical Value vs. Business Value
While your solution may solve the world’s problems and have incredible technical value, is it a business necessity?
Just because something is a technical necessity doesn’t necessarily mean it’s also a business necessity.
What does the company currently use? Do they consider this a serious enough problem? Has anyone defined a solution to this problem as a requirement? Has a budget been allocated? Has a project been created to address this problem?
If not, are you saving them money or other resources, such as time? How difficult would it be for them to implement? Would they have to dedicate time and effort to it over time?
At my startup, Cymmetria, one of the security value propositions (technical) or deliverables would be:
“Implementing data across all endpoints to redirect attackers’ efforts to environments we control, detecting them faster along with the associated forensic information.”
While faster detection is valuable, it may not be enough. Many solutions try to claim they are faster at something. Another common mistake is highlighting value, but not value that directly benefits the customer:
“Attack the attackers by shifting the economics onto them. Increase their costs exponentially, catch them, and gather the associated forensic information much faster.”
Instead, an example of a business value proposition, or benefit—the why—would be:
“Cyber deception counters attackers once they have already gained access to your environment. It provides visibility into your perimeter and control to detect attackers as they attempt to move laterally.”
Step 3: Qualify Your Customer
Only when you explain the business value can you begin to explore your market. You can also gather feedback on the acceptance of the idea by your potential customers. Being right too soon is a serious mistake in entrepreneurship.
Qualifying a customer isn’t just for the sales process. It’s fundamental when exploring your idea and conducting market research.
You might start hearing objections like, “This is very interesting, but we’re very busy right now.” Or, “We really like it, but we don’t currently have the resources to do it because of other projects.” Or perhaps, “We’d be happy to look into it next year.”
Remember that even if your contacts see the value, their boss might not, and their bonuses are tied to meeting the key performance indicators (KPIs) set by management.
Our entire first year of startup revolved around objections like these.
Step 4: Adapting to the Customer vs. Educating the Market
Constantly review your message. Adapting doesn’t have to mean changing your company’s core business; it can be as simple as adjusting your value proposition to align with your customers’ needs. Product-market fit is undeniable when it exists. Your growth is like wildfire sweeping through a dry field. However, product-market fit is rarely immediate.
That said, the effort of educating the market can take years and even outlast your funding.
This doesn’t mean you should abandon your idea, opt for entrepreneurship without innovation, or avoid ideas that require educating the market. In fact, some of my best friends build startups based solely on ideas so innovative that educating the market and facing the associated challenges is the only way forward.
Don’t be afraid to innovate—that’s what you’re here for. Remember what Ford said about what customers would have asked for if he’d asked them? They would have wanted faster horses.
We’ll talk more about product fit in a future post.
The MVP as a Philosophy of Life
Value isn’t just about messaging. Your entire startup should be part of the value-seeking process. I love exploring new technologies, but I always ask myself: Why? What is the value for the customer?
Then, I evaluate it and decide whether or not I want to take the risk. Remember, entrepreneurship involves taking risks, but only you can determine your risk tolerance.
The most important thing is to test the waters. Developing anything beyond the most basic MVP, for any functionality, makes little sense (in most cases) without customer traction.
Therefore, as the classic advice goes: Get closer to your customers! Create a basic system in a few weeks; if you spend more time on it, you’re probably doing it wrong. Shift your focus to a new battle: finding a place to test it.
Gadi Evron
Former Founder and CEO of Cymmetria Chair of global working groups (WEF RISCC), threat hunter/criminal exterminator, science fiction enthusiast, dance teacher
Startup Founders: A good idea solves a problem, a great idea creates value
The following contribution comes from the Startup Economist portal, which describes Paul O’Brien as: Consultant for early- and mid-stage startups, venture capitalist, and economic development advisor.
Startup Economist has evolved from a professional and creative blog into one of the most subscribed publications on the unique topic of startup ecosystem development.
I have three wonderful children who define who I am. I love Netflix, being a Cub Scout troop leader, coaching robotics, and playing Minecraft with them.
Professionally, I frequently participate as a speaker, debate moderator, and event organizer. My experience is based on my background in radio, on stage, and as an ENTP (Myers-Briggs) and entrepreneur.
My main clients are: organizations that drive innovation, cities and governments that develop ecosystems, founders seeking funding, and investors who back startups. I began my career at Yahoo! For a long time, I have contributed to the launch of several successful startups and have fostered economic development by focusing on venture capital return on investment.
Author: Paul O’Brien
Published in Perspectives / Research, Startups
There is a serious problem in the startup ecosystem: many founders have been misled into thinking in terms of Problem/Solution. The solution to a problem is considered paramount in a startup. This has led to the idea that validation boils down to simply talking to customers or acquiring them for a solution to a problem: prove that people will pay for your solution and you’re done!
This generates a huge amount of waste, as founders develop MVPs prematurely, focus on customers inappropriately, or accept advice from investors simply because they are offering money and need it to launch the product.
Has the startup success rate changed?
Consider this: Has the average success rate of startups changed significantly in the last 25 years of the digital age of entrepreneurship?
For as long as I can remember, it’s been said that around 90% of startups fail. And I won’t try to prove whether this is correct or accurate, because it doesn’t matter; the prevailing opinion hasn’t changed. There are so many books, and yet, no significant change. Entrepreneurship is taught in schools, and the rate remains the same.
I’m referring specifically to the digital age of entrepreneurship because it’s in this era that we have free access to knowledge, massive datasets, and instant connection and communication with virtually everyone. Hopefully, thanks to this, we can expect a much higher success rate for startups because we know what causes failure and what creates value.
A solution to a problem is NOT a competitive and scalable company. A company that is competitive and scalable *creates* value.
Every mentor, investor, and advisor should preach what creates value and how. It’s clear that this drives a startup’s success, and failing to do it well, or consistently, is what continues to confuse founders and results in an exceptionally high failure rate.
And, in fact, you can have ideas that solve problems but *don’t* create value.
This happens constantly with aspiring founders who invest enormous amounts of time and resources trying to launch something, but ultimately give up because their effort isn’t valued enough to succeed. What you need to be aware of and avoid are the people (on your team), the advisors who try to help, and the investors who offer ideas that might solve problems, appearing helpful, but that don’t actually create value. Founders, you MUST question advice and ideas, because good ideas can be fatal; you need brilliant ideas that create value.
How to Question the Good Ideas of Those Trying to Help (and Thinking They Are):
A Team Member:
“That’s a wonderful idea, go for it. Implement it and let’s see what happens.”
The idea itself is just that, and if someone’s ideas were correct, they wouldn’t be offering ideas at a startup, but rather capitalizing on their supposed genius and amassing fortunes. Go for it!
An Advisor with an Opinion:
“Thanks a lot for the suggestion. Show me how.”
At a minimum, someone claiming to know what you should do should have experience in it and be confident it will work. Advisors don’t work for you, so asking them to do it isn’t the most appropriate thing to do, but you can ask them to put their experience and confidence at your service by showing you how to do it so you can do it yourself, instead of having to figure it out on your own.
An investor offering a check:
“Great, thanks. To do that, we wouldn’t need that much capital, so let’s prepare a term sheet for the capital we would need to do what you’re advising.”
In this case, I explicitly added the phrase “trying to convince someone” because many founders consider investors’ advice more credible or valid simply because they are wealthy and successful, and they imply that they will invest if you follow their advice. Certainly, it’s a plausible reason to accept it… but just like the people on your team who give a lot of suggestions but don’t act, if their advice were always correct, they wouldn’t be giving you advice, they would be implementing it. Avoid this temptation by accepting the conditions: “Since you believe we will be more successful if we do that, we will do it and we will be successful.”
You’re not trying to set a trap for the investor! You’re validating the merit of the advice by questioning it, so you don’t waste time on bad advice, good ideas, or misinformation. If the idea is good, it creates value, and value translates into money; Unless… you don’t believe their advice is good. I want to clarify once again what might sound like a criticism of investors, since I mentioned the idea of offering them a check or implying that their advice is bad. I’m not criticizing them; I’m simply advising them to be diligent. The best advice I’ve ever heard about fundraising is: “Ask for advice.” If you want funding, ask for advice; and if you want advice, ask for funding. Obviously, you’re going to ask for and receive advice from investors; don’t let the idea of funding make you believe it’s valid advice. Don’t give up.
A necessary, competitive, sustainable, and valuable solution
What is true in developing modern startups is that you DO have to solve a problem; but you can’t consider that enough, because it must be a necessary, competitive, sustainable, and valuable solution.
What creates value? Peter Drucker pointed out, to paraphrase: “Only two things create value in business: innovation and marketing. Everything else is a cost, and marketing is what differentiates them.”
— from the 1970s and practically abandoned in teaching and methodologies since the arrival of the internet.
Create value, or you’re probably wasting your time.
The Reason You Need to Be in Love to Create a Startup
The following contribution comes from Uri Levine’s website, which defines him as follows: WHO AM I?
I am a passionate serial entrepreneur and change agent. I co-founded Waze, the world’s largest navigation and traffic app for drivers, in 2007. The app, currently used by more than 750 million drivers worldwide, was acquired by Google in June 2013 for $1.1 billion. Another achievement I’m proud of is Moovit, the «Waze of public transportation,» where I was the first board member and investor. Moovit, used by more than 750 million people worldwide, was acquired by Intel for $1 billion in 2020.
Since acquiring Waze, I have been actively pursuing my dream of creating meaningful value for a broad audience through the startups I have founded. My vision focuses on transforming inefficient markets and improving deficient services, addressing major problems, saving consumers time and money, and empowering them.
Author: Uri Levine.
Throughout 2023, I participated as a speaker at several events, some related to the launch campaign for my book, «Fall in Love with the Problem, Not the Solution: A Guide for Entrepreneurs,» others during fundraising events, and, above all, in the course of my professional activities and talks at various events.
The most frequently asked question was why my book is titled «Fall in Love with the Problem, Not the Solution.» Those who have seen me speak at events know that I almost always wear a black t-shirt with that very
