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Value Propositions

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One of the biggest terms in entrepreneurship is also one of the scariest: value proposition. Most people think they understand what it is, but often can’t quite nail down what their value proposition actually is! Well, don’t worry: Startup Secrets is here to share another easy framework that will help you build your value proposition.

Lots of entrepreneurs forget that your value proposition is all about what you do, uniquely well, that’s solving a problem. So many people get so excited about building something, and are so confident in their MVP, that they forget to figure out what problem they’re solving, and who they’re solving that problem for!

The first thing to keep in mind is that your value proposition must be framed from the customer’s perspective. The worst thing you can do to your business is building your product without validating whether it actually meets any needs, or solves any problems. Don’t tell yourself: if you build it, they will come. Instead, think about it the other way around: if they come, you will build it.

The Value Proposition Framework

So, how do you define your value proposition? At Startup Secrets, we encourage you to use this simple framework from Geoffrey Moore’s Crossing the Chasm:

Your Product is…

  • For... (who are your target customers?)
  • Who are dissatisfied with…(what current solutions or alternatives are there?)
  • The product is…(describe your product or service)
  • Providing… (what’s your key problem-solving capability?)
  • Unlike…(how do those current solutions or alternatives solve this problem?)
Startup Secret/Focus

Here, we’re going to give you one of our favorite Startup Secrets again: focus! Some founders, after reading through this framework, think: well, I have multiple value propositions! There are companies that are B2B2C, for example, that have value propositions for businesses purchasing their product, and for the customers that use it. And that may be OK, as long as each value proposition is compelling to each of those potential customers, and as long as you don’t forget to focus on one value prop before the next. Marketplaces (think, eBay) have two value propositions, one for sellers and one for buyers. But chasing both at the same time, which is often required as the marketplace is built up, is extraordinarily difficult because of the “chicken or egg” problem: which do you get first, buyers or sellers?

Value Proposition - 4

The key to your value proposition is to first think about a few questions:

  • What problem are you solving?
  • How are you solving that problem uniquely well?
  • Who are you solving that problem for?

Once you can answer these questions, you should be well on your way to being able to fill out this framework for your own value proposition.

Steps to Creating your Value Proposition: Define, Evaluate, and Build

Value Proposition - 3

When you’re building your value proposition, you should work through some steps to determine the efficacy of your value proposition statement. First, you’ll define your problem and solution, then evaluate its use, and finally build your value proposition.

Define

Value Proposition - 1

Often, entrepreneurs start their companies in one of two ways: In one way, you come across a problem and have some idea of how to fix it. In another way, you just have an idea. You’ll find yourself thinking, wow, wouldn’t it be great if there were [this thing]? But having a bunch of free-floating ideas, even if they’re focused around a single problem, especially if you’re interested in being an entrepreneur and aren’t sure how to go about it, isn’t especially helpful! You’ll need to take all those ideas and narrow them down until you find something that actually works.

Most valuable ideas solve a problem, so your next step should be defining a problem using our 4U framework. If you can find a problem that’s urgent, underserved, unworkable, or unavoidable, you’ll be on the right path to creating a valuable solution. Think to yourself: which one of those floating ideas applies to the problem I found? Filter your ideas until you’ve really focused in on a problem that has a pressing need.

Value Proposition - 5

At the point at which you’ve defined a problem to solve, and you have ideas on how to solve the problem, you’ll have to narrow down all those ideas to one, unique solution. And, don’t just think in terms of technology. How can your solution be a breakthrough in terms of segmentation, distribution, or business model? Also remember that you are part of the uniqueness of your product. Focus in on your CORE Value to see where your ideas can thrive. You can also check to see if your solution fits into our BLAC and white framework, which will help you determine how to think about your product.

Here are some questions to ask yourself when thinking about your problem and solution:

  • What problem are you solving?
  • Who are you solving that problem for?
  • How do you address the pain or need?
  • What’s unique and defensible about your product? Why is it a breakthrough?
  • How is it compelling?

At this point, you’ve found the intersection between your ideas, your problem, and your solution. Great step! But you’ll still need to decide whether or not this idea is worth pursuing.

Evaluate

Once you’ve settled on a problem and solution, you need to evaluate whether or not this problem is real, and if the solution you’ve come up with is a solution in the eyes of your potential customers. If you aren’t solving a valuable problem, you won’t build value! Evaluation is important because viable is not the same as valuable.

There are two forms of evaluation here: qualitative and quantitative. Qualitative evaluation is easy to put on paper but is often too amorphous to prove. If you’re bringing in investors, you’ll want to be able to prove the use of your product. This is why we recommend a quantitative evaluation.

We think of quantitative evaluation in terms of a before-and-after statement. This before-and-after statement should be as simple as possible: what was the acute pain that a potential customer was feeling before your product? What is the absolute joy they’re feeling now that they have your product?

Value Proposition - 2

A great example of this is the idea of vitamins versus penicillin. Let’s say you have pneumonia, and all the doctor can give you is a vitamin. Are you still going to be in pain? Absolutely! It isn’t a robust enough solution for pneumonia. Then, Alexander Fleming comes along and invents penicillin, and suddenly there’s a cure for your pneumonia. Do you feel absolute joy after being cured? Yes! Now that’s a real solution.

This is how simple your before-and-after statement should be. You should be able to get people to actually say, wow! This is so much better. I couldn’t live with that pain anymore. The more simple your before-and-after statement is, the easier it is to convey to potential customers, employees, and investors. Check out some examples below to understand how you can write your before-and-after statement.

Value Proposition - 8 Value Proposition - 6 Value Proposition - 7

Always remember that your solution can only be validated by your customers! The best validation is money. If a customer is willing to pay for your product, you might be on to something. Try to evaluate the use of your idea by getting pre-paid customers before you build your product! And don’t forget to talk to your customers. Your potential customers are going to be the best source of information and feedback on your ideas and products.

Build

Now, you’re ready to build your value proposition! Ground your value proposition in the feedback you got from evaluating your product. Always be sure to focus and narrow your ideas as much as possible. Refer back to the questions and framework above to start writing down your initial value proposition.

Once you’ve written your value proposition, don’t just forget about it! Check, re-check, and triple check your value proposition as you move down the path of starting your company. As you iterate and pivot, your value proposition may change, and you want to be sure to stay on top of the value proposition statement as your roadmap deviates away from your original ideas.


Your value proposition is an essential piece of getting all of your stakeholders on the same page. Your customers, employees, and investors should all be able to clearly understand what value you’re bringing to the market. As with your before-and-after statement, simple is best! Be sure to communicate clearly and concisely why your ideas and solutions are valuable.

Value propositions aren’t always easy to navigate. Fortunately, we have a series of other lessons to help you with all of these factors:

  • Not sure who your target segment is? Check out Adding to Lean Startup Thinking for more on how to identify your key customers.
  • Having trouble understanding your competitors or alternatives? Seet our lesson on Competition.
  • Still figuring out what you want your product to be? Try reading through Ideation, Creation and Co-Creation and BLAC and White for clues on building your product.
  • Need help understanding your key problem-solving capabilities? Head over to the CORE Value lesson to help clarify your product goals.
  • How are you different from your competitors? Learn more in our lesson on Unique Differentiation.

Still having difficulties? Ask questions of other entrepreneurs, mentors and investors in our forums.


For more on Value Propositions, check out our workshops on the Roadmap to Success (at times 3:40, 21:15, and 47:25), Building a Compelling Value Proposition, Turning Products into Companies, Go-to-Market Strategies, and Getting Behind the Perfect Investor Pitch.

Keep track of your progress in Startup Secrets!

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