2017 Student CohortSession 5: Value Proposition and

Customer Segments

AgendaProduct Market FitValue PropositionCustomer Segments2-Sided and Multi-Sided MarketsMapping Market Types

PRODUCT-MARKET FIT

Tonal Innovation

Tonal Innovation

Tonal Innovation

What makes a good Customer Segment• They are PEOPLE• Specific and well-defined group of people• Very few people who fit the specific

description won’t buy your product• Have willingness and ability to pay• Their performance or pay is judged on a

metric that you can improve

What Matters to Customers

Customers do not care about your technologythey care how the product creates value to them

Customers do not exist to buy your productyou exist for your customers

Keys to a good Value Proposition

• Direct benefit to customer• Concise• Specific and quantitative• Uniquely delivered by your team• In words your customer would actually

say

Tonal Innovation

What is Tonal Innovation’sValue Proposition?

Tonal Innovation

Tonal Innovation

Save a quantifiable, measurable amount of money

3P Quickcure Clay

“Cure-on demand”Wood Filler

for home repair

3P Quickcure Clay

Who should he interview?Who is his customer?

3P Quickcure Clay

PIVOT

3P Quickcure Clay

Who should he interview?What kind of questions

should he ask?

3P Quickcure Clay

Current curing

method

3P Quickcure Clay

What is his Value Proposition?

3P Quickcure Clay

Save a quantifiable,measurable amount

of time

3P Quickcure Clay

The biggest reason startups fail….Building the Wrong Thing -79% Failure

Startups do not fail because they fail to make something.

Startups fail because they make something no one wants to buy.

2-SIDED MARKET

AdvertisersUsersRenters

Property Owners

For every customer segment there is a different value proposition and a different revenue stream. One segment cannot exist without the other.

Multi-Sided Markets

MAPS

WORK FLOWECOSYSTEMVALUE CHAINPETAL

WORK FLOWSHow is the problem solved today?Steps in the process Materials / Data / PeopleDecision Points

ECOSYSYSTEM MAPS• All the players – who affects your

success?

VALUE CHAIN• Raw materials to finished product

Hypothesis: Our technology fits into the solar panel manufacturer segment of the value chain.

Experiment:Talk to module manufacturers.

DISCOVERY

“Glass for modules arrives available as already coated”

INSIGHT

Glass suppliers are our customer. They only care about process.We have to fit into their work flow.

VALUE O F MAPS!

PETAL DIAGRAM• Competitive Landscape• Helps to identify first customer

segments on BMC and first hypothesis of who are customer segments you are targeting.

For launching products by existing companies in existing crowded markets…

Metrics defined by users in the existing market

But…• Most startups are either

resegmenting existing markets or creating new ones

• Competition in the market involves intersection of multiple existing markets.

The startup is at the center of the universe.

Unlike traditional X/Y graph, you can add as many adjacent markets as needed.

MARKET TYPES affect EVERYTHING on the Business Model Canvas

Market Types

THE DREADED CHASM

Market Type Impacts Revenue Forecasts

Premature Spending is the KILLER For Startups

TEAM• Millenium Walls

• Market Type• Value Chain

• Peer2Peer Parking• Market Type• PETAL

• Terminus• Ecosystem

• E-PumpsNParts• Workflow

• Gremillionaires• PETAL

ID MARKET TYPE AND DO ONE MAP• Market Type

• Existing • Resegmented• New

• Map• Workflow• Ecosystem• Value Chain• PETAL

What’s Next?