IT’S SATURDAY morning, and I’m enjoying a cup of coffee and bagel at Alpha Loft’s Portsmouth location with an energized group of about 15. They are entrepreneurs in our Accelerate NH program, a New Hampshire-focused startup accelerator. After we hear each company’s practice pitch we’ll dig into the topic of value propositions.
The entrepreneurs are starting innovation-based, high-growth companies here in New Hampshire. Accelerate NH provides support and resources to help them drive their companies forward during an intensive three-month period. They’re matched with very highly qualified and experienced mentors who have been through the process of starting and building companies. They also have use of Alpha Loft co-working spaces, as well as access to staff.
We’re helping them launch and move to market fast. At the program’s end they will present their companies at a demo day event to an audience of investors, the New Hampshire entrepreneurship community, and media.
At each class session a speaker brings the topic to life based on their real world experience. Today Doug Henderson of FrostHub is leading the conversation about value propositions, helping our entrepreneurs think about theirs. For any company the value proposition is a succinct description of the way in which the company satisfies its customers’ needs, creating value for the customer and therefore for the company as well. Although it sounds obvious, articulating the proposition simply is often a real challenge.
Typically a startup entrepreneur has an idea for a solution to a problem they believe their prospective customers have. However, the entrepreneur often is not representative of the customer. Instead they’re viewing the problem and solution from their own perspective. While we like to think we can walk in another person’s shoes and understand things from their perspective, we really can’t. Our own biases don’t allow it. Getting a true picture requires considerable time spent directly with customer to be sure our solution/product has value, and is one customers will pay for.
With significant experience managing services companies, Doug saw many organizational, time and operations management problems he believed could be addressed with new software. He and his startup team conceived of a product they felt would meet the market’s needs in solving the management problems. Then he did what Stanford University entrepreneurship educator Steve Blank recommends; he got out of the building and started interviewing customers. Doug told our class what an eye opener this was. Many product features he thought were important weren’t even interesting to customers, and others he had not focused on were. Through interviews the customers helped FrostHub understand what was of value to them, and what they would pay for.
Figuring out a company’s value proposition is like a detective story in which the entrepreneur plays the role of sleuth. She or he needs a very open mind and a high level of curiosity. The process is about seeking input through testing of hypotheses and asking questions. The objective is a complete understanding of the benefits the customer sees in the product, what value the customer places on the product, how significant the problem is, and what other ways the problem can be solved. The investigation provides the entrepreneur with the evidence needed to hone a value proposition; one that customers see enough benefit in to make a purchase.
Among our Accelerate NH startups is Pickup Patrol, a software company focused on helping parents and elementary schools manage the process of kids leaving school at the end of the day.
We’re all familiar with the situation; some kids walk, take the bus, get picked up, go home with friends, and there are constant changes to these schedules every day. This is difficult for parents to communicate and schools to administer, takes time, and results in misdirected and “lost” kids.
Pickup Patrol solves this problem. Parents can use Pickup Patrol on their smartphone to conveniently enter changes to their child’s plans. School administrators have computer software that consolidates all of the change information in a central location, allowing for easy management.
So what is Pickup Patrol’s value proposition? They’re still honing it, but as of this class its, “Pickup Patrol, The better, safer way to get kids home from school. No notes. No phone calls. No chaos.” Succinct, clear, easily understood.
Do you know your company’s value proposition? Maybe its time for you to get out of the building.
Mark Kaplan, CEO of Alpha Loft, has 30 years of executive, financial, venture capital and investment industry experience. Before coming to New Hampshire in March 2013 he was actively engaged in building Maine’s entrepreneurial ecosystem in the roles of board member, adviser and mentor to organizations and entrepreneurs.