How to craft a lean & mean Value Proposition for your Startup

Mark Twain said “I didn’t have time to write a short letter, so I wrote a long one instead.” Nonetheless, every business model needs a clear value proposition – a description of the value or benefit that your product creates for a specific customer. However, crafting that 1-line pitch that makes a customer turn to your company over another might be a challenging task. Here I describe the VAD technique for crafting high-level value propositions for your startup.

Author of Crossing the Chasm, Geoff Moore, suggested a great template for making and baking your elevator test. Yet as I needed an even more high-level pitch, I had a look at the value propositions of promising web startups. Luckily I didn’t have to go far. Guy Kawasaki is a true master of crafting value propositions and mantras, as he prefer over [corporate-ish] mission statements. On his blog I found some killer examples:

• Alltop: Stay on top of all the topics.
• CoTweet: Manage Twitter with a CRM service.
• Garage Technology Ventures: Raise venture capital for your tech company.
• JaJah: Make VOIP calls easily and cheaply.
• Posterous: Create and write blogs via email.
• Slideshare: Share PowerPoint and Keynote slides including audio.
• Tweetmeme: ReTweet good stuff.
• uStream: Stream video live.

I like these. They are short, simple, playful and to-the-point. Guy is not afraid of polarizing people. Its premise is that you will rather take a “sniper approach” than using a shotgun in aiming value propositions at your customers. Generally Guy seems to put a verb or call-to-action first, followed by the application and a differentiator. That is [verb; application; differentiator], or VAD if you like.

Another interesting value proposition is that of Xobni. By highlighting “Drowning in Email?”, Xobni immediately makes you aware of your problem and invokes some kind of thank-god-I’m-not-alone-feeling. Instead of being everything to everyone, Xobni makes it clear that it offers you an Outlook sidebar plug-in. Following, Xobni highlights it main features and user perceived values – “searching your inbox and finding information about your contacts fast and easy”.

Now consider EasyPeasy. Its current value propostions are:

• EasyPeasy: an open source cloud OS for netbooks.
• EasyPeasy: Linux for the rest of us.

When using the VAD technique we came up with the following high-level pitches:

• EasyPeasy: Rediscover your netbook.
• EasyPeasy: Make your netbook a lean, mean surfing machine.
• EasyPeasy: Run any web app inside the operating system

I admit being scared of polarizing main audiences within open source and Linux. Yet, VAD helped us drill down customer segments and perceived user value. From a positioning point of view these value propositions polarize new netbook users, and focus on solving the problem of current netbook users that feel pain with their pre-installed OS.

There sure is more to it. If you would like a more in-depth approach to value propositions and business models, I recommend reading chapter 2 in Business Model Generation by Alexander Osterwalder and Yves Pigneur.

Now, feel free to slaughter or embrace the high-level EasyPeasy pitch, or throw away the shotgun, load your rifle and craft your own VAD-style value proposition.

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