Further to my post earlier this week about Investor Feedback, I wanted to expand a bit more about the 10x Value Proposition that some investors cite as the ultimate unicorn ingredient and the main reason for their investing.
The prevailing startup and VC mantra is as follows: if you are not 10x better than everyone else, why would clients stop using your competitors and choose you?
I totally agree with the logic, but as always – there are a few small details that left unaddressed.
1) It’s not 10x.
In reality, DropBox, AirBnB, Uber, TrasnferWise, Revolut and others are not 10x better than the competition. They are perhaps 2x-5x better/faster/cheaper/easier. The problem is – everyone says “10x”, but no one has ever tried to measure this “betterness”.
For instance, I use Timeular app to stop me from multitasking, help me concentrate on important tasks and track how much time I spend doing specific projects. Is Timuelar 10x better than Excel? I don’t think so. Timeular is definitely more expensive. But it’s better and more convenient and that’s enough for me.
Is TransferWise/Azimo or Revolut/Monzo 10x faster or cheaper than high street banks? Definitely not. Perhaps, 30% cheaper and 2x faster. But that’s enough for us to use them and ditch our bank for international transfers.
Is Splento 10x cheaper/faster/easier to book than freelancers? For some sessions – perhaps 2-3 times cheaper, for most sessions on average 5 times faster at delivering photos and yes – 10x easier to book, if you have never booked a photographer before. But if you have a friend who has always done all your photoshoots – you just give this friend a call and he’ll come to your event and photograph it. Couldn’t be easier. Just like with people who have their own drivers – they don’t use Uber.
10x is just an easy to use number in investor presentations and for mass media. True – if you are just marginally better, that won’t get you far. But you do have to be at least 2x better.
2) It’s never just one thing.
Just do one thing 10x better than the competition smells to me of the “silver bullet” approach.
There is no silver bullet in marketing, there is no silver bullet in management and there is no silver bullet in product. It’s always a combination of various factors.
I would never use Uber, if their drivers smoked in their cars, even if cars were available instantly and even if they drove me for free.
Nor would I use TransferWise, if they charged me £70 to send a payment, even if they promised to deliver it the same day and I could do it in one click. I would go back to good old HSBC.
For large sporting events and conferences Splento delivers photos the same day. That is 5x faster than the competition, who normally deliver photos within 2-5 days. But if the quality were bad, or galleries wouldn’t open, or price was twice as expensive – no one would use us.
It’s never about just one thing. It’s always a combination.
3) Different Target Audiences need different user propositions.
I am a strong believer that every client sees their own unique user proposition in your product.
The 10x rule is incorrect, because it is about your “product”. It should never be about the product. In business – everything is always about the customer.
If a certain segment of Uber clientele wants a cab delivered faster – so be it. Sing that song to them via traction channels that can reach them in the most efficient way.
For other clients – it’s the predictable cleanliness. Excellent.
Some love the bottled water and well dressed drivers that make them feel like royalty. You got it!
Honestly, the main thing in the first years of Uber that mattered to me the most were the ability to pay by card and get a receipt for accounts (as I only used Uber for business trips).
Yes, the 80/20 rule does work even here and 20% of your features would be the main reason why 80% of your clients choose you, but 100% of your clients will never choose you just because you do 1 feature 10x better (or 2-5x better, as described above).
At Splento, some event organisers come to us because they can get their photos the same day.
Clients who need property photos usually use us because they can get a photographer for today, not some time in the distant future.
Most clients who book us to do their team portraits and headshots – do it because we are 5x cheaper than the competition.
Many B2B customers come because they are tired of freelancers who don’t reply to emails and calls for days on end and they crave professional customer support.
Yes, all these 2x-5x improvements are only possible, because of our robust underlying business model (that is perhaps 100x better than the competition), but it’s not about us. It’s always about the customer. And I believe it’s the combination of all these factors that leads to growth and happy clients, not just one silver bullet.
As always, I may be wrong, as our List of Experiments will show that I’m really good at being wrong on a daily basis, but please do take“10x silver bullet” approach with a pinch of salt and some caveats.