Below is the ‘Tip of the Week’ from Ep76: No Fun Allowed, Part 2 (Jonathon Triest & Brett DeMarrais)
In my previous life leading breakthrough product innovation, we encouraged crazy ideas. But after a brainstorming session, each imaginative possibility that was worth exploring had to be framed in three parts; and we called this a Concept. The three components of a concept were:
1. PROBLEM: What is the existing problem?
2. BENEFIT: What is the customer benefit of the new solution?
3. REASON TO BELIEVE: What is it about the technology or approach that makes this solution possible? In other words, why should we believe that this product delivers on the benefit in #2?
To illustrate a very simple example of this, let’s use the iPod, which was first released in late 2001.
1. The problem that the iPod was addressing: Music listeners could not listen to their entire library of music on-the-go.
2. The benefit of the new solution: With the iPod, music listeners can now listen to their entire music library anytime, anywhere.
3. The reason to believe: With new mp3 file format technology, previously large music files now require very little storage space. The iPod can store thousands of mp3 files in a form factor no larger than a deck of cards.
Again, the reason to believe answers the question, “How is this possible?” And Apple played no role in developing the mp3 file format, they just leveraged the reduction in file sizes to their benefit. Many investors talk about the problem of timing and how some great businesses were just too early. John Huston mentioned this when he was a guest on the program where he cited the failure of Webvan and the success of Instacart. The problem always existed. The benefit of easy food delivery was a real value. But, the reason to believe was suspect with webvan. Technology and logistics were just not ready for Webvan to succeed.
And, at times, a reason to believe may simply be the people involved in the effort. At the idea stage, maybe a team knows the problem they are addressing but they don’t know how they are going to solve it yet. When Elon Musk said that he was going to build his own rockets for SpaceX, the only reason to believe was that Elon was set on doing it and would put together the right team to make it happen.
I recently had an email discussion with a listener on the three parts of a concept. They had downloaded the episode of “Why I Invested” on Tovala. And they wanted my opinion on a competitor of Tovala that is addressing the same problem. This company is leveraging people’s existing ovens to cook pre-prepared meals. If you recall, Tovala has created their own smart oven to cook their pre-prepared meals. Cleary both Tovala and this competitor are addressing the same problem: An inability to have a fresh, healthy, home-cooked meal w/ no preparation reqiured. And, they are both proposing to deliver the same benefit: a delicous, healthy meal w/ no prep required. But, without having tried the food, I can confidently say that the Reason to Believe is pretty shaky with the competitor. While Tovala has created a smart-oven that utilizes baking, broiling, steaming and convection cooking, this competitor’s solution includes only a standard oven. There is no new technology or innovative approach in their solution that gives the customer a reason to believe.
With every startup I invest in, I write down the problem, the customer benefit and the reason to believe, in my own words. And, for me, each of the three needs to be clear, compelling and significant. Is the problem real? Is the benefit going to delight the customer? And is there a reason why this solution will work, where nothing else has. So today I ask all founders, give your customers and your investors a reason to believe.