Harvard i-lab | Startup Secrets: Value Proposition

Category: N/A

Transcript

00:00

[Music] okay so what's fun about this particular session is that there's absolutely no

00:16

way I'm going to be able to get a perfect value proposition defined uh for any company uh and the the reason that it's important to spend some time on it despite giving you that upfront warning is that no most of the time people actually don't spend enough time on the value proposition early and they tend to

00:33

take a lot of it for granted they just assume that they've got a great idea that that's going to be the basis for a great business but it turns out that even before you have the great idea there's a whole bunch of thinking that you can do that will help you set yourself up for Success so that's what this session is about it's about where

00:48

do you start and how do you get from what might be a potentially explosive uh idea that you've got or business potential and put it down in a value proposition that will get you going towards building a business so without that um background it would be hard to

01:04

introduce my guest but we have a wonderful story to tell tonight and that is of a company that's become the fastest growing storage software company ever uh so you're going to hear that story tonight but you're also going to hear the story that behind the scenes was going on which was that when this

01:20

first was explained to us it was incredibly hard for my partners to understand I happen to have been working with the entrepreneur uh actually both of the founders during the early stages of so it was sort of being filtered into me day by day but the story was actually quite hard to tell in the early days and

01:37

the value proposition wasn't necessarily brain dead obvious yet as you've just heard it's become an incredibly successful company so we're going to try to reveal to you with the real case study here um how that happened and how it's come to play and I this point would

01:52

like to welcome Mike TR Mike if you'd like to just stand up introduce yourself um who's going to be here to start off with so Mike has asked CMO uh at uh at Activia and he's going to be joined later on by Ash ashitosh who's the founder who in true style of a good

02:07

founder is on closing calls because they moved the quarter by a month so it turns out that he's in a very busy set of negotiations the but any we joining us a little bit later on good let's be clear he's a marketing guy because he's getting his handle up

02:23

there great good to have you here Mike okay let's start with the agenda for tonight so there are three key part to this the definition of your value proposition how you evaluate it and then we're going to get to what you want to build now each of these has their own

02:38

particular reason for being so the definition is the place where you could get hung up but most people miss the second step and that's evaluating it and I want you to take away tonight at least a sense of how you can self- evaluate before you even get out into you know

02:54

testing us with customers and validating in the marketplace which of course is critical and then obviously I think what you'll do is be able to build a value proposition that for the purposes of getting your business started should give you the kind of velocity that uh we're looking to get you some unfair competitive Advantage from now in order

03:10

to get you thinking about this in the right way I'm going to tell you where we want to end up so that might sound like okay we're starting at the end but I want you to know where we're headed so where we're headed is as follows we want to be able to get to a statement that looks something like this for the Target

03:25

customers that you're going after you should be able to spell out what they are satisfied with and what the current alternatives are and give a very a specific description of what the product or service is that you're introducing and why it's new and different and then provide the key statement about what

03:43

problem it solves and then at the end make it clear why it's unlike other Alternatives and approaches so this is where we're going to head to and literally even though it's only on one page here and it's one slide it is one of the most fundamental building blocks

03:58

of starting your business and we're going to take tonight the time to to pull this apart and make sure that each part of it becomes obvious to you so how much you start well first of all the typical thing that we see entrepreneurs do is to start with an idea and the

04:13

problem with ideas is they're free floating they don't have a concept of you know what particular space are they addressing or they don't necessarily have a target audience and if you've just got an idea for example to uh introduce a new product or service and you don't know who you're targeting at

04:30

it becomes very difficult for people to glom onto it and figure out you know what you're going to do to develop it so what we try to do in this session is get you to think about things a little differently and there are really two models for this and I'm going to use actifio right away to jump in you can

04:45

think about a technology for example or a breakthrough and you could try to bring it to a problem or you can think about a problem and how to go build the technology or solution for it so why don't you jump in Mike and tell us how did actifio approach this and and without telling the entire story give us

05:02

a sense of what was difficult for you about this I think what makes Ash unique is that he is he is he's really someone who developed intimate familiarity with a business problem that was the way Enterprises store and manage their data and um Ash built a company a while ago

05:18

called app IQ he started off as an engineer actually he built like all the way down to the metal built software and applications uh that were behind uh some very important storage products and then left to start a company called app IQ and eventually sold that to HP and

05:34

became the head of the storage division at at HP um which used to be a very important company that was a joke um and uh and so what's interesting about Ash is is that he he really

05:50

developed a very intimate familiarity with a business problem that being how Enterprises store and manage their data and he's really built a career kind of applying success of generations of Technology against that problem and that is that is I would say it's a sweeping

06:05

generalization I'd be curious to get your your thoughts on this Mich but but the that is a more more typical on the west coast than I think here yeah here very often you have you know um some you know smart kid you know here or across the river and they have a great idea and they're going to go find a problem to

06:21

solve and uh that's sort of an archetypal you know entrepreneur mode here um on the west coast it's more you know somebody did their time at PayPal or whatever and they have become intimately familiar with the customer business problem and they're going to looking back from that apply some new

06:36

generation of Technology against it and um um I think it's it's that is where we started and and I frankly I think that's a great place to start um many of you have started already um but uh anyway the actifio story really starts with that intimate familiarity with a scaled

06:54

Enterprise problem related to to data management and um and maybe the ability to apply some new technology in solving that problem great so thank you Mike now who's got an idea in the room what's your idea yeah okay so do

07:11

you want me to give you my pitch no just give me your idea it's a healthc care navigation and Healthcare advocacy consultancy okay Healthcare navigation Healthcare advocation consultancy yes okay so

07:28

what's interesting about that idea is there lots of different directions you could take it I'm already hearing you know many different ways so let's think about what the challenge is with this how do we go about taking that idea and turning into something that everybody can relate to immediately does anybody

07:43

have a a a basis for a health care problem that they're nego they're navigating go ahead I have um a son with autism and trying to navigate the process of getting a diagnosis for him that included all of his his challenges

08:00

was a nightmare I could have used a healthcare navigator for that awesome okay so you two going to meet at the break she's my ideal part okay so what's great about this is real time you can hear the difference between having an idea and having a problem uh and a

08:15

really significant problem you know a m your family has autism and you're trying to find the right health care that's a big deal which would you rather start with would you rather start with a story of somebody who's got an autistic patient or would you rather start with this generalized idea pretty obvious the

08:33

story is much easier when you can start with a problem and take that problem and say because I have this need and it's really significant I need to find somebody who can navigate the healthcare system so as ideal at the two of you had that so this is why in a nutshell I

08:48

encourage you to start with the problem and very specifically focus in on that we know that people are spending a lot of money storing data in the Enterprise everybody knows that that need is growing and uh you know literally all we could really tell from what Ash's

09:04

initial thinking was was that that was something that was being done in an ineffective inefficient Way by a lot of different players and Ash had an idea and that's the only way I could characterize it how he would harmonize all of that in other words he would unify data and create a service that

09:20

would somehow make it much more efficient it was literally that basic I'm not kidding uh and there's a you know a lot to what Mike said which is that if you're Ash and you've got to track record and you've been CTO of HP and you've done fiq you probably have a lot more credibility but you in the audience in many instances will be

09:36

firsttime entrepreneurs because I know a number of you uh and so you won't have that credibility so you won't get that Grace if you will you're going to have to figure out how you're going to Define this problem a lot better so hopefully if I've done nothing else at this point I've convinced you that an idea is great

09:52

but we really want you to get to what I would call an absolutely burning need something that is so painful that somebody is saying without the solution to this problem it's a matter of life or death which obviously if you've got you know something like we've already had

10:09

the very personal case study of you know a member of your family who got autism and you want to actually go and find care for it that that's an example of something that's a really burning need but there can be many other examples it could be as basic as for example in the storage world we literally can't restore

10:25

our data from the various different places we're backing up fast than when we have disasters and so that's causing us to lose customers it's causing us for example to be unable to respond to our business needs but whatever it is and whatever scenario it is whether it's B2B or it's you know it's it's Healthcare or

10:41

it's consumer the problem is the thing we want to get uh out early so what's the way to bring your problem out I have four 's that I want you to be able to remember after tonight unworkable unavoidable urgent and undeserved really

10:56

great problems worth solving are usually for you so um those of you who know me know that I like acronyms because I was a horrible student myself and the way that I learned anything was by putting acronyms together so for you is all you have to remember tonight now let's dig into

11:11

these for a second and talk about what is an example of each one of these so unworkable a broken business process is something that's unworkable this is an example where if you can find something that is so broken that if it doesn't get

11:26

fixed people lose money or or they spend more than they need to or worst case and this is ideally somebody gets fired you found a good unworkable broken business problem now why do I say somebody gets fired what's the relevance of that

11:41

anybody tell me what what might be important about that maybe maybe using the former example about uh the fashion piece y uh and to maybe materialize it I see a uh a a lack of functionality in uh

11:57

inventory management programs they're just poorly designed yep for apparel specifically and so somebody who has a lot of experience with that with those programs would be very useful if you're going to create a program that's going to be better okay You' want somebody

12:13

that was working directly with it functionally I don't know if that does that get at your it's getting at it so I'm going to try to help you along so Charles you may see this differently since it was your example but um let's use let's just extrapolate a little bit if we said that there was an inventory

12:29

control problem such that somebody was going to get fired because we either had too much inventory in which case we were wasting money at the end of the season we were throwing out garments and we basically never sold that would be one one example The Other Extreme what if we literally couldn't fulfill customer demand for a particular item and we were

12:46

losing Revenue because somebody kept coming in and asking for this particular whatever it is you know blouse or sweater or something and we just couldn't fulfill it we just had never you know managed to track the demand that's an example of a broken business problem but what I was trying to get to is the following is if I know somebody's

13:02

accountable for that and they'll get fired because we lose the revenue or we have too much cost on the books that we write off at the end of the year I have a champion and I have somebody at that point who I can actually get to who is literally going to want to solve this problem to save that

13:18

job that's what I mean by a broken Mission critical problem and if you can identify the person that owns it who would lose their job if it's not solved you've already already got yourself a resource as a startup that's going to be extremely valuable to you and if they can explain to you in specific terms why

13:36

like for example they can't keep up with the name the number of products that they have in the current system they have because it's manual in some way or there's some broken link you know you're on to something and the more dire the consequences the better your potential solution so I love problems that have

13:53

huge and dire consequences and I would look for those for if I were you now you might be saying to me well you know how do I think of that in a in a um you know a non for-profit World well Al can tell you if you want to look at his case study that even in the non for-profit World there are dire consequences obviously if you can't get things like

14:09

medicines to the right people in the right place at the right time and it's also true in the BET Toc world even there are lots of examples of that like obviously if you find yourself going on a date and you can never get to the right place at the right time and you miss your date that has di consequences too so you know whether it's mapping or

14:26

it's social networking or it's connections you know they're all different and they all have their own different particular example but that's what I'm looking for is unworkable problems that is the start start of the first you okay unavoidable who's been dealing with our taxes this

14:41

week okay a few of you at least taxes are unavoidable the fact is you know death and taxes are the two things we have to look forward to in life These are part of our world right so whether we like it or not there is regulation that requires us to file tax taxes so

14:59

guess what if you're part of solving a problem that is unavoidable you're already in the money because you're not going to have to ask somebody whether they need it you know they need it you know that they're going to have to file their taxes well it turns out there are a lot of problems that actually are unavoidable I'm going to give you an

15:15

example for from our own portfolio it turns out right now the um cause of of uh the financial crisis is pretty well understood as derivative accounting the financial instruments got so complicated but nobody could actually understand them let alone account for them and so

15:32

big companies like GE were waking up one day and finding out that they had done currency hedging or other kinds of Arbitrage that literally were unaccounted for and when they got accounted for they caused them to lose hundreds of millions of dollars off their share price because it turned out

15:47

that they hadn't been well managed so people immediately regulated for that and said okay we now have to account for derivatives and a company was born out of that called reval it's a company that's now doing extremely well it's just gone on file to go public so I can't talk too much about it but they're solving what became an unavoidable

16:03

problem I.E derivatives need to be accounted for and that's now law so those are the kinds of problems I'm going to try to get you to think about it may not be anything to do with law or it may not be anything to do with regulation the world around us has many

16:18

needs that are ultimately uh unavoidable if you look at them in the right way but even that isn't good enough because everybody's attention is constantly being competed for and so the next VI is urgent let me give you an example that will help set up the actifio story in

16:34

the Enterprise World almost every company has a budget defined well in advance of spending money and in that budget there'll be huge clear priorities that are identified probably from line of business people driving it to do

16:49

something like for example um meet some new imperative that the uh that the companies Define a good example might be as the mobile world is sort of Taken off you know a bank might say it's absolutely imperative we have mobile solutions that can touch our customers anywhere they are where they can bank

17:04

with us 24/7 that might be an imperative and it becomes urgent to meet all of the different uh pieces of the mobile Solution that's going to be delivered and rolled out well you might say okay we want to introduce a new accounting initiative something that will actually help you with your accounting even

17:19

though we've already identified accounting as something that's unavoidable it may not be urgent at that point it may be that they're actually much more interested in getting to customers in this new mobile world and so they're going to deprioritize this accounting initiative that you walk in with and they're going to reprioritize

17:35

everything that's mobile you've got to Pig figure out where you fit in the packing order and the bottom line is if you're not in the top three you're probably not going to get any attention and you've got to understand how to align to those priorities you've got to understand where will you fall in their if like ordering of of the things that

17:51

they're going to spend time and money on now one of the things that's important to me is to think about what might get moved up or down and why good entrepreneurs do the following they look at the market and conditions around them and they say something's changing and

18:07

they identify those changes that cause things to become urgent so I just gave you an example of it we all have got used to the world from a mobile phone we've got used to the idea that from a mobile device we can do everything and so it's actually changing the way we

18:24

access things like our bank or for that matter the web in general and so guess what it's becoming urgent for almost any organization that touches consumers to do so through at least the mobile Channel if not other multiple channels

18:40

um you know whether it's for example in in in uh e-commerce world it's things like in store or you know popup stores Etc but my point is that you can see the world around us is changing to a much more mobile world where everybody wants to be able to access thing every uh anywhere anytime 24/7 so that trend is

18:57

massive how might that serve your definition of uh your problem how might it actually drive urgency and if you can align with something that's causing that uh change then that'll help you for example get prioritized whereas if you just come in as I said and you know raw

19:13

spell out your technology it's going to be difficult for people to relate to why is it urgent let's get on to the last U to give you a sense of this in in business this last one is extremely important which is underserved because in many instances I've already talked to you about the idea of of a budget there

19:28

is a zero sum game going on here so uh those of you at last week's Workshop I talked to you about competition and I said every startup has competition and some people looked at me blankly and I said the reason is because ultimately there's only a certain amount of money that's going to get spent in a business

19:44

setting for example and so you're always competing for how do you get some part of that and that's a zero sum game you're going to have to knock somebody else out to get that that share of wallet if you will and that's your competition it's competition for the the money even if it's not the same solution as you have the same point here so

20:00

there's a finite amount of dollars time people and attention that can pay homage to whatever it is that your idea is so what you want to do is find something that is underserved that's unmet that for some reason hasn't been paid attention to before and that's not easy that's what you know makes for great

20:16

entrepreneurs is when they can see those unmet needs now I'm going to invite Mike back here to talk a little bit about how this came up in the storage world so um the these are Again original slides actifio 1.0 slides or actifio as

20:32

it was spelled um and the point of this slide is just that there were lots of Technical Innovations taking place in the storage industry you had a move to uh what they called thin provisioning which was essentially a higher level of granularity in the way data was stored uh you had uh the Advent of data D

20:49

duplication which is a reduction in some of the copies that data creates at least at the end of the backup Silo um blah blah blah right there was some technical changes that were happening in terms of the way that that uh storage was managed and in

21:05

the face of these technical challenges customers were responding with a need for a simpler approach and and what they wanted were these things that are called today appliances they are essentially single function storage devices and over time the Confluence

21:22

with these two things new technologies enabling lots of new functions and customers affinity for simple devices that I could kind of plug and play into their networks you ended up with this very complicated multi-tiered system uh all these little appliances all these

21:37

little toasters and kitchen things and and devices that did one thing very well and individually they were easy to kind of deploy um and put in place but the result if you look down on the architecture as a whole was this sort of um you know Patchwork quilt of different

21:54

solutions that really weren't designed to work together so um you know applying the framework to to where uh the company found itself in the early days you know I think that we did a pretty good job against the four use

22:10

right in terms of our value proposition um there was really no way to solve this complexity problem with current technology right Cent current technology had evolved incrementally from the technology that preceded it because that's what that's in the interest of

22:25

the status quo um every uh Enterprise uh with data to be accessed and protected had this problem because they had all these little issues to be dealt with so it was was absolutely unavoidable um it was urgent because

22:41

what happened over time as data moved from you know megabyte to terabyte to now petabyte scale companies were finding that more and more of their it budgets were being consumed by checks they had to write to EMC for more and more spinning disc to store their crap

22:58

um it was like the Enterprise equivalent of like those like you know places where you store your stuff you know um just imagine if you were paying more for that than you were for your rent that was happening in the that's what was happening in the ID department so there was great urgency to try and liberate resources from these more mundane

23:15

storage capabilities and apply them against more strategic it objectives and then finally um the market was underserved um primarily because the big vendors all had a very concrete dis incentive to tackle this problem in the way that served the customer um you know

23:33

in the end you know the big companies were just buying more and more these little like you know uh these little application companies uh these little uh uh um organizations and compiling them into these more and more complex um iterative things and with that complexity came the opportunity for

23:49

services revenue and everything was great but this was the problem State as articulated by the company and even though it's kind of hard to wrap your head around the problem I think you know we did a pretty good job uh finding finding one that's a great example thank you Mike so I'll tell you what it was like as the VC on the other side it

24:05

became pretty obvious that you know we all know that storage is increasing we could all see around us that people starting to take more photographs they're starting to use more video they're starting to share more of that and that this problem was ballooning but more importantly in the Enterprise that this data uh was becoming actually a

24:20

compliance issue for example where people were being told they had to keep seven years worth of data and by the way it wasn't just their documents now it was their email notes their now it's actually any interaction with customers so you can see all these Reasons from a market standpoint that would cause people to have more and more data and was becoming more and more unworkable

24:36

and as Mike says uh what's interesting about it is was distracting from their Core Business which is you know interacting with their Customer because they're having to do all this other stuff just to manage those interactions and store it all and what's interesting about this is It's again an example of a problem that came about from vendors who

24:53

looked at things in a very specific way and said I'm going to solve this problem but but what was disruptive here was that the company started thinking about it in terms of an endtoend storage problem and that's what happened in the storage world so this problem built up and that's what made it underserved is that vendors were reinforcing their

25:10

one-off specific Solutions as opposed to thinking about the end-to-end problem about how do you manage data so that was the four years for actifio and I encourage you when you start to think about this to break it down in some specific things that you can identify from the customer Viewpoint are there

25:26

for use what what's workable for them what's unavoidable for them I have my own way of expressing this for consumers consumers actually have a hierarchy of needs this has happens to be maso's hierarchy so we'll test this with Facebook what is the need that Facebook

25:42

meets you could say guess what it it really wasn't a need I mean I didn't have a need but then you start thinking about it we all have the need to be social we actually need it's a fundamental part of our sort of human being to connect with people it turns out that actually it's it's a very

25:58

important need it's so high up in our uh world that when we think about it we want to find people we want to connect with them we want to communicate with them we want to meet them we want to share stuff with them guess what we like to entertain each other and we like to do basic things like date and get married guess what that's a pretty big

26:13

set of needs so it's not surprising that Facebook has been an incredibly successful product and service it's addressing some really significant needs now they may not be about storage uh but that's the point about these Frameworks I there's a way that when you stop and

26:29

think about the individual needs that you're trying to address for your C customer or consumer you can express them in these terms this next framework I want to introduce to you which is is the thing black and white and black and White's just an acronym again uh for

26:44

spelling out this framework of have you got a problem that's blatant and critical or is it latent and aspirational well let's talk about that in Uber's case I mean we all know that we blatantly have a need to get from A to B but did we know that we needed a service

27:00

that would be callable on our iPhone from anywhere I don't think so I don't think drivers thought that that was something they needed that they needed an app to tell them how to find consumers but the minute that you uncover this like Laten potential and you show it to be so compelling in the

27:17

way that Mike's talking about people will say well why would I ever stand at a taxi rank anymore that makes no sense I can just pull out my app and just find a driver that's nearby and get the price I want have them pick me up and take me where I want and by the way the receipts all done and everything else for me so

27:33

what happens in a lot of marketplaces is you start with latent aspirational needs and if you do a really good job they become more and more part of your daily life and they become blatant critical needs however I will tell you it's a lot easier if you can actually start with

27:48

blatant critical needs because those are the places right away where people will spend money now if we could talk about storage again for a second there's no way you can get out of the compliance in financial services we're talking about

28:03

of storing data for S years it's actually a requirement it's just a you know it's just a fundamental piece of doing business and you get shut down if you don't do those things you have Regulators who come around that's a blatant critical need the white part of it is pretty obvious which is can you

28:19

find a white space in the marketplace an open area of opportunity which you can capture and defend and do so uniquely so this is more about identifying the particular underserved space that we were talking about but if you can find black and white opportunities in other words blatant um and critical needs that

28:35

have not been addressed you're probably on to a really good opportunity and that's really what this framework's about so for uh Activia why don't you spell out how you define black and white geometric data growth uh unmet RTO which is a recovery time objective so you sign

28:51

up for a service level agreement or SLA as the manager of one of these uh it organizations and you you as a result you they say well if we go down we only want to be down for 15 minutes so your RTO is 15 minutes and if you don't make your RTO that is that is you know you

29:07

you have your your perfect sales process which is a guy who gets fired if it doesn't work um so uh paby scale Big Data I've talked a little bit about that all those things were blatant and critical and what we needed to create was a connection to this idea that I'll explain in a little bit called copy data

29:23

as the root cause of that problem um and um um when we came up with the right way to explain that idea what we found was that customers embraced it and it was only when we came up with a better way to to you know communicate to tell our story

29:40

that the business really started to you know take off at the level that that sort of defines it today so we we found that white space in the market but it was it was white space that the market didn't know it had we had to reframe the problem in a way that they could they could see it so you you brought up a

29:56

very important term there which is sometimes s you end up having to reframe the problem you have to get the consumer to see something you hadn't necessarily realized yeah absolutely you know I I think um I think it was uh the great Michael Scot who said a problem well understood is a problem half half so I wish it was but it wasn't um but that is

30:11

a great for those of you who don't know it really clearly defining a problem is so often the basis on which you can start to have a conversation that is accelerating your ability to actually solve it but if you can't Define it well you're not in a position to obviously solve it so yeah well said yeah and H

30:28

having the opportunity to you know many times um you know you can you can change the way people think about a problem now not it's not manipulation like you need to reveal underlying truth to a customer right um I think marketing gets a bad rap sometimes because um people think

30:44

it's sort of manipulative and really great marketing is revealing an underlying truth um a latent need yeah a latent need so I think to summarize on the problem piece uh as you heard right up front we really believe that the best way for you to get started is not to just have a free floating idea it's to

31:00

get very specific about what's unworkable unavoidable what's urgent what's undeserved about it and how black and white is it and if you can express it in terms that are very clearly for you with blatant and critical needs and that's addressing a white space I I bet

31:15

you're going to find your in a place that you can start to build something significant now what's nice about this is that your ideas can then be applied to that problem you can sit down and you can brainstorm with a group of people and say look really clear what's not being met as a need here we're really clear why it's urgent we're really clear

31:31

why it's unavoidable so let's throw all the ideas at that and score them you can rate them against which one of these is is actually really going to hit the problem and make it for example more obvious as a priority is going to solve it more significantly and so when you fit ideas to a problem I encourage you

31:47

to find ways to do that scoring and I would at this point say all of what I've said sounds like it's academic but you've actually got to get out and test this with customers everything I said is irrelevant unless you get out of the building and start to validate it and spend time with the people who are

32:03

actually going to try to use your product or service at that point there's a critical thing you've got to do you've got to be incredibly honest with yourself about whether you're having to push or whether actually you're getting people to tell you what their needs are

32:20

if you're pushing your ideas you've probably got a problem if you're hearing people tell you their problems and go oh yeah I've got that problem then you're probably on to something and then if they start telling you oh I've not not only that problem but let me tell you about this other piece of it so you know

32:36

I've not only got an autistic child but I've actually got all these problems with the healthcare uh you know uh for example compensation uh recompensation associated with that and let me tell you about all the things that I need in the way of Consulting for that then you get to probably have a an interesting dialogue between the two of you that will draw out more of the problems and

32:53

then you can find out what are the unmet needs and things that you can address so my asset test for you at this point is get out of the building go test it with the customers and find out whether they are actually starting to tell your story for you if they're not and if they're not buying into your problem and they're not literally starting to replay it for

33:09

you you probably need to go back and iterate on it it's a tough piece of love that I'm giving you here because I'll tell you what most entrepreneurs tend to do they have so much enthusiasm for their idea and so much conviction around it that they're not listening they they're telling and you need to be a

33:26

good listener at this point you need to be clear about that okay the good news is we've done the defined piece um and the next piece I'm going to help you go down the evaluation piece so a little bit of what I just said is good common sense but I'm now going to try to get to

33:42

some more specific examples of how you can evaluate the significance of your own idea what I'd like to do here is to ask the um obvious W questions you know who what when where why are all these um Solutions going to be useful to or for

34:00

and when and and that's really the opportunity in your startup uh but I'm going to immediately put a warning up here and we talked a little bit about this last week for those of you here the worst set of vectors that I find startups you know going off to say

34:16

they're solving are faster better cheaper vectors so let's pause and if you were here last week feel free to jump in but if you weren't I'd love to hear from you why is faster better cheaper not a great starting point for a startup why is that not a great basis for a new solution your competition can

34:33

copy you or just drop their margins a little bit and compete with you um I mean faster it's always better to be faster as we talked about before but building a whole company around faster your competition could just be motivated

34:48

to go faster mhm it's I was fast as more in the product sense so actually you're you're right but let's just build on your thinking I couldn't agree more but there's a there's a fundamental problem with this as a startup which is you have always by definition less resources than everybody else as a startup you're

35:04

starting from zero and so if you've got big competitors they can afford to do exactly what you just said they can afford to drop their margins to zero or their prices to zero and give stuff away in order to put you out of business or they'll have more resources to to f figure out what it is that you've got as

35:21

a you know slightly marginal Improvement to their product or service and they'll just put their resources on that and go after making it better I'm not saying that's always the case because there are in cases in point where faster better cheaper can be good but it's not the ideal starting point and in many

35:36

instances it's very easy for larger better funded comp uh competitors to go after but what's really exciting though that you can do as a startup is you have absolutely nothing to lose because you're starting from nothing and so you can afford to break the

35:52

rules in fact you can afford to take on the big lumbering Giants precisely because they're big lumbering Giants and so I encourage you to break through with whatever thinking you're doing and again not just technology so the Monica here

36:09

is has come up with 3DS and the 3DS are discontinuous innovation defensible technology and disruptive business models these also by the way are are part of what I was answering in your question earlier a discontinu is

36:24

discontinuous innovation is something that fundamentally changes the way you do things so the obvious one that we've all grown up with is the internet the internet fundamentally changed so many businesses it effectively disintermediated any connections that

36:40

were traditionally done manually by making them available continuously online all the time and so that made it possible for us to think about pretty much every business uh in a different way where it's goods and services that can be solved so the sorry that can be

36:57

served for example in a digital way it's a fundamental disruption you know everything that can be digitized could be delivered over the web whether we've you know talking about music or whe they're talking about wiring money these are fundamental disruptions that that the internet brought so what's also of

37:14

course typical is that we we think about things in in technology terms now technology can be defensible too um it's fair to say that you know the first thing people tend to think about when they think of defensible technology is coming up with patents that that is one part of it but patents

37:29

actually bring their own sets of issues and then the last D is the one that I was starting to get at here which is disruptive business models it it turns out that this is worth a whole session and so we do have a whole session in startup secrets on business models business models have become a huge part

37:45

of what have you know effectively caused Innovation if you think about the world in which we live now we take it for granted for example um that we want to collaborate on things that we want to share things uh and that's given rise to to business models as you know uh fundamentally changing as Lyft or Uber

38:02

but also Groupon uh Airbnb many other things like this and they're very disruptive they're hugely uh gamechanging the most obvious one in the software world when I was if feel like watching the evolution of our business was Google coming along and attacking

38:18

Microsoft and Google basically said you know what we're not going to play the same rules as Microsoft in in the apps game we're actually going to give away apps for free and we're going to monetize the data for advertising well Microsoft had a$3 half billion doll business called office and there's no

38:34

way that they could play that game because they were employing engineers who were basically entirely devoted to creating high value deep apps that they were making a lot of money out of so it wasn't a technology win in fact Google Apps never caught up to this day aren't

38:50

as rich or as deep as Microsoft apps but they're good enough and they're free and Google monetizes them in a different way the disruption there was the business model more than the technology and so I encourage you to think about this as one of the ways that you and your 3DS can be disruptive so now that Ash is here um I

39:07

want to invite him up to come join us at the front and introduce himself come on up Ash so Ash is the founder that that uh uh helped get actifio from zero to the place it is today which is back at zero or hopefully not uh and love to

39:24

have you talk Ash about since we've got this now to this place what was the opportunity you identified and then let's have Mike talk about how it met the 3DS so we've talked a little bit about you know the background to storage and the challenges behind it and you know you had a vision for this unified

39:40

data services and this was the slide that you were presenting in the sort of V1 of the story jump in and tell us a little bit about it and how you were thinking about these 3DS okay so I I think it's a uh very very simple story there's only one thing I know since my at my working life and

39:58

that storage and so I guess it's pretty natural for me to come back and address something that I've lived with for about 2025 years on different facets of the uh table uh I was a typical young engineer I went on to be a large company

40:13

executive I went on to be a VC for a while um did some startups and all common theme throughout the whole thing was about the storage world so when we look back as a as an investor looking at investment theme around um one of those

40:31

disruptive themes you're thinking about there are a few things that stand out over the last I would say 5 10 years and this is in 2008 now uh we saw a big change in I think some of the stuff you're talking about big change in how it is delivered we saw a big change in

40:47

how people use Computing resources and with the emergence of U models like the SAS models this whole notion of how consumers consume consumed and the depth of the Box basically the whole idea of a box being something that you you

41:03

consumed you bought slowly became as old as uh the Mainframe business so we looked at those three big paradigms and found an opportunity to come back and create uh a disruptive environment where we decouple uh what you do with your data

41:19

versus where you store it the old model was there was a box it came with a few knobs and if you wanted more of those knobs you found more boxes and that's that's the way the business ran I think your Microsoft Office example is a perfect one there

41:34

was no shared model there was no ability to separate out uh what I really paid for from a value perspective versus know the junk that has to come with the value and so that was the basis for how we came back and tried to come come up with a a model that that separated out what

41:49

is truly important for the business from what is truly a commodity and come up with this unified data management model so I think that was that was a starting point for the discussion and having been sted in the industry for a long time or

42:05

some people call me probably jaded in the industry for a long time I think the toughest part was to get out of our own shell and say well that's how I used to do it 15 years ago surely it must be working fine because we have companies that that have you know 2040 billion market caps building around this model

42:21

and that's probably the toughest part is to get out of your own mold of what you knew and really look at the discontinuity from a position of strength rather than just a position of comfort great so Mike do you want to highlight this in terms of the 3DS that that that uh actifio would would claim

42:38

they they've taken yeah well first I want to I want to highlight the importance of that of this first one right discontinuous Innovation it's one thing if you're coming to an industry you know nothing about which was my my huge Advantage um it takes real courage to um change something inside the sort

42:54

of you know the garbage model you know you're you're part of the system and then you decide to change it from within um very difficult to do so discontinuous Innovation uh really starts with the courage to break with the past um and I talked earlier about some of the themes

43:10

that Ash just uh reiterated which was uh changes in the enabling Technologies of storage and a customer affinity for these single function boxes and applications um and I think early in the company's life uh Ash and David really made a decision that we're going to

43:26

start with something uh totally new start with a blank sheet of paper uh the cliche is actually true in our case that's what they started with um that led to the development of some defensible technology so it started off with the architecture a new way of solving the problem uh We've invested a

43:43

lot of time and and other people's money um in building up now a portfolio of 22 patents you know in process filed or pending uh in order to make this original idea real right there was a whole bunch of enabling stuff that needed to happen for us to uh realize

44:00

that original Vision that happened on a you know yellow line piece of paper um and then what's come last was a way to sell that and price it in a way that is very difficult for our already public scaled competition to match it would

44:16

involve complex restatement of the way they do their financials and and alter their cash flow model in a way that would make investors uh unhappy so so for us I I think it's it starts with that break it starts with a better way and I think after after finding that

44:31

it's it's years of work to go and do everything necessary to realize the vision on that piece of paper although to your credit um Ash I would say that right away from day one you were willing to think about all of these 3DS like for example I remember having discussions to

44:47

you about disrupting what were traditional Big Box salese by figuring out how to sell this as a service is that fair right I think well I think um like I said this is probably one of the most conservative markets I mean as much as we talk about disruption here we we

45:03

had to be cognizant about how much friction there is between an idea and a business and so um there was there's a lot more in terms of the thought process of what else could we make discontinuous and disruptive but we took a lot of baby steps but you're absolutely right now right from the beginning we looked at

45:18

the models of what worked in the consumer industry by the way this is another big phenomena I think that drove what we did for the first time in 10 years maybe maybe 15 years ago was was when the consumer markets truly started driving technology and and consumption

45:34

models never happened before it was usual Enterprise guys we were the smartest guys around but not anymore and so we learned a lot you know it truly allowed the elephants to start dancing and this was one of those things that uh we learned a lot kept trying to tune it

45:49

at the speed at which the market could absorb great good stuff thank you we'll hear more from on the story in a in a little while now the the the next setup secret is such an obvious one I put it up there but I'm I'm going to try to spell it out for you it's actually so much work to start a company and to

46:06

build a product and to take it to Market and to get your business model working and all those other things that why wouldn't you pick a market that's got great potential to be something really big in other words why pick a small fight when you can pick a big one I'll tell you it's just as much work in many

46:22

instances to pick a small fight you're still going to have to f figure out how to hire great people and figure out how to solve your customers needs so why not find a market space that's really got huge potential where when you get it right you can have a really big impact and honestly a lot of the times that we

46:39

turn opportunities down as VCS it's because they're frankly not big enough they're not exciting enough they're not you know significant enough and where there are big problems there are big opportunities and where are big opportunities it's probably worth spending the time and energy to build you know a significant solution that you

46:55

can get real value from so for what it's worth um we always talk about these as game changers what are the things that you can go after that change the game that rewrite the rules that cause a market to be disrupted that ultimately result in huge value that's what we're interested in so in the evaluation of

47:10

these things I'm going to give you two Frameworks one is a qualitative one and the second is a quantitative one and the qualitative one is very easy we want you to be able to tell your story in a before and after scenario we want to be able to tell it in before there's some

47:26

pain something that if you don't solve it as we talked about earlier has consequences that are really significant consequences that can cause things to go wrong people to get fired money to get lost Etc and then after we want you to be able to say but once you've got my product or service look all those

47:43

problems go away they vanish and there's absolute Joy here because now you know the customers are serving are being well served we're making more money from them and things are are flowing more naturally so this before and after thing is something that you've got to do a simple exercise on you've got to decide

47:58

whether what you're doing is solving a nice to have problem which somebody could take a vitamin for or a must have problem where they need something fundamental like penicillin to address it or surgery or whatever it might be in your particular domain and if you've got a nice to have problem I'm not really

48:15

that excited about that if you've got a musthave problem and you've absolutely got to have something that is literally a drug of penicillin strength or or or morphine whatever it might be to solve that pain then you know you've got an interesting solution so let's use

48:31

actifio as an example again and bring up you know how did they think about the before and after scenario and start to tell the second phase of the story Mike if you would so um so phase two of the startup journey is is you um is the

48:48

point at which you've corrupted your vision with the external reality right you you've you've you've proven out your hypothesis in the real world because you know more than one person has paid you for it um uh and and there's a pattern in those dots and

49:04

that's a very different stage of the organization here you have a strategy that is much more stable than in phase one uh you have a product that is maturing or or uh becoming uh it's reached the critical mass of maturity in the way it's consumed um the customer is

49:20

you know we think of it as kind of the ultra early majority right there's the old crossing the chasm and that's kind of where we are is that we're on that front edge of just sort of clearing the uh um the Grand Canyon there um the engine is a combination of heroism and systems I wish I could say it was all

49:36

process and systems but it's not um it's a difficult stage of the company where you still have to do all the hero but in your spare time you have to build systems and processes to make that unnecessary um and it's a stressful time cost you a lot of hair um that's part of

49:52

that uh and then um the priority really is is just to make sure you're making happy customers in the world um and I think that that uh in our company that is job one like whatever you know bumps and bruises we got along the way because it's hard to make all this stuff work we

50:09

just want to make sure that that we have happy customers because that's really the foundation of the business going forward all right so who here feels like they have a pretty good handle on what actifio does who here understands what actifio does pretty well okay all right how many were there

50:26

one can we talk to you all right great positioning tells a story okay um we all want a story um we don't want a slide we want a story um

50:42

and the way that we explain actifio to people like yourselves today um is with an analogy so who here has a smartphone all right when you take a picture with that phone you create a 1meg file okay if you're an Apple user Photo

50:58

Stream is going to do you the kindness of sending that to your iPad and your laptop and so now your one meeg file is consuming three Megs of storage across devices and in the cloud if you send that to Instagram and it bounces out to your Twitter and Facebook accounts your one meeg photo is now consuming six Megs

51:16

of storage across those multiple devices okay now the exact same thing happens in the Enterprise um you have all those systems that Ash described in those initial slides and they're all making copy after copy of what's in production

51:34

without knowing what copies already exist backup makes a copy snapshot Disaster Recovery all these different systems the big difference with my analogy is that instead of a 1meg photo this might be a 10 terabyte Oracle database and it's now consuming 60

51:51

terabytes of data across the Enterprise around the world this is a $44 billion problem it represents 60% of the money that customers spend on disc capacity drives 65% of their storage software spending and accounts for 85%

52:07

the vast majority of their Hardware businesses are spending much more to manage copies of their data than they are to manage their data and we think this is crazy who understands what actifio does now okay that is marketing now is there

52:24

somebody whoes I don't I don't know we'll talk there was an MIT guy in the back he still um it was a joke all right so I'm going to show you uh the way that we tell that story at the next level of detail these are like two or three slides from what

52:40

we call Our cxo Deck and what's interesting is like going through these with Michael I'll be able to reinforce a lot of the ideas that we've shared so you know our pitch really starts with this image um and and the observation that every business out there is deal

52:55

dealing with an explosion in the amount of data that they need to manage um that is the problem that is the problem the custom the guy sitting in front of you has is he's got a a growth curve of his data that looks like this and so what we help him understand is that um the

53:13

majority of that data is not production data it's not data being produced by the systems that they use to run the business it's data that is being produced by systems that make a copy of that data right um and I mentioned these metrics right 44 billion uh 60% 65 and

53:31

85 the root cause of this is these siloed systems in the beginning there was backup and backup was good right you got to back your stuff up um backup wasn't fast enough at some point though and so people created separate systems to make snapshots of their production

53:47

data separate systems copying the same data um people wanted to take those snapshots and put them someplace else in case there was a smoking hole at headquarters and the disaster recovery Market was born people had a disaster they couldn't get it back fast enough they needed it faster that's business

54:03

continuity separate systems we have to make copies of data support application development that's test and Dev and we need more copies to run our our archives and do our analytics on all right so that's just the physical layer um there's this whole virtual layer of Technology as well and that results in

54:21

massive excess duplication huge spending on infrastructure all this operational complexity and massive cost to make it all work together all right so this is just a a simplified version of of many of the themes that were in that original deck but now brought to light in the

54:37

context of a story that human beings you know can wrap their head around um so what actifio did the sort of innovation was to start with a blank sheet of paper and say look you have your production data over here and we're not going to

54:53

touch that what we're going to do is we're going to going to manage copy data and we're going to do that by doing a full ingest of everything in your production environment not a point solution that adds to everything you have we're going to we're going to take a single copy of everything and from that point forward after that first

55:09

ingest we're only going to store and move a unique duped version of of whatever we don't have right so I'm only capturing the changes after that initial snapshot and I'm going to store that in such a way that I can spin up a virtual

55:25

copy for any of those uses that you now manage separately um and and that's it and the beauty of this is once you architect the system that way you get to manage it all with a single application okay um actifio is radically

55:42

simple copy data storage that's what it is radically simple copy data storage um you know one of my favorite quotes is from this guy um he said said if you can't explain it simply um it's because you don't

55:57

understand it well enough and and I think that there's great truth in that there is a sort of you know art and some craft in terms of the ability to to turn that into something that um that resonates with with you know you aren't people who understand the problem so it's even more acute for you um but I

56:13

but I really believe this and and my you know thing for you to take away is is I see entrepreneurs and they're afraid to tell it simply to just say what is it like when I'm working with an entrepreneur I'll say just tell me what it is like they'll talk for 5 minutes

56:29

about an acute robust platform for the and I'm just like I have you I saw your mouth moving I have no idea what you do um and and and it's because we all have this professional Persona and we feel like if it's complicated it's legitimate and it's substantive make it simple have

56:47

the courage to make it simple boil it down to something a 12-year-old can understand I promise it will accelerate the growth of your business so what's exciting about thank you Mike uh what you just heard is you were all sitting there and by the way this was the risk that Mike and I agreed we'd take is that you wouldn't

57:03

understand what the hell activio did until he did his revealed but that's the lot of the point of what this is about which is if you just explain all the technology and all these other issues and you don't get it to a place where people can really experience wow that's absolutely ridiculous why would I store my

57:19

photograph you know multiple times and why would I waste all that space Oh and in the Enterprise it's you know orders of magnitude bigger and why would you do that then you don't get people to a place where they understand that before scenario of all this pain that makes no sense and you don't get them to a place

57:36

where they're looking for a solution and when when you tell them the story you go well that's a relief thank goodness somebody took care of that for me so no better person that to share the before and after scenario that you had in mind than Ash himself so Ash come tell us a little bit about how you saw this and how you describe the sort of the

57:52

afterworld uh now that actifio actually has solved this the afterworld is incredibly beautiful but it's a Nirvana we wondering why we not we don't have 44 billion in Revenue yet but uh we're getting there um I iess

58:10

said I think career-wise you've looked at um uh storage companies that have just done an incredible business of piling on more storage to save all kinds of data um making I used to run h storage business about U six years 7

58:27

years ago you know $6 billion business and U there was a very interesting scenario where 50 of the biggest HPS customers used to be brought in for an off offsite Retreat and I had my counterpart who ran the software business my counterpart who ran the server business I was a storage guy and

58:42

the cios would come people who ran big businesses would come in and ask this the software guy hey you know I need some uh innovation in security what's your road map for the next 5 years I'm trying to build this web business uh the server guy would be about hey density you know processing power and when it

58:58

came to the storage guy it used to be a very simple question I don't know what you guys do all I know is my guys are just asking me for more and more budget every quarter can you just make this thing free because I really can't see the value of this thing all I know is there's tons of storage being consumed

59:14

and that was the starting point the before story was a very simple exponential growth that just showed that $29 billion of storage in 2013 was bought to to store copies of data 29 billion in fact if you look at the numbers uh the storage Market on the

59:31

production side is literally half that and so the ability to take that geometric data growth and come back to doing something meaningful to say my spend on storage is now much better aligned with how my business grows you know I have no problem paying for

59:47

something that I that I build up my business on I have a problem when it's nonlinear and that's the part that um we we first you know come back and talk about in fact it becomes less than linear in many cases the ability to reuse the same data for many

00:03

things allows you to reuse a lot of the same storage for many many different purposes so that's that's the number one and that solves the problem that I I was asked uh by the CIO group maybe eight years ago so it took me a little while I'm a little slow but it took me a little while to come back and address

00:19

that uh geometric data growth NE next part you think um there's this whole concept I mean how all of all of you probably you have dealt with you know having to pay the you know health insurance premium or premium for all kinds of auto insurance and the only goal there is it keeps

00:35

piling on in fact that's the whole notion of the insurance business it keeps piling on until you have the rainy day that you need this fund for now imagine if this insurance actually could work for you that paid for the school that paid for taking care of your car and be able to become an asset not just

00:52

something that you pay hoping the day that it's to be used does not come or maybe does come but that's the ability for what we have taken as a as a liability as an insurance as something that is more of a of a risk that you have to pay for and hope I never have to

01:09

use to something that becomes an asset hey I have my backup data can I use it to accelerate my SAS business we today have a a SAS company that that literally speeds up their development platform the de the release of development by eight times and imagine if you a business and

01:25

I could speed your business by 8X and charge you nothing more than what you did before that's a hell of an way to convert what used to an insurance into an asset are you speeding time to market for them literally time time for

01:41

um all the updates and updates in for especially for a SAS company that is absolutely what happens you get you take something being done in 13 weeks down to a few minutes which brings up the next one I mean who the heck wants to wait wait for hours when I want some

01:57

information if if I want a file I just lost my file and the old model I know this this sounds pretty crazy to people who haven't worked in the Enterprise but the model was you call the IT guy ask for some file and somewhere about two weeks later you you get your database or

02:12

file back unheard of those in the consumer industry want it now so does the Enterprise too because businesses don't have the time to wait for days and weeks to get get the information back and that ability for us to come back and demonstrate access to

02:29

information anytime anywhere instantly was a huge difference in fact if anything if you come back and say hey I give away my my existing my my competition if I look at the competition these are big massive companies they could give away the product for free now

02:45

we just the reason I'm late here is you know we were in the middle of a deal our fiscal quarter ends this end of this month we are competing against a competition that's bid 30 4 million against us and we probably end up at about one and a. half million 30 times less they could give it away they're big

03:02

enough what they cannot do is beat the one part of what it really means to run a business which is speed time this is the one one dimension that seems to go only in One Direction and that ability to come back and change the speed at which you access information anywhere that is probably the the what what Mike

03:19

would call the killer value proposition you can literally give away my competitions product what cannot do is to come back and make my information available fast enough because you cannot give back time so just to pause on that that that that very clearly spells out something we were talking about earlier which is

03:35

it it's making it obvious that even a company as larg as and I don't know whether it was EMC but whoever is a big company that's your competitor could give their product away but they can't do what we do here and when that happens the better faster cheaper is not even in

03:50

question absolutely and I think you know most Innovations and this is some slide we we talk about when we talk at our presentation most Innovations are exactly that hey I do about the same thing but I'm 10x cheaper or I'm about the same price but I'm 10x faster this is one of those things once every so

04:06

often happens where it's literally on both those Dimensions you are 10x to 20x cheaper and boy you're 100x faster than ever before that causes a complete disruption in the market and that's what we've done I think for those who follow the server site there's some company called VMware that's done that and I

04:22

used to my counterpart used to run the server business the poor guy just lost I mean you thought you lost your hair oh man he's completely gone decimated the market so that that's what happens when uh software completely takes over what used to be packaged

04:38

hardware and um last part you know we talked about this this prison of boxes that the vendors used to come back and and deliver you know I used to sell you a box and by the way if you want more of this you better buy from me because this box doesn't talk to anybody else you

04:53

have toy buy more of my stuff and more of my stuff until you get to a point where you're so fed up that you decide to take know the big shift this ability to come back and change that and provide freedom I think Mike used to have this phenomenal slide a long time ago look we are dramatically faster we're

05:09

dramatically cheaper and they had this slide of a of a guy on top of a hill saying by the way you're free you're free from what used to be a prison of uh vender dependency I think all of these they're hard to think about and you know usually try to get it get it down to one

05:25

or two things maybe three things but I think it's important for Paradigm shifting Technologies to demonstrate there's much bigger things that happen than just one or two things great thank you Ash so you can hear as this as Ash has just told this story it's like this

05:40

you know before Paradox of all these problems where people were spending money they didn't need to and they weren't getting any value out of it after not only they having that problem solved there's a whole bunch of benefits that are absolutely empowering that enable things like products being built faster Innovation being delivered quicker information being returned

05:57

sooner empowering people Mak making things possible that's what I'm talking about between before and afters if you can tell your story in that way that is the qualitative version of what I think you should evaluate your value proposition R so now we're going to move on to the quantitative piece this

06:12

actually in some ways is easier because it's about Define defining in sort of a more specific framework what is the gain that you deliver to your customer and then what is the pain it takes them to adopted now most people only spend time as entrepreneurs on the gain piece and

06:28

I'm here to tell you that the pain piece is more important when you start so let's talk you through that the gain is usually your set of benefits the pain is the cost for the customer to adopted and if we go through these you're bound to

06:43

have and you better have a whole bunch of great gains you know you save people money or you make them more money you help them for example find customers faster or you reduce that time to Market or you save for example uh the number of people involved or somehow you give them

06:59

competitive Advantage which in many instances for early adopters is actually key so you're giving them some capability they never had before um and then ultimately um you you you net that all out and you decide as Ash said on what might be the top three

07:15

things that you have as your unique selling points so how have you look at it that's going to be the story that I hope every one of you as entrepreneurs could tell but here's where it gets more interesting do you think it's easy for you to get found as a as a you know

07:31

startup no it's not it actually is difficult to find startups you know you don't have the budget to go advertise and have a brand the size of coke so guess what there's a cost to find you even there are other costs that start to come into play how much does it cost for somebody to try your solution are you

07:48

really really easy for somebody to just download and use maybe you are if you're a simple little app but if you're a complex piece of enterprise software I doubt that it's incredibly easy for you to try and I'm going to embarrass us for a second because I was there in the first board meetings what was our challenge initially uh Ash with with

08:05

actifio how many sort of bits and pieces do I me because we weren't selling Hardware originally do you want to tell that story a little bit we had some real pain associated with getting getting our uh our products adopted and tried by customers right I think you know I think um as with uh every learning process um

08:21

one of the things that U Mike was talking about is a fr of just trying out here we are complex enterprise software trying to make life easy and you're trying to make it as easy for yourself as much as you know you really focus on yourself first before you even worried about the users because you don't know

08:36

what the users are we have this enterprise software you're supposed to download it you're supposed to buy a specific server of the right kind we gave you the right server uh spe specs you buy it so we would start off the process you were supposed to download it

08:52

our guy is supposed to come and help you two weeks later our guy shows up they still don't have the server uh or they did have it they bought some cheap one with some memory that was bad next thing you know what started out was supposed to be a two two we effort you know three and a half months into it they're still

09:07

trying to put around figuring out why this thing is not up yet because our stuff work fine in the lab it's rest of the environmental stuff that you you have opened up as variables for the user to come back and actually make it work you you're basically asking the user you

09:24

be the integrator I'll give you all the parts and pieces here's the menu you cook the dish I think that was a bad lesson because we based literally three and a half months as opposed to giving the entire dish and making it very easy to consume that was probably the next part of your What it Took I me today we

09:39

do a pilot in one day you walk in we've we've taken an appliance we did nothing more than what the user was doing except we packaged it nicely we have a nice little orange bezel that Mike came up with actif orange as he calls it and you plug plug it in one day you're out of

09:55

there versus 3 and a half months that it took us for the first time to get going huge difference thanks and and having witnessed this activio is not unique almost every startup fails to take the time to think about what is the customer experience going to be of trying your

10:11

product or service of evaluating it never mind buying it just trying it and it it was fascinating to see how an actifio case you know we we came around to the point where eventually it's like wait a second why do we have the customer do any of this let's just integrate the whole thing create the

10:26

appliance you know we had long discussions at the board meeting about we don't want to be a hardware company but wait a second why would why don't we want to be a hardware custom company that's just an you know a mirage in our head aren't we a company that's dis is delivering a solution in the end that's what really counts and I you know Ash is nodding here but these are the things

10:42

that if you can just think about them up front and again put yourself in the customer perspective can take a lot of the friction the pain Etc involved in this and in the end what you want to be able to do is evaluate this all the way down to the end and and have the conversation with the customer and say okay it took you three and a half months

10:57

and it cost you how much and how many people are involved and and once you understand that extreme how could we take it to as close to zero as possible if you can do that you're in the right um mode to be able to develop your gain pain ratio now it turns out there's something in between and this is a piece

11:13

that um most people don't spend enough time on so I'm just going to spell it out as a startup what do you think the biggest issue of doing business with you is any it's on the slide but I'm just interested go ahead and I come from mental health get getting people to

11:29

change their habits people love their rituals and their routines and are committed to whatever they're doing it's just like if I get you in the habit of sales saying yes it's easier to say yes if I get you in the habit of saying no it's easier to say no changing people's

11:46

habits well said it turns out so many times the default is to do nothing people are already used to a business pro process or they're a particular used to a particular product or they're used to a particular procedure and changing it takes energy whether you like it or

12:01

not it's an inertia you've got to overcome now what's the next thing that comes out of this it turns out you are probably being considered as an alternative to something else even if it's a manual alternative and so what's the problem with being a startup the problem is you are a risk as an

12:19

alternative because you're an unknown you don't have a brand so whether you like it or not you've got to assess this you've got to say okay why would somebody do this why would they change their procedure or why would they train people to do things differently and there's got to be a really good answer

12:35

to that and in fact that's why I give this a ratio and what's the right ratio anybody tell me how much bigger has your gain got to be than your pain to overcome that inertia so let me bring Ash and and Mike to play for a second again what was our if we did if we

12:52

thought we could make a gain pain ratio of of 2 to one would we thought we had a a basis to start the business no why not I think it's a pretty obvious uh um all the stuff that you talked about in terms of the Pain part or the

13:08

inertia part just the inability for me to as a buyer and by the way that is the other role I used to play which helped me actually you stand up get through this process of being a buyer I used to be one of the largest storage buyers too and uh the inability for me to justify 50% better me big deal I'm better off

13:26

staying with my existing guy because it just doesn't make a difference enough for me because the risk of something going wrong is significantly more than just a 50% better pricing or 50% better Improvement in performance so clearly uh I'm not even in the ballpark

13:44

at that point so it turns out the number is something like an order of magnitude I mean to State the obvious overcoming risk and going through all the pain has got to have such a big impact that somebody says I'm going to

13:59

get off my ass and do it and you know as a startup you're overcoming that every time you walk through the door and pitch and so you better be thinking about how you can express your gain pain ratio in a fundamentally um impactful way which is

14:14

it's not literally got to be 10:1 but it's got to be an order of magnitude in terms of what you can say to somebody is the net benefit of what your solution is that you're delivering what now or our solution at Activia how would you say is it is it 10 to1 is it 100 to1 what's what's how how do we express our order

14:30

of magnitude on an average we're 30 to1 we just like I said I just came back from this where we are 34 million versus 1.2 um you know recovery is um you know 8 and a half hours versus 2 minutes just a whole different ball game I you're okay so now

14:46

you you hear that I mean hours versus minutes you know Millions versus a million that's where it gets to be impactful and that's why actifio is growing at the pace they are because they've got that kind of value proposition and if you

15:02

don't have it I'm not saying you don't have a business I'm saying you're going to run into all this friction you're going to have all these challenges you're going to have this inertia to get over so try to find and that's why I also spend all the time up front saying spend the time on finding whether you've really got something that's discontinuous disruptive and defensible

15:18

because if you do and it's really making an impact it'll probably end up being at least a 10 to1 uh gain pain ratio so um Mike do you want to just quickly cover this since it's a it's your sales pitch opportunity here now any buyers anybody got a got a copy data storage no um so

15:36

this is the slide we use to articulate gain to the customer and we do it on the hard dollar uh side uh in the slide and you know we're eliminating a whole bunch of software licenses and Hardware you know you can read the slide um we talk about 10x just on the cost side so we

15:52

get the first 10 10x there without quantifying the value of um uh you know how much is it worth what's an hour of downtime cost you you know that question comes up when we produce our tcco ROI analysis but but we start the

16:07

conversation really just on the basis of of a 90% reduction in TCO and we can quantify this for the customer after they tell us a little bit more about the money that they're spending today um you know our strategy to minimize the pain side of the equation uh recognizing that

16:24

this wasn't enough was uh to create a whole new class of storage um and you know I would I would uh look for you know Ash's commentary on this slide you know the one of the other brilliant things they did is they said we don't want to be a pissing match for the stuff

16:40

that you're already doing the beauty of the copy data idea is it creates something different we say look leave your that's your production data you just spent you know $4 million on a convolt based solution good for you great product that's production data um

16:56

what we do is is copy data and that's something different something new so it it enabled us to reduce the perceived pain the perceived switching costs on the part of the um of the user um and the beauty of this was that that it

17:12

turned out that the that copy data was an even better Market um as we kind of got behind this idea uh we used IDC to go out and and measure the size of these two markets and they said you know production data is about A10 billion business copy data is about a $44

17:28

billion business and by the way the copy data because it grows geometrically that's the downside for the customer you know the upside for the business is that's growing at a compound annual growth rate of 23% per year worldwide so um you know this is really I think

17:43

another one of the things that that the company got right right at the beginning was to reduce the perceived pain uh create a totally new category that let them keep what they have in the production side of their business so if you're not already you know getting the sense of this actifio

18:00

has Quantified their gain pain and they've been very specific in terms of how they can deliver it to customers and just to to you know recap on this so you all have a sense of it what I'm encouraging you to do is list out all of the things that you'll gain of course

18:17

but spend time really figuring out what's the challenge that your customers are going to have when they try to adopt use deploy manage Etc Your solution and then in between don't forget that you're a startup and that they're always going to look at you as a risk and that as we

18:32

had so clearly identified from the audience the default is to do nothing and just stick with whatever they're doing my ultimate uh startups have the following secret they are highly disruptive as Innovations but they're non-disruptive in their adoption so they

18:47

have all the impact in terms of the potential but they don't require you to change anything and that be the ideal now very few companies have that but Ash mentioned one of them and so I'll just bring it up VMware is a good example those of you who don't know what they do they virtualize uh computer environments

19:04

and in the server world when you're running Big Data Centers that support all the things that we use on our phones Etc as cloud services these servers used to have on average about well let's call it the in the teens of utilization so 15 16 18%

19:20

utilization that's crazy you know you spend all this money to buy these big boxes and they couldn't run at more than 18% utilization what VMware did was to allow you to run multiple compute loads through virtualization on the same server and they took utilization up by

19:35

guess what some multiple so you got utilization up into the 80s or 90% whatever you basically decided usually into the 80s and yet they did it by just taking existing compute loads and you didn't have to change them you didn't have to rewrite your application you didn't have to rewrite your whole uh you

19:51

know system that was being uh delivered you just packaged them effectively in this in this virtualized container and ran them alongside each other so it was a fundamental Innovation but it was non-disruptive to to deploy it people didn't have to rewrite and that was why it was so

20:06

successful and it it's true when you look back at the the sort of big innovations that really take off they don't require us to reinvent our business processes or relearn things in actifio case do you want to just one of you tell the the story of how this played out storage so um um yeah very quickly I

20:26

mean all the players each have a suite of capabilities like a stack of things that you have to connect to do what we do alone so we disrupted not only all the things that they do today but there were a whole bunch of supporting technologies that came about to mitigate

20:42

the downside of a flawed 20th century architecture and we replaced those twoo so you know this disruptive you know comes back to the disruptive business model idea we took a lot lot of those functions that people were familiar with and that people think of as separate things and we showed them how we could

20:58

do those very same things uh with a single application great so what's great about this is if you look at the gain pain and um you can evaluate it in the way that I just described um you will probably be able to if very quickly determine whether

21:13

you've got something that's worthwhile investing in the next stage of your business which is how you take it to Market and that starts with building your value proposition in the way that I I said right at the beginning uh you're going to able want to be able to express your value proposition in terms of for whom you are solving a

21:30

problem uniquely well and the framework since it's up on the website I'm not going to go through in detail is about first of all picking your Target customers so um that's got to be as narrowly defined as possible and when we get on the go to market session uh later in the in the semester we'll cover that you spell out what they're dissatisfied

21:46

with what's wrong with the current problem and uh sorry the current Solutions and that's all about the problems we just went through you spell out what your product does and you just heard actifio talk about if you can you know coming up with a new way to define it so they talked about copy data and

22:02

then you spell out what's the specific thing that that uh you're doing that is unique and again actifio case it was actually unifying the data and that unlike the traditional Alternatives in in in actifio case it was all the siloed products this is a single means to

22:18

manage all of that which saves you a tremendous amount of money so why don't we have you guys actually tell your story of how you came to the copy data concept and uh your positioning statement so um you know the the copy data concept um really it does all this

22:35

for us it really works hard for us it uh connects to a blatant customer problem it establishes this customer priority because it's driving an explosion in storage that's consuming all their resources um it explains the gain in such a way that it's so huge it actually

22:50

engenders some cynicism on the part of customer who say come on you can't really do that uh the sales process is a process of convincing them we told them the truth in the marketing process um and then we're minimizing Pain by leaving their production data alone so just a recap of how we're putting together some of those

23:06

um uh those Concepts that Michael's been talking about so I I talked a little bit about stories and their importance and great stories have a structure and the structure we use very much parallels the one uh that we just took a look at we think in terms of five components of of

23:22

uh of really you know positioning Target which is who is the actionable universe of buyers that we're talking to segment which is if I had a room full of those people in the Target what qualifying question would I ask to figure out who's likely to be a customer and who's not that's the segment brand is is whatever

23:39

you call yourself category is a competitive frame for the buyer U which is a very useful thing um it's very helpful if the buyer um if you people say I I say who do you compete with very often to a startup and they say no one one and I say well that means you're going to need to train people

23:55

about the problem that you solve you know you want to try to create some category that the buyer understands distinction is what makes you unique in that competitive set um proof is perceived evidence of Truth uh to your claim of Distinction so this is a framework that sort of roughly parallels

24:11

the one that Michael articulated uh it is the one that we we actually used and when you string these together you can articulate any company's value prop um in a segment in a in in paragraph that looks like this for Target who are segment brand provides the category with

24:26

distinction because of proof and um you know I can I can do this for almost any any uh company yes sir a lot of startups have to Pivot early on and early in your preso you talked about actifio versus actifio yeah which could be just a

24:42

pronunciation clearly but did you have to Pivot why and like what caused you to Pivot and was it a customer case which I'm sure it was if you did have to Pivot but could you maybe go through a little bit of that because I think that would be very helpful for anyone considering a startup I'm I'm going to let Ash answer

24:59

answer that I will start by saying I hate that word um it's it's such a glossing over of an incredibly painful and soul-searching process for an entrepreneur to decide what aspects of their original idea to abandon and move on from so so but but with that said I'd

25:14

love to get your answer yeah I think the people what wasn't about uh the basic concept the active F versus active Foo uh was probably just a simpler way to explain how to say something that uh was having a hard time for the for the audience but that apart the the quote

25:32

unquote pivot um was also not in the product itself if you look at the and I can go back to 2008 set a slide that basically says hey look people spend a ton more money on making and managing copies of data what we did change was something that Mike Michael was pointing

25:47

out to it's the ability to reduce the friction between what we building and what the value proposition for the customer is and what what it took to demonstrate this very very quickly we talked about this copy data storage and somebody really asks us are you really a storage guys really we

26:05

enterprise software but we really package it to look like a storage system because it's a paradigm that all the Enterprise guys understand it's a paradigm that's very easy to haul in connect power connect Network and boom you're done in a day so that that part we constantly pivot and there's more and

26:21

by the way we're not done you know we we have a long way to go as we and I think we talked about this uh much of your innovation in packaging messaging value proposition continues to change and I think uh that's one thing that definitely needs to change as we

26:36

understand better and more importantly as a as a market understands us better and we couldn't have said we are copy data storage 3 years ago they would said what the heck is copy data then Mike came in defined the whole space called copy data now there are analysts there are there are external proof that talk

26:53

about guys we should all be managing copy data it's not us it's actually analysts talking about that so there's a bunch of pivoting that we did in terms of packaging in terms of better messaging but not the fundamental product itself the Enterprise guys are a little tough to Pivot you know consumer

27:09

markets are a little different story uh there's a lot of deep rooted uh market analysis we do before we jump into this game so this was it for Enterprises managing lots of production data actifio copy data management provides access to

27:24

anything instantly because it's radically simple um and and that was it everything that we've we've done is really based on that articulation and those buckets and um it's been a guidepost for for everything that's followed you know it was very gratifying to hear Gartner say

27:41

that um but it it was you know a year and a half of hard work starting with a simple story and then focusing on quality of execution thank you very much so you know it's taken a while to get us to the point where activio could just package all of that but I often get asked by entrepreneurs why is this so important

27:58

you know why is it important to be able to end up with a statement like this well how many times are you dealing with a pitch that you've got about 10 to 15 seconds to tell somebody what you do all the time and every time you get up to explain whether it's in an elevator or a

28:14

pitch competition what you do the more crisply you can state it in a value prop proposition like this the more likely you are to get the hook in it begins the process of you being able to attract a customer and build a business and that's why the value proportion is so important when it's waffly when it's not clear

28:30

when it's not obvious when the benefits of the gain pain don't come through then you've lost your opportunity so it's very very very fundamental and thank you to the actifio guys for for bringing it to this Simplicity what I love about this at the end of the day is that at

28:45

the earlier stages it can be built around you so if you've got nothing else other than a value proposition to start off with other than that you understand the problem uniquely well that's a great starting point so when I mentioned it

29:02

last week I literally said the first thing I look for in an entrepreneur is what is their background that uniquely qualifies them to solve the problem they're talking about and if for example you grew up just to use the example we talking about earlier this evening in

29:17

the Health Care System you know you worked your way through it and you've spent years in it and you've learned what all the problems are with it and you've experienced exactly what pain goes on there and you can then talk about that with absolute Clarity then you're probably in a perfect position to bring forth a new solution to address

29:33

that problem so the first thing in your value proposition that I encourage you to articulate is why you are uniquely able to see this problem and then of course start to talk about what solution you personally have the skills or experience to start to deliver on and

29:50

finally what is it that you think in terms of some disruptive business model or experience that that you've uh got around how this might be delivered taken to Market and so forth you could bring to it but the point about this is as an entrepreneur the very very first thing

30:05

you can do is Define yourself uniquely and there's no reason why any of you in this room can't do that and it's a great basis on which to start thinking about how do you build your value proposition I could have put it first but if you didn't understand what a value proposition was I it wouldn't have made

30:21

sense I'm just going to pause so we wrap up on time the summary I want to bring to to into Focus here is not that this framework is right it's not that this is the only framework to use to define a value proposition it's that it hopefully brings out for you that it's important

30:37

to step back and think about instead of just an idea some great compelling technology you've uncovered or some great you know thought you've had what problem does it solve uniquely well for who why is it unworkable why is it unavoidable why is it something that just is not being done today and how

30:55

could it become discontinuously Innovative or defensible and how could you literally delivered in a way that gave your customers just absolute joy and some order of magnitude benefit that was easy for them to experience if you can do that and you're an entrepreneur who's uniquely suited to solving that

31:11

problem you're off to a great start so thank you very much and a particular thank you to my guest actifio mik and Ash great to hear your story we really appreciate it [Music]