The recent explosion in the startup activity has manifested itself in many shapes and sizes, not the least of which has been contemplation by entrepreneurs, researchers, and thought leaders on how new companies can and should justify their existence. The result: the advancement of the concept of ‘value’ and its close companion ‘value proposition’. But what is value? And more importantly, can different categories of value be identified for both consumer and business focused companies and startups? Value: A Brief Primer As such, value is an abstract concept (while, say, a chair is the opposite – a highly tangible and commonly understood object). And while products and services are engineered to create value, value ultimately resides in the mind of the user or the customer. It is the user’s - not the product owner’s - perceived worth (e.g. in monetary terms) of all the benefits received in exchange for the “price” paid (in the form of money, personal time, and other commitments). From the buyer’s perspective, it answers this question, “if I am a prospect, why should I use/buy/consider your product/service? Hopefully this explanation of value makes sense , so let’s now turn to the second part of the question we presented earlier. Value: A Viable Classification To set the stage, consider this: asking what “types” of value exist is almost equivalent to asking what a given product/service does for its user. And to make things simpler, let’s begin with forms of value relevant for business-to-consumer startups or companies. The first form of value creation is making something that: 1. Fulfills a Universal Human Need The total addressable market for applications that help individuals satisfy their internal drives is enormous – precisely because these needs span the entire world population. According to Steve Blank, the unparalleled growth of many of the popular consumer web applications, such as Facebook, Twitter, and Pinterest is explained by their value creation mechanism – provision of means to express human needs in an online environment. 2. Helps Resolve a Problem, Challenge, or Frustration Products and services in this value creation category are more context-specific and can be directed at both the individual’s professional and personal life. Examples abound: programming bootcamps help individuals who are struggling in their current profession switch jobs and marketplaces help busy people easily and quickly find the right people for a given job or task. � While these two forms of value generation categories are still somewhat general, the three that follow are even more specific: 3. Removes the Wealth Barrier The human population is far form being uniform: at any given time, certain segments of the population don’t have access to certain products or services. Companies that find ways to remove this barrier are able to create new markets and genereate value as a result. The Tata Nano is a car that made automobile transportaion possible for India’s “scooter” population. Wordpress, Blogger, and Tumblr all made website creation cheaper and more accessible for a large segment of personal and professional users.
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