Mentor Journey: The Value Proposition of the Startup CEO

Mentor Journey: The Value Proposition of the Startup CEO

Within the context of a startup, a CEO has to offer value propositions to three main segments: employees (or founding team), potential customers and potential investors. 

As the leader of your company, your value proposition is to make sure your employees, your customers and your investors are receiving the value of your startup in a compelling and sustainable way.

Value to Employees and Founding Team 

What attracts potential employees to join your startup journey, especially at the beginning of it, is your vision and your definition of company culture. If you are offering a strong and implementable vision of what your startup can do and become in the future, people will be interested. But what closes the deal is when you share with them how the environment in your company can help them contribute to realizing that vision. We are not talking about salary, ping pong tables, cool offices or weekend parties. We are talking about a culture  of listening, an environment of patience, personal growth, support and empowerment. We are talking about responsible freedom to implement and create.

Value to Customers

It is very important to understand that you are not selling products or  services. You are offering value to your customers’ lives, which they in turn are willing to pay for. If what you are offering is not enough, then the world can live without what you’re selling and it will let you know that really quickly.

Therefore, spend time with your customers, talk to them, listen to them and most importantly, make it a habit. Another important point regarding creating value for your customers, once your startup is up and running, you must focus on the repeatable reliability of the value you are offering. Focus on how your startup operations are designed  and make sure they are responsive to the customer feedback. Ensure that it offers quick solutions to any problems they may encounter while using your product or service. For example, don’t say we are customer centric and forget to offer customers with reliable feedback loops on all interactions between you and them. A point that is often  forgotten or badly implemented during digital transformation. 

Value to Investors

When seeking funding, many entrepreneurs think that it is the investor who should bring value to them. This is not true. You must offer as much value to investors as they do to you. You must offer potential investors value by demonstrating how your leadership will scale your startup in a profitable way. You must prove it to them too with all your early validation work. The argument must be so compelling that potential investors are actually eager to give you money but also personal contacts. If you only get an investment, you left value on the negotiation table and your argument was not strong enough. 

Brain Chesky’s Value Proposition 

In a previous article, I talked about Airbnb’s CEO, Brian Chesky and the  spectrum of leadership. If you are an entrepreneur or interested in  entrepreneurship, chances are you read his amazing letter to his team about the measures Airbnb is undertaking to stay alive in these challenging times. If you think about it, that letter was a clear display of value for employees, customers, and investors. Brian Chesky was protecting the most important asset of Airbnb’s culture, the people. Even while he was letting go of 25% of them. And that was the value he offered to Airbnb employees.

In his letter, he highlighted the following: “We faced two hard truths: 1. We don’t know exactly when travel will return. 2. When travel does return, it will look different.” This statement is what I like to call: Customer centric call to action. This is the CEO asking his team to focus on understanding the “new normal for their customers”  and to let go of any assumptions over how the company is fighting to save its older structures. Airbnb is transforming with its customer and he made that crystal clear. Everyone must align with that transformation. The company also set aside $250 millions to reimburse hosts for canceled reservations. And that is a true demonstration of value for the customer.

Here we are looking at the travel industry, and things are not looking good to say the least. And the CEO of Airbnb is admitting to that. Despite that, Airbnb raised two billion dollars in debt financing. This is what I like to call “hard rock” tangible validation of value to investors. 

Investors are not in the habit of giving away money. Yet they offered Airbnb two billion dollars in debt with around 9% of interest. And they did that because they saw the benefit this CEO has offered his team, his customers. And they are willing to bet on it. 

In a nutshell, as a leader of your company, your value proposition is to give your team enough space to create with your empowering guidance and actionable vision. To give your customers reliable and intuitive solutions to their problems, which they in turn are happy to pay for and are likely to recommend through in positive word of mouth as well. And finally, to give investors all the right reasons to choose to give you their money. 

Make sure your value proposition is well defined and lead your startup forward.  

Goodwill and respect.

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