Value Proposition and Pain Points

Update: (6/4/2012) this article has been re-written and published as a page:

It seems that FairSetup really addresses three primary pain points: capital, culture, and management.  We also have segmented our market into startups, growth, and established companies.

This is an improvement on our original value-proposition that we are making after presenting FairSetup to a pretty large number of people.  While we started with Nikita’s original pain point of stretching capital in a growth-stage company, we have learned that FairSetup has much broader applications.

Specifically:

Startups generally are comprised of small teams.  Capital is a huge pain point for them, however they do not care much for culture and management.  Besides, equity is generally the healthy conversation to have at that point and, while FairSetup may facilitate conversations around eventual departure of critical employees, we do not yet fully understand all the implications that FairSetup has in this context.  Although, on the capital side, one of our potential clients has $120K and the first employee asked for $70K.  They have since shifted the conversation to equity, but if the founder paid $70K, that would effectively preclude the company from getting off the ground.  However, if, with FairSetup, the founder would be able to hire 3 people at 40K or, better yet, 4 people at 25K with 20K left for operations, this could make the company.

Growth Stage companies have problems all-around.  With respect to capital, they need to spend money to make money and capital is the primary limiting factor in their ability to scale.  On top of that, as the organization starts growing with people being hired on decent salaries, cultural problems start to come about.  On top of that, mid-level management enters the picture complicating the system.  So these companies need help in all painpoints: capital, culture, and management.  This is why we think this market segment is likely to be our primary customer.

Established Companies already have revenues, so capital is not as much of a problem.  Take, for instance, trading firms – capital for compensation is the least of their problems.  That said, managing employee expectations, deciding on bonuses, ensuring systematic review, and keeping employees happy are major issues based on the conversations we’ve been having.  Some solutions, such as forced ranking (also known as “Rank and Yank”) can strike quite an unpleasant note, but one potentially far less pleasant than dealing with an under-performing organization.  FairSetup, however, can provide a straightforward justification for compensation (for both internal and external purposes), ensure a transparent promotional structure, systematize regular performance reviews, connect performance to compensation in a mathematically clean manner, etc.

It is ironic that, while we started out with solving a pain for a growth-stage company, we may actually be looking at established companies as a significant source of revenues.

Consequently, taking into account this feedback, we are changing our front page from:

FairSetup is a novel profit-sharing compensation model for growth-stage companies. It aligns financial and human resources for maximum growth by giving employees ownership of future profits proportional to their impact on the company bottom line.

FairSetup is our invention.  For our clients, we customize and deploy FairSetup-based compensation into their companies.

To:

FairSetup is a novel profit-sharing model where participants are compensated based on their impact.

FairSetup is our invention.  We offer a web-based calculation suite and consulting services to deploy FairSetup-based solutions into startups, growth-stage, and established companies to improve capital deployment, company culture, and management transparency.


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