The Secret of Successful Startups -Kunal Shah’s Delta 4 Theory
Delta 4 theory was coined by Kunal Shah after stepping out from freecharge and studying a vast variety of startups. According to this theory, all those businesses that have 𐤃<4 (value of delta greater than four) are more likely to succeed. In this theory basically, he explains 3 major virtues/properties that make an idea/startup kind of idea/startup that has 4 or even greater value of delta.
These Virtues are:
- Removing a hurdle.
- UBP (Unique Bragworthy Proposition).
- High Tolerance & Irreversibility.
Removing a hurdle
Where are we today? The answer is a more efficient state than yesterday we were in i.e. humanity is in a state which is far more efficient than it was 10 or 20 years ago. Similarly, in the future, we will be far more efficient in everything than we are today. Humans seek efficiency and ease.
Let me explain it-
- Booking railway tickets at the station vs booking them online. (Everybody will prefer online booking despite slow ticket booking website because it is way more efficient and time-saving than standing in a long queue in a railway station)
- Netflix vs TV (Everyone will prefer Netflix because you can watch any movie or show whenever you want while it is not the case with the tv)
- Cab service vs Offline taxi finding.
So basically in every society, there are a lot of hurdles/problems to do certain tasks. Anyone who can remove that hurdle, anybody who can solve that problem can create a delta 4 business using this solution by just scaling this solution to big masses.
UBP (Unique Bragworthy Proposition)
This essentially means that everybody who experiences the new and more efficient state would scream at everybody who’s at an inefficient state asking them to move to the new state. This is also called word-of-mouth marketing. Make your product so good that people will automatically be going to share the experience of using it because they have a great experience of using it.
High Tolerance & Irreversibility
Even though some experiences or things on your delta 4 startup are broken, People will still not go to the old/previous method of doing that particular thing because it is way more efficient than the previous state. ( For example, even if the IRCTC website is down you’ll wait till it becomes available then after that you’ll book your railway tickets online.)
Irreversibility
The behavioral change you are doing by providing a solution to the particular problem should be irreversible. For example, if you find a driver on ola/uber who denied your ride what you’ll do, most likely you’ll find another cab but still, you’ll use that cab service. (It’s not like from now I’ll never use ola/uber because the driver denied your ride.) customer’s behavior is irreversible in this case, they’ll again use cab service rather than the old method of taxi finding.
Conclusion
So any startup/idea that has value of delt greater than 4 is most likely to succeed.