Inner CEO

Value Creation vs. Business Model: Which Comes First In A Startup (And Why You're Probably Thinking About It Backwards)

Oz Merchant
June 20, 2025
June 3, 2025
Business Model

Ever built something valuable, only to watch it die in the dark?

That’s what happens when founders chase value creation without a business model.

Now flip it. Ever seen a brilliant business model with no real value behind it? It becomes a slick pitch with no staying power, a sugar high with no substance.

So which comes first—value creation or business model?

Founders love this debate. But here’s what I’d tell you in a coaching session:

You don’t choose one first; you sequence them both, fast and smart.

Let’s break down how to get the order right before you waste time building something people will never pay for.

Step 1: Kill the “Either-Or” Mindset

Most early-stage founders fall into one of two traps:

  • The Builder, obsessed with solving problems, wants to make something users love before thinking about monetization.
  • The Schemer, obsessed with revenue, tries to lock in a repeatable business model before proving anyone even cares.

Both get burned.

One builds castles on sand. The other builds revenue on nothing.

You need both: value and a path to payment. The key is knowing when to focus on each.

Step 2: Start With the Customer's Pain, Not the Product

Forget your idea for a second. I mean it.

Start with one customer. One burning pain. One expensive, frustrating, time-sucking problem.

If the pain doesn’t cost them time, money, peace of mind, or status, they won’t pay to fix it.

Real value creation begins with empathy, not features. Step into their inbox. Look at their calendar. Study their P&L.

Action Step: Interview 10 real potential customers. Ask them:

  • What are you spending money on right now to solve this?
  • What happens if you don’t fix it?
  • What would the perfect solution feel like?

That’s where value lives, not in your codebase.

Step 3: Sell Before You Build

This is where the business model comes into play.

Your job is not to build a great product. Your job is to prove someone will pay for the outcome it delivers.

Before you write a line of code, open Figma, or order any inventory, just go try to sell it.

This is the part where most founders get nervous. Selling feels vulnerable. But it’s the fastest test of whether your idea has teeth.

A purchase order is worth more than a pitch deck.

You’re not trying to scale yet. You’re just proving there’s real demand and willingness to pay. Can you get a deposit, a signed letter of intent, a pre-order?

Action Step: Build a simple landing page. Put a price on it. Show it to the 10 people you interviewed. Watch who clicks, and more importantly, who pays.

Step 4: Make the Business Model Part of the Value

Here’s the mindset shift—your business model is part of your product’s value.

How you charge, how often, and how you measure outcomes can either make your customer’s life easier or harder.

  • Usage-based pricing feels fair when value varies month to month.
  • Flat subscriptions offer predictability and ease.
  • Success fees align you with your customer’s goals.

Get the model wrong and it becomes friction. Get it right and it becomes the reason they stay.

Pro Tip: Your first business model won’t be your last. Choose one that is easiest to test, not one that scales best on paper.

Step 5: Map the Value to the Money

This is where you make the connection stick.

Draw a simple map:

  • What is the customer’s core problem?
  • What solution are you offering?
  • What outcome will they get?
  • How do you charge for it?

If you can’t draw a straight line from the customer’s pain to the money in your bank account, you’re either solving the wrong problem or charging the wrong way.

Action Step: Fill in this one-sentence model:

We help [customer] get [outcome] by [solution], and we charge [pricing model].

If you can’t complete that sentence with clarity and confidence, you’re not ready to scale—or even to build.

Step 6: Build Only What You Need to Prove the Model

Now, and only now, do you build something.

Not everything. Just enough to test your value and validate your business model.

  • For SaaS, try a no-code MVP or fake the backend manually.
  • For ecommerce, take pre-orders before you place your first inventory order.
  • For marketplaces, manually match buyers and sellers behind the scenes.

You’re not aiming for polish. You’re aiming for proof.

Final Coaching Thought: Timing Beats Perfection

Value without a business model is a passion project. A business model without value is a scam.

The founders who win don’t just build cool things. They align what customers want with how they’re willing to pay.

Start with pain. Test for payment. Learn fast. Ship small. Charge early.

Test. Talk. Charge. Iterate.

That’s the loop that builds momentum, and a real business.

Reflection Question:

Are you building something people want and will pay for or are you avoiding the parts that make it real?