Trapped Value Release

Find value locked in the world that your technology can unlock—the market will reward you with a portion of the gain

Geoffrey Moore
Crossing the Chasm with the legendary author Geoffrey Moore

Trapped Value Release

"The concept we use in venture, I call it trapped value. The idea is: where's the trapped value that this innovation would release? Because when you release trapped value, the world will give you a portion of the gain, typically 10%. It's an easy number to do math with. So if you want a billion-dollar company, you better find $10 billion worth of trapped value that your technology could release." - Geoffrey Moore

What It Is

Trapped Value is a framework for evaluating startup opportunities by identifying economic value that exists but is currently locked or inaccessible, then determining whether your technology can release it.

The insight: successful technology companies don't create value from nothing—they release value that was always there but couldn't be accessed. When you release trapped value, you're not asking customers to pay for something new; you're offering them access to something they already wanted but couldn't get.

How It Works

The Economics of Trapped Value

The 10% Rule (a rough heuristic):

  • When you release trapped value, you can capture roughly 10% of the gain
  • If you want to build a $1B company, find $10B of trapped value to release
  • If you want to build a $100M company, find $1B of trapped value

This gives you a framework for sizing opportunities and validating whether a market is big enough.

Examples of Trapped Value

Uber: Released the trapped value of empty car seats

  • Millions of cars sitting idle most of the day
  • People willing to pay for rides
  • Technology connected the two, releasing massive trapped value

Airbnb: Released the trapped value of empty bedrooms

  • Millions of spare rooms sitting unused
  • Travelers willing to pay to stay
  • Technology connected the two

AWS (for CIA): Released the trapped value of computing capacity

  • CIA needed massive computing power
  • Building and maintaining infrastructure was expensive and slow
  • Cloud computing released the value of scalable, on-demand infrastructure

Documentum: Released the trapped value of organized documents

  • Pharmaceutical companies had 500,000-page FDA submissions
  • Every day of delay cost $1-2M in lost patent life
  • Document management released that trapped value

Types of Trapped Value

  1. Asset Utilization - Physical assets sitting idle (Uber, Airbnb)
  2. Process Efficiency - Wasted time and effort (document management, workflow tools)
  3. Information Access - Knowledge that exists but isn't accessible (search, databases)
  4. Coordination - Value that could be created if parties could connect (marketplaces)
  5. Risk Reduction - Value lost to preventable problems (cybersecurity, insurance)

How to Apply It

1. Identify Trapped Value in Your Domain

Ask: What value exists in this space that people can't access?

  • What assets are underutilized?
  • What processes waste time or resources?
  • What connections aren't being made?
  • What risks are causing unnecessary losses?

2. Size the Trapped Value

Calculate the economic value currently locked:

  • How many people have this problem?
  • What's the cost of the problem per person/company?
  • What percentage of that cost could you eliminate?

3. Assess Your Technology's Ability to Release It

Does your technology actually unlock this value?

  • Is there a 10x improvement possible?
  • Can you demonstrate the release in a compelling way?
  • Is there a clear before/after story?

4. Validate the Release

Your early market work should prove you can release trapped value:

  • Marquee customers demonstrate the release
  • Measurable ROI for customers
  • Reference customers who can quantify the value gained

Trapped Value vs. "Nice to Have"

Not all product ideas release trapped value:

Trapped Value (compelling):

  • "Every day of delay costs us $1-2M"
  • "We've been doing this manually and it takes 100 hours"
  • "We lose 20% of customers because of this problem"

Nice to Have (weak):

  • "This would be slightly more convenient"
  • "Our current solution is fine but this is newer"
  • "Some people might like this feature"

The difference often determines whether you have a compelling reason to buy.

Connection to Other Frameworks

Compelling Reason to Buy

Trapped value creates the compelling reason to buy. When customers recognize that you can release value they desperately want, the sale becomes easier:

  • They come to you (not you chasing them)
  • They're willing to pay premium prices
  • They move faster than their usual decision process

Beachhead Segment Selection

When choosing your beachhead, look for segments where:

  • Trapped value is highly concentrated
  • The pain of not releasing it is acute
  • Your technology is well-suited to release it

Source

  • Guest: Geoffrey Moore
  • Episode: "Crossing the Chasm with the legendary author Geoffrey Moore"
  • Key Discussion: (00:44:08-00:46:24) - Trapped value explained; (00:46:24-00:47:32) - How to find it
  • YouTube: Watch on YouTube
  • Original Source: Geoffrey Moore and venture capital community

Related Frameworks

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