Bijoy Goswami, the prime mover behind the Bootstrap Network http://www.bootstrapnetwork.com/ has an approach he calls "Demo Sell Build" that recognizes that most of the risk in a startup is not technology but market. I agree with "figure out the core value you want to provide users" but I would give short presentations or briefings (e.g. one page handout, one slide, one HTML mockup page) to make sure you've nailed it before developing the full app. Bijoy goes into more detail on his model in the "Bootstrap Bootcamp Fall 2007" DVD here http://www.amazon.com/Bootstrap-Bootcamp-Fall-Bijoy-Goswami/...