engineering 245 the lean launchpad
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Engineering 245 The Lean LaunchPad. Lecture 6: Partners Professors Steve Blank, Ann Miura-Ko, Jon Feiber http://e245.stanford.edu/. value proposition. key activities. customer relationships. key partners. customer segments. cost structure. revenue streams. key resources. channels. - PowerPoint PPT PresentationTRANSCRIPT
Engineering 245
The Lean LaunchPad
Lecture 6: Partners
Professors Steve Blank, Ann Miura-Ko, Jon Feiberhttp://e245.stanford.edu/
2images by JAM
customer segments
key partners
cost structure
revenue streams
channels
customer relationships
key activities
key resources
value proposition
KEY PARTNERS
which partners and suppliers leverage your model?
who do you need to rely on?
Test Hypotheses: Key Partners
4
What defines a “Partner?”
5
• Shared economics
• Mutual success / failure
• Co-development/invention
• Common customer
But remember - you’re a startup
Why have partners?
6
● Faster time to market
● Broader product offering
● More efficient use of capital
● Unique customer knowledge or expertise
● Access to new markets
Partners – Physical Channels
7
• Strategic alliances
• Joint new business development efforts
• “Coopetition,” (cooperation between competitors)
• Key supplier relationships
Partners – Strategic Alliances
8
• Reduce the list of things your startup needs to build or provide to offer a complete product or service.
• Use partners to build the “whole product”
• using 3rd parties to provide a customer with a complete solution
• complement your core product with other products or services
• Training, installation, service, etc
Partners – Joint Business Development
9
• Joint promotion of complementary products• Share advertising, marketing, and sales programs
• One may be the dominant player• Intel offered advertising fees to PC Vendors
Partners – Coopetition
10
• Joint promotion of competitive products
• Competitors might join together in programs to grow awareness of their industry
• Tradeshows
• Industry Associations
Partners – Key Suppliers
11
• Outsource suppliers• Backoffice, supply chain, manufacturing
• Direct suppliers• Components, raw materials, etc.
12
Startup mistakeStrategic alliances and joint partnerships
Not needed for EarlyvangelistsAre needed for Mainstream customers
Usually fail
Traffic Partners – Virtual Channels
13
• Long-term agreements with other companies • deliver long-term, predictable levels of customers • “Cross referral” or swapping basis• Paid on a per-referral basis• Partners drive traffic using text-links, with onsite promotions, and
with ads on the referring site• Partners sometimes exchange email lists
Partnership Disaster: Boeing
14
CollaborativeLooked great on paper.
Worst business decision of the 21st century (so far!)
Mobile Location Based ApplicationsCollaborative Partner
15
Managing partners - risks
• Impendence mismatch• Longest of partners schedule becomes your longest item• No clear ownership of customer• Products lack vision – shared product design• Different underlying objectives in relationship• Churn in partners strategy or personnel• IP issues • Difficult to unwind or end
Why Will a Large Company Partner?
• You give them a competitive “leg-up”• In sales • Or “halo-effect”
• You are on their technology road-map• You’re an economic opportunity for them
• potential customer of large company• can leverage their existing products and sales
• Change agent for the large company
You need to understand their motivation
Should I take an investment from a Large Company?
• They are interested in their bottom line, not yours• Their objectives are not to make you a large company• Who’s the sponsor? What’s the motivation?
• Needs to come from the business side• Not the venture side
• Try to get sales deals not investment• Or try to offer warrants based on sales success
Startup Partner Strategies
19
• Don’t confuse partners for Earlyvangelists vs. mainstream• Don’t confuse big company partnering with startup strategy• Find the one that gives you an unfair advantage
– Air Supply strategy
• Recognize you don’t matter to a large partner
Team Deliverable for Next Week
• What partners will you need?• Why do you need them • Why will they partner with you?• What’s the cost of the partnership?• Talk to actual partners
• Summarized in a 5 Minute PowerPoint Presentation
Ground Fluor Pharmaceuticals
This is your brain on fluorine
Team: Kiel Neumann (EL)Stephen DiMagno (PI)Allan Green (Mentor)I-Corps 11/15/11
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Key Partners
I-Corps 11/15/11
Manufacture
GMP precursor manufacturesGMP cassette manufacturersRadiopharmacies
Clinical Trials
St. Jude Children’s Research HospitalSloan KetteringUCSF
General methodology for
adding fluorine to lead compounds of
interest
The Business Model Canvas
Accessibility (RCY)PuritySpeedPET/SPECTMultiplatformSensitivity (nca)Specific compounds
IPPoP dataRegulatory planUnderstanding of the regulatory process
Contract cGMP precursor manufactureSalary, RentsClinical trials
SOPs for precursors and drugsRecruit clinical sitesIn vivo animal studiesDevelop regulatory plan for pre IND meetingID cGMP CROFund-raising
Nuclear Medicine and Radiology departments
Technical Assistance (Image Atlas)FDA regulatory support
Radiopharmacies
Equipment producers
Prescribing physicians
Radiologist who perform studies
Sales of intermediates
Technology license
Product license (royalty)
Drug developersPharmaceutical development companies
IPPoP data
Radiologists
Technical assistancecGMP manufacturersRadiopharmacies
Direct sales of precursor
Sales of packaged precursor in cassettes
Cassette manufacturers
I-Corps 11/15/11
Food Chain
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Reagents
• F-dopa iodonium intermediate• F-dopamine iodonium intermediate
GMP Cassette or Components
•ABX•Eckert & Ziegler•GE MX module for TracerLab•Siemens Explora
GMP Compliant Synthesizer
•TracerLab/ GE•Eckert & Ziegler•Siemens Explora•Neoprobe•Synthra
PET Radiopharmacy
distributor
•Siemens PETNet•GE Amersham•Cardinal Health•AAA• Iason
We provide accessibility
Only want GMP precursor in cassettes without development
Could license precursor synthesis for incorporation in cassettes
Require GMP precursor (or cassette) to develop our product with their synthesizer
I-Corps 11/15/11
I-Corps Presentation 11/15 26
GMPPrecursor
Current Income Model
GMPCassette
Finished Imaging Agent
$10’s per cassette $300 per cassetteFinished Imaging AgentFinished
Imaging AgentFinished
Imaging AgentFinished
Imaging AgentFinished
Imaging Agent
$1700 per dose~100 doses/cassette
One time setup $140,000Revenue neutral
thereafter
Licensing fee or nominal royalty
($50) per cassette
$500 fee per dose at existing price structure
PatientsHospitals
GFP GFPGFP
I-Corps Presentation 11/15
Manufacturing Partners
One time setup $50-140K
Contract Manufacture
GMP Precursor
Albany Molecular
Nebraska GMP Facility
SRIInternational
Richmond Chemical
GFP
I-Corps Presentation 11/15 28
GMPPrecursor
Current Income Model
GMPCassette
Finished Imaging Agent
$10’s per cassette $300 per cassetteFinished Imaging AgentFinished
Imaging AgentFinished
Imaging AgentFinished
Imaging AgentFinished
Imaging Agent
$1700 per dose~100 doses/cassette
One time setup $140,000Revenue neutral
thereafter
Licensing fee or nominal royalty
($50) per cassette
$500 fee per dose at existing price structure
PatientsHospitals
GFP GFPGFP
I-Corps Presentation 11/15
Manufacturing Partners
Precursor use license GMP
Cassette
Synthra
SiemensExplora
Eckert&Ziegler
ABX
GFP
I-Corps Presentation 11/15 30
GMPPrecursor
Current Income Model
GMPCassette
Finished Imaging Agent
$10’s per cassette $300 per cassetteFinished Imaging AgentFinished
Imaging AgentFinished
Imaging AgentFinished
Imaging AgentFinished
Imaging Agent
$1700 per dose~100 doses/cassette
One time setup $140,000Revenue neutral
thereafter
Licensing fee or nominal royalty
($50) per cassette
$500 fee per dose at existing price structure
PatientsHospitals
GFP GFPGFP
Customer/Partners
Fee per doseTechnology license
Finished Drug
Iason
AAA
GE Healthcare
Siemens
Cardinal Health
GFP
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2.2 million doses per year %10 of the market is 200,000 doses $500 per dose = $100 million
Current sales $2 M/year because production is limited and costs are high. Confidential financial Gannt chart prepared
Potential Market
I-Corps 11/15/11
36
Product Food Chain
I-Corps 11/15/11
Precursor Sale
• F-dopa iodonium intermediate• Subcontracted manufacture (licensed)• Small profit ($10/cassette)
GMP Cassette Sales
• Current price - $300/cassette. One cassette might provide 50-100 doses of finished drug. License precursor incorporation in the cassette.
Drug Production
• Current sales ~ $1000-$1500/dose. Potential manufacturing cost per dose (FDG) $200/dose.
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ARKA Thermal SolutionHigh Performance Heat Pipe Technology
Ideation/Consulting Firm that offers design and prototyping solutions in Thermal Management
Scan and respond to market needs and provide innovative product solutions.
Offer solutions to industries and organizations proactively by seeking new avenues to utilize heat pipe technology
Week 6 Canvas
Communication of Design and PrototypesMoney Flow
Physical Product Flows
Business Model(For First Product Idea – LED thermal management module)
Arka Thermal
Manufacturer(Extension)
Joint Venture
Market
Design Sources
Other Potential Markets
What Partners will we need?
• Our partner in the new model is a Thermal Solutions manufacturer who is looking to extend into the heat pipe market.
• We require partners with production and distribution expertise• The distribution of this product also requires access to a
dedicated sales force.
Why will they partner with us?
• Arka Thermal offers design expertise in heat pipe design• Based on its talent, Arka Thermal proposes to offer novel and
high-efficiency heat pipe solutions proactively to the market.
1st Product Idea
LED Thermal Dissipation Module
Offers higher lumen intensity with a longer life enabled by novel thermal dissipation technology.
Replacement of current high lumen incandescent bulbs with LED equivalents without light quality/output compromises.
Offer a novel thermal dissipation technology module that can be used in different LED product families
Cost and Risks
• Arka Thermal The cost of the partnership lies is the design and prototype creation (for pitching purposes)
– Research and Development costs: we need to provide contemporary design that OEMS can incorporate easily in their systems. – Effectiveness: the products needs to be efficient, meet standards and form specifications. The cost in this case is testing, certification and design
upgrades to reflect OEM needs. – Recruiting and maintaining high level talent in ideation and design
The highest risk comes from not responding proactively to market change, or being first mover. Loss of design exclusivity. It is essential that design be protected.
The Manufacturer may choose to work outside of Arka Thermal’s contracts with in-house or other design agencies that offer more benefits
Cost and Risks
• Manufacturer The initial cost of setup and maintaining a product extension. Risk lies in moving into a crowded established market. The market
might not require our services.
Manufacturer
Incentives• Potential increased sales
through joint venture creation with Arka
• Extended product line with access to Arka Designs, increased product extension development possibilities
• Outsourcing R&D for product extension to Arka (greater efficiency due to specialization)
• Customized solutions for each customer of the Manufacturer
Impediments• Investments in joint
venture is substantial• ROI cannot be established
at this point• Presence of in-house R&D • Solutions from other
providers might be more lucrative
• Standards preclude use of heat pipes/ diminished interest in heat pipes
Benefits of Exclusive Partnership
• Arka Thermal gains a partner with production and distribution expertise in thermal solutions manufacturing
• Manufacturer can extend product line through joint venture and explore new markets
Interviews
Action MotionCustomer Interaction Meetings:1. Regional Senior C/A Client Manager2. Dr. Peter Foller, Former Director of
R&D chemical and Optical, PPG3. Eilis Rosenbaum and Jonathan Levine,
Hydrate Researchers4. Pine Liu, Entrepreneur in Smart Sensor
Monitoring5. Jim Miller, CMU Researcher6. Frank Stienke, Schlumberger Affiliate
Planned Customer Interaction Meetings:1. Two C/A plant visits2. Eilis Jill Rosenbaum and Jonathan
Levine, Hydrate Researchers3. Morty, CMU Facilities
Hypothesis Testing:1. Custom semiconductor grower2. Funding organization
Planned Hypothesis Testing:1. Wayne Meier, Matric Engineering
Services2. Diane L. Magin, BlackBox3. Daedalus Designs
C/A Market
Technology Supplier
[Product Form]1. Bundled into larger product2. Standalone3. SenSevere can make bundle4. Monitoring
Industrial Plants
Plant #1
Plant #2
Plant #3
Internal Pilot Test
APPROVED
Pilot Commercial Customer Test
CONDITIONAL APPROVAL
Pricing
Cell Technologies
Drying Towers Liquifaction
Detection limit of the sensor required is different for each step of the process. Discussions are in cell technologies
Each step process has different risk premium associated
Price the same product differently based on what we protect as opposed to an agglomerate value add.
Tunable sensor sensitivity
#GOAL
US Sensors Industry: $9.8BProjected Growth: 6.1%/year
C/A Market
# of Units
Operating Specifications Cost / cell
Time betw/Incidents
Downtime / incident
Average cost / year from incidents
Price
Market Size: [/year]
$73,250,000
Partner Margin:25%
Prototyping COG
Sales Profit:[/year]
$50,662,996
Year Type % Revenue [/year]
1 Innovators 2.5 $271,500
Operating costs for 1st year projected to be $200,000
2 Early Adopters 16 $8,785,000
3 Early Majority 50 $27,463,500
4 Late Majority 84 $46,141,500
Other Markets!
Laboratory Industrial
1. Hydrate research2. Micro-temperature
measurement and heating
3. Wireless smart building control
1. C/A2. Transformer gas
monitoring3. Wireless smart building
control
Achieve sales in both ends of the spectrum and all other applications fall within possible demonstrated capability
#GOAL
#KILLER APPChlorine production