lecture 1: business model & customer development
TRANSCRIPT
The Lean LaunchPad
Lecture 1: Business Models and Customer Development
Steve BlankJon FeiberJon Burke
http://i245.stanford.edu/
What’s A Company?
What’s A Company?
A business organization which sells a product or service in exchange for revenue
and profit
How Are Companies Organized?
How Are Companies Organized?
Companies are organized around Business Models
What’s a Business Model?
What’s a Business Model?
A business model describes all the parts of the company necessary to make money
What About My Technology?
What About My Technology?
Your technology is one of the many critical pieces necessary to build a company.
It is part of the “Value Proposition”
What About My Technology?
Customers don’t care about your technologyThey are trying to solve a problem
What’s A Startup?
What’s A Startup?
A startup is a temporary organization designed to search for a repeatable
and scalable business model
How to Build A Startup
IdeaBusiness ModelSize Opportunity
Customer Development
How to Build A Startup
Idea Business Model(s)
Size of the Opportunity
Customer Discovery
Customer Validation
How to Build A Startup
Idea Size of the Opportunity
Business Model(s)
Customer Discovery
Customer Validation
Theory Practice
Business Model(s)
Size of the Opportunity
How to Build A Startup
Idea Size of the Opportunity
Business Model(s)
Customer Discovery
Customer Validation
• Web startups get the product in front of customers earlier
Business Model(s)
Size of the Opportunity
How to Build A Startup
Idea Size of the Opportunity
Business Model(s)
Customer Discovery
Customer Validation
Business Model(s)
Size of the Opportunity
buzzgroup
?A business model describes all the parts of the company necessary to make money
?what are those parts? what parts is a business model composed of?
22
? ?
Business Model Canvas
to describe, challenge, design, and invent business models more systematically
building blocks 9
CUSTOMER SEGMENTS
images by JAM
VALUE PROPOSITIONS
images by JAM
CHANNELS
images by JAM
CUSTOMER RELATIONSHIPS
images by JAM
REVENUE STREAMS
images by JAM
KEY RESOURCES
images by JAM
KEY ACTIVITIES
images by JAM
KEY PARTNERS
images by JAM
COST STRUCTURE
images by JAM
images by JAM
customer segments
key partners
cost structure
revenue streams
channels
customer relationships
key activities
key resources
value proposition
images by JAM
customer segments
key partners
cost structure
revenue streams
channels
customer relationships
key activities
key resources
value proposition
images by JAM
CANVAS OVERLAY
images by JAM
OFFER
CHANNELS
CUSTOMER RELATIONSHIPS
CUSTOMERSEGMENTS
REVENUE STREAMSCOST STRUCTURE
KEYACTIVITIES
KEYPARTNERS
KEYRESOURCES
images by JAM
CANVAS OVERLAYOFFER
CHANNELS
CUSTOMER RELATIONSHIPS
CUSTOMERSEGMENTS
REVENUE STREAMSCOST STRUCTURE
KEYACTIVITIES
KEYPARTNERS
KEYRESOURCES
Business Model Canvas
building block
building block
building block
building block
building block
building block
building block
building block
building block
building block
building blockbuilding
block
building block
building block
45
illustration
?why should some of the smartest scientists in the world waste their time thinking about a business model for coffee?
!not just because most scientists drink a lot of coffee. we can learn a lot from innovative business models across industries
how much did the cost of home coffee consumption change for Swiss households over the last couple of years?
600% to 800% more
Nespresso changed the
business (model) for
espresso
RESULTS
one of the fastest-growing businesses in the Nestlé group
average growth of 30% p.a. since 2000
over 3 billion CHF annual revenue with 1 product line(3.2 bio USD)
57
buzz group
?Discuss and describe how you would design a business model around Nespresso’s invention
60
?
? ?
?
?
??
?
?
61
Nespresso machines
retail mailorder
Nespresso
.comcall
centerNespresso stores
households
business
1 x machinesales
repetitive pod sales
distribution
channels
coffee production facilites
production
B2C distributi
on brandmarketing
brandpatents
machine manufacturer
production
B2C distributi
onbrand
marketingNespress
o club
brandbrandNespresso pods
but Nespresso almost failed in 1987 due to a nonperforming business model
63
Nespresso system
offices
joint venture with
manufacturer
machine
manufacture
r
?what is the most powerful about using a shared language, such as the Business Model Canvas?
buzz group
71
?
? ?
?
?
??
?
?
possible alternatives
73
radiation-freedetection of breast cancer
hospitals
74
proprietary IP medical device manufacturers
75
?
? ?
?
?
??
?
?
But,Realize They’re Hypotheses
9 Guesses
Guess Guess
GuessGuess
GuessGuess
Guess
GuessGuess
How Does This Really Work?
Stanford Lean LaunchPad Class8 Weeks From an Idea to a Business
MammOpticsFinal project presentation for E 245 Winter 2011
MammOpticsInitial Idea
Breast cancerLeading cause of cancer in women190,000 diagnosis every year US41,000 deaths every year USIncreasing diagnosis rates
Mammography15%-25% false negatives rate25% false positives rateRequires X-ray radiationLow resolution
Novel technology based on RF-modulated optical spectroscopy
MammOptics
- Earlier detection- Non-radiative- Non-invasive
MammOpticsTechnology Comparison
Risk Invasiveness
Resolution
False Pos.
False Neg.
Device Cost
Time Require
d
MammOptics
Mammography High High .6 cm 25% 30% 20-50k 20 min.
MRI Medium Medium .1 cm 70% 5% 1000k 45 min.
Ultra-Sound Very Low Very Low >.6 cm >30% >40% 5-15k 20 min.
I.I.T.Y.I.W.H.T.K.Y
MammOpticsBusiness Model Canvas 1 of 4
Radiation-freeEarlier detectionNon-invasive
Pioneering radiologists inhospitals
Direct sales to hospitals
Strong clinical dataTrainingMaintenance
Product DevelopmentClinical trialsOperating Costs Capital equipment
sales and disposable item
Product DevelopmentIPClinical trialsFDA
IP Leading doctorsTechnical Expertise
HospitalsLeading doctors3rd party manufacturersDistributors
MammOpticsBusiness Model Canvas 1 of 4
Radiation-freeEarlier detectionNon-invasive
Pioneering radiologists inhospitals
Direct sales to hospitals
Strong clinical dataTrainingMaintenance
Product DevelopmentClinical trialsOperating Costs Capital equipment
sales and disposable item
Product DevelopmentIPClinical trialsFDA
IP Leading doctorsTechnical Expertise
HospitalsLeading doctors3rd party manufacturersDistributors
Initial g
uess
Initial g
uess
Initial g
uess
Initial g
uess
MammOpticsBusiness Model Canvas 1 of 4
Test:Customer segment
Value proposition
Finding the right customerFrom radiologists to gynecologists
MammOpticsExcursions into hospitals
Leading doctors
Patients
Hospital Managers
Technicians
Debra Ikeda Jason Davies
Jafi Alissa LipsonSunita Pal
6 women >40 8 women <40
Alicia X-ray mammography
Paul BillingsHolly V. Gautier
MammOpticsHospital purchasing decision tree
MammOpticsHospital purchasing decision tree
HospitalsComplex purchasing decision
tree. Several saboteours
MammOpticsPrivate practice purchasing decision tree
MammOpticsPrivate practice purchasing decision tree
Private practiceFaster adoption rateAttractive value proposition✔
Pioneering DoctorsHospitalsOB/GYNsPCPs
Direct Sales to doctors
Strong clinical dataTrainingMaintenance
Product DevelopmentClinical trialsOperating Costs
Capital Equipment Sales and disposable item
Product DevelopmentIPClinical trialsFDA
IP Leading doctorsTechnical Expertise
Hospitals (Capital Spending Committee)Leading doctors3rd party manufacturersDistributorsResearch Hospitals
Doctors:Earlier detectionPriceAccuracy
Patients:Radiation FreeNon-Invasive
MammOpticsBusiness Model Canvas 2 of 4
Pioneering DoctorsHospitalsOB/GYNsPCPs
Direct Sales to doctors
Strong clinical dataTrainingMaintenance
Product DevelopmentClinical trialsOperating Costs
Capital Equipment Sales and disposable item
Product DevelopmentIPClinical trialsFDA
IP Leading doctorsTechnical Expertise
Hospitals (Capital Spending Committee)Leading doctors3rd party manufacturersDistributorsResearch Hospitals
Doctors:Earlier detectionPriceAccuracy
Patients:Radiation FreeNon-Invasive
MammOpticsBusiness Model Canvas 2 of 4
How do we get to our customer?
Need sensitivity and specificity
Getting to our customerThe world of direct sales and medical marketing
MammOpticsInterviews
Breast Cancer Advocacy Groups
OB/GYNs
FDA/Clinical Trials
Medical Sales
Be Bright PinkJennifer Glover
Dr. Cindy WooDr. Jags Powers
Dr. Aaron Shuvkan
Katrina BellTanay Dudhela
Jed Hwang
Phyllis WhitelyCarl Simpson
MammOpticsMarketing
Access to ACOG by former member
Strong influence on doctors via ACOG Standard of Care
Strongly influenced by
KOLs
MammOpticsMarketing
Researchers conducting
important clinical trials
Researchers with numerous
publicationsOutsourced survey
research
Researchers with strong peer
recommendations
MammOpticsMarketing
Focus on prominent journals Need two big
publications
Choose KOL as Principal Investigators (PI)
MammOpticsMarketing
Effective method for educating doctors
Doctors required to attend workshops
Workshop must be approved by ACOG
Taught by objective medical experts
MammOpticsMarketing
ACOG Annual Clinical Meeting
Miami Breast Cancer Conference
Opportunity for feedback from
doctors
MammOpticsMarketing
Trusted information source for patients
Critical opinion leader for technology adoption
Access to media outlets
MammOpticsMarketing
IndividualDoctors
Purchasing Administrato
rs
High value medical products
(e.g. cardiovascular stents)
Commodity medical products
(e.g. latex gloves)
• Doctor education• Direct feedback from doctors• Very expensive
• No doctor education• No customer feedback• Inexpensive
Direct Sales
Distributors
MammOpticsChannel Strategies and Costs
Individual Doctors
Purchasing Administrato
rs
Channel Strategies and CostsMammOptics
5 dedicated sales people$150,000 each/year
Hire nurses or technicianswith establishedrelationships
Early adopter feedback
Continue with core group of sales people
Use women’s healthcare equipment distributor
Already established network of customers
Sales strategy 1 Sales strategy 2
MammOpticsPricing Strategy
Equipment Lease model
Per-use model
Consumable
Cost of the device
Service per year
Per-use fee
Consumable
$50,000
$3,000
0
0
$5,000
$10,000
0
0
$5,000
0
$50
0
$25,000
0
0
$20
MammOpticsPricing Strategy
Equipment Lease model
Per-use model
Consumable
Cost of the device
Service per year
Per-use fee
Consumable
$50,000
$3,000
0
0
$5,000
$10,000
0
0
$5,000
0
$50
0
$25,000
0
0
$20
Approved by
customers and
investors
ACOGACS
Doctor specialty
committee
Hospital Administrati
on
Technician
RadiologistMammography
MammOpticsCustomer Workflow
Current market Insurance
ACOGACS
Doctor specialty
committee
Hospital Administrati
on
Technician
RadiologistMammography
MammOpticsCustomer Workflow
Current market
But what would happen if we replace mammography?
Insurance
ACOGACS
Doctor specialty
committee
Hospital Administrati
on
Technician
Radiologist
Mammography
MammOpticsCustomer Workflow
Breast Radiologists
Technicians Hospitals
Loss of jobsLoss of jobs Eliminates loss leader
Puts emphasis on biopsies
Insurance
ACOGACS
Doctor specialty
committee
Hospital Administrati
on
Technician
Radiologist
Mammography
MammOpticsCustomer Workflow
Insurance
ACOGACS
Doctor specialty
committee
Hospital Administrati
on
Technician
Radiologist
Mammography
MammOpticsCustomer Workflow
InsuranceSame cost as mammography
($140)Reduced number of biopsies
($1000)
ACOG/ACSImproved healthcare(mammography weak
technique)
Insurance
ACOGACS
Doctor specialty
committee
Hospital Administrati
on
Technician
Insurance
Radiologist
Mammography
MammOpticsCustomer Workflow
Insurance
Doctor specialty
committee
Hospital Administrati
on
Technician
RadiologistMammography
MammOpticsCustomer Workflow
ACOGACS
MammOptics
Patient
PCPOB/GYN
Insurance
Doctor specialty
committee
Hospital Administrati
on
Technician
Radiologist
Mammography
MammOpticsCustomer Workflow
ACOGACS
MammOptics
Patient
PCPOB/GYN
Hospital Administrati
on
Technician
Radiologist
Mammography
MammOptics
Patient
PCPOB/GYN
PCP OB/GYNsIncreased revenue
More complete patient care
PatientImproved healthcare
Comfort
MammOpticsRevenue
ACOGACS
Doctor specialty
committee
Hospital Administrati
on
Technician
Insurance
Radiologist
Mammography
MammOpticsCustomer Workflow
MammOptics
Patient
PCPOB/GYN
OB/GYNsPCPs
Direct Sales to hospitalsDistributor
Strong clinical dataTrainingMaintenanceConferencesCME courses
Product DevelopmentClinical trialsOperating CostsMarketing Costs
Capital Equipment Sales and disposable itemPer use fees
Product DevelopmentIPClinical trialsFDAPublishing
IP Leading doctorsTechnical Expertise
Leading doctorsKey Opinion Leaders3rd party manufacturersDistributorsBreast Cancer FoundationsACOGACS
Doctors:Earlier detectionPriceAccuracy
Patients:Radiation FreeNon-Invasive
MammOpticsBusiness Model Canvas 3 of 4
OB/GYNsPCPs
Direct Sales to hospitalsDistributor
Strong clinical dataTrainingMaintenanceConferencesCME courses
Product DevelopmentClinical trialsOperating CostsMarketing Costs
Capital Equipment Sales and disposable itemPer use fees
Product DevelopmentIPClinical trialsFDAReimbursementPublishing
IP Leading doctorsTechnical Expertise
Leading doctorsKey Opinion Leaders3rd party manufacturersDistributorsBreast Cancer FoundationsACOGACS
Doctors:Earlier detectionPriceAccuracy
Patients:Radiation FreeNon-Invasive
MammOpticsBusiness Model Canvas 3 of 4
Learned how to reach the customer
How do we build a company based on this?
Building the companyThe backstage of a medical device company
MammOpticsInterviews
FDA Clinical Trials
Manufacturing
Venture Capitalists
Reimbursement
Stanford Statistics Steve AxelrodMarga Ortigas-
Wedekind
Nick MourlasDon
ArchambaultShannon Bergstedt
Ali Habib
Dana MeadBill Starling
Doctors/Sales
Dr. Aron Shuftan
Jed HwangMichael J. Nohr
Manufacturing
MammOpticsPartners
Choose manufacturing facility close to
home
Manufacturing Reimbursement
MammOpticsPartners
Difficult to get coverage for new product.
Manufacturing
MammOpticsPartners
Reimbursement PartnersMammOptics
Insurances
CPT Codes$75-$150
MammOpticsPartners
Manufacturing
FDA Clinical Trials
Reimbursement
510K vs. PMALargest cost
Biggest financial risk
Clinical Trials
12/4/2009
Stage 1Pilot trials50 patients
$600K
MammOptics
6 months
FeasibilityComparison
with mammograph
y
Clinical Trials
12/4/2009
MammOptics
6 months 15 months
Stage 1Pilot trials
Stage 2Interim trials
500 patients$7.2M
Prove superior safety-
efficacy & sensitivity
Clinical Trials
12/4/2009
MammOptics
6 months 15 months
Stage 1Pilot trials
Stage 2Interim trials
24 months
Stage 3FDA
pivotal trials1500
patients$20.5M
FDA class II, 510(K) w/ trials
Focus on superiority &
economic end-points
Clinical Trials
12/4/2009
MammOptics
6 months 15 months
Stage 1Pilot trials
Stage 2Interim trials
Stage 3FDA
pivotal trials
Stage 4Post-
market studies2000 patients$26.8M
Specific Cat III CPT/ACP CodesMarket traction
24 months24 months
Clinical Trials
12/4/2009
MammOptics
6 months 15 months
Stage 1Pilot trials
Stage 2Interim trials
Stage 3FDA
pivotal trials$600K
$7.2M
$20.5M
$26.8M
Stage 4Post-
market studies
24 months 24 months
MammOpticsPartners
MammOpticsPartners
Manufacturing
FDA Clinical Trials
Reimbursement
Financial timeline
Funding
$10M
$15M
2012
Series A $3.5 MM
Cash
Res
erve
Clin
ical
Mile
ston
es
$5M
Initialize
Desig
n M
ilest
ones
Regu
lato
ry/ I
P M
ilest
ones
Q1 Q2 Q3 Q42013
Q1 Q2 Q3 Q42014
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q42015 2016
Series B $9 MM
System
2017Q1 Q2Q1 Q2 Q3 Q4
2018Q3
Launch
Series C $30.5 MM
$30M
$20M
Regulatory / Clinical
Series D $35
MM
M&A / IPO $50 MM$40M
129 12/4/2009
Proof of Concep
t
Pilot Studie
s
IC and Processing Patents
Marketable Product
Provisional Patent
Beta-Versio
n Testin
g
Application and
System Patents
IRB / IDE
Clinical Results
Second Release
Initial Product Launch
Specific Codes (Cat. I CPT / APC)
Non-Specific Codes
1st Release
Test
2nd Release Test
Publication
Post-Market Clinical Studies
Beta Prototype
US Interim Trials
FDA – Class II – 510 (k) with Clinical Trials
Publication
Financial / Operations Timeline
Cat III
CPT
US Pivotal Clinical Trials
Laboratory
Prototype
Technology
Licensing
MammOpticsMammOptics
Financial timeline
$10M
$15M
2012
Cash
Res
erve
Clin
ical
Mile
ston
es
$5M
Initialize
Desig
n M
ilest
ones
Regu
lato
ry/ I
P M
ilest
ones
Q1 Q2 Q3 Q42013
Q1 Q2 Q3 Q42014
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q42015 2016 2017
Q1 Q2Q1 Q2 Q3 Q42018
Q3
$30M
$20M
$40M
130 12/4/2009
Proof of Concep
t
Provisional Patent
Financial / Operations Timeline
Technology
Licensing
MammOpticsMammOptics
$10M
$15M
2012
Series A $3.5 MM
Cash
Res
erve
Clin
ical
Mile
ston
es
$5M
Initialize
Desig
n M
ilest
ones
Regu
lato
ry/ I
P M
ilest
ones
Q1 Q2 Q3 Q42013
Q1 Q2 Q3 Q42014
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q42015 2016
System
2017Q1 Q2Q1 Q2 Q3 Q4
2018Q3
$30M
$20M
$40M
131 12/4/2009
Proof of Concep
t
Provisional Patent
Beta-Versio
n Testin
g
Laboratory
Prototype
Beta Prototype
Technology
Licensing
Financial / Operations Timeline
Pilot Studie
s
MammOpticsMammOptics
$10M
$15M
2012
Series A $3.5 MM
Cash
Res
erve
Clin
ical
Mile
ston
es
$5M
Desig
n M
ilest
ones
Regu
lato
ry/ I
P M
ilest
ones
Q1 Q2 Q3 Q42013
Q1 Q2 Q3 Q42014
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q42015 2016
Series B $9 MM
System
2017Q1 Q2Q1 Q2 Q3 Q4
2018Q3
$30M
$20M
$40M
132 12/4/2009
IC and Processing Patents
Marketable Product
Beta-Versio
n Testin
g
Application and
System Patents
IRB / IDE
Beta Prototype
Financial / Operations Timeline
Pilot Studie
s
Regulatory / Clinical
Laboratory
Prototype
MammOpticsMammOptics
$10M
$15M
2012
Cash
Res
erve
Clin
ical
Mile
ston
es
$5M
Desig
n M
ilest
ones
Regu
lato
ry/ I
P M
ilest
ones
Q1 Q2 Q3 Q42013
Q1 Q2 Q3 Q42014
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q42015 2016
Series B $9 MM
System
2017Q1 Q2Q1 Q2 Q3 Q4
2018Q3
Series C $30.5 MM
$30M
$20M
Regulatory / Clinical
$40M
133
IC and Processing Patents
Application and
System Patents
IRB / IDE
Cat III
CPT
Second Release
1st Release
Test
US Interim Trials US Pivotal Clinical Trials
Publication
Financial / Operations Timeline
Pilot Studie
s
MammOpticsMammOptics
$10M
$15M
2012
Cash
Res
erve
Clin
ical
Mile
ston
es
$5M
Desig
n M
ilest
ones
Regu
lato
ry/ I
P M
ilest
ones
Q1 Q2 Q3 Q42013
Q1 Q2 Q3 Q42014
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q42015 2016 2017
Q1 Q2Q1 Q2 Q3 Q42018
Q3
Launch
Series C $30.5 MM
$30M
$20M
Regulatory / Clinical
Series D $35
MM
$40M
134 12/4/2009
Clinical Results
Second Release
Initial Product Launch
Non-Specific Codes
2nd Release Test
Publication
US Interim Trials
FDA – Class II – 510 (k) with Clinical Trials
Publication
Financial / Operations Timeline
US Pivotal Clinical Trials
MammOpticsMammOptics
$10M
$15M
2012
Cash
Res
erve
Clin
ical
Mile
ston
es
$5M
Desig
n M
ilest
ones
Regu
lato
ry/ I
P M
ilest
ones
Q1 Q2 Q3 Q42013
Q1 Q2 Q3 Q42014
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q42015 2016 2017
Q1 Q2Q1 Q2 Q3 Q42018
Q3
Launch
$30M
$20M
Regulatory / Clinical
Series D $35
MM
M&A / IPO $50 MM$40M
12/4/2009
Clinical Results
Initial Product Launch
Specific Codes (Cat. I CPT / APC)
Non-Specific Codes
Publication
Post-Market Clinical Studies
FDA – Class II – 510 (k) with Clinical Trials
Financial / Operations TimelineMammOpticsMammOptics
$10M
$15M
2012
Series A $3.5 MM
Cash
Res
erve
Clin
ical
Mile
ston
es
$5M
Initialize
Desig
n M
ilest
ones
Regu
lato
ry/ I
P M
ilest
ones
Q1 Q2 Q3 Q42013
Q1 Q2 Q3 Q42014
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q42015 2016
Series B $9 MM
System
2017Q1 Q2Q1 Q2 Q3 Q4
2018Q3
Launch
Series C $30.5 MM
$30M
$20M
Regulatory / Clinical
Series D $35
MM
M&A / IPO $50 MM$40M
136 12/4/2009
Proof of Concep
t
Pilot Studie
s
IC and Processing Patents
Marketable Product
Provisional Patent
Beta-Versio
n Testin
g
Application and
System Patents
IRB / IDE
Clinical Results
Second Release
Initial Product Launch
Specific Codes (Cat. I CPT / APC)
Non-Specific Codes
1st Release
Test
2nd Release Test
Publication
Post-Market Clinical Studies
Beta Prototype
US Interim Trials
FDA – Class II – 510 (k) with Clinical Trials
Publication
Financial / Operations Timeline
Cat III
CPT
US Pivotal Clinical Trials
Laboratory
Prototype
Technology
Licensing
MammOpticsMammOptics
Radiation-freeEarlier detectionNon invasive
Pioneering DoctorsHospitals
Direct Sales to hospitals
Strong clinical dataTrainingMaintenance
Product DevelopmentClinical trialsOperating Costs
Capital Equipment Sales and disposable item
Product DevelopmentIPClinical trialsFDA
IP Leading doctorsTechnical Expertise
HospitalsLeading doctors3rd party manufacturersDistributors
MammOpticsBusiness Model Canvas 1
Radiation-freeEarlier detectionNon invasive
Pioneering DoctorsHospitals
Direct Sales to hospitals
Strong clinical dataTrainingMaintenance
Product DevelopmentClinical trialsOperating Costs
Capital Equipment Sales and disposable item
Product DevelopmentIPClinical trialsFDA
IP Leading doctorsTechnical Expertise
HospitalsLeading doctors3rd party manufacturersDistributorsResearch Hospitals
MammOpticsBusiness Model Canvas 2
Pioneering DoctorsHospitals
Direct Sales to hospitals
Strong clinical dataTrainingMaintenance
Product DevelopmentClinical trialsOperating Costs
Capital Equipment Sales and disposable item
Product DevelopmentIPClinical trialsFDA
IP Leading doctorsTechnical Expertise
Hospitals (Capital Spending Committee)Leading doctors3rd party manufacturersDistributorsResearch Hospitals
Doctors:Earlier detectionPriceAccuracy
Patients:Radiation FreeNon-Invasive
MammOpticsBusiness Model Canvas 3
Pioneering DoctorsHospitalsOB/GYNsPCPs
Direct Sales to hospitals
Strong clinical dataTrainingMaintenance
Product DevelopmentClinical trialsOperating Costs
Capital Equipment Sales and disposable item
Product DevelopmentIPClinical trialsFDA
IP Leading doctorsTechnical Expertise
Hospitals (Capital Spending Committee)Leading doctors3rd party manufacturersDistributorsResearch HospitalsBreast Cancer Foundations
Doctors:Earlier detectionPriceAccuracyImmediate Results
Patients:Radiation FreeNon-Invasive
MammOpticsBusiness Model Canvas 4
OB/GYNsPCPs
Direct Sales to hospitalsDistributor
Strong clinical dataTrainingMaintenanceConferencesCME courses
Product DevelopmentClinical trialsOperating CostsMarketing Costs
Capital Equipment Sales and disposable item
Product DevelopmentIPClinical trialsFDAReimbursementPublishing
IP Leading doctorsTechnical Expertise
Leading doctorsKey Opinion Leaders3rd party manufacturersDistributorsBreast Cancer FoundationsACOGACS
Doctors:Earlier detectionPriceAccuracy
Patients:Radiation FreeNon-Invasive
MammOpticsBusiness Model Canvas 5
OB/GYNsPCPs
Direct Sales to hospitalsDistributor
Strong clinical dataTrainingMaintenanceConferencesCME courses
Product DevelopmentClinical trialsOperating CostsMarketing Costs
Capital Equipment Sales and disposable itemPer use fees
Product DevelopmentIPClinical trialsFDAReimbursement Publishing
IP Leading doctorsTechnical Expertise
KOLs3rd party manufacturersDistributorsBreast Cancer FoundationsACOGACS
Doctors:Earlier detectionPriceAccuracyImmediate Results
Patients:Radiation FreeNon-Invasive
MammOpticsBusiness Model Canvas 6
OB/GYNsPCPs
Direct Sales to hospitalsDistributor
Strong clinical dataTrainingMaintenanceConferencesCME courses
Product DevelopmentClinical trialsOperating CostsMarketing Costs
Per use fees
Product DevelopmentIPClinical trialsFDAReimbursement Publishing
IP Leading doctorsTechnical Expertise
KOLs3rd party manufacturersDistributorsBreast Cancer FoundationsACOGACSClinical trial designer
Doctors:Earlier detectionPriceAccuracyImmediate Results
Patients:Radiation FreeNon-Invasive
MammOpticsBusiness Model Canvas 7
OB/GYNsPCPs
Direct Sales to hospitalsDistributor
Strong clinical dataTrainingMaintenanceConferencesCME courses
Product DevelopmentClinical trialsOperating CostsMarketing Costs
Per use fees
Product DevelopmentIPClinical trialsFDAReimbursement Publishing
IP Leading doctorsTechnical Expertise
KOLs3rd party manufacturers(local)Breast Cancer FoundationsACOGACSClinical trial designer
Doctors:Earlier detectionPriceAccuracyImmediate Results
Patients:Radiation FreeNon-Invasive
MammOpticsBusiness Model Canvas 8
OB/GYNsPCPs
Direct Sales to hospitalsDistributor
Strong clinical dataTrainingMaintenanceConferencesCME courses
Product DevelopmentClinical trialsOperating CostsMarketing Costs
Per use fees
Product DevelopmentIPClinical trialsFDAReimbursement Publishing
IP Leading doctorsTechnical Expertise
KOLs3rd party manufacturers(local)Breast Cancer FoundationsACOGACSClinical trial designer
Doctors:Earlier detectionPriceAccuracyImmediate Results
Patients:Radiation FreeNon-Invasive
MammOpticsBusiness Model Canvas 9
Customer Development
Get Out of the Building and Search for the Business Model
The founders^
The Customer Development Process
Customer Discovery
Customer Validation
Customer Creation
Company Building
Pivot
The Minimum Viable Product (MVP)
• Smallest feature set that gets you the most …
- orders, learning, feedback, failure…
Customer Discovery
Customer Validation
Customer Creation
Company Building
Pivot
A Pivot is the change of one or more Business Model Canvas Components
The Pivot
• The heart of Customer Development• Iteration without crisis• Fast, agile and opportunistic
Customer Discovery
Customer Validation
Customer Creation
Company Building
Pivot
Pivot Cycle Time Matters
• Speed of cycle minimizes cash needs
• Minimum feature set speeds up cycle time
• Near instantaneous customer feedback drives feature set
Customer Discovery
Customer Validation
Customer Creation
Company Building
Pivot
The Customer Development ProcessCustomer Discovery
Customer Discovery
Customer Validation
Customer Creation
Company Building
Bus Model Canvas
Extract Hypotheses Test Problem Test Solution Pivot or
Proceed
The Customer Development ProcessCustomer Validation
Customer Discovery
Customer Validation
Customer Creation
Company Building
Get Ready to Sell Sell, Sell, Sell Positioning Pivot or
Proceed
Blog Your Progress
How?
• Customer Development– The Process
• Narrative– Interviews– Surveys– Videos– Prototypes
• Business Model Canvas– Scorekeeping
• Real-time Feedback• Physical Reality Checks
– Skype– Face-to-face
We Made Students Blog Their Progress
It Changed Everything
Interview
Photos Videos
Surveys
Interview& Photos
Competitive Analysis
Key Findings
A/B Test Results
Key Question
Strategy
Business Model Canvas as the Scorecard
Market Type
Four Types of Markets
Type of MarketChanges Everything
• Market– Market Size– Cost of Entry– Launch Type– Competitive
Barriers– Positioning
• Sales– Sales Model– Margins– Sales Cycle– Chasm Width
Clone Market
Existing Market Resegmented Market
New Market
• Finance• Ongoing Capital• Time to Profitability
• Customers• Needs• Adoption
Definitions: Four Types of Markets
• Clone Market– Copy of a U.S. business model
• Existing Market– Faster/Better = High end
• Resegmented Market– Niche = marketing/branding driven– Cheaper = low end
• New Market– Cheaper/good enough, creates a new class of product/customer– Innovative/never existed before
Clone Market
Existing Market Resegmented Market
New Market
Size of Opportunity
Market/Opportunity Analysis
How Big is It?: Market/Opportunity Analysis– Identify a Customer and Market Need– Size the Market– Competitors– Growth Potential
How Big is the Pie?Total Available Market
Total Available Market
• How many people would want/need
the product?• How large is the market be
(in $’s) if they all bought?
• How many units would that be?
How Do I Find Out?• Industry Analysts – Gartner, Forrester• Wall Street Analysts – Goldman, Morgan
How Big is My Slice?Served Available Market
• How many people need/can use product?• How many people have the money to
buy the product • How large would the market be (in $’s)
if they all bought?• How many units would that be?
How Do I Find Out?• Talk to potential customers
Served Available
Market
TotalAvailableMarket
How Much Can I Eat?Target Market
• Who am I going to sell to in year 1, 2 & 3? • How many customers is that?• How large is the market be
(in $’s) if they all bought?• How many units would that be?
How Do I Find Out?• Talk to potential customers• Identify and talk to channel partners• Identify and talk to competitors
TotalAvailableMarket Target
Market
ServedAvailableMarket
Market Size: Summary
• Market Size Questions:– How big can this market be? – How much of it can we get?– Market growth rate– Market structure (Mature or in flux?)
• Most important: Talk to Customers and Sales Channel• Next important: Market size by competitive approximation
– Wall Street analyst reports are great• And : Market research firms Like Forester, Gartner
Team Deliverable by Tomorrow
1. Hypotheses for each part of business model2. Test for each of the hypotheses
What constitutes a pass/fail signal for the test (e.g. at what point would you say your hypotheses wasn’t even close to correct?
3. Plan to get out of the building to test the hypotheses
• Summarized in a 5 Minute PowerPoint Presentation– Business Model Canvas– Market Size– Getting out of the building plan
Don’t Over Think Your Hypotheses
Sweet Sensors
Yu Xiang and Yi Lu, Nature Chem. 3, 697-703 (2011).
Glucose Monitor:
• Widely available• Cheap• Quantitative
information• $10 billion market
However, it can detect only one target: glucoseand at very high concentrations
We have developed a novel technology to use any glucose monitor without modifications to detect a wide range of non-glucose targets at very low concentrations(such as diseases (e.g., TB), heavy metal ions (e.g., Pb, Hg), organic toxins, bacteria, viruses and cancers)
Examples
Market size
- 300 million patients worldwide
- Required HbA1C testing every 60-90 days
- Available in-home HbA1C tests today are $100/10 tests
- Assuming $1 per test, TAM = $1.2 billion
- Assuming 50% people have the access to a HbA1c test, SAM = $600 million
- Assuming we can capture 20% of SAM (high-end diabetics and early adopters), Target market = $120 million
Total available market = $1.2 billion
Serviceable Available Market = $600 million
Target market = $120 million
Market Size
• Growing market– Aging population– Living Style & Diets– Chronic disease
• Driving factors– Healthcare costs– Reimbursement– Healthcare labor shortage
Total Available market 170M (US & EU5)
$25B
Target market 3.5M (Resistant Hypertension)$500M
Diabetics
Sweet Sensors Yi Lu, Tian LanNeil KaneChris Sorensen
Business Model Canvas
Clinicians (in rural area)
Triage nurses
Pre-diabetics
Product supports
Patient network/community
Retailers (Walgreen)
Online vendors (Amazon)
Direct sales
Disposable test kit (used repeatedly on a regular basis)
At home
Convenient
Less exposure to infectious diseases in the hospital
Cheaper
More frequent
Better indicator of health (diabetic management)
Conferences
Product R&D
QC
Marketing
IP
Personnel
Glucose monitor manufacturers
Kit manufacturers
Reagent suppliers
Reagents
Manufacture
Licensing
FDA certification?
Diabetics
Sweet Sensors Yi Lu, Tian LanNeil KaneChris Sorensen
Action Plan
Clinicians (in rural area)
Triage nurses
Pre-diabetics
Product supports
Patient network/community
Retailers (Walgreen)
Online vendors (Amazon)
Direct sales
Disposable test kit (used repeatedly on a regular basis)
At home
Convenient
Less exposure to infectious diseases in the hospital
Cheaper
More frequent
Better indicator of health (diabetic management)
Conferences
Product R&D
QC
Marketing
IP
Personnel
Glucose monitor manufacturers
Kit manufacturers
Reagent suppliers
Reagents
Manufacture
Licensing
FDA certification?
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
cGMP manufacturerRadiopharmaciesNuclear 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)
Direct sales of precursor
R&D and clinical studies presented in journals and meetings
Drug developers
Pharmaceutical development companies
IPPoP data
Radiologists
Technical assistance
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
cGMP manufacturerRadiopharmaciesNuclear 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 developers
Pharmaceutical development companies
IPPoP data
Radiologists
Technical assistance
Direct sales of precursor
R&D and clinical studies presented in journals and meetings
Sales of precursor through global finished pharmaceutical distributor
Critical Success Factors
• Validation of the need– By talking to diabetic patients, clinician and
nurses• Validation of the customer segmentation
– By talking to glucose monitor and kit manufactures
• Evidence of market accessibility– By talking to glucose monitor and kit
distributors
Backup
Customer Discovery
Bus Model Canvas
Extract Hypotheses Test Problem Test Solution Pivot or
Proceed
Customer Discovery - Physical
Bus Model Canvas
Extract Hypotheses Test Problem Test Solution Pivot or
Proceed
• TAM/SAM• Product MVP• Customers• Channel • Market Type• Customer Relationships: Get/Keep/Grow• Key Resources• Partners• Pricing
Customer Discovery - Web
Bus Model Canvas
Extract Hypotheses Test Problem Test Solution Pivot or
Proceed
• TAM/SAM• Low Fidelity MVP• Customers/Source• Channel • Market Type• Customer Relationships: Acquire/Activate• Traffic Partners• Pricing
Customer Discovery - Physical
Bus Model Canvas
Extract Hypotheses Test Problem Test Solution Pivot or
Proceed
• TAM/SAM• Low Fidelity MVP• Customers• Channel • Market Type• Cust Relationships• Traffic Partners• Pricing
• Customer Contacts• Problem Understanding• Customer Understanding• Market Knowledge
Customer Discovery - Web
Bus Model Canvas
Extract Hypotheses Test Problem Test Solution Pivot or
Proceed
• TAM/SAM• Low Fidelity MVP• Customers• Channel • Market Type• Cust Relationships• Traffic Partners• Pricing
• Customer Engagement• Test Low Fidelity MVP• Customer Understanding• Traffic & Competitive Analysis
Customer Discovery - Physical
Bus Model Canvas
Extract Hypotheses Test Problem Test Solution Pivot or
Proceed
• TAM/SAM• Low Fidelity MVP• Customers• Channel • Market Type• Cust Relationships• Traffic Partners• Pricing
• Update Bus Model• Create Prototype/Prod Presentation• Test Solution with Customer• Update Business Model• 1st Advisory Board Members
Customer Discovery - Web
Bus Model Canvas
Extract Hypotheses Test Problem Test Solution Pivot or
Proceed
• TAM/SAM• Low Fidelity MVP• Customers• Channel • Market Type• Cust Relationships• Traffic Partners• Pricing
• Customer Engagement• Test Low Fidelity MVP• Customer Understanding• Traffic & Competitive Analysis
• Update Bus Model• Test High Fidelity MVP• Measure Customer Behavior• Update Business Model• 1st Advisory Board Members
Customer Discovery – Web/Physical
Bus Model Canvas
Extract Hypotheses Test Problem Test Solution Pivot or
Proceed
Verify the:• Value Prop• Cust Segment• Cust Relationships• Channel• Revenue Model• Pivot or Proceed
• TAM/SAM• Low Fidelity MVP• Customers• Channel • Market Type• Cust Relationships• Traffic Partners• Pricing
• Customer Engagement• Test Low Fidelity MVP• Customer Understanding• Traffic & Competitive Analysis
Customer Validation - Web
Get Ready to Sell Sell, Sell, Sell Positioning Pivot or
Proceed
Pivot
Customer Validation - Physical
Get Ready to Sell Sell, Sell, Sell Positioning Pivot or
Proceed
• Craft Positioning• Develop Sales Materials• Hire “Sales Closer”• Sales Channel Action Plan• Refine the Sales Roadmap• Formalize advisory board
Customer Validation - Web
Get Ready to Sell Sell, Sell, Sell Positioning Pivot or
Proceed
• Craft Positioning• Acquire/Activate Plans and Tools• Build High Fidelity MVP• Build Metrics Toolset• Hire data analytics chief • Formalize advisory board
Customer Validation - Physical
Get Ready to Sell Sell, Sell, Sell Positioning Pivot or
Proceed
• Craft Positioning
• Acquire/Activate Plans• Build High Fidelity MVP• Build Metrics Toolset• Hire data analytics chief • Formalize advisory board
• Find Earlyvangelists• Test Sell – Out of the Building• Refine Sales Roadmap• Test Sell Channel Partners
Customer Validation - Web
Get Ready to Sell Sell, Sell, Sell Positioning Pivot or
Proceed
• Craft Positioning
• Acquire/Activate Plans• Build High Fidelity MVP• Build Metrics Toolset• Hire data analytics chief • Formalize advisory board
• Prepare Optimization Plans & Tools• Out of the building Activation Test• Measure and Optimize Results• Test Sell Traffic Partners
Customer Validation - Physical/Web
Get Ready to Sell Sell, Sell, Sell Positioning Pivot or
Proceed
• Craft Positioning• Acquire/Activate Plans• Build High Fidelity MVP• Build Metrics Toolset• Hire data analytics chief • Formalize advisory board
• Prepare Optimization Plans• Out of the building Activation Test• Measure and Optimize Results• Test Sell Traffic Partners
• Company Positioning• Product Positioning• Validate Positioning
Customer Validation - Physical/Web
Get Ready to Sell Sell, Sell, Sell Positioning Pivot or
Proceed
• Craft Positioning• Acquire/Activate Plans• Build High Fidelity MVP• Build Metrics Toolset• Hire data analytics chief • Formalize advisory board
• Prepare Optimization Plans• Out of the building Activation Test• Measure and Optimize Results• Test Sell Traffic Partners
• Assemble Data• Validate Business Model• Validate Financial Model• Pivot or Proceed