nsf i-corps the lean launchpad lecture 8: resources, activities & costs version 6/13/12
TRANSCRIPT
NSF I-CorpsThe Lean LaunchPad
Lecture 8: Resources, Activities & Costs
Version 6/13/12
Key Activities
What’s Most Important for the Business?
© 2012 Steve Blank
Key Resources
What’s Are Your Most Important Assets?
Cost Structure
What are the Costs and Expenses
© 2012 Steve Blank
Key Resources
Four Critical Resources
• Physical• Financial• Human• Intellectual
Physical Resources
• company facilities– office space, company location
• product/services – supply of silicon wafers or iron ore, or
thousands of feet of warehouse space?
• Many physical goods are capital intensive
Financial Resources
• Friends and Family• Crowdfunding• Angels• Venture Capital• Corporate partners • Others: SBA or SBIR grants• Lease-lines• Factoring• Vendor-financing
Human Resources
• qualified employees• mentors, teachers, coaches, advisors
Mentors, Teachers, Coaches
• Mentors, teachers, coaches advance your personal career– If you want to learn a specific subject find a teacher– If you want to hone specific skills or reach an exact
goal hire a coach – If you want to get smarter and better over your career
find someone who cares about you enough to be a mentor
Advisors
• Advisors are people you need to help advance your company’s success– Founders fail when they believe their visions are facts– Listening to experienced advice can help you sort
through whether your vision is a hallucination– Getting an advisory board (by expanding your circle of
accumulated wisdom past their investors) is so important that it’s an explicit step in the Customer Development process
Qualified Employees/Culture
• Are the difference between a good idea that never went anywhere and a billion dollar firm
17
MBA295F Customer Development
in the High-Tech Enterprise Spring
2007
Executive Traits by Stage
Entrepreneurial- Driven Learning and Discovery
Mission-Oriented Management
Process-Managed Execution and Growth
Personal Contribution
Superstar Leader Manager of plans, goals, process, and personnel
Time Commitment 24/7 As needed Long term 9 to 5
Planning Opportunistic and agile
Mission- and goal-driven
Process-, and goal-driven
Process Hates and eliminates As needed, driven by mission
Implements and uses
Management Style Autocratic, star system
Distributed to departments
May be bureaucratic
Span of Control Hands-on Mission-driven, synchronized
Distributed down the organization
Focus High and passionate vision
Mission Execution
Uncertainty/Chaos Brings order out of chaos
Focuses on fast response
Focuses on repeatability
Executive Traits by Stage
Executive Traits by Stage
Executive Traits by Stage
Intellectual Property
Trademark protects branding & marks
• Trademark gives you the right to prevent others from using “confusingly similar” marks and logos
• Trademark protection lasts as long as you use the mark• The more you use the mark, the stronger your protection• Trademark registration is optional, but has significant
advantages if approved • Country by country
Copyright protects creative works of authorship
• Copyright gives right to prevent others from copying, distributing or making derivatives of your work
– Protects “expressions” of ideas but does not protect the underlying ideas
• (Way) more than just technology: – songs, books, movies, photos, etc.
• Copyright protection lasts practically forever• Copyright does not prevent independent development• Registration is optional, but is required to sue for
infringement
Trade Secrets
• Information that is kept secret and has economic value to the business
• Coke recipe, customer lists, product road maps.• No registration required• Can last for as long as you take reasonable
steps to keep confidential
Contract
• Protection agreed to by contract
• No registration process
• You have whatever protection is defined in the contract (e.g., NDA gives you certain rights to protection of your confidential information)
• The protection lasts for the time period defined in the contract
Patents• A government granted monopoly
– prevents others from making, using or selling your invention– Even if the other’s infringement was innocent or accidental
• Invention must be non-obvious• Protection lasts typically for 15-20 years• Application and examination is required
– Typical cost for application and exam is $10-30k– Typical time for application and exam is 1-4 years
• Must file in U.S. within one year of sale, offer for sale, public disclosure or public use
• Provisional application alternative
What Can be Patented?
• Just about anything . . .– Circuits, hardware– Software, applied algorithms– Formulas, designs– User interfaces– Applications, systems– Business processes (sometimes)
• But not these . . . – Scientific principles– Pure mathematical algorithms
• And, pending Supreme Court Case raises concerns regarding patentability of “methods” inventions
CostsMetrics that Matter
Search vs. Execution Metrics
• Existing companies execute plans
• Startups search for them
• Income Statement, Balance Sheet, etc are execution documents
• You first need to derive the metrics that matter
Metrics That Matter
• Value proposition: product cost, mkt size/share, competition?
• Customer Relationships: customer acquisition costs, conversion rates, lifetime value?
• Market Type: revenue curves
• Operating Costs: basic operating costs of the business?
• Channel: Channel margin, promotion, shelf-space charges?
• Revenue Streams: average selling price, # of customers/year, achievable revenue?
• Burn Rate: per month? When will the company run out of cash?
Robotic AgricultureResource, Activities Example
We’ve hit our first milestones
Jun 2011 Dec 2011 Jun 2012Mar 2013First unit
Seed Round
Confidential
Technology Track
Customer Discovery Track
Finance Track
Post-processed Image recognition
Prototype First unit
Series A
Customer trial and customer order
Real-time image recognition
Select 1st target crop
Friends and family round
Applied for grants
Testing agreement with top producer
$125 KF&F
$800 KSeed
$3-5 MSeries A
Medical DeviceResource, Activities & Cost Example
$10M
$15M
2012
Series A $3.5 MM
Cash
Rese
rve
Clin
ical
Mile
stones
$5M
Initialize
Desi
gn
Mile
stones
Reg
ula
tory
/ IP
M
ilest
ones
Q1 Q2 Q3 Q4
2013Q1 Q2 Q3 Q4
2014Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 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
35 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
Rese
rve
Clin
ical
Mile
stones
$5M
Initialize
Desi
gn
Mile
stones
Reg
ula
tory
/ IP
M
ilest
ones
Q1 Q2 Q3 Q4
2013Q1 Q2 Q3 Q4
2014Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 2016 2017Q1 Q2Q1 Q2 Q3 Q4
2018Q3
$30M
$20M
$40M
36 12/4/2009
Proof of Concep
t
Provisional Patent
Financial / Operations Timeline
Technology
Licensing
MammOpticsMammOptics
$10M
$15M
2012
Series A $3.5 MM
Cash
Rese
rve
Clin
ical
Mile
stones
$5M
Initialize
Desi
gn
Mile
stones
Reg
ula
tory
/ IP
M
ilest
ones
Q1 Q2 Q3 Q4
2013Q1 Q2 Q3 Q4
2014Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 2016
System
2017Q1 Q2Q1 Q2 Q3 Q4
2018Q3
$30M
$20M
$40M
37 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
Rese
rve
Clin
ical
Mile
stones
$5M
Desi
gn
Mile
stones
Reg
ula
tory
/ IP
M
ilest
ones
Q1 Q2 Q3 Q4
2013Q1 Q2 Q3 Q4
2014Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 2016
Series B $9 MM
System
2017Q1 Q2Q1 Q2 Q3 Q4
2018Q3
$30M
$20M
$40M
38 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
Rese
rve
Clin
ical
Mile
stones
$5M
Desi
gn
Mile
stones
Reg
ula
tory
/ IP
M
ilest
ones
Q1 Q2 Q3 Q4
2013Q1 Q2 Q3 Q4
2014Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 2016
Series B $9 MM
System
2017Q1 Q2Q1 Q2 Q3 Q4
2018Q3
Series C $30.5 MM
$30M
$20M
Regulatory / Clinical
$40M
39
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
Rese
rve
Clin
ical
Mile
stones
$5M
Desi
gn
Mile
stones
Reg
ula
tory
/ IP
M
ilest
ones
Q1 Q2 Q3 Q4
2013Q1 Q2 Q3 Q4
2014Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 2016 2017Q1 Q2Q1 Q2 Q3 Q4
2018Q3
Launch
Series C $30.5 MM
$30M
$20M
Regulatory / Clinical
Series D $35
MM
$40M
40 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
Rese
rve
Clin
ical
Mile
stones
$5M
Desi
gn
Mile
stones
Reg
ula
tory
/ IP
M
ilest
ones
Q1 Q2 Q3 Q4
2013Q1 Q2 Q3 Q4
2014Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 2016 2017Q1 Q2Q1 Q2 Q3 Q4
2018Q3
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
Rese
rve
Clin
ical
Mile
stones
$5M
Initialize
Desi
gn
Mile
stones
Reg
ula
tory
/ IP
M
ilest
ones
Q1 Q2 Q3 Q4
2013Q1 Q2 Q3 Q4
2014Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 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
42 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
AppleResource, Activities & Cost Example
KEYRESOURCES
VALUEPROPOSITON
DISTRIBUTION CHANNELS
CUSTOMER RELATIONSHIPS
CUSTOMERSEGMENTS
REVENUE STREAMSCOST STRUCTURE
KEYACTIVITIES
PARTNERNETWORK
Product User Digital Hub Digital Lifestyle Digital Platform
Invest in R&D
solutions for differentiated customers -
professional & consumer
High-end mass market
software developers
online store
brand - Apple,
PowerMac, iMac
component makers, shipping
& logistic suppliers
build whole devices both
h/w & s/w
differentiated markets
Computers, software & services
audio-visual content
producers & record labels
iPod, iTunes software &
content agreements
purchase & mgmt of digital music,
audio, video
increase switching costs
iTunes store
control the supply chain
increased investment
in R&D
iPod, music & related products
Integrated phone, games &
apps across devices
reduce cost of sales
increase switching costs -
integrationoptimize supply chain
content agreements - games & apps
iTunes through wi-fi
access
app & game developers &
cellular operators
app & game developers
iPhone, apps & related services
book publishers & developers of digital content
content agreements with book publishers
all digital devices linked through
software platform
increased switching costs -
shared information
iTunes bookstore
iPad, apps, books & related services
book publishers & developers of digital content
KEYRESOURCES
VALUEPROPOSITON
DISTRIBUTION CHANNELS
CUSTOMER RELATIONSHIPS
CUSTOMERSEGMENTS
REVENUE STREAMSCOST STRUCTURE
KEYACTIVITIES
PARTNERNETWORK
Product User Digital Hub Digital Lifestyle Digital Platform
Invest in R&D
solutions for differentiated customers -
professional & consumer
High-end mass market
software developers
online store
brand - Apple,
PowerMac, iMac
component makers, shipping
& logistic suppliers
build whole devices both
h/w & s/w
differentiated markets
Computers, software & services
audio-visual content
producers & record labels
iPod, iTunes software &
content agreements
purchase & mgmt of digital music,
audio, video
increase switching costs
iTunes store
control the supply chain
increased investment
in R&D
iPod, music & related products
Integrated phone, games &
apps across devices
reduce cost of sales
increase switching costs -
integrationoptimize supply chain
content agreements - games & apps
iTunes through wi-fi
access
app & game developers &
cellular operators
app & game developers
iPhone, apps & related services
book publishers & developers of digital content
content agreements with book publishers
all digital devices linked through
software platform
increased switching costs -
shared information
iTunes bookstore
iPad, apps, books & related services
book publishers & developers of digital content
KEYRESOURCES
VALUEPROPOSITON
DISTRIBUTION CHANNELS
CUSTOMER RELATIONSHIPS
CUSTOMERSEGMENTS
REVENUE STREAMSCOST STRUCTURE
KEYACTIVITIES
PARTNERNETWORK
solutions for differentiated customers -
professional & consumer
High-end mass market
software developers
Wholesalers, retailers, re-
sellers
online store
brand - Apple,
PowerMac, iMac
innovative designers
IP & patents & agreement
s
component makers
Shipping & logistic
suppliers
build whole devices both
h/w & s/w
software developers
differentiated markets
Invest in R&D
Computers, software & services
Product User
KEYRESOURCES
VALUEPROPOSITON
DISTRIBUTION CHANNELS
CUSTOMER RELATIONSHIPS
CUSTOMERSEGMENTS
REVENUE STREAMSCOST STRUCTURE
KEYACTIVITIES
PARTNERNETWORK
audio-visual content
producers
recordlabels
iPod, iTunes software &
content agreements
retail stores
purchase & mgmt of digital music, audio,
video
integration of information
across devices
control buying
experience
increase switching
costs
iTunes store
chain of owned stores
control the supply chain
increased investment
in R&D
iPod, music & related products
Product User Digital Hub
KEYRESOURCES
VALUEPROPOSITON
DISTRIBUTION CHANNELS
CUSTOMER RELATIONSHIPS
CUSTOMERSEGMENTS
REVENUE STREAMSCOST STRUCTURE
KEYACTIVITIES
PARTNERNETWORK
games & apps across devices
easy access & purchase
through iTunes
reduce cost of sales
increase switching costs -
integration
specialized services in retail stores
optimize supply chain
integrated phone
iPhone
content agreements extended to
games & apps
iTunes through wi-fi
access
app & game developers
app & game developers
cellular network
operators
iPhone, apps & related services
Product User Digital Hub Digital Lifestyle
KEYRESOURCES
VALUEPROPOSITON
DISTRIBUTION CHANNELS
CUSTOMER RELATIONSHIPS
CUSTOMERSEGMENTS
REVENUE STREAMSCOST STRUCTURE
KEYACTIVITIES
PARTNERNETWORK
Product User Digital Hub Digital Lifestyle
content agreements with book publishers
Digital Platform
all digital devices linked through
software platform
Premium re-sellers
book publishers
3rd party developers of
digital content
developers of
digital content
book publishers
premium resellers
control customer
experience in resellers’ stores
increased switching costs -
shared information
iPad & related services
iTunes bookstore
iPad, apps, books & related services