nsf lecture 1 bus model cust dev

NSF I-CorpsThe Lean LaunchPad

Lecture 1Business Models and

Customer Development

Version 6/22/12

Agenda

1. What we used to believe / What we now know

2. Business Models and Customer Development

3. Examples

4. Market Size

Part 1

What We Used to Believe

What We Now Know

Startups are a Smaller Version of a Large Company

What We Now Know

Startups Search Companies Execute


Strategy

Start With an Operating Plan and Financial Model

All I Need to Do is Execute the Plan

All I Need to Do is Make the Forecast

What We Now Know

Strategy

Plan MeetsFirst ContactWith Customers

Previous 5-Year Plans

All I Need to Do is Make the Forecast

No Business Plan survives first contact with customers

Planning comes before the plan

Business Models

Business Model Hypotheses

Search

Strategy

Execution

Operating Plan +Financial Model


Process

We Built Startups by Managing Processes

Product Management

+

Waterfall Engineering

Product Introduction Model

Concept/Seed

Round

Product Dev.

Alpha/Beta Test

Launch/1st Ship

Tradition – Hire Marketing

Concept/Seed

Round

Product Dev.

Alpha/Beta Test

Launch/1st Ship

- Create Marcom Materials- Create Positioning

- Hire PR Agency- Early Buzz

- Create Demand- Launch Event- “Branding”

Marketing

Tradition – Hire Sales

Concept/Seed

Round

Product Dev.

Alpha/Beta Test

Launch/1st Ship




• Build Sales Organization

Marketing

Sales• Hire Sales VP• Hire 1st Sales Staff

Tradition – Hire Bus Development

Concept Product Dev.

Alpha/Beta Test

Launch/1st Ship




• Hire Sales VP• Pick distribution Channel

• Build Sales Channel / Distribution

Marketing

Sales

• Hire First Bus Dev

• Do deals for FCSBusiness Development

Tradition – Hire Engineering

Concept Product Dev.

Alpha/Beta Test

Launch/1st Ship




• Hire Sales VP• Pick distribution Channel

• Build Sales Channel / Distribution

Marketing

Sales

• Hire First Bus Dev

• Do deals for FCSBusiness Development

Engineering • Write MRD

• Waterfall • Q/A • Tech Pubs

Product Introduction Model

Concept/Seed

Round

Product Dev.

Alpha/Beta Test

Launch/1st Ship

Customer Problem: known

Product Features: known

Waterfall / Product ManagementExecution on Two “Knowns”

Requirements

Design

Implementation

Verification

Maintenance

Source: Eric Rieshttp://startuplessonslearned.blogspot.com

What We Now Know

Strategy

More startups fail from a lack of customers than from a failure of product development


Strategy

Process Customer &Agile Development


Product Management& Waterfall

Development

Search Execution


Organization

Hire and Build a Functional Organization

What We Now Know

Organization

Founders run a Customer Development Team

No sales, marketing and business development


OrganizationCustomer

Development Team, Founder-driven

Customer Development,Agile Development


Product ManagementAgile or Waterfall Development

Functional Organization by Department

Search Execution

Strategy

Process


Education

Entrepreneurial Education was about execution

What We Now Know

Education

Entrepreneurial Education begins with the Search for a

business model


Strategy

Organization Customer DevelopmentTeam, Founder-driven

Process Customer Development,Agile Development

Education Business Model Design, Customer Development, Startup team building,

Entrepreneurial Finance, Agile Development, Customer Funnel:

Get/Keep/Grow Market




Organizational Behavior, HR Mgmt, Accounting,

Modeling, Strategy, Operations, Leadership,

Marketing, Manufacturing

Search Execution

Putting Search first is a radical change

It’s not just one more methodology


Instructional Strategies

Cases and a Business Plan were good teaching tools

What We Now Know


~100 GOOTB connections

Experiential Immersion

Team-based Simulations

55

Business Model Patterns Replace Cases

Nespresso machines

retail mailorder

Nespresso.com

callcenter

Nespresso

stores

households

business

1 x machinesales

repetitive pod sales

distribution channels

coffeeproduction

facilites

production B2C distribution brand

marketing

brandpatents

machine

manufacturer

production

B2C

distributionbrand

marketing

Nespresso club

brandbrand

Nespresso pods


Strategy

OrganizationCustomer DevelopmentTeam, Founder-driven



Entrepreneurial Finance, Agile Development,

Marketing


Experiential, constructivist, learner-centered,

inquiry-based

Search







Case, Lecture, Small Group, Mentorship

Execution


Strategy

Organization Customer DevelopmentTeam, Founder-driven




Marketing


Experiential, constructivist, learner-centered,

inquiry-based

Search

This Class


StrategyOperating Plan +Financial Model

OrganizationCustomer DevelopmentTeam, Founder-driven






Marketing





Experiential, constructivist, learner-centered, inquiry-

based

Case, Lecture, Small Group, Mentorship

Search Execution

Part 2

Business Models and


What’s A Company?

What’s A Company?

A business organization which sells a product or service in exchange for revenue

and profit

What’s A Startup?

A temporary organization designed to search

for a repeatable and scalable business model

A temporary organization designed to search

for a repeatable and scalable business model

A Startup aims to become a company

How Does Your Science Become Part of a Company?

Technology Commercialization

• IP Licensing (Patent, Process, etc.)

• Stand-alone Startup

How Are Companies Organized?

How Are Companies Organized?

Companies are organized around Business Models

What’s a Business Model?

Value Proposition

What Are You Building and For Who?

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”


Customers don’t care about your technology

They are trying to solve a problem

Customer Segments

Who Are They?

Why Would They Buy?

Channels

How does your Product Get to Customers?

Customer Relationships

How do you Get, Keep and Grow Customers?

Revenue Streams

How do you Make Money?

Key Resources

What are your most important Assets?

Key Partners

Who are your Partners and Suppliers?

Key Activities

What’s Most Important for the Business?

Cost Structure

What are the Costs and Expenses

But,Realize They’re Hypotheses

9 Guesses

Guess Guess

Guess

Guess

GuessGuess

Guess

GuessGuess


Test the Problem, Then the Solution


The Minimum Viable Product


The Pivot


Details

Customer Development is how you search for the model

How to Build A Startup

Idea

Business Model

Size Opportunity



Idea Business Model(s)

Size of the Opportunity

Customer Discovery

Customer Validation


Idea Size of the Opportunity

Business Model(s)

Customer Discovery

Customer Validation

Theory Practice

Business Model(s)




Business Model(s)

Customer Discovery

Customer Validation

Business Model(s)




Business Model(s)

Customer Discovery

Customer Validation

Business Model(s)


• First test the problem• Next test the solution



Business Model(s)

Customer Discovery

Customer Validation

Business Model(s)


Part 3

How Does this Really Work?

How Does This Really Work?

NSF Lean LaunchPad Class

10 Weeks From an Idea to a Business

Graphene Frontiers

48 COMPANIES70+ CONVERSATIONS

We are a nanotechnology materials company with a proprietary process for producing high quality, low cost, large area graphene films at commercial scale

http://www.youtube.com/watch_popup?v=dTSnnlITsVg&vq=medium%23t=76

Background: Graphene Applications“Wonder Material” Graphene

• Nano Material Subject of 2010 Nobel Prize in Physics • 2D Carbon: Strong, Flexible, Conductive, Transparent• Enables Next Generation Thin, Flexible Devices

Touch Screen, DisplaysFlexible Transparent

Electrodes

Thin, Flexible

Solar Cells

Problem: Lab Scale Not EnoughGraphene Production Must Scale Up to

Commercial Levels before Integration into Consumer Products Becomes a Reality…

Solution: Scalable Production ProcessOur Patent-Pending APCVD Graphene Production Process:•Operates at ambient pressure, reducing cost enabling flexible design•Industrial scale, continuous roll-to-roll production possible•Graphene sheet size limited only by CVD furnace dimensions•Same or better quality vis-à-vis LPCVD graphene•Graphene growth at 900-1000 °C, lower than other methods

Market: Size and GrowthNascent Graphene Market is Ready to Explode:Commercial Scale Production will be Catalyst

• Thin, Flexible Displays• Solar Thin Film• Touch Screens• Thermal Management for Electronics• Basic Materials and Research• Microscopy (TEM) Sample Supports

2012 2016

$52M

Market for GrapheneFilms/Sheets

Thermal Management$6.4B

Graphene Frontiers Process & Product Offering• GF APCVD Process will Accelerate Graphene Adoption Curve

Thin, Flexible Display$8.2B

Thin Film Solar$4.6B

Research/Mat’l/Other

$1.4B

GF TAM:$1.2B

Team: Graphene FrontiersEL: Zhengtang Luo, PhD – Chief Science Officer

10+ years experience in synthesis of carbon nanomaterials and product development for applications in the area of materials chemistry, chemical separation and electronic devices.

Mentor: Mike Patterson – CEO

Experienced entrepreneurial leader, manager, and trusted adviser to startups and Fortune 500 companies, providing expertise in growth strategy and international operations. Patterson is an Executive MBA candidate (Entrepreneurial Management, April 2012) at the Wharton School, University of Pennsylvania.

PI: A.T. Charlie Johnson, PhD – Founder, Scientific Advisory Board

Known internationally for his work in graphene electronics and carbon nanotube electronics. IP from his lab on DNA-carbon nanotube devices for use in an electronic nose system pursued by Nanosense. An author of over 130 peer-reviewed articles, Johnson holds two issued patents, with 18 other patents submitted.

Recap

• Graphene technology will change the world...

• …but not until it is available in commercial volumes

• We believe that APCVD is the best path to industrial scale

• Whoever meets this challenge will be first mover in a fast

growing market with multi-billion dollar potential

• We are the right team with the right technology to do it

What’s Next: Strategy and Roadmap

4” Scale-Up

Process Licensing

Roll-to-Roll Mfg.

Industrial Scale

TEM Grids

Materials Business

12” x 12” Sheet

Production

Intellectual PropertyThin, Flexible Displays

Application R&DTeam

Perfect

Continuous Process

“World Leader in

CVD Graphene

Innovation”Scale-Up Sheet Size

Increase Area Increase Throughput New Applications

1H 2012 2012 2013+

Commercial Roll-to-Roll Design & Prototype

ApplicationDevelopmentPhase

Product/Revenue

Milestone

Activity

What’s Next: Secure Partnerships + Investment

Active Customer Conversations

Manufacturing Partners

Distribution Partners

?Seed Investment

Needed

$1.5 MM

Here’s What We Thought:– Graphene can be used for just about anything– All of the big manufacturers are just waiting for our

product– The market for graphene will explode in 2012– We will become the world’s largest graphene

manufacturer

Enter I-Corps: Beginning Hypotheses

So Here’s What We Did…

• Research to identify target companies: Build the list

– Web, industry/research reports, personal network,

“Who else should we talk to?”

• Calls to personal/professional/alumni network: “Do you

know anyone…?”

• Intros, warm calls, cold calls, cold calls, more calls


• Google AdWords Campaign + Survey Monkey

– 3 days, 8,555 Impressions, 34 people clicking through to our site, ZERO

contacts/closes. Retrospect: What were we trying to learn???

• Serendipity: Casual conversation turns to Graphene Frontiers at alumni event:

“That’s terrific! You know, I work at DuPont. Here’s my card… send me your deck and let me know how I can help.”

–Tom Connelly, Chief Innovation Officer, DuPont


• 48 Companies Engaged, 70+ Conversations: – Lockheed Martin, GrafTech, Inventables, alphaMOS, FirstNano, Pannam Imaging,

FujiFilm, Solutia, Dontech, Tramonto Circuits, Adamant Technologies, Intel, XG Sciences, Graphene Technologies, Densitron, Hotatouch, Touch International, Magic Touch, NJY Technology, Pangea Ventures, Display Search, Dow, DuPont, 3M, Corning, BASF, WL Gore, Morgan AM&T, Plextronics, SPI Supplies, New Metals and Chemicals, G.E., Innovalight, Siemens, Nelson-Miller, Essilor USA, Nexans, E-ink, Gamma Dynamics, Plastic Logic, Cabot Corporation, Thin Diamond, Knighthawk Engineering, Kopietz Consulting, DISPLAX, NineSigma, Evaporated Coatings, LiquaVista

• 80 LLL Posts, 61 Comments/Responses– 79% comments positive or factual, 21% “Constructive”

So Here’s What We Learned…

• Atmospheric pressure production is key value-add– Not “high-quality”, not single-layer

• Many big companies are on the sidelines doing limited

product dev, waiting for a proven production method

• We need to focus on scaling up (bigger & faster)

• We need a partner to break into consumer electronics

• Cost matters, but not as much as we thought

So Here’s What We Learned…

• TEM grids are viable, near term but small market

– Will rely on distribution partner

• Displays will be next big thing

– Focus on flexible/foldable thin displays

– May require partnership with OEMs or sub-contractors

• Extensive product characterization is next step

– Transparency, haze, sheet resistance for displays (3M, Dow, DuPont)

– Minimize layers and contamination for TEM (SPI, Halcyon)

Process• Low Cost• Higher Quality• Large Area• “Industrializable”• Flexible Mfg

Material• Thermal Conduct.• Elect. Conduct• Strength• “Semiconductor”• Flexible• Transparent

• Defense• MEMS• Chem/Bio Detect.• Researchers• Optoelectronics• Transparent

Conduct. (Touch)• Solar Cell Electrodes• Thermal Mgmt• Supercapacitor• Battery• TEM support• Polymer/Composite• CVD Equip Mfg

• Distributor• Direct Sales• Online• License• Partner/JV• Bundle

• Warranty• Service/Maint.

Agree• Joint Marketing• Branding

• R & D• Scale up system design• Graphene production• IP creation/licensing• Internal application

development

• Material Sales• License/Royalty• Equipment Sales• Consulting• Maintenance• Design

• Add’l IP• Applications• SBIR• Angel• VC• Ben Franklin

• IP* (Patent/License)• Team/Expertise• Credibility/Rep• CVD Equipment• Inputs (gas/foil)• Lab space• Website• Design/Engineering

• Earlyvangelists• (Customer/Partner)• Equipment Mfg• Universities• Downstream

fabrication companies

• Suppliers

• Team• Lab space• Capital equipment

The Business Model Canvas

Process• Low Cost• Higher Quality• Large Area• “Industrializable”• Flexible Mfg

Material• Thermal Conduct.• Elect. Conduct• Strength• “Semiconductor”• Flexible• Transparent

• Defense• MEMS• Chem/Bio Sensor• Researchers• Optoelectronics• Transparent

Conduct. (Touch)• Solar Cell

Electrodes• Thermal Mgmt• Supercapacitor• Battery• TEM support• Polymer/Compos.• CVD Equip Mfg

• Distributor• Direct Sales• Online• License• Partner/JV• Bundle

• Warranty• Service/Maint.

Agree• Joint Marketing• Branding• Education

• R & D• Scale up system

design• Graphene product.• IP creation/

licensing• Internal app. dev.

• Material Sales• License/Royalty• Equipment Sales• Consulting

• Maintenance• Design• Add’l IP• Applications

• IP* (Patent/License)• Team/Expertise• Credibility/Rep• CVD Equipment• Inputs (gas/foil)• Lab space• Website• Design/Engineering

• Lead Customer• Equipment Mfg• Universities• Downstream

fabrication companies

• Suppliers

• Team• Lab space• Capital equipment• Direct Sales/Travel


Low Cost Thermal Mgmt Solutions

Direct Sales

Scale up

Material Sales

IP

Equipment Mfg

Direct Sales/Travel

Transparent Conduct. (Touch)

Chem/Bio Sensor

Education

Service/Maint.

License

Higher Quality

Large Area

“Industrializable”

License/RoyaltyCapital equipment

Lab space

Personnel

CVD Equipment

Facilities/Lab

Customization

Production

Universities

Downstream fabrication companies



Direct Sales

Scale up

Material Sales

IP

Equipment Mfg

Direct Sales/Travel


Chem/Bio Sensor

Education

Service/Maint.

License

Higher Quality

Large Area



Lab space

Personnel

CVD Equipment

Facilities/Lab

Customization

Production

Universities


Intermediate product

Graphene Frontiers Business Model Canvas – PRIOR VERSION (10.18)


Direct Sales

Scale up

Material Sales

IP

Equipment Mfg

Direct Sales/Travel


Chem/Bio Sensor

Education

Service/Maint.

License

Higher Quality

Large Area



Lab space

Personnel

CVD Equipment

Facilities/Lab

Customization

Production

Universities



Membrane switches

Replace ITO

Collaborative R & D

This Week:Split, then Pivot

Graphene Frontiers Business Model Canvas “A”

IP

Higher Quality

“Clean”

Atomically Thin and Robust

Revenue Sharingw/Distributor

“Free” (Selling Byproduct)

CVD Equipment

Facilities/Lab

Research Groups

TEM Equipment Mfg.

Trade ShowsElectron Microscopists

Academic PapersTransfer Process Optimization

Graphene Frontiers Business Model Canvas “B”

Low Cost

Scale up

IP

Equipment Mfg

Direct Sales/Travel

Flexible Transparent Conductor

Education

Service/Maint.

License

Higher Quality

Large Area


License/RoyaltyCapital Equipment

Lab space

Personnel

CVD Equipment

Facilities/Lab

Customization

Universities

Downstream Fabrication Companies


Collaborative R & D

Foldable / Bendable

PHOTOCATALYSTS for WATER REMEDIATION

(nanocatalysts)

(c) copyright 2011

• Commercialize visible light activated nanocatalysts (Nanogrids™)

• Nanotechnology removes hydrocarbons from polluted water

• Turns wastewater from fracking operations into drinkable water

• New product in a niche (multibillion $) market

• Talked to 70 people- dealers, distributors, customers)

• Surveyed another 30 customers

Initial Idea & Market Opportunity Estimate

• Our invented nanogrids™(c) technology offers inexpensive, extremely fast and efficient hydrocarbon decomposition

• It has potential uses in oil decomposition/ environmental remediation

• Focus on Gulf Oil Spill clean- up efforts

(c) copyright 2011

Total available market for environmental nanotechnologies

2010: $6.1b2014: $21.8b (projected)

Served Available Market environmental remediation

40% of total market

Target Market$8b

Ref: F. Boehm, Nanotechnology in Environmental Applications, BCC Research, 2006; NOAA, Gulf Spill Restoration, 2011

Team Members

PI: Perena Gouma, tenured Associate Professor, Dept of Materials Science & Engineering, SUNY Stony Brook; Director of Center for Nanomaterials & Sensor Development; Fulbright Scholar and NSF grantee since 2002. Has published over 100 research articles on ceramic nanomaterials and their functional applications; she holds 4 US patents

Lead: Jusang Lee, doctoral candidate in the PI’s research group; he has published research-based and review papers; he is a co-inventor along with the PI of the nanogrids™ technology

Mentor: Clive Clayton, founder Director of the SPIR program at SUNY; Leading Professor in Materials Science & Engineering, SUNY Stony Brook; Fellow of the Electrochemical Society; serving on advisory board of BASF’s Rensselaer NY Ecology Center

•Industrial nano-manufacturing providers

•Suppliers of precursor material

•IP protection• R&D capability•Brand•Expertise

•IP validation•Building a brand•Pilot studies•Marketing•Distribution

•New product (replaces toxic surfactants)•Green Photochemistry• Fully decomposes oil•No energy cost to use•Speed of deployment•Recoverable•Customization•Risk reduction•Convenience/usability

•Expanding their services•Continuous/long term•As-needed leasing

•Water remediation companies•Coast Guard•Shipping industry•Refineries•Oil service industry•EPA•Federal groups on remediation•Individual /home use (e.g. pool cleaning)

•Direct sales and/or leasing•Partner distribution channels

•Shipping

•Marketing

•Sale of nanogrids™ © per square foot•Per use charge (leased)• First to market; premium revenues•Licensing other IP

(c) copyright 2011

Business Model Canvas Version 1

Photocatalysts

Company Contact Person Lessons Learned

Dow Chemical Ventures Steve Hahn To focus on water cleaning systems; efficiency of catalyst is the key feature

Oceanside Water Pollution Control Plant, SF, CA)

Alexandre Miot To focus on petroleum-based contamination; skimming

Eastern Environmental Solutions, Inc (LI, NY)

Deb Engelhardt, Louis Bascelli, Joseph Napoli

Current practices: spill tech pads; Regen Ox (oxidizer)

Miller Environmental (LI, NY) Dave Reardon Got suggestions for pilot studies; projects cost vary a lot

DEC (region 1, NY) Karen Gomez State environmental regulations; contractors

Eco-Test Babylon (LI, NY) Thomas Powell Water quality testing procedures and EPA standards

GES Edward Savarese Current practice: pump and treat; geologists org. contact

David Tonjes DT&S-SBU; consultant

Customer is the Env. Engineer

WRS environmental; Environtrac (LI, NY)

Front desk personnel

Talked to their R&D people

So, Here’s What We Did TESTED THE CUSTOMER SEGMENTS HYPOTHESIS



•Suppliers of precursor material •IP protection

• R&D capability•Brand•Expertise

•IP validation•Building a brand•Pilot studies•Marketing•Distribution

•New product •Green• Decomposes oil•No energy cost to use•Recoverable•Customization•Risk reduction

•Expanding their services•Continuous/long term

•Water remediation companies•Coast Guard•Shipping industry•Refineries•Oil service industry•EPA•Federal groups on remediation•Individual /home use (e.g. pool cleaning)

•Partner distribution channels

•Marketing•Sale of nanogrids™ © per square foot• First to market; premium revenues•Licensing other IP

•Speed of deployment

•As-needed leasing

•Direct sales and/or leasing

•Remediation of petroleum-based oil-polluted water

•Per use charge (leased)

•Shipping

•R&D costs

Photocatalysts

Here’s What We Found Target Market: Petroleum-Oil Polluted Water Remediation

• Industry is excited about innovative products/solutions

• Problems are diverse; Common pollutants: gasoline, fuels

• Makes no sense to directly sell and ship our products

• Need to identify distributors and partner with them

• No Leasing

• Our competitive advantage could be that we offer fast remediation solutions


•IP validation

•Partner/other distribution channels

(c) copyright 2011


•Building a brand•Pilot Studies

•Distribution

• New Product

•Green

• Decomposes oil

•No energy cost to use•Fast Remediation

•Recoverable

•Customization

•Risk reduction•Convenience/usability

•IP protection

•R&D capability•Brand

•Expertise

•Marketing

•Distributors

•Dealers/Partners

•Marketing

•R&D costs

•Expanding their services

•Continuous/long term

•Sale of nanogrids™ © per square foot

• First to market; premium revenues•Licensing other IP

•Remediation of Petroleum-based oil polluted water


Photocatalysts

So, Here’s What We Did

Talked to Dealers of Environmental Remediation Products

Approached Key Distributors

Talked to Remediation Specialists in Numerous Remediation Companies

We Went on a Field Study to Eyewitness the Challenges Associated with Remediating Underground Oil Spills

ECS Environmental Compliance (MA)

AECOM (MA)

Kerfoot Technologies, Inc (MA)

EnviroTrac (LI, NY)

BKW Environmental (TX/PA)

Advanced EnvironmentalSolutions (MA)

ASSESSED THE MARKET TYPE

So, Here’s What We Found

• Remediation treatments of petroleum-oil contaminated water almost leave residual hydrocarbon contamination levels that prevent the disposal of the remediated water to the environment

• Our nanocatalysts can be used to fully remediate hydrocarbons and to provide clean water

• However, is there a sizeable market for our technology?

• What is it?

• Does the size of the opportunity make it worth pursuing it further?

New Product for Niche Segment of Existing Market


•IP validation

(c) copyright 2011


•Building a brand •Pilot Studies

• New Product•Green

• Decomposes oil

•No energy cost to use

•Fast Remediation

•Recoverable

•Customization•Risk

reduction•Convenience/usability

•IP protection

•R&D capability•Brand

•Expertise

•Marketing

•Distributors

•Dealers/Partners

•Marketing

•R&D costs




• First to market; premium revenues

•Licensing other IP


•Manufacturing costs


Photocatalysts

• Came up with different Packaging Options for our product

• Contacted 30 Potential Customers about our product

• Tried to Recruit Members for IAB

• Calculated the Cost of In-House Manufacturing

• Produced a Revenue Model for Our Company

So, Here’s What We Did

•Rolls of fabric-like material

• Blankets

• Pads /mats

Packaging options

Packaging Options & Cost of Manufacturing

Our Product* Estimated Cost Existing Product in Market

Rolls of fabric-like material (Sold per square foot)

$10 U*** Oil Absorbent $ 20

Blankets (3x2 .5 feet) $50 P***Oil-Only Weighted Absorbent Blanket $ 112

Pads mat for small spill (15" x 18“)

$30 B*** INDUSTRIES Buff Oil Absorb Pads$ 51


* Our product description: • new nanotechnology that collects & decomposes oil in water, in-situ

• It can hold oil up to 20 times its weight, floats in water, and uses sunlight to break down hydrocarbons into eco friendly products

Industry likes our product and pricing

Industry Expert/Customer Testimonials

“I feel your purchase prices are too high for the mass of the remediation market. For a massive spill of 100,000 gallons or more, the cost would compare unfavorable with skimming and transporting for reclamation.

For small spills your product is in competition with the cost of conventional absorbents plus landfill disposal. In this case, your $10 per sq. foot compares with $10-16 per ton landfill disposal.” Dan Gray, Hepaco Inc., Tucker, GA.

“I think that the pricing is right on, I think it shouldn’t be very difficult to sell the fabric, especially since its eco-friendly.Would these then, in theory, be able to be thrown in the trash along with MSW?Here on LI most of our garbage is burned, what type of off gasses are produced when these are incinerated?Also, would this product work on water/ocean/river spills?”James Cressy, Project Manager, Impact Environmental

•IP validation

(c) copyright 2011



• New Product•Green

• Decomposes oil


•Fast Remediation

•Recoverable

•Customizationn•Risk reduction

•Convenience/usability

•IP protection

•R&D capability

•Brand

•Expertise

•Marketing

•Distributors

•Dealers/Partners

•Marketing

•R&D costs








•Remediation of ”Produced Water”

•Water desalinationcompanies


Photocatalysts

Added Key Customer Segment

“Produced water”: Discharged in off-shore oil-producing areas

Fracking creates large amounts of wastewater

Current energy exploration and extraction in US creates 15-20 billion barrels of produced water / year

Worldwide, estimates top 50 billion barrels

Energy companies pay between $3 – $12 to dispose of each barrel of produced water

Produced water is usually treated to remove most free oil

Need to treat the remaining amount of soluble and volatile petroleum hydrocarbons

BTEX average concentration remaining about 5mg/L Allowable limit of BTEX in drinking water 5mg/L

WHAT IS BTEX? BTEX is the abbreviation used for four compounds found in petroleum products. The compounds are benzene, toluene, ethylbenzene, and xylenes.

Produced Water


Nanogrids™ ©

Reducing benzene contamination by 1000 times!

Turning Wastewater into Drinking Water

From 3.5 ppm

To 2.4 ppb

What is the Problem We Solve?

• Our product can contain the volatile petroleum hydrocarbons (e.g. benzene) and subsequently decompose them either in-situ or off-site

• It can be used as the final remediation step in the “produced water” clean up

• It can, in principle, turn “produced water” from wastewater to drinkable water while treating on-site

• New legislation expected to cancel the Energy Industry’s exception from the Clean Water Act, thus favoring “new, self-contained, on-site water treatment”

• The current market for treating produced water is estimated to exceed $4.3 billion for next 5 years

http://www.dw-1.com/news/info.php?refnum=528

•IP validation

•Partner/other distribution channels



•Distribution

• New Product

•Green

• Decomposes oil


•Fast Remediation

•Recoverable

•Customizationn•Risk reduction

•Convenience/usability

•IP protection

•R&D capability

•Brand

•Expertise

•Marketing

•Distributors

•Dealers/Partners

•Marketing

•R&D costs








•Remediation of ”Produced Water”•Water

desalinationcompanies

• Filtration


Photocatalysts

Market Size Diagram

GlobalNanocatalyst Market

$6bBy 2015

World Water Treatment Market $48.1b

Filtration /Water Purification Market $8.5b

Target Market

http://www.strategyr.com/Nanocatalysts_Market_Report.asp; World Water Treatment Products to 2015 - Demand and Sales Forecasts, Market Share, Market Size, Market Leaders; thttp://www.wateronline.com/article.mvc/Report-World-Water-Wastewater-Treatment-Marke-0001

http://www.strategyr.com/Nanocatalysts_Market_Report.asp

Distribution Channel Diagram

Distributors

Dealers/Potential Partners

Customers

Purchasing

Individual

Products

Filtration Industry/Integrated Solutions

Revenue model diagram

Year 1 Year 2 Year 3 Year 40

10

20

30

40

50

60

($M

)

First year revenues:20 SME of $100,000 sales/year= $2M2 LC of $1M /year =$2Mfirst year revenues : $4M

Second year revenues:75% retention of SME15 SME of $150,000 sales/year= $2.25M2 LC: $5M sales/yearsecond year revenues $7,25M

Third year revenues:maintain the domestic levels with existing customers but expand international sales to $3.5MThis will set us over $10M

Fourth year revenues:Add new line of products for existing market; expand into adjacent markets(off-site remediation; water purification; etc)Revenues to reach $50M

What’s Next

The PI and Lead are forming a company (C-corp)

The mentor will maintain advisory role

Ongoing negotiations for exclusive licensing of IP in progress

Seek seed funding from investors, VCs, SBIR, SUNY’s economic development office, NYSERDA

Explore interactions with Pall and Siemens Water Technologies on developing integrated solutions/licensing IP

Explore opportunities for women-owned businesses

Disseminate core principles learned into the University’s incubator program through mentor’s efforts

Stony Brook University Office of Technology Licensing and Industry Relations

The Office of Technology Licensing and Industry Relations (OTLIR) is an entity of the Research Foundation for State University of New York, which manages the intellectual property for esteemed SUNY faculty members and acts a liaison for academic-industry interactions.

Exclusive License General Terms: Clearly defined field of use Diligence milestones for compliance and assurance of

commercialization Up-front payment Patent cost reimbursement Financial milestone payments based on product sales and

commercial milestones Sublicensing and Assignment terms Limitations on liability including insurance and indemnification

173

Arka Solutions

Arka will make modular, low cost, enhanced heat pipe-based cooling solutions, first for

LED lighting, and subsequently for electronics cooling and HVAC applications

Total Customers Contacted: 86RIT NSF ICORPS Dec 14 2011

RIT NSF ICORPS Dec 14 2011 174

Initial Business Concept

Global lighting industry - $100B

LED lighting - $6B, CAGR>40%

Enhanced cooling allows• Higher lumen output• Higher light quality• Better reliability

LED Replacement Lamps

~500 million sockets * $15/lamp =

~$750M

Team Members

Entrepreneurial co-Lead

Kirthana KripashMBA (Candidate), RIT

Entrepreneurial co-Lead

Ankit KalaniMS Engineering (Candidate) RIT

Principal Investigator

Dr. Satish KandlikarGleason Professor

Mech. Engg., RIT

Mentor

Dr. Suresh SunderrajanPresident, NNCrystal Corp.

Kandlikar and RIT Team – NSF I-Corps

Business Canvas 1


Here is what we did.

Customers Key PartnersChannels


“We are willing to wait 5 to 7 years

for the price to fall before we adopt

this technology on a wide scale. ”

“If you bring us a modular thermal system that provides better cooling at lower cost, we would definitely want to explore this technology.

MARKET FLOW – Iteration 1

Arka provides replacement lamps

What we learnt“New Product”

Customers

• Cost: The customer is unwilling to buy the product at current prices

• Loyalty: The final consumer is highly dependent on Gatekeepers (suppliers) for guidance in product choice

Distribution and Supply

• We lack expertise in Lamp/Luminaire production

• OEMs were interested in incorporating our enhanced thermal module in their product

We had to pivot! Kandlikar and RIT Team – NSF I-Corps

Business Canvas 2


Arka provides Thermal Modules

Here is what we did.

Customers Key PartnersEnvironment

We would like to enter into a partnership to develop heat pipe based products.

Heat Exchanger

Manufacturer

What we learnt. “New Business Model”

• Our competencies lay primarily in the heat pipe industry

• The most encouragement came from a heat exchanger manufacturer who is looking to expand his product line.

• Our Business Model iterated; we will now focus on heat pipe based solutions in diverse applications.


RIT NSF ICORPS Dec 14 2011 184

Prototype Results

• Arka prototype runs 15 C cooler, allowing more LED placement per lamp

• Prototype delivers 100 % more lumens for the same form factor • ~30% lower cost/unit for similar lumen output• The weight of Par38 is 65 percent lower, and the manufacturing cost

is $4.50 (current module costs about $2.20)

Commercial PAR 38 Arka Prototype

52 °C (max) 37 °C (max)

Business Canvas 3


Heat Exchanger Manufacturer

Design Sources and

Technical Experts

Status Update and Next Steps

• Negotiations with Heat Exchanger Manufacturer (HEM) ongoing.

• Arka provides::IP, heat transfer expertise, design • HEM provides: Manufacturing, distribution and

sales channels• Arka will be proactive in exploring other market

opportunities.– Additional revenue/cost models will be explored

using the methodology of this class


Here is what we learnt.

• The Process:– Iterations occur organically when you respond to

market and consumer needs. – Explore unconventional opportunities, be OPEN,

and be aware that potential partners may be sitting next to you in a plane. I probably met my future prototyping partner on my way to Stanford.

• The Market:– Understand your customers, channels and partners– It’s about money – customer’s, partner’s and yours

– respect that without forgetting your core values. Kandlikar and RIT Team – NSF I-Corps

Thank You!

For the vision of the NSF team, and the

Valuable Guidance from Steve Blank

and the awesome Teaching Team at Stanford!

Appendix

Final Note to Educators

• Most Valuable Game Changers – Your Students!– Recognize the innovative potential of your student– Guide them to pursue commercialization: from their mom’s

gardening business to successful technological products– Motivate your students – Be ENABLERS. You can shine on your

own, but you can “nucleate” many more stars.

Final Note to Students• Most Valuable Assets – Your Ideas and Your Drive

– Dream of Possibilities– And then make them HAPPEN – you will know how by simply

GETTING STARTED


Pass/Fail Parameters in Oct ‘11

Competitive Players

LED Lamp

• Samsung• Cree• Philips• BriteLight• Sylvania

Thermal Module

• Nuventix• Thermacore

Design Firm

• Lytron• Enertron• Heat-Pipes• Transterm• Thermosys

Dr. Kandlikar – Key Takeaways

– Show innovativeness– Integration of Student education on commercialization– Hope to get NSF implementation grant for RIT curriculum– Hope to be NSF face on commercialization initiative– Create a start-up and be successful (really start a heat pipe

company)

Ankit Kalani – Key Takeaways• What I hoped to learn.

– To be involved in a grant based project from start to finish– Understanding the needs and requirement of product

development ( from research lab to an actual product)• What I learnt.

– What entrepreneurship really means – How to talk and listen to ‘actual’ customers– Understanding requirements for a start-up not just product

development– Presentation improvement skills– Planning and working to meet deadlines– Being flexible and responsive to feedback

Kirthana Kripash – Key Takeaways

• What I hoped to learn:– How to understand and facilitate the technology commercialization

process– How to work with technical teams– Student and University based technology commercialization and

resources– If academic training in entrepreneurship translates in the real world.

• What I learnt:– Working with a idea at the nascent stage while incorporating customer

feedback allows room for easier growth and modification– Concepts and Theories do not convert easily to product features.

Prototyping from paper to product takes time, effort and an ability to improvise.

Business Canvas

Week 1 - 9

Business Canvas -

Market Size

How Big is This 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 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 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

Market Size Examples

The Opportunity

Chemical Catalyst Market= $7 B

Hydrogen-ation Catalyst= $1.5 B

Pd/C Catalyst = $1.1 B

Global Catalyst Market = $29.5 B• Emissions• Refinery• Chemical

MARKET SIZE

Giant Markets > Meat: $160B / Snacks: $70B > Meat Snacks: $4B

Varying Growth Rates> Meat: + 5%> Snacks: + 15%> Jerky: + 5%

Mega Consumer Trends Converging

> Healthy, More Flavorful, Higher Quality

Snacks Driven by Innovation / News

Meat Snacks / Jerky Generally Sleepy> Limited Innovation> “Gut Stuffer” Image

Change Underway Driven by New Entrants

> All-Natural> 10% Growth Latest 52 Weeks Nielsen F/D/M

2009 US Snack Food

A m e r i ca ns L o v e to Ea t M e a t a nd S n a c k

Retail Sales

Source: US Package Facts

Sweet$35B

Salty$30B

Meat$4B

$50 Billion Dollar Protein Therapeutic Market

$1.4 Billion Dollar Cell Line Sales Market

$140 Million Dollar Target

TAM: $6 B/yr>100K systems

worldwide

SAM: $1.5B/yrAssumptions: 25K pivots w/ 1 sensor/acre

(125 sensors/pivot)

Target Market: $50-75M/yrAssumptions: 3-5% licensingRecurring consumable costs

would add to revenue

Nitrate Sensor Market

Market size - Landlords & Rental Units

Rental Real Estate is the Largest “Mom and Pop” business in America: The vast majority of properties are owned by a single individual that owns only one property.

Source: US census data

2.20

0.46 0.06

Units by Landlord Portfolio Size in USA (millions)

Small: 1 to 4

Medium: 5 to 49

Large: 50 or More

Small: 1 to 4 Medium: 5 to 49

Large: 50 or More

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100% 92%

77%

32%

% of Units, by Landlord Portfolio Size, Owned by a Single Individual

50% of the “Small” landlords own just one unit.

The market size for metastatic cancer diagnostics in the U.S. is estimated to be $805M p.a.

CanScan

U.S. population size

U.S. incidence of all cancers

% diagnosed with regional or distant cancers

Patients w/ regional or distant cancers

Cost of diagnosis and monitoring (annually)

Methodology: Value:

Cancers that spread to local or distant lymph nodes or organs

Weighted avg. patient cost p.a. for imaging procedures (2008)

x

=

=

x

U.S. Census Bureau estimate

Source:

ACS Cancer Facts & Figures 2011

NCI SEER 2011 data

JAMA. 2010; 303(16):1625-1631

x

Market size for metastatic cancer Dx / monitoring

=

Total U.S. population in 2012

Explanation:

313M

Treatment is typically given in the first year following diagnosis

0.512%

Total U.S. cancer incidence 1.6 M

39.4%

628,420

$1,285

$805M

225

Linear Lighting Market Size

225

Hypothesis TestingExamples

228

• Hypotheses to test

Hypothesis Test

There is strong Interest in facilitating rental maintenance support

Interviews (landlord and providers), web ad conversion

Service providers are willing to pay for lead generation through our site

Interviews (need to determine consensus willingness to pay)

There will be a higher response rate amongst tenants and landlords for an “exclusive” community

Interviews (tenant and landlord), survey (tenant), web ad conversion of different messages

Tenants are willing to pay a nominal fee ($1-2) for convenient rent/utility online payment service

Interviews (tenant), survey (tenant), web ad conversion.(Need at least 0.08% CPM conversion to be profitable)

Real Estate agents are willing to help push this offering to their customers

Interviews

Week 1 Week 3

Hypothesis• Existing prepaid cards add value

to a subset of the population – Underpenetrated

opportunity– We can find a better

channel to reach this customer segment and convert them

• Existing prepaid cards are flawed and can be improved

– We can do something clever to shake up the fee structure and/or build in a new feature (e.g., rewards)

• Solution = prepaid + loyalty card– Distributed at retail POS

Test

Interviewed supermarket executives, payment processors, private label card manufacturers, prepaid program managers, loyalty consultants, and data analytic firms

Results

User acquisition is critical user engagement is everything

Underpenetrated opportunity because people: Don’t understand the value

of the card Don’t know about the card Haven’t bought one yet

Potential customers are aware of and understand prepaid, but: Hate the fees Haven’t bought one yet

Week 3 Week 4

Hypothesis Test

Interviewed end users at Walmart, food banks, bus stops, payday lenders, their homes, and supermarkets

Interviewed execs at Green Dot, Rush Card, and NetSpend

Results

End Users see value: More likely to sign up for prepaid

via assisted POS sale Active vs. passive sale hypothesis

validated More likely to keep and reload cards

with ongoing cash rewards Higher retention via loyalty

hypothesis validated

Retailers see value: New revenue opportunity is

compelling Access to purchasing data outside

the store is compelling

Industry Trends Loyalty + prepaid programs are the

future

Industry execs like this idea a lot and are actively exploring it

• Existing prepaid cards add value to a subset of the population

– Underpenetrated opportunity

– We can find a better channel to reach this customer segment and convert them

• Existing prepaid cards are flawed and can be improved

– We can do something clever to shake up the fee structure and/or build in a new feature (e.g., rewards)

• Solution = prepaid + loyalty card– Distributed at retail POS

Week 4 Week 5

Hypothesis• Customer awareness and

education are key obstacles to customer acquisition and retention

• Channel: Assisted sale at POS trumps current passive j-hook sale

– Active sale enhances awareness & education

• Product: Combining prepaid + loyalty

– Cash rebates improve retention and incentive to reload

Test

$5 for 5 minutes campaign Speak to as many potential

customers as possible ask for an actual commitment

Results

20 preliminary signups

Built empathy around customer prepaid needs

Immediacy Security fears Fees Channels

Discovered other needs Job-seeking Saving for kids’ education

Understood observed behaviors High churn Lack of reloading Lack of regular usage

Loyalty component not required if you can service the true pain points

Team Deliverable by Tomorrow

• Hypotheses for each part of business model• 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?

• 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

Backup

IdeaBusiness ModelSize Opportunity


nsf lecture 1 bus model cust dev

Education

business plan

customer funnel

customer development3

marcom hire pr agency

abusiness model

sales stafforganization

test1st ship

waterfall engineering