Aaron EdenCreated by Steve Blank
»   5/12 – What to Expect»   5/19 – First Pitches»   5/26 – Experiment Day»   6/2 –Value Propositions»   6/9 – Customers, ...
» Team Presentations» Distribution Channels» Mentoring
» What were your hypotheses about users and  customers? Did you learn anything different?» Did anything change about Value...
Channels           10
Test Hypotheses: Channels                            11
Two Critical Channel Questions   How do you want to sell your product?   Is subtle, but more important than the   first: H...
How Do You Want Your Product To Get        To Your Customer?    Yourself    Someone else    Retail    Wholesale    Bundled...
How Does Your Customer Want to Buy Your Product From Your Channel?   Same Day    Delivered and installed    Downloaded    ...
Web Channels               15
Physical Channels                    16
Types of ChannelsDirect            Indirect   Licensing             • OEM             • VAR             • Reseller        ...
The Channel as a Customer» Some products are embedded in others  (OEM)» Some products are resold by others  (VARs)» Some p...
Distribution Complexity                                                                                      Global System...
How Are Channels Compensated?» Commission» Percentage of sales price» Discounted pre-purchase                             ...
How Are Channels Motivated or Incented?» Money! What makes them the most?» Training» Marketing to the channel» SPIF       ...
Channel Economics: “Direct” Sales                                                                   List                  ...
Channel Economics: Resellers                                                                            List              ...
Channel Economics: Distributors/Resellers                                                                                 ...
Channel Economics: OEM or IP Licensing                                                                                    ...
Example: Book Publishing             NationalPublisher                 Printer   Wholesaler   Retailer   Customer         ...
Book Publishing                            National              Publisher                 Distributor   Retailer   Custom...
Book Publishing Economics                 NationalPublisher                               Wholesaler            Retailer  ...
Book Publishing Delivery                National Publisher                     Printer     Wholesaler       Retailer      ...
Nature of Products Impact Channel:         Physical or Virtual?» Access to customers changes  dramatically» Logistics rela...
Bits vs. Atoms                               Channel                        Web              Physical              BitsPro...
Product and Channel Are Bits                                          Channel                              Web            ...
Web 2.0 – Product/Channel Are Bits                                        Channel                                Web      ...
Product Is Bits, but Channel Is People                                          Channel                              Web  ...
Traditional Enterprise Software                                         Channel                                 Web       ...
Physical Products Sold Over the Web                                           Channel                               Web   ...
Killing Traditional Storefronts                                          Channel                                Web       ...
The Factories May Be in China                                            Channel                                Web       ...
We Still Make Things that Need Salespeople                                          Channel                               ...
Homework»   Talk to 10-15 potential channel partners    +   (Salesmen, OEM’s distributors, etc.)»   What were your hypothe...
Appendix           41
implantable drug infusion pumps                       with remote physician control                     for chronic pain p...
Chronic Pain v3                         FS Team                                                                  Training ...
Chronic Pain v4                         FS Team                     Trade shows                                    Trainin...
Getting OutClinicians              » Dr. Stan Louie, Drug Formulation Expert (USC Pharmacy)                        » Dr. G...
Product Flow/ChannelElectronic                                                  Partners/  Health                     Flui...
Channels (Direct)Hospitals      • Direct to institutions                  • Some formularies involved in purchase decision...
Patient Care Flow (Now)                                                                         Partners/                 ...
Patient Care Flow (Proposed)  Electronic                                                                       Partners/  ...
Regulatory Considerations                        PMA                 510K           Trial size   100’s of patients   20-10...
Take-Aways• Channel is direct in this existing market   • Channel for e-health is more complex and evolving• State-to-stat...
Advanced Chemistry forPharmaceutical Progress Team: Kiel Neumann (EL)  Stephen DiMagno (PI)  Allan Green (Mentor)         ...
 PET is a non-invasive medical diagnostic  technique for cardiac, brain, and tumor imaging GFP technology makes new (unk...
The Business Model Canvas                         SOPs for precursors                                   Technical Assistan...
1) Radiologists and Nuclear Medicine Physicians2) Radiopharmacy companies (Cardinal Health, Siemens, GE Healthcare, IBA,  ...
- Face to face with attending Radiologist at Stanford  University- Face to face with radiopharmacist at UCSF- Conference c...
-   Immediate need for our product     -   Currently used SPECT product for neuroblastoma is limited by         absence of...
 Face to Face meeting with president of small radiopharmaceutical company Face to face with a clinician at Memorial Sloa...
 Significant Interest in our technology      Radiopharmacies want GMP product         No interest in GMP reagent prepar...
The Business Model Canvas                                                                            Technical Assistancec...
• F-dopa iodonium intermediate                  • F-dopamine iodonium intermediate   We provide accessibility   Reagents  ...
 Conference call with top 40 Fortune 500 chemical distribution company      Open to cGMP production of our potentially p...
» Initially seeking to market method technology  -too diffuse, but many opportunities (i.e. product-driven  opportunities ...
Approximately 2.2 million procedures in the US.Drug costs range from $700 (on-patent) to ~$150 (generic FDG)US sales of ra...
2500 installed PET scannersPET radiopharmacies cover the entire US marketRadiopharmacies have an interest in proprietary a...
Neuroblastoma                                 Parkinson’s DiseasePrevalence: about 6000 US cases               DatSCAN sal...
Lean Launchpad Tucson - Distribution Channels
Lean Launchpad Tucson - Distribution Channels
Lean Launchpad Tucson - Distribution Channels
Lean Launchpad Tucson - Distribution Channels
Lean Launchpad Tucson - Distribution Channels
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  • Lean Launchpad Tucson - Distribution Channels

    1. 1. Aaron EdenCreated by Steve Blank
    2. 2. » 5/12 – What to Expect» 5/19 – First Pitches» 5/26 – Experiment Day» 6/2 –Value Propositions» 6/9 – Customers, Users, Payers» 6/16 – Distribution Channels (Justin)» 6/23 – Customer Relationships» 6/30 – Revenue Models» 7/7 – Partners» 7/14 – Key Resources & Costs» 7/21 – Lessons Learned Presentations
    3. 3. » Team Presentations» Distribution Channels» Mentoring
    4. 4. » What were your hypotheses about users and customers? Did you learn anything different?» Did anything change about Value Proposition?» What do customers say their problems are? How do they solve this problem(s) today? Does your value proposition solve it? How?» What was it about your product that made customers interested? excited?» If B-B, who’s: decision maker, size of budget, what are they spending it on today, how will this buying decision be made?
    5. 5. Channels 10
    6. 6. Test Hypotheses: Channels 11
    7. 7. Two Critical Channel Questions How do you want to sell your product? Is subtle, but more important than the first: How does your customer want to buy your product? 12
    8. 8. How Do You Want Your Product To Get To Your Customer? Yourself Someone else Retail Wholesale Bundled with other goods or services 13
    9. 9. How Does Your Customer Want to Buy Your Product From Your Channel? Same Day Delivered and installed Downloaded Bundled with other products As a service 14 …
    10. 10. Web Channels 15
    11. 11. Physical Channels 16
    12. 12. Types of ChannelsDirect Indirect Licensing • OEM • VAR • Reseller • Distributor 17
    13. 13. The Channel as a Customer» Some products are embedded in others (OEM)» Some products are resold by others (VARs)» Some products are distributed by others» Who’s the customer? 18
    14. 14. Distribution Complexity Global Systems Systems Integrators WANs Evangelists Mainframes Direct SalesMarketing Complexity Minis LANs VARs PC Servers Desktop PCs Retail Printers Keyboards Service Web, Telesales Technicians Toner 19 Solution Complexity
    15. 15. How Are Channels Compensated?» Commission» Percentage of sales price» Discounted pre-purchase 20
    16. 16. How Are Channels Motivated or Incented?» Money! What makes them the most?» Training» Marketing to the channel» SPIF 21
    17. 17. Channel Economics: “Direct” Sales List Revenue Price End Consumer Discounts Cost of Goods EU Profit + SG&A + R&D (Supply Chain) 22Source: Mark Leslie, Stanford GSB
    18. 18. Channel Economics: Resellers List Revenue Price End Consumer Discounts Cost of Goods EU Profit + SG&A + R&D Reseller (Supply Chain) 23Source: Mark Leslie, Stanford GSB
    19. 19. Channel Economics: Distributors/Resellers List Revenue Price End Consumer Distributor Discounts Cost of Goods Profit + SG&A + EU Reseller (Supply Chain) R&D 24Source: Mark Leslie, Stanford GSB
    20. 20. Channel Economics: OEM or IP Licensing ListYour Revenue Price Cost of Distributor Distributor Discounts Master Goods Profit + SG&A + EU Reseller (Supply R&D Chain) Cost of Goods Profit + SG&A Reseller(Supply + R&D Chain)Your Product Becomes Your Customer’s Cost of Goods 25 Source: Mark Leslie, Stanford GSB
    21. 21. Example: Book Publishing NationalPublisher Printer Wholesaler Retailer Customer Distributor 26
    22. 22. Book Publishing National Publisher Distributor Retailer Customer Wholesaler•Percent of Retail 35% 15% 10% 40% $7.00 $3.00 $2.00 $8.00 $20.00 • You get - 35% of retail - the distributor gets 10% - the wholesaler gets 15% - the retailer gets 40% - less any discount they offer the customer 27
    23. 23. Book Publishing Economics NationalPublisher Wholesaler Retailer Customer Distributor Allowances Wholesale costs Bills Markup Credit guarantees Payment guarantees Payment guarantees Return rights Credits 28 Payments
    24. 24. Book Publishing Delivery National Publisher Printer Wholesaler Retailer DistributorPrepare film Receive (content)  Schedules  Print Determine Merchandise orders allocations titles  Bundle counts  Film Deliver Sell orders magazines Establish Prepare Print and identity galleys ship Create magazines demand Acknowledge 29 returns
    25. 25. Nature of Products Impact Channel: Physical or Virtual?» Access to customers changes dramatically» Logistics related to product complexity» People as products 30
    26. 26. Bits vs. Atoms Channel Web Physical BitsProduct Physical 31
    27. 27. Product and Channel Are Bits Channel Web Physical  Rapid Agile and Customer Development  Fastest to acquire early Bits customers and scaleProduct Physical 32
    28. 28. Web 2.0 – Product/Channel Are Bits Channel Web Physical  Google  Twitter  Facebook Bits  Zynga  Cloud ServicesProduct Physical 33
    29. 29. Product Is Bits, but Channel Is People Channel Web Physical  Rapid Agile and  Rapid Agile and Customer Development Customer development  Fastest to acquire early  Traditional sales channel Bits customers and scale  May require installationProduct Physical 34
    30. 30. Traditional Enterprise Software Channel Web Physical  Google  Microsoft  Twitter  SAP  Facebook  Oracle Bits  Zynga  Cloud ServicesProduct Physical 35
    31. 31. Physical Products Sold Over the Web Channel Web Physical  Rapid Agile and  Rapid Agile and Customer Customer development development Bits  Fastest to acquire early  Traditional sales customers and scale channel  May require installationProduct  Rapid Customer development  Logistics, shipping and Physical manufacturing critical  Customer service 36
    32. 32. Killing Traditional Storefronts Channel Web Physical  Google  Microsoft  Twitter  SAP  Facebook  Oracle Bits  Zynga  Cloud ServicesProduct  Zappos  Amazon  Cafepress Physical  Netflix  Consumer electronics 37
    33. 33. The Factories May Be in China Channel Web Physical  Rapid Agile and  Rapid Agile and Customer development Customer development  Fastest to acquire early  Traditional sales channel Bits customers and scale  May require installationProduct  Rapid Customer  Longer customer development feedback cycle  Logistics, shipping and  May require large capital Physical manufacturing critical requirements for scale  Customer service 38
    34. 34. We Still Make Things that Need Salespeople Channel Web Physical  Google  Microsoft  Twitter  SAP  Facebook  Oracle Bits  Zynga  Cloud ServicesProduct  Zappos  Cars  Amazon  Solar panels  Cafepress  Wind turbines Physical  Netflix  Bookstores  Consumer electronics  Consumer electronics 39
    35. 35. Homework» Talk to 10-15 potential channel partners + (Salesmen, OEM’s distributors, etc.)» What were your hypotheses about who/what your channel would be? Did you learn anything different?» Did anything change about Value Proposition?» Update your Google Group with Business Model Canvas» Draw your channel diagram» Summarized in a 5 Minute Presentation» Read» Startup Owner’s Manual pages :227-256, 332-342 40
    36. 36. Appendix 41
    37. 37. implantable drug infusion pumps with remote physician control for chronic pain patients at home “the right dose at the right time and place” 42Christian Gutierrez (EL), Ellis Meng (PI), Carol Christopher (IM), Tuan Hoang (FE)
    38. 38. Chronic Pain v3 FS Team Training Patients Faster reliefKOLs Trade shows Formulary Acceptance Clinical data Efficient patientFoundations management and Clinicians FDA Dosing flexibility SupportAdvocacy Groups Access to high-value InstitutionsOEMs therapies and pharmacoeconomics Hospitals IP PayorsWireless ProprietaryDevelopers Reduce length of Pain clinics knowledge hospital stays and Human Resources pharmacoeconomics Product Dev Costs Unit sales Manufacturing Costs Support ServicesMarketing Costs FDA/Clinical Trials 43
    39. 39. Chronic Pain v4 FS Team Trade shows Training Faster relief PatientsKOLs Formulary Acceptance Clinical data FDA Efficient patientFoundations management and Clinicians CMS (Medicare) Dosing flexibility SupportAdvocacy Groups Access to high-value InstitutionsOEMs therapies and pharmacoeconomics Hospitals IPWireless PayorsDevelopers Proprietary pharmacoeconomics Pain clinics knowledgeElectronic health Human Resourcesrecord providers Product Dev Costs Unit sales Manufacturing Costs Support ServicesMarketing Costs FDA/Clinical Trials Bundled kits Electronic records 44
    40. 40. Getting OutClinicians » Dr. Stan Louie, Drug Formulation Expert (USC Pharmacy) » Dr. Giovanni Cucchiaro, Anesthesiologist (CHLA)Institutions/patients » Dr. Diana Hull, Physician (Group Health in Washington state, formerly at Kaiser California) » Thomas Hsu, Insurance Specialist (Network Medical Management; a California ICA) » Two chronic pain patients ˃ Pump user and creator of support forum ˃ User of oral narcotics and patchesRegulatory » Dr. Frances Richmond (Director Regulatory Science Program, USC)Entrepreneurs/ » Richard Hull (formerly at company selling Lapband) 45Industry
    41. 41. Product Flow/ChannelElectronic Partners/ Health Fluid Synchrony OEMS Records Electronic Support Pump + Bundled Records Services Controller Kits Hospitals (AnesthesiologistsPatients Neurosurgeons) Pain Clinic (Anesthesiologists Neurosurgeons) 46
    42. 42. Channels (Direct)Hospitals • Direct to institutions • Some formularies involved in purchase decisionsPain Clinics • Some doctors make purchase decision directly • Device company/Doctor relationship is key • Heavily influenced by : • Clinical study results • Regulatory approval • Reimbursement 47
    43. 43. Patient Care Flow (Now) Partners/ Fluid Synchrony OEMS Support Pump + Bundled Services Controller Kits Hospitals Surgery/Rx/ (Anesthesiologists Patient Discharged reprogramming Neurosurgeons) Pain ClinicTrial period/ Scheduled (AnesthesiologistsHome setting follow-up Neurosurgeons) 48 Weeks/months Key factors: Reimbursement , state regulations
    44. 44. Patient Care Flow (Proposed) Electronic Partners/ Health Fluid Synchrony OEMS Records Electronic Support Pump + Bundled Records Services Controller Kits Actionable feedback to doctors/institutions E-prescription / closing loop Hospitals Surgery/Rx/ (Anesthesiologists Patient Discharged reprogramming Neurosurgeons) Pain ClinicTrial period/ Scheduled (AnesthesiologistsHome setting follow-up Neurosurgeons) 49 Weeks/months Days Key factors: Reimbursement , state regulations
    45. 45. Regulatory Considerations PMA 510K Trial size 100’s of patients 20-100 Costs Up to $100,000 per patient $10-50 MM $1-10 MM Time ~ 3-4 yrs + post ~ 2-3 yrs approval follow-on• PMA approval with grouping of FDA approved drugs.• Clinical trials results used to obtain CMS (Medicare) approval• 510K restricts technology to predicate devices • Can be more difficult to market against incumbents• European CE mark is easier to attain (safety and performance only) 50
    46. 46. Take-Aways• Channel is direct in this existing market • Channel for e-health is more complex and evolving• State-to-state regulations can impact incentives • Can pose problems as electronic records systems vary across the country Next Steps• Understand costs associated with reaching doctors/institutions directly• Understand structure of e-health channel• Develop regulatory pathway (timelines and cost profile) 51
    47. 47. Advanced Chemistry forPharmaceutical Progress Team: Kiel Neumann (EL) Stephen DiMagno (PI) Allan Green (Mentor) 52
    48. 48.  PET is a non-invasive medical diagnostic technique for cardiac, brain, and tumor imaging GFP technology makes new (unknown) and known (but clinically inaccessible) [18F]-labeled radiotracers readily available Fast, multiplatform, high efficiency synthesis of these fleeting, precious agents. Initial target indications: pediatric neuroblastoma, Parkinson’s disease. 53
    49. 49. The Business Model Canvas SOPs for precursors Technical Assistance cGMP manufacturer and drugs (Image Atlas) Radiopharmacies Accessibility (RCY) Radiopharmacies Recruit clinical sites FDA regulatory support Nuclear Medicine and Purity In vivo animal studies Radiology departments Speed Equipment producers Develop regulatory PET/SPECT plan for pre IND Multiplatform Technical assistance Prescribing physicians meeting Sensitivity (nca) ID cGMP CRO Pharmaceutical Specific compounds Radiologist who perform Fund-raising development studies companies Direct sales of precursor General IP methodology for PoP data adding fluorine to Drug developers R&D and clinical studies IP lead compounds of presented in journals and PoP data interest meetings Regulatory plan Sales of precursor Radiologists Understanding of the through global finished regulatory process pharmaceutical distributor Sales of intermediates Contract cGMP precursor manufacture Salary, Rents Technology license 54 Clinical trials Product license (royalty)
    50. 50. 1) Radiologists and Nuclear Medicine Physicians2) Radiopharmacy companies (Cardinal Health, Siemens, GE Healthcare, IBA, AAA)3) Equipment manufacturers (GE, Philips, IBA, Advion)4) cGMP manufacturers1) Pharmaceutical companies2) Radiologists and Nuclear Medicine Physicians 55
    51. 51. - Face to face with attending Radiologist at Stanford University- Face to face with radiopharmacist at UCSF- Conference call with Nuclear Radiologist at Memorial Sloan Kettering- Conference call with president of medium size drug company with PET product at the FDA- Telephone conference with cGMP facility 56
    52. 52. - Immediate need for our product - Currently used SPECT product for neuroblastoma is limited by absence of correlative CT data- Our lead PET agent would provide more information on existing imaging equipment base- Two customers offered to participate in clinical trials- Potential for further development of other tracers identified in interviews - Actual need for the general procedure - Allow access to previously unknown tracers 57
    53. 53.  Face to Face meeting with president of small radiopharmaceutical company Face to face with a clinician at Memorial Sloan-Kettering Face to face with Global Production Manager of Molecular imaging for one of world’s largest radiopharmaceutical companies OncoKinib collaboration between Geurbet, OncoDesign, and Ariana pharmaceuticals Face to face meeting with head of R & D and International Production Manager from Linz, Austria Eckert and Zeigler – German PET modular synthesis provider Face to face meeting with Executive Director and CEO of Scott Tech Center in Omaha, NE Introductory teleconference to CEO of Innovation Accelerator 58
    54. 54.  Significant Interest in our technology  Radiopharmacies want GMP product  No interest in GMP reagent preparation  Third-party manufacturers would use our developed synthetic pathways  Internal competition with one world radiopharmaceutical leader  Best to approach one of other two world leaders Scott Tech Center  Willing to offer free advice on startup strategy  Provided introduction to Innovation Accelerator  Offered introduction to Director of Venture Technology of one of world’s leading radiopharmaceutical companies 59
    55. 55. The Business Model Canvas Technical AssistancecGMP manufacturer SOPs for precursors (Image Atlas) RadiopharmaciesRadiopharmacies and drugs Accessibility (RCY) FDA regulatory supportNuclear Medicine and Recruit clinical sites Purity Equipment producersRadiology In vivo animal studiesdepartments Develop regulatory Speed PET/SPECT Prescribing physicians plan for pre IND meeting Multiplatform Technical assistance Sensitivity (nca) Radiologist who perform ID cGMP CRO Pharmaceutical Specific compounds studies Fund-raising development companies General methodology for Direct sales of precursor IP adding fluorine to Drug developers PoP data lead compounds of R&D and clinical studies interest presented in journals and IP meetings Radiologists PoP data Regulatory plan Sales of precursor Understanding of the through global finished regulatory process pharmaceutical distributor Sales of intermediates Contract cGMP precursor manufacture Salary, Rents 60 Technology license Clinical trials Product license (royalty)
    56. 56. • F-dopa iodonium intermediate • F-dopamine iodonium intermediate We provide accessibility Reagents •ABX Could license precursor •Eckert & Ziegler synthesis for •GE MX module for TracerLabGMP Cassette or •Siemens Explora incorporation in Components modules •TracerLab/ GE Require GMP precursor (or •Eckert & Ziegler •Siemens Explora cassette) to develop ourGMP Compliant Synthesizer •Neoprobe •Synthra product with their synthesizer •Siemens PETNet •GE Amersham Only want GMP PET •Cardinal Health •AAA precursor in modules 61Radiopharmacy distributor •Iason without development
    57. 57.  Conference call with top 40 Fortune 500 chemical distribution company  Open to cGMP production of our potentially proprietary precursors  Interested in developing a general “plug-and-play” cassette  Would allow implementation of our methodology and precursors for any radiochemistry module  Important for FDA compliant production of any drug used in patient diagnostics Face to face meeting with Director of Business Development of a leading drug discovery outsourcing company  Discussed preclinical studies and contract manufacturing of proprietary intermediates- Face to face with former Director of Chemistry of major pharmaceutical company - Significant interest in general methodology application to proprietary compound syntheses 62
    58. 58. » Initially seeking to market method technology -too diffuse, but many opportunities (i.e. product-driven opportunities more than general technology-driven)» Need to identify specific imaging product opportunities» Validated hypothesis for immediate need of tracers» Raised question on identity of lead compound pipeline for Parkinson’s disease» Recruited two potential partners for clinical trials 63
    59. 59. Approximately 2.2 million procedures in the US.Drug costs range from $700 (on-patent) to ~$150 (generic FDG)US sales of radiopharmaceuticals for PET and SPECT $1.2 billionUS sales expected to grow to $6 billion by 2018Global numbers approximately 2x 64 Source: Bio-Tech Systems Report #330; data for 2010.
    60. 60. 2500 installed PET scannersPET radiopharmacies cover the entire US marketRadiopharmacies have an interest in proprietary agents as a basis of competitionin their market. 65
    61. 61. Neuroblastoma Parkinson’s DiseasePrevalence: about 6000 US cases DatSCAN sales in Europe ~$100 Mabout 1000 new cases per year The worlds highest recordedSubjects receive 3-6 images/year prevalence of Parkinsons Disease ofto follow response to therapeutic protocols any region is in Nebraska, with 329.3 people per 100,000 populationWorld market at U.S. x 2 gives potential of40,000-70,000 scans/year US – 600,000 patients 1 scan per year @ $500 = $300 MDrug costs $500/per gives ~$20 - $35 M 66

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