Delft climate kic 070212 part 1

How to Fail Less Business Models andCustomer Development Steve Blank www.steveblank.com @sgblank

Agenda – Day One• 9:00 - 11:00 Introduction to Customer Development• 11:00 - 11:30 break• 11:30 - 13:00 value proposition customer segments• 13:00 – 14:30 lunch working session Students prepare first version of business model canvas• 14:30 – 16:00 Student presentation of business model canvas• 16:00 – 16:15 break• 16:15 – 17:00 distribution channelsHomework: 1) update your canvas2)develop a customer discovery action plan

Agenda – Day One• 9:00 - 11:00 Introduction to Customer Development• 11:00 - 11:30 break• 11:30 - 13:30 value proposition customer segments• 12:30 – 13:30 lunch working session Students prepare first version of business model canvas• 13:30 – 15:00 Student presentation of business model canvas• 15:00 – 15:15 break• 15:30 – 16:30 distribution channelsHomework: 1) update your canvas2)develop a customer discovery action plan

Agenda – Day Two• 9:00 - 10:30 Student presentations on customer discovery action plan• 10:30 - 11:30 customer relationships (get/keep/grow)• 11:30 – 12:00 break• 12:00 - 13:00 revenue streams• 13:00 – 14:00 lunch working session Students present• 13:30 – 14:15 partners• 14:15 - 15:00 resources, activities, costs• 15:00 – 15:15 break• 15:30 – 16:30 Customer Development Manifesto

What We Used to Believe Search Versus Execution

Startups are Smaller Versions of Large Companies

What We Now KnowSearch Versus Execution

Startups SearchLarge Companies Execute

What We Used to Believe Strategy

All I Need to Do is Execute the Plan

Actual Photo of What Happens When Plan Meets First Contact With Customers

All I Need is the 5- Year Forecast

Previous5-Year Plans

All I Need to Do is Make the Forecast

What We Now Know Strategy

Planning comes before the plan

Business Models

Search Execution Business Model Operating Plan +Strategy Hypotheses Financial Model

What We Used to Believe Process

We Built Startups byManaging Processes Product Management + Waterfall Engineering

Product Introduction Model Concept/ Product Alpha/Beta Launch/Seed Round Dev. Test 1st Ship

Tradition – Hire Marketing Concept/ Product Alpha/Beta Launch/ Seed Round Dev. Test 1st Ship - Create Marcom - Hire PR Agency - Create DemandMarketing Materials - Early Buzz - Launch Event - Create Positioning - “Branding”

Tradition – Hire Sales Concept/ Product Alpha/Beta Launch/ Seed Round Dev. Test 1st Ship - Create Marcom - Hire PR Agency - Create DemandMarketing Materials - Early Buzz - Launch Event - Create Positioning - “Branding” • Hire Sales VP • Build SalesSales • Hire 1st Sales Staff Organization

Tradition – Hire Bus Development Concept Product Alpha/Beta Launch/ Dev. Test 1st Ship - Create Marcom - Hire PR Agency - Create Demand Marketing Materials - Early Buzz - Launch Event - Create Positioning - “Branding” • Hire Sales VP • Build Sales Channel / Sales • Pick distribution Distribution Channel Business • Hire First • Do deals for FCSDevelopment Bus Dev

Tradition – Hire Engineering Concept Product Alpha/Beta Launch/ Dev. Test 1st Ship - Create Marcom - Hire PR Agency - Create Demand Marketing Materials - Early Buzz - Launch Event - Create Positioning - “Branding” • Hire Sales VP • Build Sales Channel / Sales • Pick distribution Distribution Channel Business • Hire First • Do deals for FCSDevelopment Bus DevEngineering • Write MRD • Waterfall • Q/A •Tech Pubs

Product Introduction Model Concept/ Product Alpha/Beta Launch/Seed Round Dev. Test 1st Ship

Waterfall / Product Management Execution on Two “Knowns” Requirements Product Features: known Design Implementation Verification Customer Problem: known MaintenanceSource: Eric Rieshttp://startuplessonslearned.blogspot.com

What We Now Know Strategy

More startups fail froma lack of customers than from afailure of product development

Customer Development A Search Strategy

Search ExecutionStrategy Business Model Operating Plan + Hypotheses Financial ModelProcess Customer & Product Management & Agile Development Agile Development

What We Used to Believe Organization

Hire and Build aFunctional Organization

What We Now Know Organization

Founders run a Customer Development TeamNo sales, marketing and business development

Search Execution Strategy Business Model Operating Plan + Hypotheses Financial Model Customer Development, Product Management Process Agile Development Agile or Waterfall Development Customer Functional OrganizationOrganization Development Team, by Department Founder-driven

SearchStrategy Business Model HypothesesProcess Customer Development, Agile DevelopmentOrganization Customer Development Team, Founder-driven

Search ExecutionStrategy Business Model Operating Plan + Hypotheses Financial ModelProcess Customer Development, Product Management Agile Development Agile or Waterfall DevelopmentOrganization Customer Development Functional Organization Team, Founder-driven by Department

Part 2 Business Models andCustomer Development

What‟s A Startup?

A temporary organization designed to searchfor a repeatable and scalable business model

A temporary organization designed to searchfor a repeatable and scalable business modelA Startup aims to become a company

What‟s a Business Model?

Value PropositionWhat Are You Building and For Who?

Customer Segments Who Are They? Why Would They Buy?

ChannelsHow does your Product Get to Customers?

Customer RelationshipsHow do you Get, Keep and Grow Customers?

Revenue StreamsHow do you Make Money?

Key ResourcesWhat are your most important Assets?

Key PartnersWho are your Partners and Suppliers?

Key ActivitiesWhat‟s Most Important for the Business?

Cost StructureWhat are the Costs and Expenses

But,Realize They‟re Hypotheses

9 Guesses GuessGuess Guess Guess Guess Guess Guess Guess Guess

Customer DevelopmentTest the Problem, Then the Solution

Customer Development The Minimum Viable Product

Customer Development The Pivot

Customer Development ishow you search for the model

How Does This Really Work? Lean LaunchPad Class 8 Weeks, 100 Customer Calls

CBiRC, Iowa State University

CBiRC, Iowa State UniversityBio-basedsustainable chemical intermediates for polymer bio-surfactants, bio-lubricants I-Corps Team ShivaniGarg Entrepreneurial Lead Graduate student, 3.5 yrs in biochemistryBio-based chemical Dr. Basil Nikolau Principal Investigator intermediates Professor, 30 yrs in biochemistry Dr. Peter Keeling I-Corps Mentor Entrepreneur, 30 yrs in biotechnology industry

Interviews conducted = 100 CBiRC, Iowa State University Bio-basedsustainable chemical intermediates for polymer bio-surfactants, bio-lubricants I-Corps Team ShivaniGarg Entrepreneurial Lead Graduate student, 3.5 yrs in biochemistry Bio-based chemical Dr. Basil Nikolau Principal Investigator intermediates Professor, 30 yrs in biochemistry Dr. Peter Keeling I-Corps Mentor Entrepreneur, 30 yrs in biotechnology industry

Value propositionProblem Solution Features of value proposition • Non- • Sustainable, bio-based • Bi-functional molecules renewable, petroleum replacement • Flexibility in chain length derived feedstock for • Higher performance • Flexibility in branching surfactant, lubricant • Improved cold industry temperature tolerance of detergents, lubricants

Growing market opportunity Bio-based chemicals growing at 15% p.a. $1 trillion petrochemical market $24 bn surfactants

Position in Value Chain OmegaChem

Business Model Canvas 1.0 •Co-create •Production, yi value proposition eld, quality Problem - Non- • Customer •Existing •Match renewable goodwill and market Polymer - Bio-mass customer‟s feedstock for trust manufacturers, suppliers product specs making polymer • Customer Biotech Solution communities companies, - Contractual (Product) – Bio- scale-up based and • New market - sustainable Novel bio-plastic -Technology •Manufacturing replacement companies? providers facility Features - Bi- •Physical •IP functional and product •Multi-sided -Utility providers • Human customizable •Indirect channel market? resources, capit •Wholesale al • Sell bio-based monomers •Fixed – Capital • Added value pricing based onValue•Variable – Manufacturing, prop. hypothesis: Bio-mass Bio-based and sustainable customization of products • Licensing?Customer segment hypothesis: Polymer manufacturers, new marketsTest: Talked to biochemical companies

Value Proposition, Customer Segments: ExperimentsTalked to potential customers Biochemical companies, Market research (15) Senior ScientistVice-President, Technology Development R&D Director Senior Scientist Senior Business Development Manager Research Scientist Market Research Analyst

Value Proposition, Customer Segments: Results Surfactants: new market ($24bn) Monomer Monomer manufacturer “Have you manufacturer considered surfactants Polymer space?” formulator Polymer Surfactant - DSM formulator Formulator Polymer Polymer Surfactant user user user Consumer facing Consumer facing company company Consumer Consumer

Value Proposition, Customer Segments: IterationBusiness Model Canvas 4.0 Problem - Non- renewable •Existing market feedstock Polymer Solution – Bio- manufacturers, Bi based, sustainable otech companies, replacement Surfactants, Features - Bi- Home & functional, Personal Care customizable sector • „Drop-in‟ monomers • New market - •Diacids(chain Novel bio-plastic length: C10-C16) companies? •New functionalities •Multi-sided (cyanide, amine) market?Channel hypothesis: Indirect channel of wholesaleTest: Talked to chemical distributors

Channels: ExperimentsHere’s what we did… Distributors (9) Biochemical industry executives (3)

Channels: Results Pivot: Entry barriers are key Monomer manufacturer DistributorHigh entry barriers Polymer Surfactant Low entry barriers formulator formulator(Petro-based is (Market pull for greenhard to dislodge.) Distributor products) Polymer Surfactant user user “Petro industry Consumer facing wishes that you company guys did not exist!” - Draths Consumer

Channels: IterationBusiness Model Canvas 5.0 Problem - Non- Existing markets renewable feedstock •Polymer manufacturers Solution – Bio- based, sustainable •Biotech companies replacement •Regional supply of Customer in value surfactant raw- chain material Formulator • Avoidance of single companies material sourcing (petro) • Green Existing market •Physical product sectors Features - Bi- •Indirect channel •Surfactants functional, customiz •Wholesale able Distributors •Home & Personal • „Drop-in‟ monomers Care sectorCustomer Relationship Hypothesis: Co-create value propositionTests: Talked to surfactant/lubricant companies

Customer Relationships: Experiments Here’s what we did… Surfactants (4) Lubricants (4) Business Marketing Leader Research Scientist Technical Director Senior Scientist Catalyst Research Principal Scientist Engineer Director, R&D Tribology Section Leader Other bio-based companies (6) Biobased Chemicals Analyst President, Personal Care Program Manager Vice-President, R&D Senior Scientist, R&D Global Head, R&D

Customer Relationships: Results Here’s what we found… Monomer manufacturerDistributor Surfactant users influence Surfactant surfactant formulator formulator decisions, so need to partner with surfactant users Surfactant first! userDecision Green Panel – Focus onMakers reducing petroleum based Consumer facing products company Consumer Market Pull (Sustainability agenda)

Customer Relationships: IterationBusiness Model Canvas 6.0 Problem - Non- •Co-create value renewable feedstock proposition Solution – Bio- • Customer goodwill Customer in value based, sustainable and trust chain replacement • Customer Formulator •Regional supply of communities companies surfactant raw- •Trade-shows, PR material •Conferences, surve • Avoidance of single ys Existing market material sourcing sectors (petro) •Surfactants • Green •High-performance •Lubricants Features - Bi- •Home & Personal functional, Care sector customizable • „Drop-in‟ monomersRevenue Model Hypothesis: Value-based pricing, licensing Tests: 1. Developed a product sheet 2. Talked to 7 surfactant companies 3. Talked to 6 production economics experts

Revenue model: HypothesisPayment Flow Hypothesis Biomass Biomass 15 c/lb* supplier Biomass Range 5-20c/lb Monomer manufacturer Monomer ? Detergent alcohols 80c/lbDistributor Surfactant Formulation ? formulator Formulated Surfactant 90c/lb Surfactant Surfactant 100 c/lb*Decision user Formulated Detergent 100c/lbMakers Consumer facing Detergent 200 c/lb* company 10% Surfactant in Detergent Consumer Product *ICIS Market Intelligence, 201

Revenue model: Result 1Payment Flow Biomass Biomass 15 c/lb* supplier Biomass Range 5-20c/lb Monomer manufacturer Monomer 80 c/lb Detergent alcohols 80c/lbDistributor Surfactant Formulation 90 c/lb formulator Formulated Surfactant 90c/lb Surfactant Surfactant 100 c/lbDecision user Formulated Detergent 100c/lbMakers Consumer facing Detergent 200 c/lb company 10% Surfactant in Detergent Consumer Product *ICIS Market Intelligence, 201

Revenue model: Result 2 Scale up is the key Less than 100 c/lb is achievable Optimized scale up (~500,000 lb/day)“You give us1kg, we can evaluate.” Earlyvangelists

Revenue Model: IterationBusiness Model Canvas 7.0 •Production, yiel d, quality- Cheapest bio-mass •Match customer‟s suppliers product specs • Constant- Contractual scale- innovation up -Technology providers -Utility providers - Surfactant Users (P&G) •Sell bio-based monomersPartners Hypothesis: Bio-mass suppliers, scale-up, technology • Added value pricing based on customization ofproviders, utility providers, surfactant users products •Create demand by partnering with SurfactantTests: Talked to potential partners Users and then sell to Formulators • Licensing

Partners: HypothesisHere’s what we hypothesized… Market Biomass Research supplier Partners Monomer Start-up manufacturers Incubators Distributor Scale-up Surfactant providers formulator Surfactant Technology Decision user partners Makers Consumer facing company Consumer

Partners: ExperimentsHere’s what we did… Market Start-up Scale-up Technology Research (3) Incubators (4) providers (4) partners (3)

Partners: Iterate Business Model Canvas 8.0 -Market Research Agencies- Start-up incubatorsCheapest bio-mass suppliers - Contractual scale- up -Technology providers -Utility providers - Surfactant Users (P&G)What‟s next?State funding (i6 grant)Federal funding (SBIR)

First to Last Business Model Canvas

First CanvasBusiness Model Canvas 1.0 •Co-create •Production, yi value proposition eld, quality Problem - Non- • Customer •Existing •Match renewable goodwill and market Polymer - Bio-mass customer‟s feedstock for trust manufacturers, suppliers product specs making polymer • Customer Biotech Solution communities companies, - Contractual (Product) – Bio- scale-up based and • New market - sustainable Novel bio-plastic -Technology •Manufacturing replacement companies? providers facility Features - Bi- •Physical •IP functional and product •Multi-sided -Utility providers • Human customizable •Indirect channel market? resources, capit •Wholesale al • Sell bio-based monomers •Fixed – Capital • Added value pricing based on •Variable – Manufacturing, Bio-mass customization of products • Licensing?

Final Canvas Business Model Canvas 8.0 Problem - Non- •Co-create value renewable feedstock proposition -Market Research •Production, yiel Solution – Bio- • Customer goodwill Agencies d, quality Customer in value based, sustainable and trust •Match customer‟s chain replacement • Customer- Start-up incubators product specs Formulator •Regional supply of communities • Constant companies surfactant raw- •Trade-shows, PRCheapest bio-mass innovation material •Conferences, suppliers • Avoidance of single surveys Existing market material sourcing - Contractual scale- sectors (petro) up •Surfactants • Green •Manufacturing •High-performance -Technology facility •Physical product •Lubricants providers •IP •Indirect channel Features - Bi- • Human •Wholesale •Home & Personal functional, customiz - Surfactant Users resources, capital Distributors Care sector able (P&G) •IHS (Market Info) •„Drop-in‟ monomers •Sell bio-based monomers •Fixed – Capital •Create demand by partnering with Surfactant •Variable – Manufacturing, Bio-mass Users and then sell to Formulators • Licensing

Evolution of Canvas

Business Model Canvas 1.0 •Co-create •Production, yi value proposition eld, quality Problem - Non- • Customer •Existing •Match renewable goodwill and market Polymer - Bio-mass customer‟s feedstock for trust manufacturers, suppliers product specs making polymer • Customer Biotech Solution communities companies, - Contractual (Product) – Bio- scale-up based and • New market - sustainable Novel bio-plastic -Technology •Manufacturing replacement companies? providers facility Features - Bi- •Physical •IP functional and product •Multi-sided -Utility providers • Human customizable •Indirect channel market? resources, capit •Wholesale al • Sell bio-based monomers •Fixed – Capital • Added value pricing based on •Variable – Manufacturing, Bio-mass customization of products • Licensing?

Business Model Canvas 2.0 Problem - Non- •Co-create •Production, yi value proposition •Existing renewable eld, quality • Customer market Polymer feedstock for •Match goodwill and manufacturers, - Bio-mass making polymer customer‟s trust Biotech suppliers Solution • Customer companies, product specs (Product) – Bio- communities Surfactant - Contractual based and manufacturers scale-up sustainable •Manufacturing replacement • New market - -Technology facility Features - Bi- Novel bio-plastic providers •IP functional and •Physical companies? • Human customizable product -Utility providers resources, capit • „Drop-in‟ •Indirect channel •Multi-sided al monomers •Wholesale market? •SRI (Market •Diacids Info) • Sell bio-based monomers •Fixed – Capital • Added value pricing based on •Variable – Manufacturing, Bio-mass customization of products • Licensing?

Business Model Canvas 3.0 Problem - Non- renewable •Co-create •Production, yi feedstock value proposition •Existing eld, quality Solution – Bio- • Customer market Polymer - Bio-mass •Match based, sustainable goodwill and manufacturers, suppliers customer‟s replacement trust Biotech product specs Features - Bi- • Customer companies, - Contractual functional, customi communities Surfactant scale-up zable manufacturers •Manufacturing • „Drop-in‟ -Technology facility monomers • New market - providers •IP •Diacids(chain •Physical Novel bio-plastic • Human length: C10-C16) product companies? -Utility providers resources, capit •New •Indirect channel al functionalities •Wholesale •Multi-sided •SRI (Market (cyanide, amine) market? Info) •State funding, SBIR funding •Sell bio-based monomers •Fixed – Capital • Added value pricing based on •Variable – Manufacturing, Bio-mass customization of products • Licensing

Business Model Canvas 4.0 Problem - Non- renewable •Co-create •Production, value proposition •Existing market feedstock • Customer Polymer yield, quality Solution – Bio- •Match goodwill and manufacturers, Bi - Bio-mass based, sustainable customer‟s trust otech companies, suppliers replacement product specs • Customer Surfactants, Features - Bi- communities Home & - Contractual functional, customi Personal Care scale-up zable sector •Manufacturing • „Drop-in‟ -Technology facility monomers • New market - providers •IP •Diacids(chain •Physical Novel bio-plastic • Human length: C10-C16) product companies? -Utility providers resources, capit •New •Indirect channel al functionalities •Wholesale •Multi-sided •SRI IHS (cyanide, amine) market? (Market Info) •State funding, SBIR funding •Sell bio-based monomers •Fixed – Capital • Added value pricing based on •Variable – Manufacturing, Bio-mass customization of products • Licensing

Business Model Canvas 4.3 Problem - Non- Existing markets renewable feedstock •Polymer •Co-create value manufacturers •Production, yiel proposition Solution – Bio- d, quality • Customer based, sustainable •Biotech companies •Match customer‟s goodwill and trust- Bio-mass suppliers replacement product specs • Customer •Local supply of Customer in value communities- Contractual scale- surfactant raw- chain up material Formulator • Avoidance of single companies -Technology material sourcing providers (petro) •Manufacturing • Green Existing market -Utility providers facility •Physical product sectors •IP Features - Bi- •Indirect channel •Surfactants • Human functional, •Wholesale resources, capital customizable Distributors •Home & Personal •IHS (Market Info) • „Drop-in‟ monomers Care sector •Sell bio-based monomers •Fixed – Capital • Added value pricing based on customization of •Variable – Manufacturing, Bio-mass products • Licensing

Business Model Canvas 5.0 Problem - Non- Existing markets renewable feedstock •Polymer •Co-create value manufacturers •Production, yiel proposition Solution – Bio- d, quality • Customer based, sustainable •Biotech companies •Match customer‟s goodwill and trust- Bio-mass suppliers replacement product specs • Customer •Regional supply of Customer in value communities- Contractual scale- surfactant raw- chain up material Formulator • Avoidance of single companies -Technology material sourcing providers (petro) •Manufacturing • Green Existing market -Utility providers facility •Physical product sectors •IP Features - Bi- •Indirect channel •Surfactants • Human functional, customiz •Wholesale resources, capital able Distributors •Home & Personal •IHS (Market Info) • „Drop-in‟ monomers Care sector •Sell bio-based monomers •Fixed – Capital • Added value pricing based on customization of •Variable – Manufacturing, Bio-mass products • Licensing

Business Model Canvas 6.0 Problem - Non- •Co-create value renewable feedstock proposition Solution – Bio- • Customer goodwill •Production, yiel Customer in value based, sustainable and trust d, quality chain replacement • Customer •Match customer‟s Formulator- Bio-mass suppliers •Regional supply of communities product specs companies surfactant raw- •Trade-shows, PR- Contractual scale- material •Conferences, surve up • Avoidance of single ys Existing market material sourcing sectors -Technology (petro) •Surfactants providers • Green •Manufacturing •High-performance facility •Physical product •Lubricants -Utility providers •IP Features - Bi- •Indirect channel • Human •Wholesale •Home & Personal functional, customiz resources, capital Distributors Care sector able •IHS (Market Info) • „Drop-in‟ monomers •Sell bio-based monomers •Fixed – Capital • Added value pricing based on customization of •Variable – Manufacturing, Bio-mass products • Licensing

Business Model Canvas 7.0 Problem - Non- •Co-create value renewable feedstock proposition •Production, yiel Solution – Bio- • Customer goodwill d, quality Customer in value- Cheapest bio-mass based, sustainable and trust •Match customer‟s chain suppliers replacement • Customer product specs Formulator •Regional supply of communities • Constant companies- Contractual scale- surfactant raw- •Trade-shows, PR innovation up material •Conferences, • Avoidance of single surveys Existing market -Technology material sourcing sectors providers (petro) •Surfactants • Green -Utility providers •Manufacturing •High-performance facility •Physical product •Lubricants - Surfactant Users •IP Features - Bi- •Indirect channel • Human •Wholesale •Home & Personal (P&G) functional, customiz resources, capital Distributors Care sector able •IHS (Market Info) • „Drop-in‟ monomers •Sell bio-based monomers • Added value pricing based on customization of •Fixed – Capital products •Variable – Manufacturing, Bio-mass •Create demand by partnering with Surfactant Users and then sell to Formulators • Licensing

Business Model Canvas 8.0 Problem - Non- •Co-create value -Market Research renewable feedstock proposition Agencies •Production, yiel Solution – Bio- • Customer goodwill d, quality Customer in value based, sustainable and trust- Start-up incubators •Match customer‟s chain replacement • Customer product specs Formulator •Regional supply of communitiesCheapest bio-mass • Constant companies surfactant raw- •Trade-shows, PR suppliers innovation material •Conferences, surve • Avoidance of single ys - Contractual scale- Existing market material sourcing up sectors (petro) •Surfactants • Green -Technology •Manufacturing •High-performance providers facility •Physical product •Lubricants •IP Features - Bi- •Indirect channel -Utility providers • Human •Wholesale •Home & Personal functional, customiz resources, capital Distributors Care sector able - Surfactant Users •IHS (Market Info) • „Drop-in‟ monomers (P&G) •Sell bio-based monomers •Fixed – Capital •Create demand by partnering with Surfactant •Variable – Manufacturing, Bio-mass Users and then sell to Formulators • Licensing

Total Contacts: 96Red Ox’s Electrochemical Desalination Cell 1. desalinates brine, a waste product from oil & gas and other industries 2. generates electricity quietly and 3. produces bulk inorganics that can be sold as commodities.André Taylor (PI) David Kohn (EL) Tom Livingston (IM) National Science Foundation Innovation Corps Program May 23, 2012

Problem:Saline brine.What is it?Water that is saltier than sea water.It is produced as a waste product of many industrialprocesses. 127

Why is it a problem?Saline brine is:1. Environmentally harmful2. Heavily regulated3. Costly to treat and dispose of.

What we thought1. Desalination 2. Oil and gas productionPhoto 1: Kay Bailey Hutchison desalination plant Photo 2: a hydraulic fracturing site nearin El Paso Tx. Morgantown Pa. 129

What we did: 130

What we learned: 1. Desalination 2. Oil and gas production Photo 1: Kay Bailey Hutchison desalination plant Photo 2: a hydraulic fracturing site near in El Paso Tx. Morgantown Pa.

Key Partners Key Activities Value Customer Customer -R & D Propositions Relationships Segments-Manufacturers -Engineering -Turns waste cost -Service -Inland and coastal-Utilities customization into revenue -Customization desalination plants-Regulators -Decreased input -Link to value add -Industrial brine -Learn regulatory-Utility Commissions costs / volatility in industrial producers landscape -Quiet electricity ecosystem -Hydrofracking -Foster relationships -Inland and coastal on-site -Improve public operations with stakeholders desalination plants image -Hiring & retention -Industrial brine -Decreased liability -Chemical producers Key Resources -Better public Channels distributors -Hydrofracking image -Chemical End Users -People operations -Decreased -B2B marketing -Chemical Producers -Intellectual permitting time -Service property-Chemical agreements -CO2 sequestration -Licensingdistributors -Brand -Utilities -Energy efficiency arrangements-Chemical Producers -Relationships with -Fuel Cell Mfgs stakeholders and -DOESN’T CAUSE partners EARTHQUAKES Cost Structure Revenue Streams-People -Manufacture / Capital -Royalties from licenses -Chemical sales-R & D -Operation and -Service contracts -Electricity sales–Prototyping maintenance -Engineering consulting -REC sales-Legal fees -Sales and Marketing fees -Brine treatment(IP, Licensing, Regulatory) -Strategic Partnerships contracts

Key Partners Key Activities Value Customer Customer -R & D Propositions Relationships Segments -Manufacturers -Engineering -Turns waste cost -Service -Water Treatment -Membrane Mfgs customization into revenue -Customization for Hydrofracking -Utilities -Decreased -Link to value add (Especially -Know regulatory Produced Water) -Regulators disposal costs in industrial landscape -Inlandand coastal -Engineering firms -Decreased input ecosystem -Foster relationships desalination plants-Inland and coastal with stakeholders costs / volatility -Improve public -Quiet electricity image -Industrial brinedesalination plants -Hiring & retention on-site producers-Industrial brineproducers Key Resources -Decreased liability Channels - Electric Utilities (for-Hydrofracking -People -Better public -B2B marketing energy efficiencyoperations -Intellectual image FOR -Possibly investments)-Chem. distributors property CLIENTS -Decreased distributors/-Chemical Producers -Chemical permitting time ? conferences -Brand distributors -Service -Relationships with -Chemical End Users-Other frac water -DOESN’T CAUSE agreements stakeholders and -Chemical Producerstreatment startups partners EARTHQUAKES -Licensing arrangements Cost Structure Revenue Streams-People -Manufacture / Capital -Royalties from licenses -Chemical sales-R & D & Prototyping -Operation and -Service contracts -Electricity sales-Legal fees maintenance -Strategic Partnerships -REC sales(IP, Licensing, Regulatory) -Sales and Marketing -Brine treatment contracts

Traditional methods to dispose of saline brine include: Deep well injection Evaporation Pits Photo 4: a small deep well injection rig Photo 5 : a typical wastewater evaporation pit

Thought: Problem in the Marcellus Texas:~50,000 Class II Disposal Wells (at least 80% for enhanced recovery) Pennsylvania: 8 Class II Disposal Wells

Price for water treatment ~60x higher than wethought!

ServiceWell Owner Providers (Fracking, O nsite recycling) Engineering Firms Regulators (WaterRights, Dispos Primaryal, Permitting) Treatment Facility Technology Developers / Vendors Secondary Treatment Contractor Disposal Companies

DisposalProduced Dilution with Water Freshwater Reuse to Frac Another Well Primary How high can Treatment they go? This is where we Tertiary fit in Treatment Current state of Discharge the art are evaporators and Must be crystallizers drinking water quality

Drilling Flowback Produced Water Water WaterWater from drilling First 30 days of Produced overmuds used to drill production well’s operating well life (4-30 years) Medium TDS High TSS Very high TDS ~5-20 % of injected (usually 100,000 Small ppm or higher) quantity, weird stuff in it ~5-20 % of injected

Class II Wells Primary and Tertiary Treatment Cost of 0.50-1.50 10.00-12.00 5.00-6.00 Disposal ($/bbl) Transport 4.00-16.00 2.00-4.00 1.00-4.00Cost ($/bbl) Total 4.50-17.50 12.00-16.00 6.00-10.00 ($/bbl)

“Moe! don’t throw out that brine!”

North American Produced Water Market TAM: $5 bn/yr SAM: $3 bn Target: $0.5 bnOur projections:~ $21 million/year revenues from one10,000 barrel per day plant<5% of current treatment and disposal in PA

DisposalProduced Dilution with Water Freshwater Reuse to Frac Another Well Primary Treatment Tertiary = ~$1/bbl/hr Treatment Discharge

SaltProcessing Treatment Storage Drop-Off

Risks1. Market risk: increasing reuse lowers disposal rate2. Technology risk3. Unable to sell into chemical markets 146

Key Partners Key Activities Value Customer Customer -R & D Propositions Relationships Segments-Manufacturers -Engineering -Turns waste cost into -Water Treatment-Integrators customization revenue -Make it easy for for Oil and Gas-Membrane Mfgs -Decreased them to get rid of (Especially -Know regulatory disposal costs and their waste Produced Water)-Engineering firms landscape volume -Brand = good PR -Service Providers -Foster relationships -Decreased for Oil and Gas-Hydrofracking with stakeholders transport costs -Oil and Gasoperations -Hiring & retention -Decreased input Owner/Operators-Service providersfor oil and gas costs / volatility and Key Resources Channelsindustry freshwater volume-Oil and Gas -People -Quiet electricityOwner/Operators -Intellectual -B2B marketing -Chemical property -Better public -Possibly distributors-Other frac water image for clients distributors/ -Chemical End Userstreatment startups -Brand -Decreased conferences -Chemical Producers -Relationships with permitting time -Oil &gas well-Environmental stakeholders and service providers/Groups/Regulators -Doesn’t Cause partners Earthquakes manufacturers Cost Structure Revenue Streams-People -Manufacture / Capital -Royalties from licenses -Chemical sales-R & D & Prototyping -Operation and -Service contracts -Electricity sales-Legal fees maintenance -Strategic Partnerships -REC sales(IP, Licensing, Regulatory) -Sales and Marketing -Brine treatment contracts

Key Partners Key Activities Value Customer Customer -R & D Propositions Relationships Segments- Produced Water -Engineering -Service Providers -DecreasedTreatment customization -Make it easy for for Oil and Gas disposal costs andcompanies them to get rid of Water Treatment volume -Know regulatory their waste for Oil and Gas-Service providers -Decreased landscape -Brand = good PR (Especiallyfor oil and gas transport costs -Foster relationships Produced Water)industry -Valuable with stakeholders -Oil and Gas-Oil and Gas Coproducts -Hiring & retention Owner/OperatorsOwner/Operators -Quiet electricityRESEACH ARMS Key Resources Channels -People-Manufacturers -Intellectual -Better public -Chemical -Chemical-Membrane Mfgs property image for clients Distributors distributors-Engineering firms -Decreased -Oil &gas well -Chemical End Users -Brand permitting time service providers -Chemical Producers -Relationships with -Doesn’t Cause and water-Environmental stakeholders and Earthquakes treatmentGroups/Regulators partners companies Cost Structure Revenue Streams-People -Manufacture / Capital -Royalties from licenses -Chemical sales-R & D & Prototyping -Operation and -Service contracts -Electricity sales-Legal fees maintenance -Strategic Partnerships -REC sales(IP, Licensing, Regulatory) -Sales and Marketing -Brine treatment 148 contracts

Why Do We Do This?

Additional Resources• I-Corps class summary:http://steveblank.com/2012/03/26/the-national-science-foundation-innovation-corps-what-america-does-best/• I-Corps team presentations:http://www.slideshare.net/sblank/tagged/i-corps• Resources for startups: http://steveblank.com/tools-and-blogs-for-entrepreneurs/• Books for startups: http://steveblank.com/books-for-startups/• Additional resources: http://steveblank.com/slides/

The Lean LaunchPad Lecture 2 Value Proposition Version 6/22/12

Value PropositionWhat Are You Building and For Who?

Product/Market Fit

The Value Proposition Gain Creators Products &Services MVP Pain Killers

Pain = Customer ProblemGain = Customer Solution

The Customer Segment Gains Persona • Jobs /Archetyp • Problem or Need e Pains Market Type

Gain Creators GainsProducts&Services MVP Persona • Jobs /Archetyp • Problem or Need e Pain Pains Killers Product/Market Fit

Product/Services

Value Proposition - Products• Which are part of your value proposition? – (e.g. manufactured goods, commodities, produce, ...)• Which intangible products are part? – (e.g. copyrights, licenses, ...)• Which financial products? – (e.g. financial guarantees, insurance policies, ...)• Which digital products? – (e.g. mp3 files, e-books, ...)

Value Proposition - Services• Which core services are part of your value proposition? – (e.g. consulting, a haircut, investment advice, ...)• Which pre-sales or sales services? – (e.g. help finding the right solution, financing, free delivery service, ...)• Which after-sales services? – (e.g. free maintenance, disposal, ...)

Pain Killers Reduce or eliminate wastedtime, costs, negative emotions, risks - during and after getting the job done

Pain Killers - Hypotheses• Produce savings? – (e.g. time, money, or efforts, …)• Make your customers feel better? – (e.g. kills frustrations, annoyances, things that give them a headache, ...)• Fix underperforming solutions? – (e.g. new features, better performance, better quality, ...)• Ends difficulties and challenges customers encounter? – (e.g. make things easier, helping them get done, eliminate resistance, ...)• wipe out negative social consequences? – (e.g. loss of face, power, trust, or status, ...)...• Eliminate risks – (e.g. financial, social, technical risks, or what could go awfully wrong, ...)

Pain Killer – Is it a Problem or Need?• Are you solving a Problem?• Are you fulfilling a Need?• For who?• How do you know?

Pain Killer - Ranking• Rank each pain your products and services kill according to their intensity for the customer.• Is it very intense or very light?• For each pain indicate the frequency at which it occurs

Gain Creators How do they create benefits the customerexpects, desires or is surprised by, including functional utility, social gains, positive emotions, and cost savings?

Gain Creators- Hypotheses• Create savings that make your customer happy? – (e.g. in terms of time, money and effort, ...)• Produce expected or better than expected outcomes? – (e.g. better quality level, more of something, less of something, ...)• Copy or outperform current solutions that delight customer? – (e.g. regarding specific features, performance, quality, ...)• Make your customer‟s job or life easier? – (flatter learning curve, usability, accessibility, more services, lower cost of ownership, ...)• Create positive consequences that customer desires? – (makes them look good, produces an increase in power, status, ...).

Gain Creator- Ranking• Rank each gain your products and services create according to its relevance to the customer.• Is it substantial or insignificant?• For each gain indicate the frequency at which it occurs.

Minimum Viable Product

Define Minimum Viable Product – Physical• First, tests your understanding of the problem (pain)• Next tests your understanding of the solution (gain) – Proves that it solves a core problem for customers• The minimum set of features needed to learn from earlyvangelists- Interviews, demos, prototypes, etc- Lots of eyeball contact

Define the Minimum Viable Product – Web/Mobile• NOW build a “low fidelity” app for customer feedback – tests your understanding of the problem• LATER build a “high fidelity” app tests your understanding of the solution – Proves that it solves a core problem for customers – The minimum set of features needed to learn from earlyvangelists- Avoid building products nobody wants- Maximize the learning per time spent

The Art of the MVP• A MVP is not a minimal product• “But my customers don‟t know what they want!”• At what point of “I don‟t get it!” will I declare defeat?

Things to Consider

Value Proposition – Common Mistakes• It‟s just a feature of someone else‟s product• It‟s a “nice to have” instead of a “got to have”• Not enough customers care

Questions for Value Proposition• Competition: What do customers do today?• Technology / Market Insight: Why is the problem so hard to solve?• Market Size: How big is this problem?• Product: How do you do it?

Key Questions for Value Prop• Problem Statement: What is the problem?• Ecosystem: For whom is this relevant?• Competition: What do customers do today?• Technology / Market Insight: Why is the problem so hard to solve?• Market Size: How big is this problem?• Product: How do you do it?

Technical Versus Market Insight

Technology and Market Insight Technology Insight Market Insight• Moore‟s Law  Value chain disruption• New scientific  Deregulation discoveries  Changes in how• Typically applies to people work, live and hardware, clean interact and what they techand biotech expect

Examples of Technical Insight • Topological analysis enables highly dimensional data to be analyzed without predetermining number of feature sets  Mass produced components can be used to create a miniaturized fluorescence microscope

Examples of Market Insight • People want to play more involved games than what is currently offered • Facebook can be the distribution for such games  Masses of people are more likely to micro- blog than blog  The non-symmetric relationships will allow companies and individuals to self-promote and will impact distribution  European car sharing sensibilities could be adopted in North America  People, particularly in urban environments, no longer wanted to own cars but wanted to have flexibility.

Types of Value Propositions Comes from Technical Insight Comes from Market Insight More Efficient Lower Better cost BetterSmaller Distribution Bundling Simpler Faster Better Branding

Insight• All of you are starting with technical insight• All of you will get out of the building and get data• A few of view will get market insight

Examples

Value propositionProblem Solution Features of value proposition • Non- • Sustainable, bio-based • Bi-functional molecules renewable, petroleum replacement • Flexibility in chain length derived feedstock for • Higher performance • Flexibility in branching surfactant, lubricant • Improved cold industry temperature tolerance of detergents, lubricants

Hand weed control is a Nightmare Crews of 100s needed Labor getting harder to get Back-breaking task 2-3 weedings per crop Food contamination risk $250-1,000 per acre Confidential

Circulating Tumor Cells (CTCs): Initial IdeaCirculating tumor cells Oncologists & Pathologists Cancer cells that have Does my patient have any detached from the CTCs? tumor and are How aggressive are they? circulating in the blood stream Capture and grow CTCs Video technology to characterize aggressiveness 188 188

The value proposition epiphany: CanScan is a cell culture company! 189 189

We are unique in our ability to culture CTCs Technology Capability Company Product Technology Channel Isolate Count Analyze Culture Parsortix Filter  Kits CellSearch Antibody  Kits Vita-Assays Substrate  Kits Mvs360 Antibody  Device OncoCEE Microfluidics   CLIA labs LiquidBiopsy Antibody   CLIA labs ISET device Filter   Device On-Q-ITY chip Microfluidics    Device ApoStreamTM Technology Microfluidics    Device - Substrate     CLIA? *This is an abbreviated list 190 190 Class 8 - Update 3.19.2012

Cell culture value proposition Identify and enumerate CTCs Characterizegrowth potential Culture Test Chemotherapies CTCs Test CTCs for biomarkers 191 191

DisposalProduced Dilution with Water Freshwater Reuse to Frac Another Well Primary How high can Treatment they go? This is where we Tertiary fit in Treatment Current state of Discharge the art are evaporators and Must be crystallizers drinking water quality

The Problem & Our Solution De-mineralization X Problem: No products that reverses demineralization Our solution: effectively Remineralization peptides that restore lost mineral

The Lean LaunchPad Lecture 3 Customer Segments Who Are Your Customers?What Job Do They Want You to Do? 6/22/12

Customer Segments Who Are They? Why Would They Buy?

Product/Market Fit

The Value Proposition Gain Creators Products &Services MVP Pain Killers

Pain = Customer ProblemGain = Customer Solution

The Customer Segment Gains Persona • Jobs /Archetyp • Problem or Need e Pains Market Type

Gain Creators GainsProducts&Services MVP Persona • Jobs /Archetyp • Problem or Need e Pain Pains Killers Product/Market Fit

Jobs to Be Done Problems/NeedsWhat is the customer segment trying to get done? Is it a problem or a need?

Customer Segments – Jobs/Needs• What functional or social jobs are getting done? – (e.g. perform or complete a specific task, solve a specific problem or trying to look good, gain power or status, ...)• What emotional jobs? – (e.g. esthetics, feel good, security, ...)• What basic needs are you helping your customer satisfy? – (e.g. entertainment, communication, sex, ...)

Buyer/Co-Creator/Transferor• Are they a buyers – (e.g. comparing offers, deciding, buying, taking delivery of a product or service, ...)• Are they co-creators – (e.g. co-designing with solution providers, contributing value to the solution, ...)• Are they transferors – (how customers dispose of a product, transfer it to others, or resell, ...)

Customer Segment Jobs - Rank• Rank each job according to its significance to the customer.• Is it crucial or is it trivial?• For each job indicate the frequency at which it occurs.• Outline in which specific context a job is done, because that may impose constraints or limitations – (e.g. while driving, outside, ...)

Customer Painsundesired costs and situations, risks, negative emotions

Customer Segments – Pains• What do your customers find too costly? – (e.g. takes a lot of time, costs too much, requires substantial efforts, ...)• How are current solutions underperforming? – (e.g. lack of features, performance, malfunctioning, ...)• What are the customers main difficulties and challenges? – (difficulties getting things done, resistance, ...)• What‟s keeping your customer awake at night? – (e.g. big issues, concerns, worries, ...)

Customer Segments – Pains• What barriers are keeping customers from adopting? – (e.g. upfront investment costs, learning curve, resistance to change, ...)• What makes your customers feel bad? – (e.g. frustrations, annoyances, things that give them a headache, ...)• What risks do customers fear? – (e.g. financial, social, technical risks, or what could go awfully wrong, ...

Customer Gains benefits the customer expects, desires or issurprised by. includes functional utility, social gains, positive emotions, and cost savings

Customer Segments – Gains• Which savings would make your customer happy? – (e.g. in terms of time, money and effort, ...)• What outcomes do they expect and what would go beyond their expectations? – (e.g. quality level, more of something, less of something, ...)• How do current solutions delight your customer? – (e.g. specific features, performance, quality, ...)• What would make your customer‟s job or life easier? – (e.g. flatter learning curve, more services, lower cost of ownership, ...)

Customer Segments – Gains• What positive social consequences do they desire? – (e.g. makes them look good, increase in power, status, ...)• What are customers looking for? – (e.g. good design, guarantees, specific or more features, ...)• What do customers dream about? – (e.g. big achievements, big reliefs, ...)• How does your customer measure success and failure? – (e.g. performance, cost, ...)• What would increase the likelihood of adopting a solution? – (e.g. lower cost, less investments, lower risk, better quality, performance, design, ...)

Customer Persona/Archetype

Define Customer Archetype/Persona• Who are they? – Position / title / age / sex / role• How do they buy? – Discretionary budget (name of budget and amount)• What matters to them? – What motivates them?• Who influences them? – What do they read/who do they listen to?• Draw a Day in the Life of the customer

Market Type

Type of Market Changes Everything Existing Resegmented New Clone Market Market Market Market

Type of Market Changes Everything Existing Resegmented New Clone Market Market Market Market• Market • Sales •Customers – Market Size – Sales Model •Customers • Needs – Cost of Entry • Needs – Margins • Adoption – Launch Type – Sales Cycle • Adoption – Competitive – Chasm Width •Finance Barriers •Finance Capital • Ongoing – Positioning • Ongoing Capital • Time to Profitability • Time to Profitability

Definitions: Four Types of Markets Existing Resegmented New Clone Market Market Market Market• Existing Market – Faster/Better = High end• Resegmented Market – Niche = marketing/branding driven – Cheaper = low end• New Market – Cheaper/good enough can create a new class of product/customer – Innovative/never existed before• Clone Market • Local adaptation

Market Type Existing Resegmented New CloneCustomers Known Possibly Known Unknown Possibly KnownCustomer Performance Better fit Transform- Local versionNeeds ational improvementCompetitors Many Many if wrong, None None few if rightRisk Lack of Market and Evangelism Misjudge branding, sales product re- and education local needs and definition cycle distribution ecosystemExamples Google Southwest Market Type determines: Groupon Baidu  Rate of customer adoption  Sales and Marketing strategies  Cash requirements

Market Type - Existing• Incumbents exist, customers can name the mkt• Customers want/need better performance• Usually technology driven• Positioning driven by product and how much value customers place on its features• Risks: – Incumbents will defend their turf – Network effects of incumbent – Continuing innovation

Market Type – ResementingExisting• Low cost provider (Southwest)• Unique niche via positioning (Whole Foods)• What factors can: – you eliminate that your industry has long competed on? – Be reduced well below the industry‟s standard? – should be raised well above the industry‟s standard? – be created that the industry has never offered? (blue ocean)

Market Type – New• Customers don‟t exist today• How will they find out about you?• How will they become aware of their need?• How do you know the market size is compelling?• Which factors should be created that the industry has never offered? (blue ocean)

Market Type – Clone• Takes foreign business model and adapts it to local conditions – Language – Culture – Import restrictions – Local control/ownership• Need market large enough >100 million

Other Thoughts

Who‟s the Customer?• User?• Influencer?• Recommender?• Decision Maker?• Economic Buyer?• Saboteur?• Archetypes for each?

Pass/Fail Signals & Experiments• How do you test interest?• Where do you test interest?• What kind of experiments can you run?• How many do you test?

Multi-Sided MarketsBusiness to Business to Consumer (B to B to C)

Who‟s The Customer?• Consumer End Users, Corporate Customers Pay• Multiple Consumers• Etc.

Multiple Customer Segments• Each has its own Value Proposition• Each has its own Revenue Stream• One segment cannot exist without the other• Which one do you start with?

Customer Segment Examples

Meet Xing XieInternational Graduate Student at Stanford • Engineering graduate student – Receives financial package to cover tuition, fees, insurance and living expenses Xing Art • Chinese 4-2-1 family – No siblings, spoiled by parents – High disposable income • 1st time to America – No credit score, SSN, or US address – Strong ties to his community in China • Academically responsible – Completes all homework on time • Financially responsible – Pays all bills on time and in full • Social network is similarly responsible

Results: Our Customers • Professional Kite Surfers • Solely concerned with performance • Average Kite Surfer • Performance and cost sensitive • “One less thing to carry” effect • Prospective Kite Surfer • Cost sensitive • Learning barrier

Customer Archetype: Joe “Dude” Marrama • Loves to ski, surf, rock climb • Salary ~100K/year • Looking for something to do when the surf‟s blown out • Intimidated by cost and learning curve of kiting “Companies need to offer more entry level packages." Matt Sexton Founder Collegiate Kiteboarding Association

™ Customer Workflow Phase I: Phase II: Phase III: Phase IV: Design Prototyping Manufacturing Final Product 6-8 weeks 3-4 weeks 8-12 weeks 3-4 weeks5/23/2012 235

IT The Gov‟tsubsidi Water Ecosystem es systems Nutrient manageme nt Planting/tilling/harvest Heavy Farmers equipmen tHungryfolks or Seed cars banks, Ag-Bio Regulato ry fees $$ Mitigate fines

CustomerSegments• Commercial Institutions: – Primary Market – $1.4B (Globally) – License and Revenue sharing agreements• Academic Labs: – Secondary Market – Increase Visibility of Tech – $140 M (North America) – Product Sales

The Problem Missing out Lonely Left aside Disconnected Frustrated Multitasking I‟m busy Living different lives Send each other things Laugh less through email/text Planning the next visitMany short call Everything is an effortthroughout day Post-poning couple time Don‟t communicate trivial things

Design ArkaSources and Heat Exchanger Technical Lights Manufacturer Experts Division? Partnership? Market Market …

Determining our customers Oncologist Pathologist Patient management Sample management• Oncologists decide • Pathologists perform in- what tests to order, house tests and when, and how often facilitate contracts with service providers• Primary customer • Less important 241 241

Use and Payment Model (Hospital) Hospital Oncologists Patient $ HospitalCROs Pathology HMO $ 2 Lab Decider 1 $ Influencer $ Buyer / CanScan Payer Class 3 - Update 2.6.2012

Reimbursement Model 3 Private CMS 3 payer/MAC 4 2 Hospital / Clinic 2 Lab Advisory Oncologists ASCO / Committee 2 NCCN 1 5 CanScan1 Generate physician interest 12 Physician lobbies payer/hospital3 Regional payer reimburses Influence4 National CMS coverage decided Payment5 Hospital reimburses CanScan Sets rate Class 4 - Update 2.13.2012

Health insurance reimbursement is a necessary precondition for hospitals to use our service Private insurance or Medicare reimbursement requires: Evidence of • Double-blinded, placebo controlled clinical trial with several hundred participants will be needed Clinical Utility − Must demonstrate the detection is accurate and repeatable − Must demonstrate improved decision-making ability for physician linked to better patient outcomes Assignment of • Codes are assigned by the AMA (CPT code) and CMS (HCPCS code) semi-annually with editorial panel approval (12-18 mo) a Billing Code − CanScan’s likely coding: HCPCS Level II or CPT category III* − VeridexCellSearch received code in Nov. 2011 for CTCs − CanScan will likley need new code (non-immunologic)* Coding used for non-FDA approved service billed by suppliers other than physicians Class 4 - Update 2.13.2012

What We Found: Patient Care FlowElectronic Partners/ Health Fluid Synchrony OEMS Records Electroni Support Pump + Bundled c ServicesControlle Kits Actionable feedback Records r to doctors/institutions E-prescription / closing loop Surgery/Rx/ PatientDischarged reprogrammin g Hospitals (Anesthesiologists Neurosurgeons)Trial period/ Scheduled Home follow-up setting - Process shortened to days - Improves outcomes

What We Found: Value Chain PatientsCPT reimbursementPump $13,305 Pay for coverage Service providedSurgical Kit $2887Refill Kit $200 Hospitals / Fluid Synchrony Insurance Clinics Product Hospital purchase Reimbursement 246

Position in Value Chain OmegaChem

Value Proposition, Customer Segments: Results Surfactants: new market ($24bn) Monomer Monomer manufacturer “Have you manufacturer considered surfactants Polymer space?” formulator Polymer Surfactant - DSM formulator Formulator Polymer Polymer Surfactant user user user Consumer facing Consumer facing company company Consumer Consumer

Product and Payment Flows $250 $200 Year unit Cosmetics Firm DepartmentContractManufacturer MySkin Tech or Spas / Salons Stores orSales Reps Increased $500 - $1K Sales unit Consumer MySkinTone Product Money Cosmetics Cosmetic Money• B2B2C customer relationship• MySkin Technology customer are also strategic partners• Instrument is simple and inexpensive enough for broad deployment 249

Sourcing for Expanded Product Offering Electronic Health Fluid Synchrony OEMS Records Electroni Support Pump + Bundled c ServicesControlle Kits Records r Hospitals (Anesthesiologists Patients Neurosurgeons) Pain Clinic (Anesthesiologists Neurosurgeons) 250

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Delft climate kic 070212 part 1

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