1. Interviewed: 100
• End Users 50+ • Manufacturers 3 • Partners 25 Domain Experts: 22
Surveyed: 115
FINAL PRESENTATION
March 6, 2011

2. Our Team
We are passionate kiters and realized we could make the sport
more accessible to others.
Oliver Riihiluoma
• M.S. ME
Woods Buckley • B.S. ME, minor C.S.
• M.S. MS&E • Sponsored Kitesurfer,
• B.S. Earth 2yrs
Systems
• Surfer, 10yrs
Megan Lin
• M.S. MS&E
Coleman Buckley • B.S. Applied-Mathematics
• M.S. Biology & Economics
• B.S. Biology • Prospective Kitesurfer
• Sponsored
Kitesurfer, 3yrs

3. Introducing ENGINE KITES

4. Our Original Idea
0
Retailers 0
Kite design
& manufacture
4
• High 10 • Vendor 0 Professional Kite
Online performance assisted Surfers
Brick mortar
Kite Instructors
Branding at low cost • Instructor
assisted “Joe” Kite Surfer
Manufacturers
Professional • Ease of • Pro assisted
Technology
Distributors
sponsors
travel • Direct Prospective Kite
Surfer
Industry Media
0 0
Retailers
Relationship with Online
Retailers
Brick & Mortar
Media
Pros Peer to Peer
Brand Direct online
Technology
People 0 0
Manufacturing
IP Kite sales
Marketing & Sales + related gear
Insurance

5. Business Overview
Problem - Product - Solution

6. The Problem
• A kiter needs multiple kites for different wind conditions
• Kites are $1000+ = significant financial barrier to entry
• Solution is the The Origami System!

7. Our Product: An Adjustable Kite
A light wind kite would be folded to decrease surface area
and serve as a high wind kite. The kite adjustment would be
quick and done prior to entering the water.

8. Our Product: An Adjustable Kite
A light wind kite would be folded to decrease surface area
•
and serve as a high wind kite. The kite adjustment would be
quick and done prior a low-cost/niche entrant in a re-
Engine Kites is to entering the water.
segmented kite market. We make kite surfing financially
and physically accessible for any extreme sports
enthusiast.

9. The Journey
• Defining Our Scope
Canvas #1: Finding the Right Customer
•
Canvas #2: Understanding the Industry
•
Canvas #3: Building the Company
•

10. The Journey
• Defining Our Scope
• Market Sizing
• Market Opportunity
• Canvas #1: Finding the Right Customer
• Canvas #2: Understanding the Industry
• Canvas #3: Building the Company

11. The Proxies
Brands associated with: equipment,
accessories, clothing, sports gear, etc.
1995: "Hurley and his group
•
realized that the modern surfer
also loved fashion, skate, snow,
music and art."
Revenue 1993: $25 M
•
1998: $70 M
•

12. The Opportunity We compared this to
the U.S. Surf Industry:
Serviceable $6.24b in retail
$12.1b Extreme sales in 2010
Sports Retail Sales
Addressable
$567m
(est current # kiters)
<15% of sales
$2.6b Extreme from equipment
Sports Equipment
*not to scale
Phase 1: Gain industry credibility, sell quality, niche product
Phase 2: Build the brand, launch new product lines and offerings

13. The Journey
Defining Our Scope
• Canvas #1: Finding the Right Customer
• Understanding our customer
• Testing the value proposition
• Canvas #2: Understanding the Industry
• Canvas #3: Building the Company

14. Our Original Idea
0
Retailers 0
Kite design
& manufacture
4
• High 10 • Vendor 0 Professional Kite
Online performane assisted Surfers
Brick mortar
Kite Instructors
Branding at low cost • Instructor
assisted “Joe” Kite Surfer
Manufacturers
Professional • Ease of • Pro assisted
Technology
Distributors
sponsors
travel • Direct Prospective Kite
Surfer
Industry Media
0 0
Retailers
Relationship with Online
Retailers
Brick & Mortar
Media
Pros Peer to Peer
Brand Direct online
Technology
People 0 0
Manufacturing
IP Kite sales
Marketing & Sales + related gear
Insurance

15. Hypothesis:
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

16. Testing:
Who kitesurfs?
45 Interviews & 115 Surveys
Male Dominated
>50% skateboard or snowboard regularly
$68,000 is the average income
>50% active gamers
60% College Grad
Most people try Kite Surfing at the
recommendation of a friend.

17. Testing:
Pain Points
45 Interviews & 115 Surveys
Existing Kitesurfer Prospective Kitesurfer
Cost of Equipment ✓ ✓
Cost of Lessons ✓
Equipment Mobility ✓ ✓
Infrequency of
Sessions
✓
(dependent on wind
conditions)
Safety Concerns ✓

18. 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

19. 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

20. 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
He bought our Kite!
“Companies need to offer more entry level
packages."
Matt Sexton
Founder Collegiate Kiteboarding Association

21. The Journey
• Defining Our Scope
• Canvas #1: Finding the Right Customer
• Canvas #2: Understanding the Industry
• Building the kites
• Understanding our channels, How do people buy kites?
• Partner strategy
• Canvas #3: Building the Company

22. Canvas #2
0 4 0 45
Kite design
45
• Vendor
VARs & manufacture • High assisted Professional Kite
Online
Brick mortar
performance • Instructor Surfers
Kite Instructors
Branding and quality assisted “Joe” Kite Surfer
Manufacturers
Expos at low cost • Pro assisted
•
Technology
OEM
Distributors
Professional
sponsors
• Ease of travel •
Partner?
Direct
Prospective Kite
Surfer
Industry Media 0 0
Partner Retailers Other boarders
Partner? Online (snow, skate
Relationship with Brick & Mortar and surf)
Retailers
Peer to Peer
Media
Pros Direct online
Brand & OEM Referrals?
Technology
People 0 45
Manufacturing
IP Kite sales
Marketing & Sales + related gear
Warranty, replacement parts
Insurance

23. Channel Flow
$400-$500 w/ bar and lines
(20 kite production run) 3 days
$42/year
$70 Direct
Contracted 70% margin Website
manufacturer 35%
mar
$25 gin
2+ weeks Design product
Build & Deliver Build Brand
Kites Create Demand
Direct Sales
Distributor
Deliver
Orders
~$7,000 Software Program Retailers
& Partners
35-45% markup
Merchandize
Articulate Value

24. Unit Economics
For Each Kite Sold
Gross Revenue 1,000
Cost of Goods Sold
Manufacturing 500
Distribution 25
Customer Acquisition 60
Total COGS 585
Gross Profit $415

25. Unit Economics
How did we For Each Kite Sold
calculate Customer Gross Revenue 1,000
Acquisition?
Cost of Goods Sold
Dependent on Manufacturing 500
Sales Channel: Distribution 25
• commission Customer Acquisition 60
• retail space
• website Total COGS 585
Gross Profit $415
Dependent on
Marketing Strategy:
• advertisement
• free lessons

26. Hypothesis:
Exploring Channels & Partners

27. Results:
Direct - Referrals - Retail, 30 interviews
• Most kite companies now sell direct
• Kiters rely on brand and industry reviews
• New consumers use instructor recommendations
• Typical channel margin is 20-45%
• Manufacturer/Retailer relationship is key, highly
political

28. Hypothesis:
Customer Reach Through Hotels
Insight: on vacation, individuals typically not
considered part of the "Extreme Sports crowd"
are still likely to try out extreme sports

29. Results:
Customer Reach Through Hotels
Many hotels/resorts already offer kitesurfing
vacations and partner with kitesurfing
equipment companies or kitesurfing lesson
providers.
Receptive response to our pitch: free lessons &
commission on sales.

30. Hypothesis:
Customer Reach Through Major Label
Idea: Partnering with a major label would give our
product immediate credibility

31. Results:
Customer Reach Through Major Label
Reality check: Major labels aren't willing to take the risk
of partnering with an unproven brand and product.

32. The Competition

33. Hypothesis:
The Kitesurfing marketplace is crowded.
Hypothesis:
No single company with significant (>20%) market share = low
cost to entry

34. Results:
The Kitesurfing marketplace is crowded.
Hypothesis:
No single company with significant (>20%) market share = low
cost of entry
Yes, but...
The market is saturated and more people are making kites than
selling them and it is a monoculture.

35. A Lack of Diversity

36. Technology Sets Us Apart
Our Competitive Advantage

37. The Journey
• Defining Our Scope
• Canvas #1: Finding the Right Customer
• Canvas #2: Understanding the Industry
• Canvas #3: Building the Company
• Lessons learned
• Next steps

38. Canvas #3
50+
2 5 13
VARs
Kite design
• High • Vendor Professional Kite
5
assisted
• Instructor
& manufacture
Online performance Surfers
Brick mortar
Branding and quality assisted
Kite Instructors
at low cost • Direct “Joe” Kite Surfer 13
Manufacturers Expos
• • Website
• Partner Prospective Kite
•
Ease of travel Surfer
Industry Media
3 Up to date 30
wind Retailers
Partner Partner
•
conditions
Industry Relationships
Direct online
OEM Reduced
Distributors Brand environmental
Technology Partner
impact
Website
7 People
Marketing & Sales 45+
Manufacturing
IP Kite sales
Warranty, replacement parts + related gear Accessories
Insurance
Website Maintenance

39. Introducing Engine Kites

40. Hypothesis:
Demand Generation
• Website
• Wind conditions + news and social
• Effective Channel Management
• Website, direct
• Retailer & Partners (later)
• Build credibility, educate users
• Free Beach lessons
• Kite Expos
• Pro Riders + Online Media
• Ads and reviews in industry journals + presence on online forums

41. Testing:
Price and Bundling
• Validated Hook! People want Kitesurfing lessons!
• 100 email addresses for those interested in kite lessons
• Instructors tells us paid lesson conversion rate to purchase: ~75%
• Validated Price Point! $1000
• However, people expect deals
• Bundling with free lessons, repairs or other equipment is added
benefit

42. Results:
Prospective Kiters
We sold some kites!
5 commitments to purchase
• For those that did not buy...there
was a high demand to demo the
product
Goal:
• Sell 20 kites first, before building
them

43. Testing:
Experienced Kiters
Performance takes priority.
"Looks interesting. I could see this marketed as a one kite quiver which would
be really nice for travel. Price, it could go for the equivalent of a kite and
a half I would think. Performance an durability would be key"
"Rad idea for your kite I like the idea of having the ability to change kites
without having to walk to your car and pump up another kite. as long as the
kite performance was the same I would say it would be worth at
least 50% more"
"If this kite rocked it - just flew amazingly, and the price was significantly
less than the cost of two kites - I could see it being appealing. If the
kite flew at a mediocre level, the cost was only minimally different than the cost
of two kites...I'd definitely go for the 9m and 7m kites (more range and no
alteration necessary)"

44. Keeping Customers Engaged

45. Hypothesis:
This was our plan...
• Focus on building
awareness and user base
in Bay Area before
expanding. Main goal:
build brand loyalty
• Contact earlyvangelists
• Explore partnerships

46. Free wind conditions brought to you by:
Please share your email to access to free wind
conditions and latest product developments
Email:
CLICK TO
DEMO TODAY!

47. CLICK TO
DEMO TODAY!

48. Site Value Prop:
• Bay Area Kitesurfers want current wind conditions
(100% of those interviewed)
• Install approval granted for 3 pilot sites
• Users must share email to access site data
• Users can easily demo, purchase and register for lessons via
site
CLICK TO
DEMO TODAY!

49. Results:
Unanticipated Challenges
Don Montague – “Godfather of kiting”
•
• Designed the software most kite companies use, set-up the first
kite factory in China, hold multiple kite related patents, knows
everybody and everything about the kite industry.
Don's Insights:
•
• Shared some interesting numbers
• ~100,000 kites sold/year, no company sells more than 20,000
units/year
• Materials costs have tripled in the last 5 years, pushing down
margin
• Most companies just treading water, not making much profit.
• High risk – lawsuits, recalls, etc.
• Even if we get a toe-hold locally, difficult to expand

50. Moving Forward
• At this time committing to building a company doesn't
seem like a good idea.
• Value prop remains valid, new strategy is to license to
existing brands, let them fight it out.
Pivot:
• Patent and license kite design to other manufacturers
• Offer Don a percentage of revenue from profits and have
him go to bat for us getting licenses sold.

51. Lessons Learned
• A good product doesn’t make a good business
• Passion for your product AND customers is key
• Team culture is critical
• Value of getting out of the building
• Accessibility of getting through to large businesses

52. Appendix: Canvases 1-7

53. The Canvas #1
Kite design
Retailers & manufacture • High • Vendor Professional Kite
• Online assisted Surfers
• Brick mortar performance
• Instructor
• Kite Instructors Branding at low cost
assisted “Joe” Kite Surfer
Manufacturers
• Technology Professional • Ease of • Pro assisted
Prospective Kite
Distributors
sponsors
travel • Direct Surfer
Industry Media
Retailers
Relationship with
• • Online
•
Retailers
• Brick & Mortar
•
Media
Pros • Peer to Peer
Brand Direct online
Technology
People
Manufacturing
IP Kite sales
Marketing & Sales + related gear
Insurance

54. The Canvas #2
Kite design Vendor
VARs & manufacture High assisted Professional Kite
Online performance Surfers
Brick mortar
Instructor
Kite Instructors
Branding and quality at assisted
Expos “Joe” Kite Surfer
Manufacturers low cost Pro assisted
Technology
Professional
Partner? Prospective Kite
OEM Ease of travel
sponsors Direct Surfer
Distributors
Industry Media
Partner? Retailers Other boarders
Partner? Online (snow, skate
Relationship with Brick & Mortar and surf)
Retailers
Peer to Peer
Media
Pros Direct online
Brand & OEM Referrals?
Technology
People
Manufacturing
IP Kite sales
Marketing & Sales + related gear
Warranty, replacement parts
Insurance

55. Canvas # 3
Retailer Partner Product Marketing Engine Kites Customer
High Vendor Assisted “Joe” Kitesurfer
VARS Branding
Website Kite Expos performance
online Pro sponsors and quality Website
Prospective Kite
at low cost Surfer
Partners
Kite design & Partner
Ease of travel
Manufacture
Manufacturers Other boarders
OEMs? Up to date (snow, skate
wind and surf)
Website
conditions Retailers
Industry Industry Relationships
Media Reduced Direct
Brand People environmental
impact Partners
Technology
Distributors
IP
People
Manufacturing Marketing Kite sales
+ related gear Accessories
Warranty, Website
Insurance
replacement Maintenance

56. Canvas # 4
Retailer Partner Product Marketing Engine Kites Customer
Vendor Assisted “Joe” Kitesurfer
VARS Branding
Website Kite Expos High
online Pro sponsors performance Direct
Prospective Kite
and quality Surfer
Partners at low cost
Kite design & Partner
Manufacture
Manufacturers Ease of travel Other boarders
OEMs? (snow, skate
Reduced and surf)
environmental Retailers
Industry Industry Relationships impact
Media Direct
Brand People
Technology Partners
Distributors
IP
People
Manufacturing Marketing Kite sales
+ related gear Accessories
Warranty, Insurance
replacement

57. The Canvas #5
0
2 0 13
Kite design • Vendor 13
Professional Kite
VARs & manufacture High assisted
Online
Brick mortar
performance • Instructor Surfers
Branding and quality at assisted
Kite Instructors
low cost • Direct “Joe” Kite Surfer
Manufacturers Expos
• Website
Ease of travel • Partner Prospective Kite
Surfer
Industry Media
0 Up to date wind 0
conditions Retailers
Partner Partner
Industry Relationships Reduced
Direct online
OEM environmental
Distributors Brand impact
Technology Partner
Website
1 People
Marketing & Sales 30+
Manufacturing
IP Kite sales
Warranty, replacement parts + related gear Accessories
Insurance
Website Maintenance

58. Canvas #6
45 50+
20 5
VARs
Kite design
High
• Vendor Professional Kite
5
assisted
• Instructor
& manufacture
Online performance Surfers
Brick mortar
Branding and quality at assisted
Kite Instructors
low cost • Direct “Joe” Kite Surfer 45+
Manufacturers Expos
• Website
Industry Media
Ease of travel • Partner Prospective Kite
Surfer
3 Up to date wind 30
conditions Retailers
Partner Partner
Industry Relationships Reduced
Direct online
OEM environmental
Distributors Brand impact
Technology Partner
Website
7 People
Marketing & Sales 45+
Manufacturing
IP Kite sales
Warranty, replacement parts + related gear Accessories
Insurance
Website Maintenance

59. Canvas #7
50+ 7
20 6 45
45
Kite design Vendor
VARs & manufacture High assisted Professional Kite
Online performance Surfers
Brick mortar
Instructor
Kite Instructors
Branding and quality at assisted “Joe” Kite Surfer
low cost Direct
Manufacturers Expos
Website Prospective Kite
Ease of travel Surfer
Industry Media
3 Up to date wind 30
conditions Retailers
Industry Relationships
Reduced Direct online
Brand environmental
Technology impact
Website
8 People
Marketing & Sales 5
1 Licensing?
Manufacturing
IP Kite sales
Warranty, replacement parts + related gear Accessories
Insurance
Website Maintenance

60. Questions?