The Background: Graphene is an amazing material that will improve and disrupt entire industries, including electronics and clean energy
Problem statement: None of these things will happen unless and until graphene can be produced in large quantities – Commercial Scale
Solution: We can do this. Our technology offers the best path forward to enable commercial scale production of graphene films at low cost.
Market Opportunity: We believe that there is significant demand for graphene, but the market will not develop and companies will not design products that incorporate graphene until a reliable source is identified
We may have been overconfident.
So here’s the plan.
We’re now ready to raise money to scale up and develop our continuous manufacturing prototype, and we have several heavy hitters who are waiting to see us succeed…
We may have been overconfident.
We:--Made a target list--asked for introductions and referrals--worked our networks--made a BUNCH of calls
The Payoff:--What we thought was important wasn’t important to our potential customers and partners--The market *will not grow* until someone can prove that they can supply graphene--The source must be reliable, and the cost must be within reason**WE NEED TO DEMONSTRATE SCALE**
We can make money TODAY with TEM Grids and material sales… distributors are clamoring for our stuffWe have work to do to meet display requirementsBig companies are willing to help us get there
Version 1: Crazy, right?? We realized that we had work to do, so we completely revamped our slide before we presented it to our classmates by…
…using a cleaner template and underlining a few words. We settled on this as Graphene Frontiers Canvas #1 and thought that we would WOW the audience with how much detail we had and how broad our scope and opportunity was.We projected this on the screen and were promptly booed off the stage. Sooo….. v2 was born:
Lesson #1: Focus.We narrowed our scope to the three applications we believed were most promising and set out to test our assumptions
We were a bit too hesitant to fail fast and close doors, but we did recognize early on that we were probably not going to become “the Alcoa of nanocarbon”
We also heard from customers that we would need to integrate into existing production lines… high volume manufacturers may be reluctant to buy vast quantities of material… they probably want to license and make their own.We also learned that ITO and silver nanowires were the competition for touch screen and displays, but we were beginning to quantify the differentiators
We heard that collaborative R&D would be a necessity—we will need to help companies use our material in their product development.Membrane switches—a new opportunity we evaluated, was quickly ruled out.
The big week:Near term opportunity: TEM GridsMedium term opportunity: Thin, flexible displays
Canvas A: TEM GridsWe’re partnering with SPI, a microscopy supply distributor, and have developed a Minimum Viable Product that is undergoing beta testing and evaluation.We will provide them with graphene on copper foil (a byproduct of our work to scale up production), and they will transfer to the grids, QC, package, market, sell, etc. and we have agree in principle on a revenue sharing deal
Canvas “B”: Flexible transparent conductors for Displays
We learned that we needed to partner with manufacturers to incorporate graphene into product development, and *SCALE UP IS CRITICAL*Cost is not as important as we thought earlier,: We don’t need to beat ITO, we need to do what it can’t do (flexible, impervious to oxygen, etc.)
Tell them where we are now.
This market is very lucrative. The size of the market is large, few barriers, large incentives, a market that is set to grow, multiple brands, the presence of smaller brands and manufacturers duking it out with larger names, no industry standards as yet…. Why didn’t this work, you ask?Because the market is large, there are multiple brands, small and large manufacturers are duking it out, there are no industry standards, there is resistance to change and other factors.
Because we were adjacent to and serving the consumer market (Commercial consumers of LED PAR38 lamps), a large part of our customer interaction was with facilities managers and other consumer gatekeepers like architects and distributors. Most of our customers were very aware of advances in the LED lamp space. They kept up to date with brands, prices and incentives for these products. Many indicated awareness that LED lamps need better thermal management and expressed interest in adopting this technology across multiple properties. Most of our interviewed customers had experimented with LED lamps and were very pleased with the performance of these lamps. Advantages included reduced energy consumption and cost, reduced maintenance and inventory cost and the longevity of the lamp. However, they communicated that they were unable to use these lamps on a wide-scale because of the price of these lamps. At current prices, $40 -50, these lamps could not be adopted across commercial properties. Commercial Customers indicated that the desired price range lay in the $15 – 20 bracket. They were willing to wait for up to 5 years for the price to fall prior to wide scale usage of these lamps. Other disadvantages included the directional nature of the beam (requiring more lamps for illuminations), the weight of the lamp and the chance of theft.Commercial customers were aware of NYSERDA and NYPA incentives and do utilize those grants to purchase LED lamps. Many utilize these incentives to buy lamps that were used in properties that were aiming to achieve and maintain LEED certifications. Customers were also highly influenced by gatekeepers. The range was diverse and ranged from contractors, architects and distributors to trade publications in their professional field. The influence of each of these gatekeepers was dependent on the type of commercial customer and the nature of the occupation of each interviewee. Many indicated that they were not very likely to consider changing brands of lamps.
SCRIPTArka Thermal Solutions would work in the LED light space. But instead of producing LED lamps, ATS would produce the thermal component – our core technology. Arka would design and produce thermal management components that would then be fitted into LED lamps. We had moved one step upstream; joining, what was earlier, our supplier side to become a component manufacturer for LED lamps. This would allow us to:Focus on our core competencyNot have to enter a market that was complex and supplier drivenReduce initial capital investmentHave shorter lead timesExplore greater scope in product linesReduce the number of customers, but increase our rapport with them. OEMs said “we are very interested….”
This market was ideal for a startup with Arka’s genetics. But the business plan had to iterate again. Why?Arkafaced certain inherent barriers. The first questions was the flow of design and product. Would we manufacture the product? Manufacture and brand it as Arka? Or outsource manufacturing and brand it Arka? Not brand at all, but court a LED manufacturer, pitch a solution and then work with partner suppliers? Which was the most viable for Arka, why would a partner supplier choose to work with us? And why would a customer choose to work with a partner supplier at all? And so, how could we protect our design? How would we enforce design non-disclosure and protect our core assets?These questions were hard to answer. Each model that it’s advantages and disadvantages. Arka is a very young startup and loss of a vital asset like it’s heat pipe IP would be a devastating setback. We had to come up with a business model that, at this point, would best reflect and capitalize on the core competencies of the founding members.
This slide represents pass/fail parameters that we outlined in October 2011 when we disclosed and created our initial business model. As of December 2011, these pass/fail parameters have been put to use. The Value Proposition, outlined in green, indicates that our value proposition (while modified) is the vital component around which our business model has pivoted twice. At the core of Arka remains the novel heat pipe technology that can offer significant gains in thermal transfer while reducing the energy consumption and improving efficiency of the product. At this point of time, Arka seeks to capitalize on this novel heat pipe technology as an asset that serves to differentiate Arka from other heat pipe manufacturer and designers. The parameters highlighted in blue are those that were modified. These parameters did not fail due to the lack of positive feedback, but because of other considerations in the first two iterations. Long lead times and Break Even Point Goal, the lack of expertise in manufacturing, the presence of gatekeepers and strong customer attitudes are a few of the reasons while these parameters caused iterations in the first two models. Feedback while positive in these areas, did not translate to a strong defensible business model. The parameters outlined in red are those that were true. For example, with our proposed customer segments in the first business model, this parameter was validated because customers indicated that switching to LED lamps was not a high priority at this point of time, and they were willing to wait for prices to fall before adopting the technology. We also faced challenges with the execution of the project. The long lead times and lack of expertise in manufacturing were some of the challenges.
How has your method of instruction changed? In class and in the lab? Problem solving and student guidance?How will it make you change the curriculum? New additions within your class (besides large scale changes in course structure and otherwise?
1. The Lean LaunchPadLecture 1: Business Models and Customer Development Steve Blank Jon Feiber Jon Burke Jerry Engel #leanlaunchpad
2. Agenda1. What we used to believe / What we now know2. Business Models and Customer Development3. Examples4. Market Size5. For tomorrow
3. Part 1What We Used to Believe What We Now Know
4. What We Used to Believe
5. Startups are a Smaller Version of a Large Company
6. What We Now Know
7. Startups SearchCompanies Execute
8. What We Used to Believe Strategy
9. Start With an Operating Plan and Financial Model
10. All I Need to Do is Execute the Plan
11. All I Need to Do is Make the Forecast
12. All I Need to Do is Execute the Plan
13. What We Now Know Strategy
14. No Business Plan survives first contact with customers
15. Planning comes before the plan
16. Business Models
17. Business Models
18. Search Execution Business Model Operating Plan +Strategy Hypotheses Financial Model
19. What We Used to Believe Process
20. We Built Startups byManaging Processes Product Management + Waterfall Engineering
21. Product Introduction Model Concept/ Product Alpha/Beta Launch/Seed Round Dev. Test 1st Ship
22. 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”
23. 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
24. 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
25. 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
26. Waterfall / Product Management Execution on Two “Knowns” Requirements Product Features: known Design Implementation Verification Customer Problem: known MaintenanceSource: Eric Rieshttp://startuplessonslearned.blogspot.com
27. Waterfall / Product Management Execution on Two “Knowns” Requirements Product Features: known Design Implementation Verification Customer Problem: known MaintenanceSource: Eric Rieshttp://startuplessonslearned.blogspot.com
28. What We Now Know Strategy
29. More startups fail froma lack of customers than from afailure of product development
30. Customer Development
31. Search ExecutionStrategy Business Model Operating Plan + Hypotheses Financial ModelProcess Customer & Product Management & Waterfall Agile Development Development
32. What We Used to Believe Organization
33. Hire and Build aFunctional Organization
34. What We Now Know Organization
35. Founders run a Customer Development TeamNo sales, marketing and business development
36. 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
37. What We Used to Believe Education
38. Entrepreneurial Education was about execution
39. Entrepreneurial Education was about execution
40. What We Now Know Education
41. Entrepreneurial Educationbegins with the Search for a business model
42. 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 DepartmentEducation Business Model Design, Organizational Behavior, Customer Development, HR Mgmt, Accounting, Startup team building, Modeling, Strategy, Operations, Leadership, Entrepreneurial Finance, Marketing, Manufacturing Agile Development, Customer Funnel: Get/Keep/Grow Market
43. Now imagine these classes virtual and networked independent of location
44. Putting Search first is a radical changeIt’s not just one more methodology
45. What We Used to Believe Instructional Strategies
46. Cases and a Business Plan were good teaching tools
47. Cases and a Business Plan were good teaching tools
48. What We Now KnowInstructional Strategies
49. Experiential Immersion ~100 GOOTB connections
50. Team-based Simulations
51. Business Model Patterns Replace Cases Nespresso club production Nespresso machines Nespressopo ds distribution channels Nespresso .com productioncoffee facilites B2C 1 x machine distribution sales 53
52. 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 Education Business Model Design, Organizational Behavior, Customer Development, HR Mgmt, Accounting, Startup team building, Modeling, Strategy, Entrepreneurial Finance, Operations, Leadership, Agile Development, Marketing, Manufacturing MarketingInstructional Experiential, constructivist, Case, Lecture, SmallStrategies learner-centered, Group, Mentorship inquiry-based
53. SearchStrategy Business Model HypothesesProcess Customer Development, Agile DevelopmentOrganizationCustomer Development Team, Founder-driven This Class Education Business Model Design, Customer Development, Startup team building, Entrepreneurial Finance, Agile Development, MarketingInstructional Experiential, constructivist,Strategies learner-centered, inquiry-based
54. 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 Education Business Model Design, Organizational Behavior, Customer Development, HR Mgmt, Accounting, Startup team building, Modeling, Strategy, Entrepreneurial Finance, Operations, Leadership, Agile Development, Marketing, Manufacturing MarketingInstructional Experiential, constructivist, Case, Lecture, Small Group,Strategies learner-centered, inquiry- Mentorship based
55. Part 2 Business Models andCustomer Development
56. What’s A Company?
57. What’s A Company? A business organization which sells aproduct or service in exchange for revenue and profit
58. What’s A Startup?
59. A temporary organization designed to searchfor a repeatable and scalable business model
60. A temporary organization designed to searchfor a repeatable and scalable business model
61. A temporary organization designed to searchfor a repeatable and scalable business model
62. A temporary organization designed to searchfor a repeatable and scalable business model
63. A temporary organization designed to searchfor a repeatable and scalable business modelA Startup aims to become a company
64. How Does Your ScienceBecome Part of a Company?
65. Technology Commercialization• IP Licensing (Patent, Process, etc.)• Stand-alone Startup
66. How Are Companies Organized?
67. How Are Companies Organized?Companies are organized around Business Models
68. What’s a Business Model?
69. Value PropositionWhat Are You Building and For Who?
70. What About My Technology?
71. What About My Technology?Your technology is one of the many critical pieces necessary to build a company. It is part of the “Value Proposition”
72. What About My Technology?Customers don’t care about your technology They are trying to solve a problem
73. Customer Segments Who Are They? Why Would They Buy?
74. ChannelsHow does your Product Get to Customers?
75. Customer RelationshipsHow do you Get, Keep and Grow Customers?
76. Revenue StreamsHow do you Make Money?
77. Key ResourcesWhat are your most important Assets?
78. Key PartnersWho are your Partners and Suppliers?
79. Key ActivitiesWhat’s Most Important for the Business?
80. Cost StructureWhat are the Costs and Expenses
81. CANVAS OVERLAYKEY KEY OFFER CUSTOMER CUSTOMERPARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS KEY CHANNELS RESOURCESCOST STRUCTURE REVENUE STREAMS images by JAM
84. Business Model Canvas building block building building building block block building blockbuilding block block building building block building block building block block building building building building block block block block
85. Turning Hypotheses Into Facts
86. The Four Steps – The Startup Path Customer Development
87. Customer DevelopmentTest the Problem, Then the Solution
88. Hypotheses Testing and Insight
89. Customer Development The Pivot
90. Customer Development is how you search for the model Search ExecutionCustomer Customer Customer CompanyDiscovery Validation Creation Building Pivot
91. Customer Discovery
92. Web/Mobile Versus Physical Customer Customer Discovery Validation Pivot•Web/Mobile startups run faster•Different process steps for web vs. physical•Customer Relationships are radically different
93. Customer Discovery
94. Customer Validation
96. Part 3How Does this Really Work?
97. How Does This Really Work?NSF Lean LaunchPad Class10 Weeks From an Idea to a Business
98. Graphene FrontiersWe are a nanotechnology materialscompany with a proprietary process forproducing high quality, low cost, largearea graphene films at commercial scale
99. Background: Graphene Applications “Wonder Material” Graphene• Nano Material Subject of 2010 Nobel Prize in Physics• 2D Carbon: Strong, Flexible, Conductive, Transparent• Enables Next Generation Thin, Flexible Devices Flexible Transparent Thin, Flexible Touch Screen, Displays Electrodes Solar Cells
100. Problem: Lab Scale Not Enough Graphene Production Must Scale Up to Commercial Levels before Integration into Consumer Products Becomes a Reality…
101. Solution: Scalable Production ProcessOur Patent-Pending APCVDGraphene Production Process:•Operates at ambient pressure,reducing cost enabling flexible design•Industrial scale, continuous roll-to-roll production possible•Graphene sheet size limited only byCVD furnace dimensions•Same or better quality vis-à-visLPCVD graphene•Graphene growth at 900-1000 °C,lower than other methods
102. Market: Size and Growth Nascent Graphene Market is Ready to Explode: Commercial Scale Production will be Catalyst • Thin, Flexible Displays • Solar Thin Film • Touch Screens Thin, Flexible Display • Thermal Management for Electronics Thermal Management $8.2B • Basic Materials and Research $6.4B • Microscopy (TEM) Sample Supports GF TAM: $1.2B Research/ Market for Thin Film Solar Mat’l/Other Graphene $4.6B $1.4B Films/Sheets $52M Graphene Frontiers Process & Product Offering • GF APCVD Process will Accelerate Graphene Adoption Curve 2012 2016
103. Team: Graphene FrontiersEL:Zhengtang Luo, PhD – Chief Science Officer10+ years experience in synthesis of carbonnanomaterials and product development for applicationsin the area of materials chemistry, chemical separationand electronic devices.Mentor: Mike Patterson – CEOExperienced entrepreneurial leader, manager, andtrusted adviser to startups and Fortune 500 companies,providing expertise in growth strategy and internationaloperations. Patterson is an Executive MBA candidate(Entrepreneurial Management, April 2012) at theWharton School, University of Pennsylvania.PI: A.T. Charlie Johnson, PhD – Founder, Scientific Advisory BoardKnown internationally for his work in graphene electronics and carbon nanotube electronics. IP from his lab onDNA-carbon nanotube devices for use in an electronic nose system pursued by Nanosense. An author of over130 peer-reviewed articles, Johnson holds two issued patents, with 18 other patents submitted.
104. Recap• Graphene technology will change the world...• …but not until it is available in commercial volumes• We believe that APCVD is the best path to industrial scale• Whoever meets this challenge will be first mover in a fast growing market with multi-billion dollar potential• We are the right team with the right technology to do it
105. What’s Next: Strategy and Roadmap 1H 2012 2012 2013+ Commercial Roll-to- ApplicationPhase 4” Scale-Up Roll Design & Prototype DevelopmentProduct/ TEM Grids Process Licensing Intellectual Property Materials Business Thin, Flexible DisplaysRevenue 12” x 12” Sheet Roll-to-Roll Mfg. Application R&DMilestone Production Industrial Scale Team “World Leader in Perfect CVD GrapheneActivity Scale-Up Sheet Size Continuous Process Innovation” Increase Area Increase Throughput New Applications
106. What’s Next: Secure Partnerships + Investment Distribution Active Customer Manufacturing Partners Conversations Partners Seed Investment Needed
107. Enter I-Corps: Beginning HypothesesHere’s What We Thought: – Graphene can be used for just about anything – All of the big manufacturers are just waiting for our product – The market for graphene will explode in 2012 – We will become the world’s largest graphene manufacturer
108. So Here’s What We Did…• Research to identify target companies: Build the list – Web, industry/research reports, personal network, “Who else should we talk to?”• Calls to personal/professional/alumni network: “Do you know anyone…?”• Intros, warm calls, cold calls, cold calls, more calls
109. So Here’s What We Did…• Google AdWords Campaign + Survey Monkey – 3 days, 8,555 Impressions, 34 people clicking through to our site, ZERO contacts/closes. Retrospect: What were we trying to learn???• Serendipity: Casual conversation turns to Graphene Frontiers at alumni event: “That’s terrific! You know, I work at DuPont. Here’s my card… send me your deck and let me know how I can help.” –Tom Connelly, Chief Innovation Officer, DuPont
111. So Here’s What We Learned…• Atmospheric pressure production is key value-add – Not “high-quality”, not single-layer• Many big companies are on the sidelines doing limited product dev, waiting for a proven production method• We need to focus on scaling up (bigger & faster)• We need a partner to break into consumer electronics• Cost matters, but not as much as we thought
112. So Here’s What We Learned…• TEM grids are viable, near term but small market – Will rely on distribution partner• Displays will be next big thing – Focus on flexible/foldable thin displays – May require partnership with OEMs or sub-contractors• Extensive product characterization is next step – Transparency, haze, sheet resistance for displays (3M, Dow, DuPont) – Minimize layers and contamination for TEM (SPI, Halcyon)
113. • R&D • Warranty• Earlyvangelists • Defense • Scale up system design • Service/Maint.• (Customer/Partner) • MEMS • Graphene production Material Agree• Equipment Mfg • Chem/Bio Detect. • IP creation/licensing • Thermal Conduct. • Joint Marketing• Universities • Researchers • Internal application • Elect. Conduct • Branding• Downstream • Optoelectronics development • Strength fabrication • Transparent companies • “Semiconductor” Conduct. (Touch)• Suppliers • IP* (Patent/License) • Flexible • Solar Cell Electrodes • Team/Expertise • Transparent • Thermal Mgmt • Credibility/Rep • Distributor • Supercapacitor Process • CVD Equipment • Direct Sales • Battery • Low Cost • Inputs (gas/foil) • Online • TEM support • Higher Quality • Lab space • License • Polymer/Composite • Large Area • Website • Partner/JV • CVD Equip Mfg • “Industrializable” • Design/Engineering • Bundle • Flexible Mfg • Team • Material Sales • Add’l IP • Lab space • License/Royalty • Applications • Capital equipment • Equipment Sales • SBIR • Consulting • Angel • Maintenance • VC • Design • Ben Franklin
114. The Business Model Canvas• Lead Customer • R&D • Warranty• Equipment Mfg Material • Scale up system • Service/Maint.• Universities • Thermal Conduct. • Defense design Agree• Downstream • Elect. Conduct • MEMS • Graphene product. • Joint Marketing fabrication • Strength • Chem/Bio Sensor • IP creation/ • Branding companies • “Semiconductor” • Researchers licensing • Education• Suppliers • Flexible • Optoelectronics • Internal app. dev. • Transparent • Transparent Conduct. (Touch) Process • Solar Cell • Low Cost Electrodes • Higher Quality • Thermal Mgmt • IP* (Patent/License) • Large Area • Supercapacitor • Distributor • Team/Expertise • “Industrializable” • Battery • Direct Sales • Credibility/Rep • Flexible Mfg • TEM support • Online • CVD Equipment • Polymer/Compos. • License • Inputs (gas/foil) • CVD Equip Mfg • Partner/JV • Lab space • Bundle • Website • Design/Engineering • Team • Lab space • Material Sales • Maintenance • Capital equipment • License/Royalty • Design • Direct Sales/Travel • Equipment Sales • Add’l IP • Consulting • Applications
115. The Business Model CanvasEquipment Mfg Scale up Low Cost Education Thermal Mgmt SolutionsUniversities Customization Higher Quality Service/Maint. Transparent Production Conduct.Downstream Large Area (Touch)fabricationcompanies Chem/Bio “Industrializable” IP License Sensor CVD Equipment Direct Sales Facilities/Lab License/Royalty Capital equipment Personnel Material Sales Direct Sales/Travel Lab space
116. The Business Model CanvasEquipment Mfg Scale up Low Cost Education Thermal Mgmt SolutionsUniversities Customization Higher Quality Service/Maint. Transparent Production Conduct.Downstream Large Area (Touch)fabricationcompanies Chem/Bio “Industrializable” IP License Sensor CVD Equipment Direct Sales Facilities/Lab License/Royalty Capital equipment Personnel Material Sales Direct Sales/Travel Lab space
117. The Business Model CanvasEquipment Mfg Scale up Low Cost Education Thermal Mgmt SolutionsUniversities Customization Higher Quality Service/Maint. Transparent Production Conduct.Downstream Large Area (Touch)fabricationcompanies Chem/Bio “Industrializable” IP License Sensor CVD Equipment Direct Sales Facilities/Lab License/Royalty Capital equipment Personnel Intermediate product Material Sales Direct Sales/Travel Lab space
118. Graphene Frontiers Business Model Canvas – PRIOR VERSION (10.18) Scale upEquipment Mfg Low Cost Education Thermal Mgmt Solutions Customization Service/Maint.Universities Higher Quality Transparent Collaborative R Conduct. Production &D (Touch)Downstream Large Areafabrication Membranecompanies switches “Industrializable” IP License Replace ITO CVD Equipment Direct Sales Facilities/Lab Chem/Bio Sensor License/Royalty Capital equipment Personnel Intermediate product Material Sales Direct Sales/Travel Lab space
119. This Week:Split, then Pivot
120. Graphene Frontiers Business Model Canvas “A” Research Transfer Process Academic Papers Groups Optimization Atomically Thin and Robust Electron Trade Shows Microscopists TEM Equipment Higher Quality Mfg. “Clean” IP CVD Equipment Facilities/Lab “Free” Revenue Sharing (Selling Byproduct) w/Distributor
121. Graphene Frontiers Business Model Canvas “B” Scale upEquipment Foldable / Education FlexibleMfg Bendable Transparent Customization Service/Maint. ConductorUniversities Higher Quality Collaborative R&DDownstream Large AreaFabricationCompanies “Industrializable” IP License Low Cost CVD Equipment Facilities/Lab Intermediate License/Royalty Capital Equipment Personnel product Direct Sales/Travel Lab space
122. Graphene Frontiers Business Model Canvas “B” Scale upEquipment Foldable / Education FlexibleMfg Bendable Transparent Customization Service/Maint. ConductorUniversities Higher Quality Collaborative R&DDownstream Large AreaFabricationCompanies “Industrializable” IP License Low Cost CVD Equipment Facilities/Lab Intermediate License/Royalty Capital Equipment Personnel product Direct Sales/Travel Lab space
123. PHOTOCATALYSTS for WATER REMEDIATION (nanocatalysts) • Commercialize visible light activated nanocatalysts (Nanogrids™) • Nanotechnology removes hydrocarbons from polluted water • Turns wastewater from fracking operations into drinkable water • New product in a niche (multibillion $) market • Talked to 70 people- dealers, distributors, customers) • Surveyed another 30 customers (c) copyright 2011
124. Initial Idea & Market Opportunity Estimate Total available market• Our invented nanogrids™(c) for environmentaltechnology offers inexpensive, nanotechnologiesextremely fast and efficient 2010: $6.1bhydrocarbon decomposition 2014: $21.8b (projected)• It has potential uses in oildecomposition/ environmental Served Available Marketremediation environmental remediation 40% of total market• Focus on Gulf Oil Spill clean-up efforts Target Market $8b Ref: F. Boehm, Nanotechnology in Environmental Applications, BCC Research, 2006; NOAA, Gulf Spill Restoration, 2011 (c) copyright 2011
125. Team Members PI: PerenaGouma, tenured Associate Professor, Dept of Materials Science & Engineering, SUNY Stony Brook; Director of Center for Nanomaterials& Sensor Development; Fulbright Scholar and NSF grantee since 2002. Has published over 100 research articles on ceramic nanomaterials and their functional applications; she holds 4 US patents Lead: Jusang Lee, doctoral candidate in the PI’s research group; he has published research-based and review papers; he is a co-inventor along with the PI of the nanogrids™ technology Mentor: Clive Clayton, founder Director of the SPIR program at SUNY; Leading Professor in Materials Science & Engineering, SUNY Stony Brook; Fellow of the Electrochemical Society; serving on advisory board of BASF’s Rensselaer NY Ecology Center
127. So, Here’s What We Did TESTED THE CUSTOMER SEGMENTS HYPOTHESISCompany Contact Person Lessons LearnedDow Chemical Ventures Steve Hahn To focus on water cleaning systems; efficiency of catalyst is the key featureOceanside Water Pollution AlexandreMiot To focus on petroleum-based contamination;Control Plant, SF, CA) skimmingEastern Environmental Deb Engelhardt, Current practices: spill tech pads; Regen OxSolutions, Inc (LI, NY) Louis Bascelli, (oxidizer) Joseph NapoliMiller Environmental (LI, NY) Dave Reardon Got suggestions for pilot studies; projects cost vary a lotDEC (region 1, NY) Karen Gomez State environmental regulations; contractorsEco-Test Babylon (LI, NY) Thomas Powell Water quality testing procedures and EPA standardsGES Edward Savarese Current practice: pump and treat; geologists org. contactDavid Tonjes DT&S-SBU; Customer is the Env. Engineer consultantWRS environmental; Environtrac Front desk Talked to their R&D people(LI, NY) personnel
129. Here’s What We Found Target Market: Petroleum-Oil Polluted Water Remediation• Industry is excited about innovative products/solutions• Problems are diverse; Common pollutants: gasoline, fuels• Makes no sense to directly sell and ship our products• Need to identify distributors and partner with them• No Leasing• Our competitive advantage could be that we offer fast remediation solutions
131. So, Here’s What We Did ASSESSED THE MARKET TYPE Talked to Dealers of Environmental Remediation Products ECS Environmental Approached Key Distributors Compliance (MA) Talked to Remediation Specialists in Numerous AECOM (MA) Remediation Companies We Went on a Field Study to Eyewitness the Kerfoot Challenges Associated with Remediating Technologies, Inc Underground Oil Spills (MA) EnviroTrac (LI, NY) BKW Environmental (TX/PA) Advanced Environmental Solutions (MA)
132. So, Here’s What We Found NewProduct for Niche Segment of Existing Market• Remediation treatments of petroleum-oil contaminated water almost leave residual hydrocarbon contamination levels that prevent the disposal of the remediated water to the environment• Our nanocatalystscan be used to fully remediate hydrocarbonsand to provide clean water• However, is there a sizeable market for our technology?• What is it?• Does the size of the opportunity make it worth pursuing it further?
134. So, Here’s What We Did Packaging Options & Cost of Manufacturing•Came up with differentPackaging Options for our product• Contacted 30 Potential Customers about our product• Tried to Recruit Members for IAB• Calculated the Cost of In-House Manufacturing• Produced a Revenue Model for Our Company Packaging options •Rolls of fabric-like material • Blankets • Pads /mats
135. So, Here’s What We Found Industry likes our product and pricingOur Product* Estimated Cost ExistingProductinMarketRolls of fabric-like material (Sold $10 U***per square foot) Oil Absorbent $ 20Blankets (3x2 .5 feet) $50 P***Oil-Only Weighted Absorbent Blanket $ 112Pads mat for small spill (15" x $30 B*** INDUSTRIES Buff Oil Absorb Pads18“) $ 51* Our product description:• new nanotechnology that collects & decomposes oil in water, in-situ• It can hold oil up to 20 times its weight, floats in water, and uses sunlight tobreak down hydrocarbons into eco friendly products
136. Industry Expert/Customer Testimonials“I feel your purchase prices are too high for the mass of the remediationmarket. For a massive spill of 100,000 gallons or more, the cost wouldcompare unfavorable with skimming and transporting for reclamation.For small spills your product is in competition with the cost of conventionalabsorbents plus landfill disposal. In this case, your $10 per sq. foot compareswith $10-16 per ton landfill disposal.”Dan Gray, Hepaco Inc., Tucker, GA.“I think that the pricing is right on, I think it shouldn’t be very difficult to sell thefabric, especially since its eco-friendly.Would these then, in theory, be able to be thrown in the trash along with MSW?Here on LI most of our garbage is burned, what type of off gasses areproduced when these are incinerated?Also, would this product work on water/ocean/river spills?”James Cressy, Project Manager, Impact Environmental
138. So, Here’s What We FoundProduced Water Added Key Customer Segment “Produced water”: Discharged in off-shore oil-producing areas Fracking creates large amounts of wastewater Current energy exploration and extraction in US creates 15-20 billion barrels of produced water / year Worldwide, estimates top 50 billion barrels Energy companies pay between $3 – $12 to dispose of each barrel of produced waterWHAT IS BTEX?BTEX is the abbreviation used Produced water is usually treated to remove most free oilfor four compounds found inpetroleum products. The compounds are benzene, Need to treat the remaining amount of soluble andtoluene, ethylbenzene, and volatile petroleum hydrocarbonsxylenes. BTEX average concentration remaining about 5mg/L Allowable limit of BTEX in drinking water 5mg/L
140. What is the Problem We Solve?• Our product can contain the volatile petroleum hydrocarbons (e.g. benzene) and subsequently decompose them either in-situ or off-site• It can be used as the final remediation step in the “produced water” clean up• It can, in principle, turn “produced water” from wastewater to drinkable water while treating on-site• New legislation expected to cancel the Energy Industry’s exception from the Clean Water Act, thus favoring “new, self-contained, on-site water treatment”• The current market for treating produced water is estimated to exceed $4.3 billionfor next 5 years
144. Revenue model diagramFirst year revenues:20 SME of $100,000 sales/year= $2M2 LC of $1M /year =$2M 60first year revenues : $4MSecond year revenues:75% retention of SME 5015 SME of $150,000 sales/year= $2.25M2 LC: $5M sales/yearsecond year revenues $7,25M 40 ($M)Third year revenues:maintain the domestic levels with existingcustomers but expand international sales 30to $3.5MThis will set us over $10M 20Fourth year revenues:Add new line of products for existingmarket; expand into adjacent markets(off-site remediation; water purification; 10etc)Revenues to reach $50M 0 Year 1 Year 2 Year 3 Year 4
145. What’s Next The PI and Lead are forming a company (C-corp) The mentor will maintain advisory role Ongoing negotiations for exclusive licensing of IP in progress Seek seed funding from investors, VCs, SBIR, SUNY’s economic development office, NYSERDA Explore interactions with Pall and Siemens Water Technologies on developing integrated solutions/licensing IP Explore opportunities for women-owned businesses Disseminate core principles learned into the University’s incubator program through mentor’s efforts
146. Stony Brook University Office of Technology Licensing and Industry Relations The Office of Technology Licensing and Industry Relations (OTLIR) is an entity of the Research Foundation for State University of New York, which manages the intellectual property for esteemed SUNY faculty members and acts a liaison for academic-industry interactions. Exclusive License General Terms: Clearly defined field of use Diligence milestones for compliance and assurance of commercialization Up-front payment Patent cost reimbursement Financial milestone payments based on product sales and commercial milestones Sublicensing and Assignment terms Limitations on liability including insurance and indemnification
147. Total Customers Contacted: 86 RIT NSF ICORPS Dec 14 2011 163
148. Initial Business ConceptGlobal lighting industry - $100B LED lighting - $6B, CAGR>40% Enhanced cooling allows LED Replacement • Higher lumen output Lamps • Higher light quality ~500 million sockets • Better reliability * $15/lamp = ~$750M RIT NSF ICORPS Dec 14 2011 164
149. Principal Investigator Mentor Dr. Satish Kandlikar Dr. Suresh Sunderrajan Gleason Professor President, NNCrystal Corp. Mech. Engg., RIT Entrepreneurial co-Lead Entrepreneurial co-Lead AnkitKalani KirthanaKripashMS Engineering (Candidate) RIT MBA (Candidate), RIT Kandlikar and RIT Team – NSF I-Corps
150. Kandlikar and RIT Team – NSF I-Corps
151. Customers Channels Key Partners “We are willing to wait 5 to 7 years for the price to fall “If you bring us a before we adopt modular thermal this technology on system that provides a wide scale. ” better cooling at lower cost, we would definitely want to explore this technology. Kandlikar and RIT Team – NSF I-Corps
152. Other Components Arka provides replacement lamps Arka Lights •LEDarray, Lampcomponents Luminaire •LED luminaires Manufacturers and Fixtures Distributor Contractor Project/Owner
153. Customers Distribution and Supply : The customer is • We lack inunwilling to buy the product Lamp/Luminaire productionatcurrent prices : The final consumer • OEMs were interested inis highly dependent on incorporating our enhancedGatekeepers (suppliers) for thermal module in theirguidance in product choice product We had to pivot! Kandlikar and RIT Team – NSF I-Corps
154. Arka Lights Arka provides Thermal Modules OEMs • LED luminaires and Fixtures Other DistributorComponents Contractor Project/Owner • Institutions, Home Owners, Distributors
155. Customers Environment Key Partners We would like to enter into a partnership toHeat Exchanger develop heat Manufacturer pipe based products.
156. • Our competencies lay primarily in the heat pipe industry• The most encouragement came from a heat exchanger manufacturer who is looking to expand his product line.• Our Business Model iterated; we will now focus on heat pipe based solutions in diverse applications. Kandlikar and RIT Team – NSF I-Corps
157. Commercial PAR 38 Arka Prototype 52 °C (max) 37 °C (max)• Arka prototype runs 15 C cooler, allowing more LED placement per lamp• Prototype delivers 100 % more lumens for the same form factor• ~30% lower cost/unit for similar lumen output• The weight of Par38 is 65 percent lower, and the manufacturing cost is $4.50 (current module costs about $2.20) RIT NSF ICORPS Dec 14 2011 174
159. • Negotiations with Heat Exchanger Manufacturer (HEM) ongoing.• Arka provides::IP, heat transfer expertise, design• HEM provides: Manufacturing, distribution and sales channels• Arka will be proactivein exploring other market opportunities. – Additional revenue/cost models will be explored using the methodology of this class Kandlikar and RIT Team – NSF I-Corps
160. • The Process: – Iterations occur organicallywhen you respond to market and consumer needs. – Explore unconventional opportunities, be OPEN, and be aware that potential partners may be sitting next to you in a plane. I probably met my future prototyping partner on my way to Stanford.• The Market: – Understand your customers, channels and partners – It’s about money – customer’s, partner’s and yours – respect that without forgetting your core values. Kandlikar and RIT Team – NSF I-Corps
161. • Most Valuable Game Changers – Your Students! – Recognize the innovative potential of your student – Guide them to pursue commercialization: from their mom’s gardening business to successful technological products – Motivate your students – Be ENABLERS. You can shine on your own, but you can “nucleate” many more stars.• Most Valuable Assets – Your Ideas and Your Drive – Dream of Possibilities – And then make them HAPPEN – you will know how by simply GETTING STARTED Kandlikar and RIT Team – NSF I-Corps
162. – Show innovativeness– Integration of Student education on commercialization– Hope to get NSF implementation grant for RIT curriculum– Hope to be NSF face on commercialization initiative– Create a start-up and be successful (really start a heat pipe company)
163. • What I hoped to learn. – To be involved in a grant based project from start to finish – Understanding the needs and requirement of product development ( from research lab to an actual product)• What I learnt. – What entrepreneurship really means – How to talk and listen to ‘actual’ customers – Understanding requirements for a start-up not just product development – Presentation improvement skills – Planning and working to meet deadlines – Being flexible and responsive to feedback
164. • What I hoped to learn: – How to understand and facilitate the technology commercialization process – How to work with technical teams – Student and University based technology commercialization and resources – If academic training in entrepreneurship translates in the real world.• What I learnt: – Working with a idea at the nascent stage while incorporating customer feedback allows room for easier growth and modification – Concepts and Theories do not convert easily to product features. Prototyping from paper to product takes time, effort and an ability to improvise.
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174. How to Build A Startup Idea Business Model Size Opportunity Customer Development
175. How to Build A Startup Business Size of the Customer CustomerIdea Model(s) Opportunity Discovery Validation
176. How to Build A Startup Size of the Business Size of the Business Customer CustomerIdea Opportunity Model(s) Opportunity Model(s) Discovery Validation Theory Practice
177. How to Build A Startup Size of the Business Size of the Business Customer CustomerIdea Opportunity Model(s) Opportunity Model(s) Discovery Validation
178. How to Build A Startup Size of the Business Size of the Business Customer CustomerIdea Opportunity Model(s) Opportunity Model(s) Discovery Validation • First test the problem • Next test the solution
179. How to Build A Startup Size of the Business Size of the Business Customer CustomerIdea Opportunity Model(s) Opportunity Model(s) Discovery Validation
180. More in theBest Practices Workshop Tonight – 7pm
181. Part 4How Big is This Opportunity?
182. Market/Opportunity AnalysisHow Big is It?: Market/Opportunity Analysis – Identify a Customer and Market Need – Size the Market – Competitors – Growth Potential
183. How Big is the Pie? Total Available Market • How many people would want/need the product? • How large is the market be (in $’s) if they all bought?Total Available Market • How many units would that be? How Do I Find Out? • Industry Analysts – Gartner, Forrester • Wall Street Analysts – Goldman, Morgan
184. How Big is My Slice? Served Available Market • How many people need/can use product? • How many people have the money to buy the product Total • How large would the market be (in $’s)Available Served if they all bought? Market Available • How many units would that be? Market How Do I Find Out? • Talk to potential customers
185. How Much Can I Eat? Target Market • Who am I going to sell to in year 1, 2 & 3? • How many customers is that? • How large is the market be (in $’s) if they all bought? Total Served • How many units would that be?Available Available Market Market Target Market How Do I Find Out? • Talk to potential customers • Identify and talk to channel partners • Identify and talk to competitors
186. Market Size: Summary• Market Size Questions: – How big can this market be? – How much of it can we get? – Market growth rate – Market structure (Mature or in flux?)• Most important: Talk to Customers and Sales Channel• Next important: Market size by competitive approximation – Wall Street analyst reports are great• And : Market research firms Like Forester, Gartner
187. Team Deliverable by Tomorrow• Hypotheses for each part of business model• Test for each of the hypotheses – What constitutes a pass/fail signal for the test (e.g. at what point would you say your hypotheses wasn’t even close to correct?• Plan to get out of the building to test the hypotheses• Summarized in a 5 Minute PowerPoint Presentation – Business Model Canvas – Market Size – Getting out of the building plan Don’t Over Think Your Hypotheses