The Lean LaunchPadLecture 1: Business Models and    Customer Development            Steve Blank            Jon Feiber     ...
Agenda1.   What we used to believe / What we now know2.   Business Models and Customer Development3.   Examples4.   Market...
Part 1What We Used to Believe What We Now Know
What We Used to Believe
Startups are a Smaller Version     of a Large Company
What We Now Know
Startups SearchCompanies Execute
What We Used to Believe        Strategy
Start With an Operating Plan    and Financial Model
All I Need to Do is Execute the Plan
All I Need to Do is Make the Forecast
All I Need to Do is Execute the Plan
What We Now Know     Strategy
No Business Plan survives first   contact with customers
Planning comes before the plan
Business Models
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...
Tradition – Hire Sales     Concept/           Product               Alpha/Beta              Launch/    Seed Round         ...
Tradition – Hire Bus Development      Concept         Product                 Alpha/Beta           Launch/                ...
Tradition – Hire Engineering      Concept             Product                 Alpha/Beta             Launch/              ...
Waterfall / Product Management                                    Execution on Two “Knowns”                               ...
Waterfall / Product Management                                    Execution on Two “Knowns”                               ...
What We Now Know     Strategy
More startups fail froma lack of customers than from afailure of product development
Customer Development
Search             ExecutionStrategy    Business Model                                 Operating Plan +              Hypot...
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...
What We Used to Believe       Education
Entrepreneurial Education was       about execution
Entrepreneurial Education was       about execution
What We Now Know    Education
Entrepreneurial Educationbegins with the Search for a      business model
Search                          ExecutionStrategy    Business Model                                              Operating...
Now imagine these classes virtual and networked independent of           location
Putting Search first is a          radical changeIt’s not just one more methodology
What We Used to Believe   Instructional Strategies
Cases and a Business Plan were     good teaching tools
Cases and a Business Plan were     good teaching tools
What We Now KnowInstructional Strategies
Experiential Immersion              ~100 GOOTB connections
Team-based Simulations
Business Model Patterns    Replace Cases                                             Nespresso                            ...
Search                             ExecutionStrategy        Business Model                                                ...
SearchStrategy          Business Model                    HypothesesProcess         Customer Development,                 ...
Search                             ExecutionStrategy          Business Model                                              ...
Part 2 Business Models andCustomer Development
What’s A Company?
What’s A Company?  A business organization which sells aproduct or service in exchange for revenue                 and pro...
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 model
A temporary organization      designed to searchfor a repeatable and scalable       business model
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 becom...
How Does Your ScienceBecome Part of a Company?
Technology Commercialization• IP Licensing (Patent, Process, etc.)• Stand-alone Startup
How Are Companies   Organized?
How Are Companies    Organized?Companies are organized around      Business Models
What’s a Business Model?
Value PropositionWhat Are You Building and For Who?
What About My Technology?
What About My Technology?Your technology is one of the many critical  pieces necessary to build a company.   It is part of...
What About My Technology?Customers don’t care about your technology     They are trying to solve a problem
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
CANVAS OVERLAYKEY        KEY          OFFER         CUSTOMER      CUSTOMERPARTNERS   ACTIVITIES                 RELATIONSH...
But,Realize They’re Hypotheses
9 Guesses                            GuessGuess    Guess                                     Guess                  Guess ...
Business Model Canvas              building               block                                 building                  ...
Turning Hypotheses Into Facts
The Four Steps – The Startup Path        Customer Development
Customer DevelopmentTest the Problem, Then the Solution
Hypotheses Testing and Insight
Customer Development       The Pivot
Customer Development is   how you search for the model        Search                          ExecutionCustomer           ...
Customer Discovery
Web/Mobile Versus Physical                   Customer            Customer                   Discovery           Validation...
Customer Discovery
Customer Validation
CustomerValidation
Part 3How Does this Really Work?
How Does This Really Work?NSF Lean LaunchPad Class10 Weeks From an Idea to a Business
Graphene FrontiersWe are a nanotechnology materialscompany with a proprietary process forproducing high quality, low cost,...
Background: Graphene Applications                “Wonder Material” Graphene• Nano Material Subject of 2010 Nobel Prize in ...
Problem: Lab Scale Not Enough    Graphene Production Must Scale Up to   Commercial Levels before Integration into    Consu...
Solution: Scalable Production ProcessOur Patent-Pending APCVDGraphene Production Process:•Operates at ambient pressure,red...
Market: Size and Growth Nascent Graphene Market is Ready to Explode: Commercial Scale Production will be Catalyst  •   Thi...
Team: Graphene FrontiersEL:Zhengtang Luo, PhD – Chief Science Officer10+ years experience in synthesis of carbonnanomateri...
Recap• Graphene technology will change the world...• …but not until it is available in commercial volumes• We believe that...
What’s Next: Strategy and Roadmap              1H 2012                       2012                        2013+            ...
What’s Next: Secure Partnerships + Investment  Distribution   Active Customer    Manufacturing   Partners       Conversati...
Enter I-Corps: Beginning HypothesesHere’s What We Thought:  – Graphene can be used for just about anything  – All of the b...
So Here’s What We Did…• Research to identify target companies: Build the list   – Web, industry/research reports, personal...
So Here’s What We Did…• Google AdWords Campaign + Survey Monkey    – 3 days, 8,555 Impressions, 34 people clicking through...
So Here’s What We Did…• 48 Companies Engaged, 70+ Conversations:  – Lockheed Martin, GrafTech, Inventables, alphaMOS, Firs...
So Here’s What We Learned…• Atmospheric pressure production is key value-add   – Not “high-quality”, not single-layer• Man...
So Here’s What We Learned…• TEM grids are viable, near term but small market   – Will rely on distribution partner• Displa...
•   R&D                                             • Warranty• Earlyvangelists                                           ...
The Business Model Canvas• Lead Customer                              • R&D                                               ...
The Business Model CanvasEquipment Mfg          Scale up          Low Cost             Education              Thermal Mgmt...
The Business Model CanvasEquipment Mfg          Scale up          Low Cost             Education              Thermal Mgmt...
The Business Model CanvasEquipment Mfg          Scale up          Low Cost               Education              Thermal Mg...
Graphene Frontiers Business Model Canvas – PRIOR VERSION (10.18)                        Scale upEquipment Mfg             ...
This Week:Split, then Pivot
Graphene Frontiers Business Model Canvas “A” Research               Transfer Process                       Academic Papers...
Graphene Frontiers Business Model Canvas “B”                        Scale upEquipment                                 Fold...
Graphene Frontiers Business Model Canvas “B”                        Scale upEquipment                                 Fold...
PHOTOCATALYSTS for WATER      REMEDIATION                  (nanocatalysts)  • Commercialize visible light activated nanoca...
Initial Idea & Market Opportunity Estimate                                                  Total available market• Our in...
Team Members   PI: PerenaGouma, tenured Associate Professor, Dept of Materials    Science & Engineering, SUNY Stony Brook...
Business Model Canvas Version 1                                        Photocatalysts                                     ...
So, Here’s What We Did                     TESTED THE CUSTOMER SEGMENTS HYPOTHESISCompany                          Contact...
Business Model Canvas Version 2                                          Photocatalysts                                   ...
Here’s What We Found     Target Market: Petroleum-Oil Polluted Water Remediation• Industry is excited about innovative pro...
Business Model Canvas Version 3                                        Photocatalysts                    •IP validation   ...
So, Here’s What We Did    ASSESSED THE MARKET TYPE   Talked to Dealers of Environmental Remediation    Products          ...
So, Here’s What We Found                 NewProduct for Niche Segment of Existing Market• Remediation treatments of petrol...
Business Model Canvas Version 4                                            Photocatalysts                               •I...
So, Here’s What We Did     Packaging Options & Cost of Manufacturing•Came up with differentPackaging Options for our produ...
So, Here’s What We Found                                      Industry likes our product and pricingOur Product*          ...
Industry Expert/Customer Testimonials“I feel your purchase prices are too high for the mass of the remediationmarket. For ...
Business Model Canvas Version 5                                           Photocatalysts                              •IP ...
So, Here’s What We FoundProduced Water                                     Added Key Customer Segment                     ...
Turning Wastewater into Drinking WaterReducing benzene contamination by 1000 times!                                       ...
What is the Problem We Solve?• Our product can contain the volatile petroleum hydrocarbons (e.g.  benzene) and subsequentl...
Business Model Canvas Version 6                                           Photocatalysts                              •IP ...
Market Size DiagramGlobal                                             World WaterNanocatalyst Market                      ...
Distribution Channel Diagram                           Distributors                                               Customer...
Revenue model diagramFirst year revenues:20 SME of $100,000 sales/year= $2M2 LC of $1M /year =$2M                         ...
What’s Next The PI and Lead are forming a company (C-corp)   The mentor will maintain advisory role   Ongoing negotiati...
Stony Brook University       Office of Technology Licensing and Industry Relations   The Office of Technology Licensing a...
Total Customers Contacted: 86          RIT NSF ICORPS Dec 14 2011   163
Initial Business ConceptGlobal lighting industry - $100B       LED lighting - $6B, CAGR>40%                               ...
Principal Investigator                                Mentor           Dr. Satish Kandlikar                 Dr. Suresh Sun...
Kandlikar and RIT Team – NSF I-Corps
Customers                Channels              Key Partners “We are willing to  wait 5 to 7 years for the price to fall   ...
Other Components                                      Arka provides                                              replaceme...
Customers                  Distribution and Supply    : The customer is          • We lack        inunwilling to buy the p...
Arka Lights                             Arka provides                                               Thermal Modules       ...
Customers             Environment   Key Partners                  We would like                  to enter into a          ...
• Our competencies lay primarily in the heat  pipe industry• The most encouragement came from a heat  exchanger manufactur...
Commercial PAR 38                          Arka Prototype  52 °C (max)                                                    ...
Design       ArkaSources and                    Heat Exchanger Technical    Lights            Manufacturer  Experts       ...
• Negotiations with Heat Exchanger Manufacturer  (HEM) ongoing.• Arka provides::IP, heat transfer expertise, design• HEM p...
• The Process:  – Iterations occur organicallywhen you respond to    market and consumer needs.  – Explore unconventional ...
• Most Valuable Game Changers – Your Students!   – Recognize the innovative potential of your student   – Guide them to pu...
–   Show innovativeness–   Integration of Student education on commercialization–   Hope to get NSF implementation grant f...
• What I hoped to learn.  – To be involved in a grant based project from start to finish  – Understanding the needs and re...
• What I hoped to learn:   – How to understand and facilitate the technology commercialization     process   – How to work...
Week 1 - 9
Business Canvas -
Business Canvas -
Business Canvas -
Business Canvas -
Business Canvas -
Business Canvas -
Business Canvas -
Business Canvas -
How to Build A Startup             Idea        Business Model       Size Opportunity    Customer Development
How to Build A Startup        Business   Size of the   Customer    CustomerIdea    Model(s)   Opportunity   Discovery   Va...
How to Build A Startup        Size of the         Business     Size of the                       Business     Customer    ...
How to Build A Startup       Size of the        Business     Size of the                      Business     Customer    Cus...
How to Build A Startup              Size of the               Business      Size of the                              Busin...
How to Build A Startup       Size of the        Business     Size of the                      Business     Customer    Cus...
More in theBest Practices Workshop      Tonight – 7pm
Part 4How Big is This Opportunity?
Market/Opportunity AnalysisHow Big is It?: Market/Opportunity Analysis  – Identify a Customer and Market Need  – Size the ...
How Big is the Pie?              Total Available Market                       • How many people would want/need           ...
How Big is My Slice?                Served Available Market                        • How many people need/can use product?...
How Much Can I Eat?                            Target Market                               • Who am I going to sell to in ...
Market Size: Summary• Market Size Questions:  – How big can this market be?  – How much of it can we get?   – Market growt...
Team Deliverable by Tomorrow•   Hypotheses for each part of business model•   Test for each of the hypotheses    –    What...
Lecture 1 NSF I-Corps March 2012 bus model cust dev
Lecture 1 NSF I-Corps March 2012 bus model cust dev
Lecture 1 NSF I-Corps March 2012 bus model cust dev
Lecture 1 NSF I-Corps March 2012 bus model cust dev
Lecture 1 NSF I-Corps March 2012 bus model cust dev
Lecture 1 NSF I-Corps March 2012 bus model cust dev
Lecture 1 NSF I-Corps March 2012 bus model cust dev
Lecture 1 NSF I-Corps March 2012 bus model cust dev
Lecture 1 NSF I-Corps March 2012 bus model cust dev
Lecture 1 NSF I-Corps March 2012 bus model cust dev
Lecture 1 NSF I-Corps March 2012 bus model cust dev
Lecture 1 NSF I-Corps March 2012 bus model cust dev
Lecture 1 NSF I-Corps March 2012 bus model cust dev
Lecture 1 NSF I-Corps March 2012 bus model cust dev
Lecture 1 NSF I-Corps March 2012 bus model cust dev
Lecture 1 NSF I-Corps March 2012 bus model cust dev
Lecture 1 NSF I-Corps March 2012 bus model cust dev
Lecture 1 NSF I-Corps March 2012 bus model cust dev
Lecture 1 NSF I-Corps March 2012 bus model cust dev
Lecture 1 NSF I-Corps March 2012 bus model cust dev
Lecture 1 NSF I-Corps March 2012 bus model cust dev
Lecture 1 NSF I-Corps March 2012 bus model cust dev
Lecture 1 NSF I-Corps March 2012 bus model cust dev
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  • 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
  • Rock Stars.
  • 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
  • --Not successful: AdWords--Very successful: Luck!!
  • The numbers
  • 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?
  • Lecture 1 NSF I-Corps March 2012 bus model cust dev

    1. 1. The Lean LaunchPadLecture 1: Business Models and Customer Development Steve Blank Jon Feiber Jon Burke Jerry Engel #leanlaunchpad
    2. 2. Agenda1. What we used to believe / What we now know2. Business Models and Customer Development3. Examples4. Market Size5. For tomorrow
    3. 3. Part 1What We Used to Believe What We Now Know
    4. 4. What We Used to Believe
    5. 5. Startups are a Smaller Version of a Large Company
    6. 6. What We Now Know
    7. 7. Startups SearchCompanies Execute
    8. 8. What We Used to Believe Strategy
    9. 9. Start With an Operating Plan and Financial Model
    10. 10. All I Need to Do is Execute the Plan
    11. 11. All I Need to Do is Make the Forecast
    12. 12. All I Need to Do is Execute the Plan
    13. 13. What We Now Know Strategy
    14. 14. No Business Plan survives first contact with customers
    15. 15. Planning comes before the plan
    16. 16. Business Models
    17. 17. Business Models
    18. 18. Search Execution Business Model Operating Plan +Strategy Hypotheses Financial Model
    19. 19. What We Used to Believe Process
    20. 20. We Built Startups byManaging Processes Product Management + Waterfall Engineering
    21. 21. Product Introduction Model Concept/ Product Alpha/Beta Launch/Seed Round Dev. Test 1st Ship
    22. 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. 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. 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. 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. 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. 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. 28. What We Now Know Strategy
    29. 29. More startups fail froma lack of customers than from afailure of product development
    30. 30. Customer Development
    31. 31. Search ExecutionStrategy Business Model Operating Plan + Hypotheses Financial ModelProcess Customer & Product Management & Waterfall Agile Development Development
    32. 32. What We Used to Believe Organization
    33. 33. Hire and Build aFunctional Organization
    34. 34. What We Now Know Organization
    35. 35. Founders run a Customer Development TeamNo sales, marketing and business development
    36. 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. 37. What We Used to Believe Education
    38. 38. Entrepreneurial Education was about execution
    39. 39. Entrepreneurial Education was about execution
    40. 40. What We Now Know Education
    41. 41. Entrepreneurial Educationbegins with the Search for a business model
    42. 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. 43. Now imagine these classes virtual and networked independent of location
    44. 44. Putting Search first is a radical changeIt’s not just one more methodology
    45. 45. What We Used to Believe Instructional Strategies
    46. 46. Cases and a Business Plan were good teaching tools
    47. 47. Cases and a Business Plan were good teaching tools
    48. 48. What We Now KnowInstructional Strategies
    49. 49. Experiential Immersion ~100 GOOTB connections
    50. 50. Team-based Simulations
    51. 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. 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. 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. 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. 55. Part 2 Business Models andCustomer Development
    56. 56. What’s A Company?
    57. 57. What’s A Company? A business organization which sells aproduct or service in exchange for revenue and profit
    58. 58. What’s A Startup?
    59. 59. A temporary organization designed to searchfor a repeatable and scalable business model
    60. 60. A temporary organization designed to searchfor a repeatable and scalable business model
    61. 61. A temporary organization designed to searchfor a repeatable and scalable business model
    62. 62. A temporary organization designed to searchfor a repeatable and scalable business model
    63. 63. A temporary organization designed to searchfor a repeatable and scalable business modelA Startup aims to become a company
    64. 64. How Does Your ScienceBecome Part of a Company?
    65. 65. Technology Commercialization• IP Licensing (Patent, Process, etc.)• Stand-alone Startup
    66. 66. How Are Companies Organized?
    67. 67. How Are Companies Organized?Companies are organized around Business Models
    68. 68. What’s a Business Model?
    69. 69. Value PropositionWhat Are You Building and For Who?
    70. 70. What About My Technology?
    71. 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. 72. What About My Technology?Customers don’t care about your technology They are trying to solve a problem
    73. 73. Customer Segments Who Are They? Why Would They Buy?
    74. 74. ChannelsHow does your Product Get to Customers?
    75. 75. Customer RelationshipsHow do you Get, Keep and Grow Customers?
    76. 76. Revenue StreamsHow do you Make Money?
    77. 77. Key ResourcesWhat are your most important Assets?
    78. 78. Key PartnersWho are your Partners and Suppliers?
    79. 79. Key ActivitiesWhat’s Most Important for the Business?
    80. 80. Cost StructureWhat are the Costs and Expenses
    81. 81. CANVAS OVERLAYKEY KEY OFFER CUSTOMER CUSTOMERPARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS KEY CHANNELS RESOURCESCOST STRUCTURE REVENUE STREAMS images by JAM
    82. 82. But,Realize They’re Hypotheses
    83. 83. 9 Guesses GuessGuess Guess Guess Guess Guess Guess Guess Guess
    84. 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. 85. Turning Hypotheses Into Facts
    86. 86. The Four Steps – The Startup Path Customer Development
    87. 87. Customer DevelopmentTest the Problem, Then the Solution
    88. 88. Hypotheses Testing and Insight
    89. 89. Customer Development The Pivot
    90. 90. Customer Development is how you search for the model Search ExecutionCustomer Customer Customer CompanyDiscovery Validation Creation Building Pivot
    91. 91. Customer Discovery
    92. 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. 93. Customer Discovery
    94. 94. Customer Validation
    95. 95. CustomerValidation
    96. 96. Part 3How Does this Really Work?
    97. 97. How Does This Really Work?NSF Lean LaunchPad Class10 Weeks From an Idea to a Business
    98. 98. Graphene FrontiersWe are a nanotechnology materialscompany with a proprietary process forproducing high quality, low cost, largearea graphene films at commercial scale
    99. 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. 100. Problem: Lab Scale Not Enough Graphene Production Must Scale Up to Commercial Levels before Integration into Consumer Products Becomes a Reality…
    101. 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. 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. 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. 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. 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. 106. What’s Next: Secure Partnerships + Investment Distribution Active Customer Manufacturing Partners Conversations Partners Seed Investment Needed
    107. 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. 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. 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
    110. 110. So Here’s What We Did…• 48 Companies Engaged, 70+ Conversations: – Lockheed Martin, GrafTech, Inventables, alphaMOS, FirstNano, Pannam Imaging, FujiFilm, Solutia, Dontech, Tramonto Circuits, Adamant Technologies, Intel, XG Sciences, Graphene Technologies, Densitron, Hotatouch, Touch International, Magic Touch, NJY Technology, Pangea Ventures, Display Search, Dow, DuPont, 3M, Corning, BASF, WL Gore, Morgan AM&T, Plextronics, SPI Supplies, New Metals and Chemicals, G.E., Innovalight, Siemens, Nelson-Miller, Essilor USA, Nexans, E-ink, Gamma Dynamics, Plastic Logic, Cabot Corporation, Thin Diamond, Knighthawk Engineering, Kopietz Consulting, DISPLAX, NineSigma, Evaporated Coatings, LiquaVista• 80 LLL Posts, 61 Comments/Responses – 79% comments positive or factual, 21% “Constructive”
    111. 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. 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. 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. 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. 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. 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. 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. 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. 119. This Week:Split, then Pivot
    120. 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. 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. 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. 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. 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. 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
    126. 126. Business Model Canvas Version 1 Photocatalysts •New product •Water remediation •IP validation (replaces toxic •Expanding their companies •Building a brand surfactants) services •Coast Guard •Pilot studies•Industrial nano- •Green •Continuous/long •Shipping •Marketingmanufacturing Photochemistry term industry •Distributionproviders • Fully •As-needed leasing •Refineries decomposes oil •Oil service industry•Suppliers of •No energy cost •EPAprecursor to use •Federal groups onmaterial •IP protection •Speed of remediation • R&D capability deployment •Individual / •Direct sales home use •Brand •Recoverable and/or leasing •Expertise •Customization (e.g. pool cleaning) •Partner •Risk reduction distribution •Convenience/us channels ability •Shipping •Sale of nanogrids™ © per square foot •Per use charge (leased) •Marketing • First to market; premium revenues •Licensing other IP (c) copyright 2011
    127. 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
    128. 128. Business Model Canvas Version 2 Photocatalysts •Water remediation •Expanding companies •IP validation •New product their services •Green •Coast Guard •Building a brand •Continuous/l • Decomposes oil •Shipping•Industrial nano- •Pilot studies ong term •No energy cost industrymanufacturing •Marketing to use •Refineriesproviders •Distribution •As-needed •Recoverable •Oil service industry leasing •Customization •EPA•Suppliers of •Risk reduction •Federal groups onprecursor remediationmaterial •IP protection •Partner •Individual / • R&D capability distribution home use •Brand •Speed of channels (e.g. pool cleaning) •Expertise deployment •Direct sales •Remediation of and/or leasing petroleum-based oil-polluted water •Marketing •Shipping •Sale of nanogrids™ © per square foot • First to market; premium revenues •R&D costs •Licensing other IP •Per use charge (leased)
    129. 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
    130. 130. Business Model Canvas Version 3 Photocatalysts •IP validation • New Product •Building a brand •Expanding their services •Pilot Studies•Industrial nano- •Green •Remediationmanufacturing •Marketing •Continuous/lo of Petroleum-providers • Decomposes oil ng term •Distribution based oil polluted water •No energy cost to use•Suppliers of •Fast Remediationprecursor •IP protection •Partner/other •Recoverablematerial distribution •R&D •Customization channels capability •Risk reduction •Brand •Distributors •Convenience/usabili •Expertise ty •Dealers/Partners •Marketing •Sale of nanogrids™ © per square foot •R&D costs • First to market; premium revenues •Licensing other IP (c) copyright 2011
    131. 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. 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?
    133. 133. Business Model Canvas Version 4 Photocatalysts •IP validation •Building a brand •Expanding • New Product their services •Pilot Studies•Industrial nano- •Green •Remediationmanufacturing •Marketing •Continuous/lo of Petroleum-providers • Decomposes oil ng term based oil polluted water •No energy cost to use•Suppliers of •Fast Remediationprecursor •IP protection •Recoverablematerial •R&D •Customization •Distributors capability •Risk reduction •Brand •Dealers/Partners •Convenience/ •Expertise usability •Marketing •Sale of nanogrids™ © per square foot •R&D costs • First to market; premium revenues •Manufacturing costs •Licensing other IP (c) copyright 2011
    134. 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. 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. 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
    137. 137. Business Model Canvas Version 5 Photocatalysts •IP validation •Building a brand •Expanding • New Product their services •Pilot Studies •Green •Remediation •Marketing •Continuous/lo of Petroleum-•Suppliers of • Decomposes oil ng term based oilprecursor polluted watermaterial •No energy cost to use •Fast Remediation •IP protection •Recoverable •Remediation •Water •R&D capability •Customizationn •Distributors of ”Produced desalination Water” •Risk reduction companies •Brand •Convenience/ •Dealers/Partners •Expertise usability •Marketing •Sale of nanogrids™ © per square foot •R&D costs • First to market; premium revenues •Manufacturing costs •Licensing other IP (c) copyright 2011
    138. 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
    139. 139. Turning Wastewater into Drinking WaterReducing benzene contamination by 1000 times! Nanogrids™ © From 3.5 ppm To 2.4 ppb
    140. 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
    141. 141. Business Model Canvas Version 6 Photocatalysts •IP validation • New Product •Building a brand •Expanding •Remediation their services of Petroleum- •Pilot Studies •Green based oil•Suppliers of •Marketing •Continuous/lo polluted waterprecursor • Decomposes oil ng termmaterial •Distribution •No energy cost to use •Remediation •Fast Remediation •IP protection of ”Produced •Partner/other Water” •Recoverable •Water distribution desalination •R&D capability •Customizationn channels companies •Risk reduction • Filtration •Brand •Distributors •Convenience/ •Expertise usability •Dealers/Partners •Marketing •Sale of nanogrids™ © per square foot •R&D costs • First to market; premium revenues •Manufacturing costs •Licensing other IP
    142. 142. Market Size DiagramGlobal World WaterNanocatalyst Market Treatment Market$6bBy 2015 $48.1b Target Market Filtration /Water Purification Market $8.5b http://www.strategyr.com/Nanocatalysts_Market_Report.asp; World Water Treatment Products to 2015 - Demand and Sales Forecasts, Market Share, Market Size, Market Leaders; thttp://www.wateronline.com/article.mvc/Report-World-Water-Wastewater- Treatment-Marke-0001
    143. 143. Distribution Channel Diagram Distributors Customers Purchasing Individual Dealers/Potential Products PartnersFiltrationIndustry/IntegratedSolutions
    144. 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. 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. 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. 147. Total Customers Contacted: 86 RIT NSF ICORPS Dec 14 2011 163
    148. 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. 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. 150. Kandlikar and RIT Team – NSF I-Corps
    151. 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. 152. Other Components Arka provides replacement lamps Arka Lights •LEDarray, Lampcomponents Luminaire •LED luminaires Manufacturers and Fixtures Distributor Contractor Project/Owner
    153. 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. 154. Arka Lights Arka provides Thermal Modules OEMs • LED luminaires and Fixtures Other DistributorComponents Contractor Project/Owner • Institutions, Home Owners, Distributors
    155. 155. Customers Environment Key Partners We would like to enter into a partnership toHeat Exchanger develop heat Manufacturer pipe based products.
    156. 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. 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
    158. 158. Design ArkaSources and Heat Exchanger Technical Lights Manufacturer Experts Division? Partnership? Market Market …
    159. 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. 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. 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. 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. 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. 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.
    165. 165. Week 1 - 9
    166. 166. Business Canvas -
    167. 167. Business Canvas -
    168. 168. Business Canvas -
    169. 169. Business Canvas -
    170. 170. Business Canvas -
    171. 171. Business Canvas -
    172. 172. Business Canvas -
    173. 173. Business Canvas -
    174. 174. How to Build A Startup Idea Business Model Size Opportunity Customer Development
    175. 175. How to Build A Startup Business Size of the Customer CustomerIdea Model(s) Opportunity Discovery Validation
    176. 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. 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. 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. 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. 180. More in theBest Practices Workshop Tonight – 7pm
    181. 181. Part 4How Big is This Opportunity?
    182. 182. Market/Opportunity AnalysisHow Big is It?: Market/Opportunity Analysis – Identify a Customer and Market Need – Size the Market – Competitors – Growth Potential
    183. 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. 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. 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. 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. 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
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