1. Crossing the Rubicon:
Entrepreneurial education at the
crossroads
Steve Blank
www.steveblank.com
@sgblank

2. We’ve learned a lot about
entrepreneurship

3. Perhaps our curriculums should
reflect what we’ve learned?

4. Agenda
1. What we used to believe / What we now know
2. Business Models and Customer Development
3. Class Example
4. The Evolution of the Curriculum

5. Part 1
What We Used to Believe
What We Now Know

6. What We Used to Believe

7. There is one type of startup and
entrepreneur

8. What We Now Know

9. Lifestyle Startups
Work to Live their Passion
Startup
• Serve known customer with
known product
• Work for their passion

10. Small Business Startups
Work to Feed the Family
Small
Startup
Business
• Serve known customer with
known product
• Feed the family

11. Small Business Startups
Work to Feed the Family
Small
Startup
Business
Exit Criteria
• known customer - Business Model found
known product
- Profitable business
• Feed the family
- Existing team
< $500K in revenue
- Not venture-backable

12. Social Entrepreneurship Startups
Social Large
Startup Non-Profit
• Solve pressing social problems
• Social Enterprise: Profitable
• Social Innovation: New Strategies
• Not venture-backable

13. Scalable Startup
Born to Be Big
Search Execute
Scalable Large
Startup Company
Goal is to solve for:
unknown customer and
unknown features

14. Scalable Startup
Search Execute
Scalable Large
Startup Company
Goal is to solve for: Exit Criteria
unknown customer and - Business model found
unknown features - Total Available Market > $500m
- Can grow to>$100m/year
- Can be Venture capital funded

15. Buyable Startup
Search Sell
Scalable $2 to $50M
Startup Acquisition
Goal is to solve for: - Sell to larger company
Internet, Mobile, Gaming Apps - Angel or early stage VC

16. Large Company Sustaining Innovation
Innovate or Evaporate
Sustaining Innovation
Scalable Large
Transition
Startup Company
• Existing Market / Known customer
•Known product feature needs

17. Large Company Disruptive Innovation
New Large
Transition
Division Company
Disruptive Innovation
•New Market
•New tech, customers, channels

18. Large Company Disruptive Innovation
Large
New Division Transition
Company
Disruptive Innovation
•Build
•Partner
•Acquire
- IP
- Talent
- Product
- Customers
- Business

19. What We Used to Believe

20. Startups are About Vision & Ideas

21. What We Now Know

22. Most visions are hallucinations

23. What We Used to Believe

24. Startups are a Smaller Version
of a Large Company

25. What We Now Know

26. Startups Search
Companies Execute

27. What We Used to Believe
Strategy

28. Start With an Operating Plan
and Financial Model

29. All I Need to Do is Execute the Plan

30. All I Need to Do is and Make the
Forecast

31. All I Need to Do is Execute the Plan

32. What We Now Know
Strategy

33. No Business Plan survives first
contact with customers

34. Planning comes before the plan

35. Business Models

36. Business Models

37. Search Execution
Business Model Operating Plan +
Strategy
Hypotheses Financial Model

38. What We Used to Believe
Process

39. We Built Startups by
Managing Processes
Product Management
+
Waterfall Engineering

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

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

42. Tradition – Hire Sales
Concept/ Product Alpha/Beta Launch/
Seed Round 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
Sales • Hire 1st Sales Staff Organization

43. 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 FCS
Development Bus Dev

44. 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 FCS
Development Bus Dev
Engineering • Write MRD • Waterfall • Q/A •Tech Pubs

45. Waterfall / Product Management
Execution on Two “Knowns”
Requirements
Product Features: known
Design
Implementation
Verification
Customer Problem: known Maintenance
Source: Eric Ries
http://startuplessonslearned.blogspot.com

46. Waterfall / Product Management
Execution on Two “Knowns”
Requirements
Product Features: known
Design
Implementation
Verification
Customer Problem: known Maintenance
Source: Eric Ries
http://startuplessonslearned.blogspot.com

47. What We Now Know
Strategy

48. More startups fail from
a lack of customers than from a
failure of product development

49. Startups go from failure to failure

50. Startups go from failure to failure
The ones that win are those that
learn from failure

51. Customer Development

52. Search Execution
Strategy Business Model
Operating Plan +
Hypotheses
Financial Model
Process Customer & Product Management
& Waterfall
Agile Development Development

53. What We Used to Believe
Organization

54. Hire and Build a
Functional Organization

57. What We Now Know
Organization

58. Founders run a
Customer Development Team
No sales, marketing and business
development

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

60. What We Used to Believe
Education

61. Entrepreneurial Education was
about execution

62. Entrepreneurial Education was
about execution

63. What We Now Know
Education

64. Entrepreneurial Education
begins with the Search for a
business model

65. Search Execution
Strategy Business Model
Operating Plan +
Hypotheses
Financial Model
Process Customer Development, Product Management
Agile Development Agile or Waterfall Development
Organization Customer Development Functional Organization
Team, Founder-driven by Department
Education Creativity/Innovation, Organizational Behavior,
Business Model Design, HR Mgmt, Accounting,
Customer Development, Modeling, Strategy,
Operations, Leadership,
Startup team building,
Marketing, Manufacturing
Entrepreneurial Finance,
Agile Development,
Customer Funnel:
Get/Keep/Grow Market

66. Putting Search first is a
radical change
It’s not just one more methodology

67. What We Used to Believe
Instructional Strategies

68. Cases and a Business Plans were
good entrepreneurial teaching tools

69. Cases and a Business Plan were
good teaching tools

70. What We Now Know
Instructional Strategies

71. Experiential Immersion
~100 GOOTB connections

72. Team-based Simulations

73. Business Model Patterns
Replace Cases
Nespresso
club
production
Nespresso
machines
Nespressopo
ds
distribution
channels Nespresso
.com
production
coffee
facilites
B2C 1 x machine
distribution sales
73

74. Business Model Competitions
Replace Business Plan Competitions

75. Business Model Competitions
Replace Business Plan Competitions
http://www.businessmodelcompetition.com/

76. Now imagine these classes virtual and
networked independent of location

77. Search Execution
Strategy Business Model
Operating Plan +
Hypotheses
Financial Model
Process Customer Development, Product Management
Agile Development Agile or Waterfall Development
Organization
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
Marketing
Instructional Experiential, constructivist, Case, Lecture, Small
Strategies learner-centered, Group, Mentorship
inquiry-based

78. Classes on Entrepreneurial
Execution Follows Search

79. Search
Strategy Business Model
Hypotheses
Process Customer Development,
Agile Development
Organization
Customer Development
Team, Founder-driven
Education Business Model Design,
Customer Development,
Startup team building,
Entrepreneurial Finance,
Agile Development,
Marketing
Instructional Experiential, constructivist,
Strategies learner-centered, inquiry-
based

80. Search Execution
Strategy Business Model
Operating Plan +
Hypotheses
Financial Model
Process Customer Development, Product Management
Agile Development Agile or Waterfall Development
Organization
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
Marketing
Instructional Experiential, constructivist, Case, Lecture, Small Group,
Strategies learner-centered, inquiry- Mentorship
based

81. Part 2
Business Models and
Customer Development

82. What’s A Company?

83. What’s A Company?
A business organization which sells a
product or service in exchange for revenue
and profit

84. What’s A Startup?

85. A temporary organization
designed to search
for a repeatable and scalable
business model

86. A temporary organization
designed to search
for a repeatable and scalable
business model

87. A temporary organization
designed to search
for a repeatable and scalable
business model

88. A temporary organization
designed to search
for a repeatable and scalable
business model

89. A temporary organization
designed to search
for a repeatable and scalable
business model
A Startup aims to become a
company

90. How Are Companies
Organized?

91. How Are Companies
Organized?
Companies are organized around
Business Models

92. What’s a Business Model?

93. What’s a Business Model?

95. Value Proposition
What Are You Building and For Who?

97. What About My
Idea/Technology?

98. What About My
Idea/Technology?
Your idea/ technology is one of the pieces
necessary to build a company.
It is part of the “Value Proposition”

99. Customer Segments
Who Are They?
Why Would They Buy?
What Job are They Trying to Get Done?

101. Channels
How does your Product
Get to Customers?

103. Customer Relationships
How do you Get, Keep and Grow Customers?

105. Revenue Streams
How do you Make Money?

107. Key Resources
What are your most important Assets?

109. Key Partners
Who are your Partners and Suppliers?

111. Key Activities
What’s Most Important for the Business?

113. Cost Structure
What are the Costs and Expenses

115. CANVAS OVERLAY
KEY KEY OFFER CUSTOMER CUSTOMER
PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS
KEY CHANNELS
RESOURCES
COST STRUCTURE REVENUE STREAMS
images by JAM

116. But,
Realize They’re Hypotheses

117. 9 Guesses
Guess
Guess Guess
Guess
Guess
Guess Guess
Guess Guess

118. Business Model Canvas
building
block building
building
building block
block
building block
building block
block
building
building block
building block building
block block
building building building building
block block block block

120. Customer Development

121. Customer Development
The Process for Turning
Hypotheses Into Facts

122. The Four Steps – The Startup Path
Customer Development

124. Customer Development
Test the Problem, Then the Solution

126. Hypotheses Testing and Insight

127. Customer Development
The Pivot

129. Customer Development is
how you search for the model
Search Execution
Customer Customer Customer Company
Discovery Validation Creation Building
Pivot

130. Customer Discovery

131. 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

132. Customer Discovery

133. Customer Validation

134. Customer
Validation

135. Part 3
How Does this Really Work?

136. How Does This Really Work?
Lean LaunchPad Class
8 Weeks From an Idea to a Business

137. Search
Strategy Business Model
Hypotheses
Process Customer Development,
Agile Development
Organization Customer Development
Team, Founder-driven This Class
Education Business Model Design,
Customer Development,
Startup team building,
Entrepreneurial Finance, Agile
Development, Marketing
Instructional Experiential, constructivist,
Strategies learner-centered,
inquiry-based

138. dentalOptics
Amit Desai, Aaswath Raman,
AshwinMadgavkar, AlokVasudev
Revolutionizing dental diagnostics
through non-invasive imaging
Final Presentation
Interviewed: 72 people

139. The A-Team
Amit Desai AshwinMadgavkar Aaswath Raman AlokVasudev
Ph.D., Mat. Sci MBA/M.S. Ph.D., App. Physics Ph.D., EE
Cambridge, BCG, UT Austin Microsoft, Harvard UT Austin
NC State
Mentor: Ethan Bloch
dentalOptics

140. Dental lighting is
ripe for innovation
dentalOptics

141. Original Idea : Inside-Out Dental
Lighting
Bring the light-source
inside the mouth
Provide better, more
consistent illumination
dentalOptics

142. Overview
I. Understanding our Customers
II. Finding Customer & Value Proposition Fit
III. Building the Business:
Channels, Partners & Regulators
IV. Introducing.. periOptics
dentalOptics

143. Overview
I. Understanding our Customers
II. Finding Customer & Value Proposition Fit
III. Building the Business:
Channels, Partners & Regulators
IV. Introducing.. periOptics
dentalOptics

144. Version 0 The A-Team
• Prototyping
• • Personal
• Manufacturers • Design
Improved • Dentists
• diagnostics service
Manufacturing • Hygienists
• Resellers • Marketing • Training &
• Sales • Better • Specialists
customization demos
• Distributors • Service
• Marketers • Superior
patient • Chains
• Trade
• Stanford
experience • Direct sales • Dental
organizations
• Trade schools
• IP • Lower price shows • Hospitals
• Human
• Dental
• Our network
schools
• Human resources • Compliance • Product sales
• Manufacturing • Warranties &
• Marketing support • Licensing (physical & IP)
• Sales • Legal • Accessory sales
dentalOptics

145. Getting out of the building
dentalOptics

146. Three major dentist archetypes
Most typical dentist
• Primarily concerned with patient care
Care
• Worried about costs
providers • Optimizes lifestyle and income
Uses technology to up-sell additional procedures
• Typically in high-income areas
“Bentley”
• State-of-the-art facilities and technologies
dentists • Early adopter of dental devices
Equipment handled by purchasing department
• Uses financial metrics to make decisions
“Chain”
• Technologies standardized across all offices
dentists
dentalOptics

147. Version 0 The A-Team
• Prototyping
• • Personal
• Manufacturers • Design
Improved • Dentists
• Manufacturing diagnostics service
• Hygienists
• Hypotheses
Resellers Tested:
• Marketing • Training &
• Sales • Better • Specialists
customization demos
• Distributors • Service
• Intra-oral lighting
• provides value for all
Marketers • Superior
patient • Chains
dental professionals
• Trade experience • Direct sales • Dental
• Channels • Stanford
organizations
• Trade
• IP • Lower price
schools
shows • Hospitals
• Human
• Dental
• Our network
schools
• Human resources • Compliance • Product sales
• Manufacturing • Warranties &
• Marketing support • Licensing (physical & IP)
• Sales • Legal • Accessory sales
dentalOptics

148. Immediate changes
• Current lighting was satisfactory for most uses
• However dentists expressed interest in better lighting for
particular sets of procedures
dentalOptics

149. Immediate changes
• Current lighting was satisfactory for most uses
• However dentists expressed interest in better lighting for
particular sets of procedures
• Redid customer segmentation:
Segment by Procedure Length
dentalOptics

150. Version 0 The A-Team
• Prototyping
• • Personal
• Manufacturers • Design
Improved • Dentists
• diagnostics service
Manufacturing • Hygienists
• Resellers • Marketing • Training &
• Sales • Better • Specialists
customization demos
• Distributors • Service
• Marketers • Superior
patient • Chains
• Trade
• Stanford
experience • Direct sales • Dental
organizations
• Trade schools
• IP • Lower price shows • Hospitals
• Human
• Dental
• Our network
schools
• Human resources • Compliance • Product sales
• Manufacturing • Warranties &
• Marketing support • Licensing (physical & IP)
• Sales • Legal • Accessory sales
dentalOptics

151. Version 0+ The A-Team
• Prototyping • Personal
• Manufacturers • Design • Improved service • Procedure
• Manufacturing diagnostics • Training & length
• Resellers • Marketing demos
• Sales • Better • Continuing
• Distributors • Service customization education - Short
- Medium
• Marketers • Superior
patient
- Long
• Trade experience
•
• Stanford Direct sales
organizations
• IP • Lower price • Trade
• Human shows
• Our network • Reduced time • Distributor
• Human resources • Compliance • Product sales
• Manufacturing • Warranties &
• Marketing support • Licensing (physical & IP)
• Sales • Legal • Accessory sales
dentalOptics

152. Version 1 The A-Team
• Prototyping • Personal
• Manufacturers • Design • Improved service • Procedure
• Manufacturing diagnostics • Training & length
• Hypothesis
Resellers Tested:
• Marketing demos
• Sales • Better • Continuing
• Distributors • Service customization education - Short
• Lighting needs differ - Medium
• Marketers on procedure
based • Superior
patient
- Long
•
length
Trade experience
organizations • Stanford • Direct sales
• IP • Lower price • Trade
• Human shows
• Our network • Reduced time • Distributor
• Human resources • Compliance • Product sales
• Manufacturing • Warranties &
• Marketing support • Licensing (physical & IP)
• Sales • Legal • Accessory sales
dentalOptics

153. Procedure length learnings
Procedure length Short (< 1 hr)
Moderate
(1-2 hrs)
Long (> 2 hrs)
dentalOptics

154. Procedure length learnings
Procedure length Short (< 1 hr)
Moderate
(1-2 hrs)
Existing lighting solutions
Long (> 2 hrs)  Surgical microscope
 Loupe light
 Clamps
Anesthesia
Patient comfort / movement
no longer an issue
dentalOptics

155. Procedure length learnings
Procedure length Short (< 1 hr)
Identified key procedures:
 Root canals
 Crack detection
Moderate  Color matching
(1-2 hrs)
 Done by all
dentists
Long (> 2 hrs)  Lighting critical
Segment by Procedure Type
dentalOptics

156. Version 1 The A-Team
• Prototyping • Personal
• Manufacturers • Design • Improved service • Procedure
• Manufacturing diagnostics • Training & length
• Resellers • Marketing demos
• Sales • Better • Continuing
• Distributors • Service customization education - Short
- Medium
• Marketers • Superior
patient
- Long
• Trade experience
organizations • Stanford • Direct sales
• IP • Lower price • Trade
• Human shows
• Our network • Reduced time • Distributor
• Human resources • Compliance • Product sales
• Manufacturing • Warranties &
• Marketing support • Licensing (physical & IP)
• Sales • Legal • Accessory sales
dentalOptics

157. Version 1 The A-Team
• Prototyping • Improved • Personal
• Manufacturers • Design diagnostics service • Procedure
• Manufacturing • Training & type
• Resellers • Marketing demos
• Superior - Root canal
• Sales • Continuing
patient
• Distributors • Service education - Crack
experience
detection
• Marketers
• Reduced - Color
• Trade procedure matching
organizations • Stanford time • Direct sales
• IP • Trade
• Human shows
• Our network • Distributor
• Human resources • Compliance • Product sales
• Manufacturing • Warranties &
• Marketing support • Licensing (physical & IP)
• Sales • Legal • Accessory sales
dentalOptics

158. $200 MM/yr US market size
$25 B dental
equipment industry
• 180,000 dentists
• 2300 visits per year average
• Consumable for each patient TAM: $2B
• ~$5 cost per consumable
• 10% of visits
• $0-100 cost per tool
$200 M serviceable
• 20% of dentists
diagnostic tool market
Source: US BLS, ADA, dentist interviews, industry research dentalOptics

159. $200 MM/yr US market size
$25 B dental
equipment industry
• 180,000 dentists
• 2300 visits per year average
• Consumable for each patient TAM: $2B
• ~$5 cost per consumable
• 10% of visits
• $0-100 cost per tool
$200 M serviceable
• 20% of dentists
diagnostic tool market
Consumables are key
Source: US BLS, ADA, dentist interviews, industry research dentalOptics

160. Version 1 The A-Team
• Prototyping • Improved • Personal
• Manufacturers • Design diagnostics service • Procedure
• Manufacturing • Training & type
• Resellers • Marketing demos
• Superior - Root canal
• Sales • Continuing
patient
• Distributors • Service education - Crack
experience
detection
• Marketers
• Reduced - Color
• Trade procedure matching
organizations • Stanford time • Direct sales
• IP • Trade
• Human shows
• Our network • Distributor
Key Learning:
•• Human resources component drastically
Consumable • Compliance • Product sales
• improves revenue potential &
Manufacturing • Warranties • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics

161. Overview
I. Understanding our Customers
II. Finding Customer & Value Proposition Fit
III. Building the Business:
Channels, Partners & Regulators
IV. Introducing.. periOptics
dentalOptics

162. Version 2+ The A-Team
• Prototyping • Improved • Personal
• Manufacturers • Design diagnostics service • Procedure
• Manufacturing • Training & type
• Hypothesis Tested:
Resellers • Marketing
• Superior demos
• Sales • Continuing - Root canal
patient
• Distributors • Service education - Crack
• Lighting needs differ experience
detection
• Marketers on procedure type
based • Reduced - Color
• Trade procedure matching
organizations • Stanford time • Direct sales
• IP • Trade
• Human shows
• Our network • Distributor
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics

163. Segmenting by Procedure Types
Intra-oral light
benefit Procedure
 Increased
visibility in  Root canal
tight spaces
 Reduce
procedure
time
 Multiple teeth  Crack  Dentists
at once detection
 Improve
Diagnostic
Capability
 More natural  Color
light matching
dentalOptics

164. Best response: Transillumination
Intra-oral light
+ imaging benefit Procedure
 Track
crack/defect  Root canal
 Reduce progress
procedure
time
 Multiple teeth  Transillumination  Dentists
 Improve at once for Cracks
Preventative
Diagnostic
Capability
 Proactive
 Color
detection vs.
 Drive patient waiting for matching
loyalty and patient pain
return visits
dentalOptics

165. Prototyping
Transilluminated tooth using fiber or LED source
dentalOptics

166. Prototypes
dentalOptics

167. Form & Function
function form
dentalOptics

168. Physical prototypes help!
• Handing dentists a crude clay mockup got us better, more actionable
feedback
• A great way of gauging whether new functionality satisfies a need
dentalOptics

169. Interest, but not excitement
Dentists generally liked the
prototype Key Takeaways
Dentist #
Imaging back teeth is essential
5
Market would be somewhat
4 limited / niche
3
2
1
None Neutral Very Positive
Interest in prototype
dentalOptics

170. Version 2+ The A-Team
• Prototyping • Improved • Personal
• Manufacturers • Design diagnostics service • Procedure
• Manufacturing • Training & type
• Hypothesis Tested:
Resellers • Marketing
• Superior demos
• Sales • Continuing - Root canal
patient
• Distributors • Service education - Crack
• Lighting needs differ experience
detection
• Marketers on procedure type
based • Reduced - Color
• Trade procedure matching
organizations • Stanford time • Direct sales
• IP • Trade
• Human shows
• Our network • Distributor
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics

171. Version 2+ The A-Team
• Prototyping • Personal
• • Reduced service • Crack
• Manufacturers Design
• Manufacturing procedure • Training &
time
detection
• Resellers • Marketing demos
• Sales • Continuing
• Distributors • Service • Improve education
preventative
• Marketers diagnostics
• Trade • Increase # of
organizations • Stanford • Direct sales
procedures
• IP • Trade
• Human • Provide a shows
• Our network patient record • Distributor
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics

172. Keeping our ear to the ground..
We were tipped off to a potentially larger diagnostic market:
dentalOptics

173. Keeping our ear to the ground..
We were tipped off to a potentially larger diagnostic market:
Non-invasive gum disease
detection
“This would be a game changer!”
“A new standard of care”
dentalOptics

174. This should get poked into your
gums 192 times during a dental
visit
…there must be a better way
dentalOptics

175. Version 2+ The A-Team
• Prototyping • Personal
• • Reduced service • Crack
• Manufacturers Design
• Manufacturing procedure • Training &
time
detection
• Resellers • Marketing demos
• Sales • Continuing
• Distributors • Service • Improve education
preventative
• Periodontal
• Marketers diagnostics
imaging
• Trade • Increase # of
organizations • Stanford • Direct sales
procedures
• IP • Trade
• Human • Provide a showsCustomer Insight:
• Our network patient record • Distributor
• Periodontal
imaging could be
• Human resources • Compliance • Product sales larger market
a
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics

176. Periodontal care right now
Considerable undertreatment
70% of offices don’t regularly do a full
probe test of all teeth! Time & effort
50% of US population has mild-severe
periodontitis, only 5-10% of are
treated
“The number-one reason dentists are
sued is failure to diagnose periodontal
disease”*
30% of patients don’t feel the need for
the recommended treatment*
Increases with aging population
dentalOptics
*K. Esler, Sidekick (2009)

177. Version 3+ The A-Team
• Prototyping • Personal
• Design • Reduced service • Crack
• Manufacturers
• Manufacturing procedure • Training &
time
detection
• Hypothesis Tested:
Resellers • Marketing demos
• Sales • Continuing
• Distributors • Service • Improve education
• Periodontal imaging is of preventative
• Periodontal
• Marketers interest to
greater diagnostics
imaging
•
dentists
Trade • Increase # of
organizations • Stanford • Direct sales
procedures
• IP • Trade
• Human • Provide a shows
• Our network patient record • Distributor
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics

178. Version 3+ The A-Team
• Prototyping • Personal
• Accuracy
• Manufacturers • Design service • Crack
• Manufacturing • Reduced time • Training & detection
• Resellers • Marketing demos
• Sales • Patient comfort • Continuing
• Distributors • Service education
✔
• Increase # of
procedures • Periodontal
• Marketers
imaging
• Improve records
• Trade
organizations • Stanford • Direct sales
• Patient
• IP education
• Trade
• Human shows
• Our network • Reduced • Distributor
malpractice
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics

179. Version 3+ The A-Team
• Prototyping • Personal
• Manufacturers • Accuracy
• • Design service
Manufacturers
• Manufacturing • Training &
• Periodontal
• Reduced time
• Resellers • imaging
• Resellers Marketing demos
• Sales • Patient comfort • Continuing
•
• Distributors
Distributors • Service education
• Increase # of
•
• Marketers
Marketers New hypothesis: procedures
• Improve records
• Trade
Trade
organizations
organizations •• Stanford
Insurance companies • Direct sales
• Patient
• IP • Trade
could be strategic partners
education
• Insurance • Human shows
companies • Our network • Reduced • Distributor
malpractice
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics

180. Overview
I. Understanding our Customers
II. Finding Customer & Value Proposition Fit
III. Building the Business:
Channels, Partners & Regulators
IV. Introducing.. periOptics
dentalOptics

181. Version 4+ The A-Team
• Prototyping • Personal
• Manufacturers • Accuracy
• Design service
• Manufacturing • Training &
• Periodontal
• Reduced time
Hypotheses Tested:
• Resellers • Marketing imaging
demos
• Sales • Patient comfort • Continuing
• Distributors • •
Service Insurance companies
• Increase # of
education
• Marketers would embrace this
procedures
technology
• Improve records
• Trade • FDA compliance is not • Direct sales
organizations • Stanford
• Patient
prohibitive
• IP education
• Trade
• Insurance • Human shows
companies • Our network • Reduced • Distributor
malpractice
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics

182. Key Partner: Insurance
Largest dental insurance
provider in California
“Periodontal probing is the single most inaccurate piece of data
we get from dentists. Fraud and abuse are common”
dentalOptics

183. Key Partner: Insurance
Largest dental insurance
provider in California
“Periodontal probing is the single most inaccurate piece of data
we get from dentists. Fraud and abuse are common”
Dental Policy Committee
• Meets regularly to evaluate new technologies
• Determines which technologies will be added to annual contracts
based on efficacy and cost savings to insurance company
Willing to recommend use of new technology
Need more clinical data, but are enthusiastic about the idea!
dentalOptics

184. What we make
Device cost
(one time)
~$2000
Dental
Dentist
Optics
Disposables
~$2.50 per patient
dentalOptics

185. What the dentist normally makes
$250
Insurance
Membership
$250
Co-pay
Dentist Patient
Equipment / Variable Costs
Note: Assumes 50/50 copay-insurance split
dentalOptics

186. What we’d add for the dentist
Device creates
$250 additional
Insurance periodontal
procedures
Device cost
(one time)
Membership
~$2000 $250
Co-pay
Dental
Dentist Patient
Optics
Disposables
~$2.50 per patient
Equipment / Variable Costs
Note: Assumes 50/50 copay-insurance split
dentalOptics

187. Three classes of FDA Devices
Criteria FDA Requirements
Minimal health and safety Need to register with FDA but
Class I risks, established precedent not get approval before putting it
(eg, dental on the market
pick, gloves, toothbru
sh)
Presents safety and health risks Submit 510-K application to
Class II that aren't completely controlled FDA, include detail about
(eg, dental by GMP (good manufacturing device, marketing
fillings, ceramics, drill processes) materials, device safety
s) features, and other paperwork
Invasive, inflammable, or Very thorough process similar to
presents other significant drug approval. Requires clinical
Class III significant safety risks. Often trails and mountains of
(eg, stent, implantabl
times a new type of device paperwork
e pacemaker)
dentalOptics

188. Some regulatory risk
Device key risk: Proxy suggests our device
misdiagnosis will be class II
Device carries little direct risk Intra-oral, non-invasive laser light
• Intra-oral, non-invasive probe caries (tooth decay) detector
• Uses non-harmful wavelengths
of radiation Approved as class II medical
device. Clinical tests conducted to
prove accuracy
Key risk: misdiagnosis
• Clinical evidence required to
establish efficacy
Source: Iowa Dental Supply dentalOptics

189. Class II FDA approval process
Month 0 3 6 9 12 15 18
Feasibility study Class II device FDA trials and approval
• Construct device • Determine predicate device(s)
prototype
• Enroll 4-7 sites and 10+ periodontists in study
• Determine device
• Fix critical end-points based on device capability (eg,
diagnostic capabilities
1 mm measurement error)
• Begin FDA 510(k)
• Submit 510(k) to FDA and obtain approval
documentation
• Enroll 1-2 periodontists
in preliminary efficacy
study
Without a predicate
Trial Size 30 patients 200-400 patients 1000-2000 patients
Costs $200 K $200 - 400 K dentalOptics
$1,000 – 2,000 K

190. Version 4+ The A-Team
• Prototyping • Personal
• Manufacturers • Accuracy
• • Design service
Manufacturers
• Manufacturing • Training &
• Periodontal
• Reduced time
Hypotheses Tested:
• Resellers • imaging
• Resellers Marketing demos
• Sales • Patient comfort • Continuing
• Distributors •
• Distributors •
Service Insurance companies
• Increase # of
education
•
• Marketers
Marketers
would embrace this
procedures
technology
• Improve records
• Trade
Trade • FDA compliance is not • Direct sales
organizations
organizations • Stanford
• Patient
prohibitive
• IP • Trade
✔
education
• Insurance • Human shows
companies • Our network • Reduced • Distributor
malpractice
•
•
•
Human resources
Manufacturing
•
•
Compliance
Warranties &
✔ •
•
Product sales
Licensing (physical & IP)
Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics

191. Version 4+ The A-Team
• Prototyping • Personal
• Manufacturers • Accuracy
• Design service
• Manufacturing • Training &
• Periodontal
• Reduced time
• Resellers • Marketing imaging
demos
• Sales • Patient comfort • Continuing
• Distributors • Question asked:
Service education
• Increase # of
• Marketers procedures
• How do we sell our
• Improve records
• Trade product?
organizations • Stanford • Direct sales
• Patient
• IP education
• Trade
• Insurance • Human shows
companies • Our network • Reduced • Distributor
malpractice
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics

192. Channels
Direct Sales Big Distributors
Private Practice Institutional Purchasing
Dentist Dentist Department
dentalOptics

193. Channels
Direct Sales Big Distributors
80% Market Share
30% Margin
Private Practice Institutional Purchasing
Dentist Dentist Department
dentalOptics

194. Channels
Continuing
Education Magazines Trade
Courses & Email Shows
Direct Sales Big Distributors
80% Market Share
30% Margin
Private Practice Institutional Purchasing
Dentist Dentist Department
dentalOptics

195. Version 4+ The A-Team
• Prototyping • Personal
• Manufacturers • Accuracy
• Design service
• Manufacturing • Training &
• Periodontal
• Reduced time
• Resellers • Marketing imaging
demos
• Sales • Patient comfort • Continuing
• Schein/Patt. • Service education
• Increase # of
• Marketers procedures
• Improve records
• Trade
• Stanford • Direct sales
organizations •
• IP
Patient • Trade
education
• Insurance • Human shows
companies • Our network • Reduced • Patterson/S
malpractice chein
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics

196. Version 4+ The A-Team
• Prototyping • Personal
• Manufacturers • Accuracy
• Design service
• Manufacturing • Training &
• Periodontal
• Reduced time
• Resellers • Marketing imaging
demos
• Sales • Patient comfort • Hypothesis
Continuing Tested:
• Distributors • Service education
• Increase # of
• Marketers procedures • Value Propositions are
• Trade • Improve records strong enough to sell
• Stanford • Direct sales
products
organizations •
• IP
Patient • Trade
education
• Insurance • Human shows
companies • Our network • Reduced • Patterson/S
malpractice chein
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics

197. Our Sales Pitch
dentalOptics

198. Patient experience is key
• Accuracy 
• Reduced time ☐
• Patient comfort 
Value Props • Patient education 
• Reduced malpractice exposure 
• Up-sell procedures 
• Improved record keeping 
“This seems
reasonable”
“I’d write you a “We would have “It would be cost
check today!” the discussion” prohibitive”
Cost Props
$1000 $2000 $8000
Per patient consumable cost < $5
dentalOptics

199. Version 4+ The A-Team
• Prototyping • Personal
• Manufacturers • Accuracy
• • Design service
Manufacturers
• Manufacturing • Training &
• Periodontal
• Reduced time
• Resellers • imaging
• Resellers Marketing demos
• Sales • Patient comfort • Continuing
•
• Distributors
Distributors • Service education
• Increase # of
•
• Marketers
Marketers procedures
• Improve records
• Trade
Trade
• Stanford • Direct sales
organizations
organizations •
• IP
Patient • Trade
education
• Insurance • Human shows
companies • Our network • Reduced • Patterson/S
malpractice chein
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics

200. Version 4+ The A-Team
• Prototyping • Personal
• Manufacturers • Accuracy
• • Design service
Manufacturers
• Manufacturing • Training &
• Periodontal
• Resellers • • Reduced time imaging
• Resellers Marketing demos
• Sales • Continuing
•
• Distributors
Distributors • Service • Patient education
comfort
•
• Marketers
Marketers
• Improved
• Trade
Trade records
• Stanford • Direct sales
organizations
organizations
• IP • Patient
• Trade
• Insurance • Human education shows
companies • Our network • Patterson/S
chein
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics

201. Version 5 The A-Team
• Prototyping • Personal
• Manufacturers • Accuracy
• • Design service
Manufacturers
• Manufacturing • Training &
• Periodontal
• Resellers • • Reduced time imaging
• Resellers Marketing demos
• Sales • Continuing
•
• Distributors
Distributors • Service • Patient education
comfort
•
• Marketers
Marketers
• Improved
• Trade
Trade records
• Stanford • Direct sales
organizations
organizations
• IP • Patient
• Trade
• Insurance • Human education shows
companies • Our network • Patterson/S
chein
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics

202. dentalOptics
dentalOptics

203. dentalOptics
periOptics
dentalOptics

204. Our Product: periOptics
dentalOptics

205. Our Product: periOptics
$2000 per unit
$2.50 per silicone sleeve
Distributed through:
Patterson Dental &
Direct
Imaging Resolution:
< 1mm
dentalOptics

206. $400 MM annual total addressable market
for Periodontal Diagnostic Device
Total addressable market ($MM)
450
$320 MM $400 MM
400
350
300
250
200
150
100 $75 MM
50
0
Device sales Consumables Total
• Device cost - $2000 • $2.5 consumables per
• Amortized over 4 years patient
• 128 MM patients per year dentalOptics
Source: Department of Health and Human Services

207. Growth Plan
Month 0 6 12 18 24
Regulatory Feasibility study Class II device FDA trials and approval
Product
Early Prototype Dev. Product Cycle I Product Cycle II
Development
Scale-up
Planning with Manufacturers
Preparation
Costs $300 K $1.5-2 M
dentalOptics

208. Growth Plan
Month 0 6 12 18 24
Regulatory Feasibility study Class II device FDA trials and approval
Product
Early Prototype Dev. Product Cycle I Product Cycle II
Development
Scale-up
Planning with Manufacturers
Preparation
Costs $300 K $1.5-2 M
Unit Economics Cost to Dentist:
$2000
Cost of Goods Margin Distributor
$500* $900 $600
Revenue
*At scale: 10K units dentalOptics

209. Next Step: Evaluate Technical Options
Optical Acoustic
J Clin Periodontol 2003; 30: 849–854
Printed in Denmark. All rights reserved
function dentalOptics
Periodontal ultrasonogra

210. Lessons Learned
Physical prototypes engage potential customers
Consumables are key to revenue models in dental devices
Listen to your customers for new directions
Caregivers don’t think exclusively like businesspeople: the
patient experience is paramount
“Hi, I’m a Stanford student…” gets you a conversation with
pretty much anyone
dentalOptics

211. Lean LaunchPad – Student Selection
• Students apply as a team
– Their application is their business model canvas
– Interdisciplinary business and engineering teams
• We select for teams, notideas

212. Lean LaunchPad - Class Organization
• Teams present every week
– Teaching team critiques
• Teams spend tens of hours outside the classroom
– They keep a blog of their customer discovery
• Lectures are minimalist
• Syllabus and slides on-line

213. Example of a
Lean LaunchPad Team Blog

214. Lean LaunchPad Class
National Science Foundation

215. Lean LaunchPad Class
We’ll Teach ~175 Teams in 2012
National Science Foundation

216. Part 4
The New Entrepreneurship Curriculum

217. This is Not about One Class

218. It Changes Everything

219. It Changes Everything
Undergraduate/Graduate
Technology Startups, Small Business
Startups, Corporate Entrepreneurship

220. How?

221. Building the New Curriculum

222. Step 1:
Decide what type of
Entrepreneurship you’re teaching

223. Step 1:
Decide what type of
Entrepreneurship you’re teaching
Small business? Social? Scalable?
Buyable? Corporate?

224. Step 2:
Embrace Search Versus Execute

225. Step 2:
Embrace Search Versus Execute
It drives the new curriculum

226. Step 3:
Start By Teaching the
Business Model Canvas

227. Step 3:
Start Teaching the Canvas
It’s the basics for “hypotheses”

228. Step 3:
Start Teaching the Canvas
Undergrads to graduates

229. Step 4:
Start Teaching Customer Development

230. Step 4:
Start Teaching Customer Development
It’s the basics for “search”

231. Step 4:
Start Teaching Customer Development
Level of intensity can vary – but getting
out of the classroom is the key

232. Step 5:
Move Teaching the Plan

233. Step 5:
Move Teaching the Plan
Operating Plans come after the search

234. Step 5:
Move Teaching the Plan
Business Plan competitions
do not teach real-world skills