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NSF I-Corps
The Lean LaunchPad

      Lecture 1
 Business Models and
Customer Development



                       Version 6/22/12
Agenda

1.   What we used to believe / What we now know
2.   Business Models and Customer Development
3.   Examples
4.   Market Size
Part 1

What 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 Search
Companies 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
What We Now Know

     Strategy
Plan Meets
First Contact
With
Customers
Previous
5-Year Plans
All I Need to Do is Make the Forecast
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 by
Managing Processes

  Product Management
            +
  Waterfall Engineering
Product Introduction Model



 Concept/    Product   Alpha/Beta   Launch/
Seed Round    Dev.        Test      1st Ship
Tradition – Hire Marketing




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


                 - Create Marcom        - Hire PR Agency   - Create Demand
Marketing          Materials            - Early Buzz       - Launch Event
                 - Create Positioning                      - “Branding”
Tradition – Hire Sales



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


                  - Create Marcom          - Hire PR Agency       - Create Demand
Marketing           Materials              - Early Buzz           - Launch Event
                  - Create Positioning                            - “Branding”


                                         • Hire Sales VP          • Build Sales
Sales                                    • Hire 1st Sales Staff    Organization
Tradition – Hire Bus Development



      Concept         Product                 Alpha/Beta           Launch/
                       Dev.                      Test              1st Ship


                - Create Marcom            - Hire PR Agency   - Create Demand
 Marketing        Materials                - Early Buzz       - Launch Event
                - Create Positioning                          - “Branding”


                                       • Hire Sales VP        • Build Sales Channel /
  Sales                                • Pick distribution     Distribution
                                        Channel

 Business                                • Hire First         • Do deals for FCS
Development                                Bus Dev
Tradition – Hire Engineering



      Concept             Product                 Alpha/Beta             Launch/
                           Dev.                      Test                1st Ship


                    - Create Marcom            - Hire PR Agency     - Create Demand
 Marketing            Materials                - Early Buzz         - Launch Event
                    - Create Positioning                            - “Branding”


                                           • Hire Sales VP          • Build Sales Channel /
  Sales                                    • Pick distribution       Distribution
                                            Channel

 Business                                    • Hire First           • Do deals for FCS
Development                                    Bus Dev


Engineering     • Write MRD      • Waterfall                • Q/A         •Tech Pubs
Product Introduction Model



 Concept/    Product   Alpha/Beta   Launch/
Seed Round    Dev.        Test      1st Ship
Waterfall / Product Management
                                    Execution on Two “Knowns”



                                 Requirements
                                                                 Product Features: known
                                            Design

                                                Implementation


                                                         Verification

   Customer Problem: known                                       Maintenance




Source: Eric Ries
http://startuplessonslearned.blogspot.com
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
What We Now Know

     Strategy
More startups fail from
a lack of customers than from a
failure of product development
Customer Development
Search             Execution

Strategy    Business Model
                                 Operating Plan +
              Hypotheses
                                 Financial Model


Process       Customer &       Product Management
                                   & Waterfall
           Agile Development      Development
What We Used to Believe

      Organization
Hire and Build a
Functional Organization
Nsf lecture 1 bus model cust dev
Nsf lecture 1 bus model cust dev
What We Now Know

    Organization
Founders run a
 Customer Development Team

No sales, marketing and business
          development
Search                      Execution

 Strategy     Business Model
                                           Operating Plan +
                Hypotheses
                                           Financial Model

             Customer Development,        Product Management
 Process
               Agile Development     Agile or Waterfall Development


                 Customer             Functional Organization
Organization
             Development Team,            by Department
               Founder-driven
What We Used to Believe

       Education
Entrepreneurial Education was
       about execution
Entrepreneurial Education was
       about execution
What We Now Know

    Education
Entrepreneurial Education
begins with the Search for a
      business model
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,
                                            Operations, Leadership,
             Entrepreneurial Finance,
                                            Marketing, Manufacturing
               Agile Development,
                Customer Funnel:
              Get/Keep/Grow Market
Putting Search first is a
          radical change

It’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 Know

Instructional Strategies
Experiential Immersion

              ~100 GOOTB connections
Team-based Simulations
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
                                                           55
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
Search

Strategy          Business Model
                    Hypotheses


Process         Customer Development,
                  Agile Development


OrganizationCustomer 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
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
Part 2

 Business Models and
Customer Development
What’s A Company?
What’s A Company?

  A business organization which sells a
product or service in exchange for revenue
                 and profit
What’s A Startup?
A temporary organization
      designed to search
for a repeatable and scalable
       business model
A temporary organization
      designed to search
for a repeatable and scalable
       business model
A temporary organization
      designed to search
for a repeatable and scalable
       business model
A temporary organization
      designed to search
for a repeatable and scalable
       business model
A temporary organization
      designed to search
for a repeatable and scalable
        business model
A Startup aims to become a
          company
How Does Your Science
Become 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?
Nsf lecture 1 bus model cust dev
Value Proposition

What Are You Building and For Who?
Nsf lecture 1 bus model cust dev
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 the “Value Proposition”
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?
Nsf lecture 1 bus model cust dev
Channels

How does your Product
  Get to Customers?
Nsf lecture 1 bus model cust dev
Customer Relationships

How do you Get, Keep and Grow Customers?
Nsf lecture 1 bus model cust dev
Revenue Streams
How do you Make Money?
Nsf lecture 1 bus model cust dev
Key Resources
What are your most important Assets?
Nsf lecture 1 bus model cust dev
Key Partners

Who are your Partners and Suppliers?
Nsf lecture 1 bus model cust dev
Key Activities

What’s Most Important for the Business?
Nsf lecture 1 bus model cust dev
Cost Structure
What are the Costs and Expenses
Nsf lecture 1 bus model cust dev
But,
Realize They’re Hypotheses
9 Guesses


                            Guess
Guess    Guess
                                     Guess

                  Guess
        Guess               Guess



        Guess                Guess
Nsf lecture 1 bus model cust dev
Nsf lecture 1 bus model cust dev
©2006
©2006
Customer Development

Test the Problem, Then the Solution
Nsf lecture 1 bus model cust dev
Nsf lecture 1 bus model cust dev
Customer Development

  The Minimum Viable Product
Nsf lecture 1 bus model cust dev
Customer Development

       The Pivot
Nsf lecture 1 bus model cust dev
Customer Development

        Details
Customer Development is
how you search for the model
Nsf lecture 1 bus model cust dev
Nsf lecture 1 bus model cust dev
Nsf lecture 1 bus model cust dev
Nsf lecture 1 bus model cust dev
How to Build A Startup

             Idea
       Business Model
       Size Opportunity
    Customer Development
How to Build A Startup

         Business   Size of the   Customer    Customer
Idea     Model(s)   Opportunity   Discovery   Validation
How to Build A Startup

        Size of the
         Business     Size of the
                       Business     Customer    Customer
Idea    Opportunity
         Model(s)     Opportunity
                       Model(s)     Discovery   Validation




       Theory                        Practice
How to Build A Startup

        Size of the
         Business     Size of the
                       Business     Customer    Customer
Idea    Opportunity
         Model(s)     Opportunity
                       Model(s)     Discovery   Validation
How to Build A Startup

              Size of the
               Business      Size of the
                              Business     Customer    Customer
Idea          Opportunity
               Model(s)      Opportunity
                              Model(s)     Discovery   Validation




       • First test the problem
       • Next test the solution
How to Build A Startup

        Size of the
         Business     Size of the
                       Business     Customer    Customer
Idea    Opportunity
         Model(s)     Opportunity
                       Model(s)     Discovery   Validation
Part 3

How Does this Really Work?
How Does This Really Work?

NSF Lean LaunchPad Class
10 Weeks From an Idea to a Business
Graphene Frontiers
We are a nanotechnology materials
company with a proprietary process for
producing high quality, low cost, large
area graphene films at commercial scale
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
Problem: Lab Scale Not Enough
    Graphene Production Must Scale Up to
   Commercial Levels before Integration into
    Consumer Products Becomes a Reality…
Solution: Scalable Production Process
Our Patent-Pending APCVD
Graphene Production Process:
•Operates at ambient pressure,
reducing cost enabling flexible design
•Industrial scale, continuous roll-to-
roll production possible
•Graphene sheet size limited only by
CVD furnace dimensions
•Same or better quality vis-à-vis
LPCVD graphene
•Graphene growth at 900-1000 °C,
lower than other methods
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
Team: Graphene Frontiers
EL:Zhengtang Luo, PhD – Chief Science Officer
10+ years experience in synthesis of carbon
nanomaterials and product development for applications
in the area of materials chemistry, chemical separation
and electronic devices.

Mentor: Mike Patterson – CEO
Experienced entrepreneurial leader, manager, and
trusted adviser to startups and Fortune 500 companies,
providing expertise in growth strategy and international
operations. Patterson is an Executive MBA candidate
(Entrepreneurial Management, April 2012) at the
Wharton School, University of Pennsylvania.


PI: A.T. Charlie Johnson, PhD – Founder, Scientific Advisory Board
Known internationally for his work in graphene electronics and carbon nanotube electronics. IP from his lab on
DNA-carbon nanotube devices for use in an electronic nose system pursued by Nanosense. An author of over
130 peer-reviewed articles, Johnson holds two issued patents, with 18 other patents submitted.
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
What’s Next: Strategy and Roadmap
              1H 2012                       2012                        2013+

                                  Commercial Roll-to-             Application
Phase        4” Scale-Up         Roll Design & Prototype         Development


Product/    TEM Grids                Process Licensing      Intellectual Property
            Materials Business                             Thin, Flexible Displays
Revenue

            12” x 12” Sheet           Roll-to-Roll Mfg.       Application R&D
Milestone   Production                 Industrial Scale            Team

                                                               “World Leader in
                                              Perfect
                                                                CVD Graphene
Activity       Scale-Up Sheet Size            Continuous
                                              Process            Innovation”

            Increase Area     Increase Throughput    New Applications
What’s Next: Secure Partnerships + Investment
  Distribution   Active Customer    Manufacturing
   Partners       Conversations       Partners




                                   Seed Investment
                                      Needed
Enter I-Corps: Beginning Hypotheses


Here’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
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
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
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”
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
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)
•   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
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
The Business Model Canvas


Equipment Mfg          Scale up          Low Cost             Education              Thermal Mgmt
                                                                                     Solutions

Universities           Customization
                                         Higher Quality       Service/Maint.
                                                                                     Transparent
                       Production                                                    Conduct.
Downstream                               Large Area                                  (Touch)
fabrication
companies
                                                                                     Chem/Bio
                                         “Industrializable”
                       IP                                     License                Sensor

                       CVD Equipment                          Direct Sales

                       Facilities/Lab



                                                                        License/Royalty
  Capital equipment          Personnel
                                                                        Material Sales
 Direct Sales/Travel         Lab space
The Business Model Canvas


Equipment Mfg          Scale up          Low Cost             Education              Thermal Mgmt
                                                                                     Solutions

Universities           Customization
                                         Higher Quality       Service/Maint.
                                                                                     Transparent
                       Production                                                    Conduct.
Downstream                               Large Area                                  (Touch)
fabrication
companies
                                                                                     Chem/Bio
                                         “Industrializable”
                       IP                                     License                Sensor

                       CVD Equipment                          Direct Sales

                       Facilities/Lab



                                                                        License/Royalty
  Capital equipment          Personnel
                                                                        Material Sales
 Direct Sales/Travel         Lab space
The Business Model Canvas


Equipment Mfg          Scale up          Low Cost               Education              Thermal Mgmt
                                                                                       Solutions

Universities           Customization
                                         Higher Quality         Service/Maint.
                                                                                       Transparent
                       Production                                                      Conduct.
Downstream                               Large Area                                    (Touch)
fabrication
companies
                                                                                       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
Graphene Frontiers Business Model Canvas – PRIOR VERSION (10.18)


                        Scale up
Equipment Mfg                             Low Cost               Education              Thermal Mgmt
                                                                                        Solutions
                        Customization
                                                                 Service/Maint.
Universities                              Higher Quality                                     Transparent
                                                                 Collaborative R             Conduct.
                        Production                               &D                          (Touch)
Downstream                                Large Area
fabrication                                                                          Membrane
companies                                                                            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
This Week:
Split, then Pivot
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
Graphene Frontiers Business Model Canvas “B”


                        Scale up
Equipment                                 Foldable /             Education             Flexible
Mfg                                       Bendable                                     Transparent
                        Customization
                                                                 Service/Maint.        Conductor
Universities                              Higher Quality         Collaborative
                                                                 R&D
Downstream                                Large Area
Fabrication
Companies
                                          “Industrializable”
                        IP                                       License
                                          Low Cost
                        CVD Equipment

                        Facilities/Lab



                                                       Intermediate        License/Royalty
  Capital Equipment           Personnel                product

  Direct Sales/Travel         Lab space
Graphene Frontiers Business Model Canvas “B”


                        Scale up
Equipment                                 Foldable /             Education             Flexible
Mfg                                       Bendable                                     Transparent
                        Customization
                                                                 Service/Maint.        Conductor
Universities                              Higher Quality         Collaborative
                                                                 R&D
Downstream                                Large Area
Fabrication
Companies
                                          “Industrializable”
                        IP                                       License
                                          Low Cost
                        CVD Equipment

                        Facilities/Lab



                                                       Intermediate        License/Royalty
  Capital Equipment           Personnel                product

  Direct Sales/Travel         Lab space
How Does This Really Work?

NSF Lean LaunchPad Class
10 Weeks From an Idea to a Business
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
Initial Idea & Market Opportunity Estimate


                                                  Total available market
• Our invented       nanogrids™(c)                 for environmental
technology offers inexpensive,                    nanotechnologies
extremely fast and efficient
                                                  2010: $6.1b
hydrocarbon decomposition
                                                  2014: $21.8b (projected)
• It has potential uses in oil
decomposition/ environmental                      Served Available Market
remediation                                       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
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
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
                    •Marketing
manufacturing                                 Photochemistry    term                      industry
                    •Distribution
providers                                     • Fully           •As-needed leasing       •Refineries
                                              decomposes oil                             •Oil service industry
•Suppliers of                                 •No energy cost                            •EPA
precursor                                     to use                                     •Federal groups on
material                 •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
So, Here’s What We Did
                     TESTED THE CUSTOMER SEGMENTS HYPOTHESIS
Company                          Contact Person    Lessons Learned

Dow Chemical Ventures            Steve Hahn        To focus on water cleaning systems;
                                                   efficiency of catalyst is the key feature

Oceanside Water Pollution        AlexandreMiot     To focus on petroleum-based contamination;
Control Plant, SF, CA)                             skimming
Eastern Environmental            Deb Engelhardt,   Current practices: spill tech pads; Regen Ox
Solutions, Inc (LI, NY)          Louis Bascelli,   (oxidizer)
                                 Joseph Napoli
Miller Environmental (LI, NY)    Dave Reardon      Got suggestions for pilot studies; projects
                                                   cost vary a lot
DEC (region 1, NY)               Karen Gomez       State environmental regulations; contractors


Eco-Test Babylon (LI, NY)        Thomas Powell     Water quality testing procedures and EPA
                                                   standards
GES                              Edward Savarese   Current practice: pump and treat; geologists
                                                   org. contact
David Tonjes                     DT&S-SBU;         Customer is the Env. Engineer
                                 consultant
WRS environmental; Environtrac   Front desk        Talked to their R&D people
(LI, NY)                         personnel
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                              industry
manufacturing         •Marketing
                                             to use                                      •Refineries
providers             •Distribution                                    •As-needed
                                             •Recoverable                                •Oil service industry
                                                                       leasing
                                             •Customization                              •EPA
•Suppliers of
                                             •Risk reduction                             •Federal groups on
precursor
                                                                                         remediation
material
                       •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)
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
Business Model Canvas Version 3

                                        Photocatalysts


                    •IP validation
                                          • New Product
                    •Building a brand                                     •Expanding
                                                                          their services
                    •Pilot Studies
•Industrial nano-                         •Green                                                 •Remediation
manufacturing       •Marketing                                               •Continuous/lo      of Petroleum-
providers                                 • Decomposes oil                   ng term
                    •Distribution                                                                based oil
                                                                                                 polluted water
                                          •No energy cost to use

•Suppliers of                             •Fast Remediation
precursor           •IP protection                                           •Partner/other
                                          •Recoverable
material                                                                      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
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)
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?
Business Model Canvas Version 4

                                            Photocatalysts


                               •IP validation
                    •Building a brand                                         •Expanding
                                                   • New Product
                                                                              their services
                               •Pilot Studies
•Industrial nano-                                  •Green                                            •Remediation
manufacturing           •Marketing                                               •Continuous/lo      of Petroleum-
providers                                              • Decomposes oil          ng term             based oil
                                                                                                     polluted water
                                                 •No energy cost to
                                                 use
•Suppliers of                                        •Fast Remediation
precursor               •IP protection
                                                •Recoverable
material
                    •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
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
So, Here’s What We Found
                                      Industry likes our product and pricing

Our Product*                           Estimated Cost   ExistingProductinMarket


Rolls of fabric-like material (Sold    $10              U***
per square foot)                                        Oil Absorbent
                                                        $ 20

Blankets (3x2 .5 feet)                 $50              P***Oil-Only Weighted Absorbent Blanket
                                                        $ 112

Pads mat for small spill (15" x        $30              B*** INDUSTRIES Buff Oil Absorb Pads
18“)                                                    $ 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 to
break down hydrocarbons into eco friendly products
Industry Expert/Customer Testimonials
“I feel your purchase prices are too high for the mass of the remediation
market. For a massive spill of 100,000 gallons or more, the cost would
compare unfavorable with skimming and transporting for reclamation.

For small spills your product is in competition with the cost of conventional
absorbents plus landfill disposal. In this case, your $10 per sq. foot compares
with $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 the
fabric, 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 are
produced when these are incinerated?
Also, would this product work on water/ocean/river spills?”
James Cressy, Project Manager, Impact Environmental
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 oil
precursor
                                                                                                    polluted water
material                                        •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
So, Here’s What We Found
Produced 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 water
WHAT IS BTEX?
BTEX is the abbreviation used          Produced water is usually treated to remove most free oil
for four compounds found in
petroleum products.
 The compounds are benzene,            Need to treat the remaining amount of soluble and
toluene, ethylbenzene, and              volatile petroleum hydrocarbons
xylenes.                               BTEX average concentration remaining about 5mg/L
                                       Allowable limit of BTEX in drinking water 5mg/L
Turning Wastewater into Drinking Water
Reducing benzene contamination by 1000 times!
                                                      Nanogrids™ ©

                                       From 3.5 ppm




                                                              To 2.4 ppb
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
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 water
precursor                                             • Decomposes oil        ng term
material            •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
Market Size Diagram


Global                                             World Water
Nanocatalyst Market                                Treatment
                                                   Market
$6b
By 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
Distribution Channel Diagram

                           Distributors




                                               Customers
                                               Purchasing
                                                Individual
                           Dealers/Potential     Products
                               Partners



Filtration
Industry/Integrated
Solutions
Revenue model diagram
First year revenues:
20 SME of $100,000 sales/year= $2M
2 LC of $1M /year =$2M                              60
first year revenues : $4M

Second year revenues:
75% retention of SME
                                                    50
15 SME of $150,000 sales/year= $2.25M
2 LC: $5M sales/year
second year revenues $7,25M                         40

                                             ($M)
Third year revenues:
maintain the domestic levels with existing
customers but expand international sales            30
to $3.5M
This will set us over $10M
                                                    20
Fourth year revenues:
Add new line of products for existing
market; expand into adjacent markets
(off-site remediation; water purification;          10
etc)
Revenues to reach $50M
                                                    0
                                                          Year 1   Year 2   Year 3   Year 4
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
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
How Does This Really Work?

NSF Lean LaunchPad Class
10 Weeks From an Idea to a Business
Total Customers Contacted: 86
          RIT NSF ICORPS Dec 14 2011   173
Initial Business Concept


Global 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                         174
Principal Investigator                                Mentor

           Dr. Satish Kandlikar                 Dr. Suresh Sunderrajan
            Gleason Professor                President, NNCrystal Corp.
              Mech. Engg., RIT




      Entrepreneurial co-Lead                  Entrepreneurial co-Lead

                  AnkitKalani                        KirthanaKripash
MS Engineering (Candidate) RIT                    MBA (Candidate), RIT




                                  Kandlikar and RIT Team – NSF I-Corps
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                  “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
Other
 Components                                      Arka provides
                                              replacement lamps
                     Arka Lights
   •LED
array, Lamp
components


                                    Luminaire
                 •LED
               luminaires          Manufacturers
              and Fixtures



                                                   Distributor




                                                                 Contractor



                                                                              Project/Owner
Customers                  Distribution and Supply

    : The customer is          • We lack        in
unwilling to buy the product     Lamp/Luminaire production
atcurrent prices

        : The final consumer   • OEMs were interested in
is highly dependent on           incorporating our enhanced
Gatekeepers (suppliers) for      thermal module in their
guidance in product choice       product

                   We had to pivot!    Kandlikar and RIT Team – NSF I-Corps
Nsf lecture 1 bus model cust dev
Arka Lights                             Arka provides
                                               Thermal Modules

                                    OEMs



             • LED luminaires and
                     Fixtures




  Other                                    Distributor
Components




                                                                      Contractor




                                                                                   Project/Owner
                                                     • Institutions, Home
                                                     Owners, Distributors
Customers             Environment   Key Partners




                  We would like
                  to enter into a
                  partnership to
Heat Exchanger    develop heat
 Manufacturer     pipe based
                  products.
• 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
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                         184
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Design       Arka
Sources and                    Heat Exchanger
 Technical    Lights            Manufacturer
  Experts


                        Division?
                       Partnership?




              Market
              Market
                …
• 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
• 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
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• 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
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Nsf lecture 1 bus model cust dev
–   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)
• 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
• 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.
Week 1 - 9
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Market Size

How Big is This Opportunity?
Market/Opportunity Analysis


How Big is It?: Market/Opportunity Analysis
  – Identify a Customer and Market Need
  – Size the Market
  – Competitors
  – Growth Potential
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
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
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
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
Market Size
Examples
The Opportunity


                                  Global Catalyst
                                  Market =
Chemical                           $29.5 B
Catalyst
           Hydrogen-   Pd/C       • Emissions
           ation       Catalyst
Market     Catalyst    = $1.1 B
                                  • Refinery
= $7 B     = $1.5 B               • Chemical
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MARKET SIZE
        A m e r i c a n s L o v e t o Ea t M e a t a n d S n a c k
 Giant Markets
> Meat: $160B / Snacks: $70B                    2009 US Snack Food
> Meat Snacks: $4B                                          Retail Sales
 Varying Growth Rates                                                     Salty
> Meat: + 5%                                                               $30B
> Snacks: + 15%
>Jerky:    + 5%
 Mega Consumer Trends Converging            Sweet
>Healthy, More Flavorful, Higher Quality      $35B
 Snacks Driven by Innovation / News
                                                                           Meat
 Meat Snacks / Jerky Generally Sleepy
> Limited Innovation                                                       $4B
> “Gut Stuffer” Image                        Source: US Package Facts

 Change Underway Driven by New Entrants
>All-Natural
> 10% Growth Latest 52 Weeks Nielsen F/D/M
$50 Billion Dollar
Protein Therapeutic Market



          $1.4 Billion Dollar
        Cell Line Sales Market


                      $140 Million
                      Dollar Target
Nsf lecture 1 bus model cust dev
Nitrate Sensor Market




                    SAM: $1.5B/yr
   TAM: $6 B/yr      Assumptions:       Target Market: $50-75M/yr
  >100K systems      25K pivots w/       Assumptions: 3-5% licensing
    worldwide        1 sensor/acre       Recurring consumable costs
                  (125 sensors/pivot)       would add to revenue
Market size - Landlords & Rental Units
          Units by Landlord Portfolio Size in                       % of Units, by Landlord Portfolio
                    USA (millions)                                 Size, Owned by a Single Individual


                                                           100%          92%
                                                            90%
                                                                                       77%
                 0.06                                       80%
  0.46
                                                            70%
                                       Small: 1 to 4
                                                            60%
                                                            50%
                                       Medium: 5 to 49      40%                                       32%
                             2.20                           30%
                                       Large: 50 or More    20%
                                                            10%
    50% of the “Small” landlords own just one unit.           0%
                                                                     Small: 1 to 4 Medium: 5 to   Large: 50 or
                                                                                       49            More

 Rental Real Estate is the Largest “Mom and Pop” business in America: The vast majority of properties are
 owned by a single individual that owns only one property.

Source: US census data
The market size for metastatic cancer diagnostics in the
         U.S. is estimated to be $805M p.a.

Methodology:                     Value:    Explanation:                           Source:
     U.S. population size        313M       Total U.S. population in 2012         U.S. Census
              x                                                                     Bureau estimate

 U.S. incidence of all cancers   0.512%     Treatment is typically given in       ACS Cancer Facts
                                             the first year following diagnosis     & Figures 2011
              =
 Total U.S. cancer incidence     1.6 M

              x
 % diagnosed with regional                  Cancers that spread to local or       NCI SEER 2011
                                 39.4%
     or distant cancers                      distant lymph nodes or organs          data
              =
  Patients w/ regional or
                                 628,420
      distant cancers
              x
   Cost of diagnosis and                    Weighted avg. patient cost p.a.       JAMA. 2010;
                                 $1,285
   monitoring (annually)                     for imaging procedures (2008)          303(16):1625-1631
              =
 Market size for metastatic
                                 $805M
  cancer Dx / monitoring
Nsf lecture 1 bus model cust dev
Nsf lecture 1 bus model cust dev
Linear Lighting Market Size




                              225
Nsf lecture 1 bus model cust dev
Hypothesis Testing
    Examples
• Hypotheses to test

Hypothesis                                  Test
There is strong Interest in facilitating    Interviews (landlord and providers), web
rental maintenance support                  ad conversion

Service providers are willing to pay for    Interviews (need to determine
lead generation through our site            consensus willingness to pay)
There will be a higher response rate        Interviews (tenant and landlord), survey
amongst tenants and landlords for an        (tenant), web ad conversion of different
“exclusive” community                       messages
Tenants are willing to pay a nominal fee    Interviews (tenant), survey (tenant),
($1-2) for convenient rent/utility online   web ad conversion.
payment service                             (Need at least 0.08% CPM conversion to
                                            be profitable)
Real Estate agents are willing to help      Interviews
push this offering to their customers

                                                                                       228
Nsf lecture 1 bus model cust dev
Nsf lecture 1 bus model cust dev
Nsf lecture 1 bus model cust dev
Nsf lecture 1 bus model cust dev
Week 1  Week 3


          Hypothesis                                  Test                               Results
•   Existing prepaid cards add value       Interviewed supermarket             User acquisition is critical 
    to a subset of the population           executives, payment                  user engagement is everything
      – Underpenetrated                     processors, private label card
          opportunity                       manufacturers, prepaid              Underpenetrated opportunity
      – We can find a better                program managers, loyalty            because people:
          channel to reach this             consultants, and data analytic        Don’t understand the value
          customer segment and              firms                                   of the card
          convert them                                                            Don’t know about the card
                                                                                  Haven’t bought one yet
•   Existing prepaid cards are flawed
    and can be improved                                                         Potential customers are aware of
     – We can do something clever                                                and understand prepaid, but:
          to shake up the fee                                                     Hate the fees
          structure and/or build in a                                             Haven’t bought one yet
          new feature (e.g., rewards)

•   Solution = prepaid + loyalty card
     – Distributed at retail POS
Week 3  Week 4


          Hypothesis                                  Test                            Results
•   Existing prepaid cards add value       Interviewed end users at       End Users see value:
    to a subset of the population           Walmart, food banks, bus          More likely to sign up for
      – Underpenetrated                                                        prepaid via assisted POS sale
                                            stops, payday lenders, their      Active vs. passive sale
          opportunity                       homes, and supermarkets            hypothesis validated
      – We can find a better                                                  More likely to keep and reload
          channel to reach this            Interviewed execs at Green         cards with ongoing cash
          customer segment and              Dot, Rush Card, and NetSpend       rewards
                                                                              Higher retention via loyalty
          convert them                                                         hypothesis validated

•   Existing prepaid cards are flawed                                      Retailers see value:
    and can be improved
                                                                              New revenue opportunity is
                                                                               compelling
     – We can do something clever                                             Access to purchasing data
          to shake up the fee                                                  outside the store is compelling
          structure and/or build in a
          new feature (e.g., rewards)                                      Industry Trends
                                                                              Loyalty + prepaid programs
                                                                               are the future
•   Solution = prepaid + loyalty card
                                                                              Industry execs like this idea a
     – Distributed at retail POS                                               lot and are actively exploring it
Week 4  Week 5


         Hypothesis                                  Test                              Results
•   Customer awareness and                $5 for 5 minutes campaign           20 preliminary signups
    education are key obstacles to        Speak to as many potential
    customer acquisition and               customers as possible ask for      Built empathy around customer
    retention                              an actual commitment                 prepaid needs
                                                                                      Immediacy
•   Channel: Assisted sale at POS                                                     Security fears
    trumps current passive j-hook                                                     Fees
    sale                                                                              Channels
      – Active sale enhances                                                   Discovered other needs
         awareness & education                                                        Job-seeking
                                                                                      Saving for kids’ education
                                                                               Understood observed behaviors
•   Product: Combining prepaid +                                                      High churn
    loyalty                                                                           Lack of reloading
      – Cash rebates improve                                                          Lack of regular usage
          retention and incentive to
          reload                                                               Loyalty component not required
                                                                                if you can service the true pain
                                                                                points
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
Nsf lecture 1 bus model cust dev
Backup

         Idea
    Business Model
   Size Opportunity
Customer Development

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Nsf lecture 1 bus model cust dev

  • 1. NSF I-Corps The Lean LaunchPad Lecture 1 Business Models and Customer Development Version 6/22/12
  • 2. Agenda 1. What we used to believe / What we now know 2. Business Models and Customer Development 3. Examples 4. Market Size
  • 3. Part 1 What We Used to Believe What We Now Know
  • 4. What We Used to Believe
  • 5. Startups are a Smaller Version of a Large Company
  • 6. What We Now Know
  • 8. What We Used to Believe Strategy
  • 9. Start With an Operating Plan and Financial Model
  • 10. All I Need to Do is Execute the Plan
  • 11. All I Need to Do is Make the Forecast
  • 12. What We Now Know Strategy
  • 15. All I Need to Do is Make the Forecast
  • 16. No Business Plan survives first contact with customers
  • 20. Search Execution Business Model Operating Plan + Strategy Hypotheses Financial Model
  • 21. What We Used to Believe Process
  • 22. We Built Startups by Managing Processes Product Management + Waterfall Engineering
  • 23. Product Introduction Model Concept/ Product Alpha/Beta Launch/ Seed Round Dev. Test 1st Ship
  • 24. 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”
  • 25. 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
  • 26. 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
  • 27. 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
  • 28. Product Introduction Model Concept/ Product Alpha/Beta Launch/ Seed Round Dev. Test 1st Ship
  • 29. 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
  • 30. 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
  • 31. What We Now Know Strategy
  • 32. More startups fail from a lack of customers than from a failure of product development
  • 34. Search Execution Strategy Business Model Operating Plan + Hypotheses Financial Model Process Customer & Product Management & Waterfall Agile Development Development
  • 35. What We Used to Believe Organization
  • 36. Hire and Build a Functional Organization
  • 39. What We Now Know Organization
  • 40. Founders run a Customer Development Team No sales, marketing and business development
  • 41. 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
  • 42. What We Used to Believe Education
  • 43. Entrepreneurial Education was about execution
  • 44. Entrepreneurial Education was about execution
  • 45. What We Now Know Education
  • 46. Entrepreneurial Education begins with the Search for a business model
  • 47. 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, Operations, Leadership, Entrepreneurial Finance, Marketing, Manufacturing Agile Development, Customer Funnel: Get/Keep/Grow Market
  • 48. Putting Search first is a radical change It’s not just one more methodology
  • 49. What We Used to Believe Instructional Strategies
  • 50. Cases and a Business Plan were good teaching tools
  • 51. Cases and a Business Plan were good teaching tools
  • 52. What We Now Know Instructional Strategies
  • 53. Experiential Immersion ~100 GOOTB connections
  • 55. 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 55
  • 56. 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
  • 57. Search Strategy Business Model Hypotheses Process Customer Development, Agile Development OrganizationCustomer 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
  • 58. 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
  • 59. Part 2 Business Models and Customer Development
  • 61. What’s A Company? A business organization which sells a product or service in exchange for revenue and profit
  • 63. A temporary organization designed to search for a repeatable and scalable business model
  • 64. A temporary organization designed to search for a repeatable and scalable business model
  • 65. A temporary organization designed to search for a repeatable and scalable business model
  • 66. A temporary organization designed to search for a repeatable and scalable business model
  • 67. A temporary organization designed to search for a repeatable and scalable business model A Startup aims to become a company
  • 68. How Does Your Science Become Part of a Company?
  • 69. Technology Commercialization • IP Licensing (Patent, Process, etc.) • Stand-alone Startup
  • 70. How Are Companies Organized?
  • 71. How Are Companies Organized? Companies are organized around Business Models
  • 74. Value Proposition What Are You Building and For Who?
  • 76. What About My Technology?
  • 77. 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”
  • 78. What About My Technology? Customers don’t care about your technology They are trying to solve a problem
  • 79. Customer Segments Who Are They? Why Would They Buy?
  • 81. Channels How does your Product Get to Customers?
  • 83. Customer Relationships How do you Get, Keep and Grow Customers?
  • 85. Revenue Streams How do you Make Money?
  • 87. Key Resources What are your most important Assets?
  • 89. Key Partners Who are your Partners and Suppliers?
  • 91. Key Activities What’s Most Important for the Business?
  • 93. Cost Structure What are the Costs and Expenses
  • 96. 9 Guesses Guess Guess Guess Guess Guess Guess Guess Guess Guess
  • 100. ©2006
  • 101. Customer Development Test the Problem, Then the Solution
  • 104. Customer Development The Minimum Viable Product
  • 106. Customer Development The Pivot
  • 109. Customer Development is how you search for the model
  • 114. How to Build A Startup Idea Business Model Size Opportunity Customer Development
  • 115. How to Build A Startup Business Size of the Customer Customer Idea Model(s) Opportunity Discovery Validation
  • 116. How to Build A Startup Size of the Business Size of the Business Customer Customer Idea Opportunity Model(s) Opportunity Model(s) Discovery Validation Theory Practice
  • 117. How to Build A Startup Size of the Business Size of the Business Customer Customer Idea Opportunity Model(s) Opportunity Model(s) Discovery Validation
  • 118. How to Build A Startup Size of the Business Size of the Business Customer Customer Idea Opportunity Model(s) Opportunity Model(s) Discovery Validation • First test the problem • Next test the solution
  • 119. How to Build A Startup Size of the Business Size of the Business Customer Customer Idea Opportunity Model(s) Opportunity Model(s) Discovery Validation
  • 120. Part 3 How Does this Really Work?
  • 121. How Does This Really Work? NSF Lean LaunchPad Class 10 Weeks From an Idea to a Business
  • 122. Graphene Frontiers We are a nanotechnology materials company with a proprietary process for producing high quality, low cost, large area graphene films at commercial scale
  • 123. 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
  • 124. Problem: Lab Scale Not Enough Graphene Production Must Scale Up to Commercial Levels before Integration into Consumer Products Becomes a Reality…
  • 125. Solution: Scalable Production Process Our Patent-Pending APCVD Graphene Production Process: •Operates at ambient pressure, reducing cost enabling flexible design •Industrial scale, continuous roll-to- roll production possible •Graphene sheet size limited only by CVD furnace dimensions •Same or better quality vis-à-vis LPCVD graphene •Graphene growth at 900-1000 °C, lower than other methods
  • 126. 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
  • 127. Team: Graphene Frontiers EL:Zhengtang Luo, PhD – Chief Science Officer 10+ years experience in synthesis of carbon nanomaterials and product development for applications in the area of materials chemistry, chemical separation and electronic devices. Mentor: Mike Patterson – CEO Experienced entrepreneurial leader, manager, and trusted adviser to startups and Fortune 500 companies, providing expertise in growth strategy and international operations. Patterson is an Executive MBA candidate (Entrepreneurial Management, April 2012) at the Wharton School, University of Pennsylvania. PI: A.T. Charlie Johnson, PhD – Founder, Scientific Advisory Board Known internationally for his work in graphene electronics and carbon nanotube electronics. IP from his lab on DNA-carbon nanotube devices for use in an electronic nose system pursued by Nanosense. An author of over 130 peer-reviewed articles, Johnson holds two issued patents, with 18 other patents submitted.
  • 128. 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
  • 129. What’s Next: Strategy and Roadmap 1H 2012 2012 2013+ Commercial Roll-to- Application Phase 4” Scale-Up Roll Design & Prototype Development Product/ TEM Grids Process Licensing Intellectual Property Materials Business Thin, Flexible Displays Revenue 12” x 12” Sheet Roll-to-Roll Mfg. Application R&D Milestone Production Industrial Scale Team “World Leader in Perfect CVD Graphene Activity Scale-Up Sheet Size Continuous Process Innovation” Increase Area Increase Throughput New Applications
  • 130. What’s Next: Secure Partnerships + Investment Distribution Active Customer Manufacturing Partners Conversations Partners Seed Investment Needed
  • 131. Enter I-Corps: Beginning Hypotheses Here’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
  • 132. 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
  • 133. 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
  • 134. 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”
  • 135. 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
  • 136. 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)
  • 137. 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
  • 138. 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
  • 139. The Business Model Canvas Equipment Mfg Scale up Low Cost Education Thermal Mgmt Solutions Universities Customization Higher Quality Service/Maint. Transparent Production Conduct. Downstream Large Area (Touch) fabrication companies Chem/Bio “Industrializable” IP License Sensor CVD Equipment Direct Sales Facilities/Lab License/Royalty Capital equipment Personnel Material Sales Direct Sales/Travel Lab space
  • 140. The Business Model Canvas Equipment Mfg Scale up Low Cost Education Thermal Mgmt Solutions Universities Customization Higher Quality Service/Maint. Transparent Production Conduct. Downstream Large Area (Touch) fabrication companies Chem/Bio “Industrializable” IP License Sensor CVD Equipment Direct Sales Facilities/Lab License/Royalty Capital equipment Personnel Material Sales Direct Sales/Travel Lab space
  • 141. The Business Model Canvas Equipment Mfg Scale up Low Cost Education Thermal Mgmt Solutions Universities Customization Higher Quality Service/Maint. Transparent Production Conduct. Downstream Large Area (Touch) fabrication companies 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
  • 142. Graphene Frontiers Business Model Canvas – PRIOR VERSION (10.18) Scale up Equipment Mfg Low Cost Education Thermal Mgmt Solutions Customization Service/Maint. Universities Higher Quality Transparent Collaborative R Conduct. Production &D (Touch) Downstream Large Area fabrication Membrane companies 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
  • 144. 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
  • 145. Graphene Frontiers Business Model Canvas “B” Scale up Equipment Foldable / Education Flexible Mfg Bendable Transparent Customization Service/Maint. Conductor Universities Higher Quality Collaborative R&D Downstream Large Area Fabrication Companies “Industrializable” IP License Low Cost CVD Equipment Facilities/Lab Intermediate License/Royalty Capital Equipment Personnel product Direct Sales/Travel Lab space
  • 146. Graphene Frontiers Business Model Canvas “B” Scale up Equipment Foldable / Education Flexible Mfg Bendable Transparent Customization Service/Maint. Conductor Universities Higher Quality Collaborative R&D Downstream Large Area Fabrication Companies “Industrializable” IP License Low Cost CVD Equipment Facilities/Lab Intermediate License/Royalty Capital Equipment Personnel product Direct Sales/Travel Lab space
  • 147. How Does This Really Work? NSF Lean LaunchPad Class 10 Weeks From an Idea to a Business
  • 148. 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
  • 149. Initial Idea & Market Opportunity Estimate Total available market • Our invented nanogrids™(c) for environmental technology offers inexpensive, nanotechnologies extremely fast and efficient 2010: $6.1b hydrocarbon decomposition 2014: $21.8b (projected) • It has potential uses in oil decomposition/ environmental Served Available Market remediation 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
  • 150. 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
  • 151. 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 •Marketing manufacturing Photochemistry term industry •Distribution providers • Fully •As-needed leasing •Refineries decomposes oil •Oil service industry •Suppliers of •No energy cost •EPA precursor to use •Federal groups on material •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
  • 152. So, Here’s What We Did TESTED THE CUSTOMER SEGMENTS HYPOTHESIS Company Contact Person Lessons Learned Dow Chemical Ventures Steve Hahn To focus on water cleaning systems; efficiency of catalyst is the key feature Oceanside Water Pollution AlexandreMiot To focus on petroleum-based contamination; Control Plant, SF, CA) skimming Eastern Environmental Deb Engelhardt, Current practices: spill tech pads; Regen Ox Solutions, Inc (LI, NY) Louis Bascelli, (oxidizer) Joseph Napoli Miller Environmental (LI, NY) Dave Reardon Got suggestions for pilot studies; projects cost vary a lot DEC (region 1, NY) Karen Gomez State environmental regulations; contractors Eco-Test Babylon (LI, NY) Thomas Powell Water quality testing procedures and EPA standards GES Edward Savarese Current practice: pump and treat; geologists org. contact David Tonjes DT&S-SBU; Customer is the Env. Engineer consultant WRS environmental; Environtrac Front desk Talked to their R&D people (LI, NY) personnel
  • 153. 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 industry manufacturing •Marketing to use •Refineries providers •Distribution •As-needed •Recoverable •Oil service industry leasing •Customization •EPA •Suppliers of •Risk reduction •Federal groups on precursor remediation material •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)
  • 154. 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
  • 155. Business Model Canvas Version 3 Photocatalysts •IP validation • New Product •Building a brand •Expanding their services •Pilot Studies •Industrial nano- •Green •Remediation manufacturing •Marketing •Continuous/lo of Petroleum- providers • Decomposes oil ng term •Distribution based oil polluted water •No energy cost to use •Suppliers of •Fast Remediation precursor •IP protection •Partner/other •Recoverable material 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
  • 156. 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)
  • 157. 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?
  • 158. Business Model Canvas Version 4 Photocatalysts •IP validation •Building a brand •Expanding • New Product their services •Pilot Studies •Industrial nano- •Green •Remediation manufacturing •Marketing •Continuous/lo of Petroleum- providers • Decomposes oil ng term based oil polluted water •No energy cost to use •Suppliers of •Fast Remediation precursor •IP protection •Recoverable material •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
  • 159. 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
  • 160. So, Here’s What We Found Industry likes our product and pricing Our Product* Estimated Cost ExistingProductinMarket Rolls of fabric-like material (Sold $10 U*** per square foot) Oil Absorbent $ 20 Blankets (3x2 .5 feet) $50 P***Oil-Only Weighted Absorbent Blanket $ 112 Pads mat for small spill (15" x $30 B*** INDUSTRIES Buff Oil Absorb Pads 18“) $ 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 to break down hydrocarbons into eco friendly products
  • 161. Industry Expert/Customer Testimonials “I feel your purchase prices are too high for the mass of the remediation market. For a massive spill of 100,000 gallons or more, the cost would compare unfavorable with skimming and transporting for reclamation. For small spills your product is in competition with the cost of conventional absorbents plus landfill disposal. In this case, your $10 per sq. foot compares with $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 the fabric, 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 are produced when these are incinerated? Also, would this product work on water/ocean/river spills?” James Cressy, Project Manager, Impact Environmental
  • 162. 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 oil precursor polluted water material •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
  • 163. So, Here’s What We Found Produced 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 water WHAT IS BTEX? BTEX is the abbreviation used  Produced water is usually treated to remove most free oil for four compounds found in petroleum products. The compounds are benzene,  Need to treat the remaining amount of soluble and toluene, ethylbenzene, and volatile petroleum hydrocarbons xylenes.  BTEX average concentration remaining about 5mg/L  Allowable limit of BTEX in drinking water 5mg/L
  • 164. Turning Wastewater into Drinking Water Reducing benzene contamination by 1000 times! Nanogrids™ © From 3.5 ppm To 2.4 ppb
  • 165. 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
  • 166. 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 water precursor • Decomposes oil ng term material •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
  • 167. Market Size Diagram Global World Water Nanocatalyst Market Treatment Market $6b By 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
  • 168. Distribution Channel Diagram Distributors Customers Purchasing Individual Dealers/Potential Products Partners Filtration Industry/Integrated Solutions
  • 169. Revenue model diagram First year revenues: 20 SME of $100,000 sales/year= $2M 2 LC of $1M /year =$2M 60 first year revenues : $4M Second year revenues: 75% retention of SME 50 15 SME of $150,000 sales/year= $2.25M 2 LC: $5M sales/year second year revenues $7,25M 40 ($M) Third year revenues: maintain the domestic levels with existing customers but expand international sales 30 to $3.5M This will set us over $10M 20 Fourth year revenues: Add new line of products for existing market; expand into adjacent markets (off-site remediation; water purification; 10 etc) Revenues to reach $50M 0 Year 1 Year 2 Year 3 Year 4
  • 170. 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
  • 171. 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
  • 172. How Does This Really Work? NSF Lean LaunchPad Class 10 Weeks From an Idea to a Business
  • 173. Total Customers Contacted: 86 RIT NSF ICORPS Dec 14 2011 173
  • 174. Initial Business Concept Global 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 174
  • 175. Principal Investigator Mentor Dr. Satish Kandlikar Dr. Suresh Sunderrajan Gleason Professor President, NNCrystal Corp. Mech. Engg., RIT Entrepreneurial co-Lead Entrepreneurial co-Lead AnkitKalani KirthanaKripash MS Engineering (Candidate) RIT MBA (Candidate), RIT Kandlikar and RIT Team – NSF I-Corps
  • 176. Kandlikar and RIT Team – NSF I-Corps
  • 177. 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
  • 178. Other Components Arka provides replacement lamps Arka Lights •LED array, Lamp components Luminaire •LED luminaires Manufacturers and Fixtures Distributor Contractor Project/Owner
  • 179. Customers Distribution and Supply : The customer is • We lack in unwilling to buy the product Lamp/Luminaire production atcurrent prices : The final consumer • OEMs were interested in is highly dependent on incorporating our enhanced Gatekeepers (suppliers) for thermal module in their guidance in product choice product We had to pivot! Kandlikar and RIT Team – NSF I-Corps
  • 181. Arka Lights Arka provides Thermal Modules OEMs • LED luminaires and Fixtures Other Distributor Components Contractor Project/Owner • Institutions, Home Owners, Distributors
  • 182. Customers Environment Key Partners We would like to enter into a partnership to Heat Exchanger develop heat Manufacturer pipe based products.
  • 183. • 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
  • 184. 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 184
  • 186. Design Arka Sources and Heat Exchanger Technical Lights Manufacturer Experts Division? Partnership? Market Market …
  • 187. • 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
  • 188. • 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
  • 191. • 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
  • 194. 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)
  • 195. • 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
  • 196. • 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.
  • 197. Week 1 - 9
  • 207. Market Size How Big is This Opportunity?
  • 208. Market/Opportunity Analysis How Big is It?: Market/Opportunity Analysis – Identify a Customer and Market Need – Size the Market – Competitors – Growth Potential
  • 209. 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
  • 210. 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
  • 211. 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
  • 212. 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
  • 214. The Opportunity Global Catalyst Market = Chemical $29.5 B Catalyst Hydrogen- Pd/C • Emissions ation Catalyst Market Catalyst = $1.1 B • Refinery = $7 B = $1.5 B • Chemical
  • 217. MARKET SIZE A m e r i c a n s L o v e t o Ea t M e a t a n d S n a c k  Giant Markets > Meat: $160B / Snacks: $70B 2009 US Snack Food > Meat Snacks: $4B Retail Sales  Varying Growth Rates Salty > Meat: + 5% $30B > Snacks: + 15% >Jerky: + 5%  Mega Consumer Trends Converging Sweet >Healthy, More Flavorful, Higher Quality $35B  Snacks Driven by Innovation / News Meat  Meat Snacks / Jerky Generally Sleepy > Limited Innovation $4B > “Gut Stuffer” Image Source: US Package Facts  Change Underway Driven by New Entrants >All-Natural > 10% Growth Latest 52 Weeks Nielsen F/D/M
  • 218. $50 Billion Dollar Protein Therapeutic Market $1.4 Billion Dollar Cell Line Sales Market $140 Million Dollar Target
  • 220. Nitrate Sensor Market SAM: $1.5B/yr TAM: $6 B/yr Assumptions: Target Market: $50-75M/yr >100K systems 25K pivots w/ Assumptions: 3-5% licensing worldwide 1 sensor/acre Recurring consumable costs (125 sensors/pivot) would add to revenue
  • 221. Market size - Landlords & Rental Units Units by Landlord Portfolio Size in % of Units, by Landlord Portfolio USA (millions) Size, Owned by a Single Individual 100% 92% 90% 77% 0.06 80% 0.46 70% Small: 1 to 4 60% 50% Medium: 5 to 49 40% 32% 2.20 30% Large: 50 or More 20% 10% 50% of the “Small” landlords own just one unit. 0% Small: 1 to 4 Medium: 5 to Large: 50 or 49 More Rental Real Estate is the Largest “Mom and Pop” business in America: The vast majority of properties are owned by a single individual that owns only one property. Source: US census data
  • 222. The market size for metastatic cancer diagnostics in the U.S. is estimated to be $805M p.a. Methodology: Value: Explanation: Source: U.S. population size 313M  Total U.S. population in 2012  U.S. Census x Bureau estimate U.S. incidence of all cancers 0.512%  Treatment is typically given in  ACS Cancer Facts the first year following diagnosis & Figures 2011 = Total U.S. cancer incidence 1.6 M x % diagnosed with regional  Cancers that spread to local or  NCI SEER 2011 39.4% or distant cancers distant lymph nodes or organs data = Patients w/ regional or 628,420 distant cancers x Cost of diagnosis and  Weighted avg. patient cost p.a.  JAMA. 2010; $1,285 monitoring (annually) for imaging procedures (2008) 303(16):1625-1631 = Market size for metastatic $805M cancer Dx / monitoring
  • 227. Hypothesis Testing Examples
  • 228. • Hypotheses to test Hypothesis Test There is strong Interest in facilitating Interviews (landlord and providers), web rental maintenance support ad conversion Service providers are willing to pay for Interviews (need to determine lead generation through our site consensus willingness to pay) There will be a higher response rate Interviews (tenant and landlord), survey amongst tenants and landlords for an (tenant), web ad conversion of different “exclusive” community messages Tenants are willing to pay a nominal fee Interviews (tenant), survey (tenant), ($1-2) for convenient rent/utility online web ad conversion. payment service (Need at least 0.08% CPM conversion to be profitable) Real Estate agents are willing to help Interviews push this offering to their customers 228
  • 233. Week 1  Week 3 Hypothesis Test Results • Existing prepaid cards add value  Interviewed supermarket  User acquisition is critical  to a subset of the population executives, payment user engagement is everything – Underpenetrated processors, private label card opportunity manufacturers, prepaid  Underpenetrated opportunity – We can find a better program managers, loyalty because people: channel to reach this consultants, and data analytic  Don’t understand the value customer segment and firms of the card convert them  Don’t know about the card  Haven’t bought one yet • Existing prepaid cards are flawed and can be improved  Potential customers are aware of – We can do something clever and understand prepaid, but: to shake up the fee  Hate the fees structure and/or build in a  Haven’t bought one yet new feature (e.g., rewards) • Solution = prepaid + loyalty card – Distributed at retail POS
  • 234. Week 3  Week 4 Hypothesis Test Results • Existing prepaid cards add value  Interviewed end users at End Users see value: to a subset of the population Walmart, food banks, bus  More likely to sign up for – Underpenetrated prepaid via assisted POS sale stops, payday lenders, their  Active vs. passive sale opportunity homes, and supermarkets hypothesis validated – We can find a better  More likely to keep and reload channel to reach this  Interviewed execs at Green cards with ongoing cash customer segment and Dot, Rush Card, and NetSpend rewards  Higher retention via loyalty convert them hypothesis validated • Existing prepaid cards are flawed Retailers see value: and can be improved  New revenue opportunity is compelling – We can do something clever  Access to purchasing data to shake up the fee outside the store is compelling structure and/or build in a new feature (e.g., rewards) Industry Trends  Loyalty + prepaid programs are the future • Solution = prepaid + loyalty card  Industry execs like this idea a – Distributed at retail POS lot and are actively exploring it
  • 235. Week 4  Week 5 Hypothesis Test Results • Customer awareness and  $5 for 5 minutes campaign  20 preliminary signups education are key obstacles to  Speak to as many potential customer acquisition and customers as possible ask for  Built empathy around customer retention an actual commitment prepaid needs  Immediacy • Channel: Assisted sale at POS  Security fears trumps current passive j-hook  Fees sale  Channels – Active sale enhances  Discovered other needs awareness & education  Job-seeking  Saving for kids’ education  Understood observed behaviors • Product: Combining prepaid +  High churn loyalty  Lack of reloading – Cash rebates improve  Lack of regular usage retention and incentive to reload  Loyalty component not required if you can service the true pain points
  • 236. 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
  • 238. Backup Idea Business Model Size Opportunity Customer Development

Editor's Notes

  1. The Background: Graphene is an amazing material that will improve and disrupt entire industries, including electronics and clean energy
  2. Problem statement: None of these things will happen unless and until graphene can be produced in large quantities – Commercial Scale
  3. Solution: We can do this. Our technology offers the best path forward to enable commercial scale production of graphene films at low cost.
  4. 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
  5. Rock Stars.
  6. We may have been overconfident.
  7. So here’s the plan.
  8. 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…
  9. We may have been overconfident.
  10. We:--Made a target list--asked for introductions and referrals--worked our networks--made a BUNCH of calls
  11. --Not successful: AdWords--Very successful: Luck!!
  12. The numbers
  13. 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**
  14. 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
  15. 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…
  16. …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:
  17. Lesson #1: Focus.We narrowed our scope to the three applications we believed were most promising and set out to test our assumptions
  18. 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”
  19. 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
  20. 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.
  21. The big week:Near term opportunity: TEM GridsMedium term opportunity: Thin, flexible displays
  22. 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
  23. Canvas “B”: Flexible transparent conductors for Displays
  24. 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.)
  25. Tell them where we are now.
  26. 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.
  27. 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.
  28. 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….”
  29. 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.
  30. 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.
  31. 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?