Building a Compelling Value Proposition

@NYUEntrepreneur
Venture Secrets:
Building a Compelling
Value Proposition for
Your Research
Frank Rimalovski
Executive Director, NYU Entrepreneurial Institute
Managing Director, NYU Innovation Venture Fund
Instructor, NSF Innovation Corps (I-Corps)
Mar 25, 2015

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April&8th:&Meet&an&Entrepreneur:&Rachel&Meyer!
Co$Founder!Shoots!&!Roots!
Upcoming!Series!@!the!Leslie!eLab!
Mid&May:&Life&Science&VC&1st&Pitch&
Invita?on&Only&
Preference&for&BioVenture&Speaker&Series&ADendees!

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Agenda
3
1.  What makes for a successful
startup?
2.  What we used to believe
3.  What we now know: The right way
to start (up)
4.  Beneﬁts to this approach

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What makes for a successful
startup?

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Commercialization Myth
5
Basic &
Applied
Research
Scientific
Discovery/
Invention/
IP Creation
Venture
Formation
& Growth

@NYUEntrepreneurThe “valley of death”
Commercialization Reality
Basic &
Applied
Research
Scientific
Discovery/
Invention/
IP Creation
Customer
Discovery &
Prototype
Dev
Business
Model &
Team
Formation
Venture
Formation
& Growth
• Customer/market discovery
• Engineering/prototypes
• Mentors and advisors
• Collaborative spaces
• Business leadership
• Legal counsel
• Capital

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Two parts to
Translational Medicine
1.  Advancing the science/technology
2.  Finding a repeatable business model
u  Current eﬀorts focus on #1
u  Successful eﬀorts require both
7

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Answers are Outside Your Lab
u  You may be smartest person in your lab
u  Not smarter than collective intelligence of
your potential customers, partners, payers
& regulators
u  Can’t learn by reading papers or lectures
u  Experts are overrated
You need to get outside your building

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It’s Bigger Than the Revenue Model
u  Testing hypotheses makes substantive changes to
biz model before you do science/design
o  Deﬁne clinical utility
o  Who core & tertiary users/buyers/payers are
o  Sales & marketing process required for initial
revenues and downstream commercialization
o  Data required for future partnerships/collaborations
o  Intellectual property risks
o  Regulatory pathways
o  Reimbursement strategies
o  Roles of partners
u  Aﬀects your biological & clinical hypotheses
9

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Need to do this before
ﬁnishing the science or
building/designing the product

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Evidence-based
Entrepreneurship
(aka the Lean Startup)
11

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What We Used to Believe

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Startups are a Smaller Version
of a Large Company

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Start with an Operating Plan
and Financial Model

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All I Need to Do is Make the Forecast

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What We Now Know

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“Everyone
has a plan
until they get
punched in
the face!”

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Planning comes before the plan

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Business Model Canvas

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

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So what do we do?

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Customer Development

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A temporary organization
designed to search
for a repeatable and scalable
business model
A startup is…

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What is a Business Model?
How a company
creates value for itself
while delivering
products or services for
customers

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What is a Business Model?

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9 Guesses
29
Guess
Guess
Guess
Guess
Guess
Guess
Guess
Guess Guess

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Testing Hypotheses
u Apply the scientiﬁc method to
customer discovery
31
Observe
phenomena
Formulate
hypothesis
Test
hypothesis
via rigorous
experiments
Establish
theory based
on repeated
validation of
results
Modify
hypothesis
PIVOT!

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Customer Development is how you
search for the business model

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First test the problem,
then test the solution
33

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Value Proposition
What Problem Are You Solving?

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Value Proposition
describes the beneﬁts
customers can expect
from a bundle of
products and services

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Customer Segment
Who Cares?

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Customer Proﬁle
Who are they and
why would they buy?

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Problem-Solution Fit
Fit

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So where does my
technology come in?

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It’s not about your technology!
40

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So where does my
technology come in?
Customers don’t care about technology
They are trying to solve a problem
Customer discovery is about identifying that
problem & exploring how you could solve it

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Key Questions for Value Prop
u  Problem Statement: What is the problem?
u  Technology / Market Insight: Why is the
problem so hard to solve?
u  Product: How do you solve it today?
u  Competition: Who is delivering that solution?
u  Clinical utility: What level of improvement
in eﬃcacy/safety/cost/etc. is needed?
u  Market Size: How big is this problem?

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Deﬁne Customer Archetype
u  Who are they?
o  Position / title / age / sex / role
u  How/where do they buy?
o  Discretionary budget (name of
budget and amount)
u  What matters to them?
o  What motivates them?
u  Who inﬂuences them?
o  What do they read/who do they
listen to?

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What is your potential customer
trying to get done?
Jobs to be Done
46

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…they want
a quarter-inch hole!"
People don't want to buy
a quarter-inch drill…
SOLUTION
(WHAT)
JOB
(WHY)
Innosight
LLC

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Who has what job to be done?
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“Make me efficient at
my work”
FUNCTIONAL
“Convey my
professional status”
SOCIAL
“Make me confident
that I can get the job
done”
EMOTIONAL
“Help me perform like
a professional”
JOB
•  Prestigeà show that
I use the latest
starting with my
equipment
•  Valueà demonstrate
my ability to
recognize value
•  Confidenceà ensure
that I can count on
my equipment
•  Versatilityà give me
the ability to work in
different conditions
•  Accuracy à the
ability to only effect
targeted tissue
•  Speedà help me
complete the task
quickly
Innosight
LLC

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Customer Proﬁles
Innosight
LLC

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put yourself in
the customers’
shoes

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Who’s the Customer in a Company?

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Reimbursement!

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How Do They Interact to Buy?
u  Organization Chart
u  Inﬂuence Map
u  Sales Road Map

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Customer
Ecosystem of people you need
to understand, satisfy and
appeal to
in order to get them
to buy your product.

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Technology Lifecycle Adoption Curve
60

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Your Business Model Will Change…
61

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Product / Solution Fit

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Case Study: The Smart Needle
Source: Paul Yock, NIH I-Corps 2014

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Great concept: transducer inside
needle
…just listen to localize
blood vessel

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Source: Paul Yock,
NIH I-Corps 2014

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What’s the need?
A way to localize arteries and
veins to improve the speed and
accuracy of needle sticks

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A way to localize arteries and veins
to improve the speed and accuracy
of needle sticks
Need statement:
•  fast
•  accurate
•  needle size no bigger than current
•  maintain sterility
Need criteria:

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What we missed!
The existing approach was cheap!

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A cost-effective way to localize
arteries and veins to improve the
speed and accuracy of needle sticks
Need statement:
•  (where is there real value in time saved?)
•  Accurate
•  Needle size no bigger than current
•  Maintain sterility
Need criteria:

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For most patients it’s not worth it to
add the expense of extra technology
to save a little time
The real need is in high-risk patients:
trauma, acute MI, neonatal ICU

amico.com

Dovemed.com


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A cost-effective way to localize arteries and
veins to improve the speed and accuracy of
needle sticks in high-risk patients
Need statement:
•  Less than $25 additional per patient
•  Accurate
Need criteria:

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We missed something else!
The technique must
be user-friendly and
easy to learn

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A cost-effective way to localize arteries and
veins to improve the speed and accuracy of
needle sticks in high-risk patients
Need statement:
•  Less than $25 additional per patient
•  Require minimal new skill & training
•  Accurate
Need criteria:

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The Bottom Line
Validating your need at the outset
is the single most cost-eﬀective
strategy for minimizing risk!
It provides the basis for all
subsequent technical, clinical
and business strategy decisions

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I’ve ﬁgured out who I’m selling to
and what pain point I’m solving!
I’m ready to start building and
selling… Right?!

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? ✔ ✔
?
?
?
?
? ?
Not so fast!

@NYUEntrepreneur
? ✔ ✔
?
?
?
?
? ?
Especially in the Life Sciences…
You can’t have a valid
business until you test
both sides of the
canvas!

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Key Activities
What’s Most Important for the Business?
•  Pre-clinical
studies
•  Clinical Trials
•  FTO
•  Regulatory
Pathway
•  CPT Coding

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Key Resources
What are your most important assets?
•  Data
package
•  Intellectual
Property
•  Non-dilutive
funding

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Key Partners
Who are your Partners and Suppliers?
•  Patent counsel
•  Clinical sites
•  CROs/
designers
•  Contract Mfg
•  Foundations
•  Patient Adv
Groups
How will these
relationships
work?

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Channels
How does your product get to customers?
•  Distributors
•  Direct sales
•  Business
development

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Customer Relationships
How do you Get, Keep and Grow Customers?
•  SAB
•  KOLs
•  Papers
•  Conferences
•  PR

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Revenue Streams
How do you make money?
•  Reimbursement?
•  Capital purchase/lease
•  ???

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Cost Structure
What are the Costs and Expenses?

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The Minimum Viable Product
85

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Help start the process of learning
as quickly & cheaply as possible
The Minimum Viable Product
86

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What is this?
87

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What is this?
88

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What is this?
89

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Why create an MVP?
u  Answer questions & generate new ones
u  Validate your assumptions
u  Compare alternatives
u  Fail early & cheaply
u  Visualize your ideas & share with others
o  Team
o  Customers
o  Investors
90

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Why use this approach?

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1. Find go-to-market strategy…
92

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…and do it more quickly
93

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2. Design an MVP
94
Start the process of
learning as quickly &
cheaply as possible
Minimum Viable Product

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3. Build a Team
95
“Co-founder skills are the ﬁrst derivative of
the business model canvas”
SteveBlank.com

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4. Raise Funds
96
POC
Grants

Compe99ons

Seed
Funds

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5. Launch a better business
97

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What’s next?
Leslie eLab
• 6,000 sq ft NYU
Startup Hub
• Daily workshops
& speakers
• Collaborative
workspaces
• Prototyping lab
• Entrepreneur-in-
residence
• 16 Washington Pl
10am-10pm M-F
Innovation
Corps (I-Corps)
• Prior NSF
(& soon NIH)
grantees
• 7-weeks
• $50,000 for
NSF I-Corps
• Immersive,
experiential
startup training
Rolling
Applications
5-Day Lean
Launchpad
Class
• 5-day immersive
class (for credit)
• Grad students
• Co-taught by
Steve Blank
• Applied learning
for your startup
• Team-based
Offered last week
in Aug (24-28)

Summer
Launchpad
Accelerator
• 10-week program
• For graduating
students
• $7,500 & space
• Entrepreneur &
investor mentors
• Lean Startup
bootcamp
Apps due Apr 17
98

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Questions?
entrepreneur@nyu.edu
@nyuentrepreneur
nyu.edu/entrepreneur
nyuentrepreneur.com
16 Washington Place
99

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Helping startups start up

Building a Compelling Value Proposition

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