1. How to Fail Less
Business Models and
Customer Development
Steve Blank
www.steveblank.com
@sgblank
2. Agenda – Day One
• 9:00 - 11:00 Introduction to Customer Development
• 11:00 - 11:30 break
• 11:30 - 13:00 value proposition
customer segments
• 13:00 – 14:30 lunch working session
Students prepare first version of business model canvas
• 14:30 – 16:00 Student presentation of business
model canvas
• 16:00 – 16:15 break
• 16:15 – 17:00 distribution channels
Homework: 1) update your canvas
2)develop a customer discovery action plan
3. Agenda – Day One
• 9:00 - 11:00 Introduction to Customer Development
• 11:00 - 11:30 break
• 11:30 - 13:30 value proposition
customer segments
• 12:30 – 13:30 lunch working session
Students prepare first version of business model canvas
• 13:30 – 15:00 Student presentation of business
model canvas
• 15:00 – 15:15 break
• 15:30 – 16:30 distribution channels
Homework: 1) update your canvas
2)develop a customer discovery action plan
4. Agenda – Day Two
• 9:00 - 10:30 Student presentations on customer
discovery action plan
• 10:30 - 11:30 customer relationships (get/keep/grow)
• 11:30 – 12:00 break
• 12:00 - 13:00 revenue streams
• 13:00 – 14:00 lunch working session
Students present
• 13:30 – 14:15 partners
• 14:15 - 15:00 resources, activities, costs
• 15:00 – 15:15 break
• 15:30 – 16:30 Customer Development Manifesto
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
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
34. Search Execution
Strategy Business Model
Operating Plan +
Hypotheses
Financial Model
Process Customer & Product Management
& Agile Development
Agile Development
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. Search
Strategy Business Model
Hypotheses
Process
Customer Development,
Agile Development
Organization
Customer Development
Team, Founder-driven
43. 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
90. CBiRC, Iowa State University
Bio-basedsustainable chemical intermediates for
polymer bio-surfactants, bio-lubricants
I-Corps Team
ShivaniGarg
Entrepreneurial Lead
Graduate student, 3.5 yrs in
biochemistry
Bio-based chemical Dr. Basil Nikolau
Principal Investigator
intermediates Professor, 30 yrs in biochemistry
Dr. Peter Keeling
I-Corps Mentor
Entrepreneur, 30 yrs in biotechnology
industry
91. Interviews conducted = 100
CBiRC, Iowa State University
Bio-basedsustainable chemical intermediates for
polymer bio-surfactants, bio-lubricants
I-Corps Team
ShivaniGarg
Entrepreneurial Lead
Graduate student, 3.5 yrs in
biochemistry
Bio-based chemical Dr. Basil Nikolau
Principal Investigator
intermediates Professor, 30 yrs in biochemistry
Dr. Peter Keeling
I-Corps Mentor
Entrepreneur, 30 yrs in biotechnology
industry
92. Value proposition
Problem Solution Features of value
proposition
• Non- • Sustainable, bio-based • Bi-functional molecules
renewable, petroleum replacement • Flexibility in chain length
derived feedstock for • Higher performance • Flexibility in branching
surfactant, lubricant • Improved cold
industry temperature tolerance of
detergents, lubricants
95. Business Model Canvas 1.0
•Co-create
•Production, yi value proposition
eld, quality Problem - Non- • Customer •Existing
•Match renewable goodwill and market Polymer
- Bio-mass
customer‟s feedstock for trust manufacturers,
suppliers
product specs making polymer • Customer Biotech
Solution communities companies,
- Contractual
(Product) – Bio-
scale-up
based and • New market -
sustainable Novel bio-plastic
-Technology •Manufacturing replacement companies?
providers facility Features - Bi- •Physical
•IP functional and product •Multi-sided
-Utility providers • Human customizable •Indirect channel market?
resources, capit •Wholesale
al
• Sell bio-based monomers
•Fixed – Capital • Added value pricing based on
Value•Variable – Manufacturing,
prop. hypothesis: Bio-mass
Bio-based and sustainable
customization of products
• Licensing?
Customer segment hypothesis: Polymer manufacturers, new markets
Test: Talked to biochemical companies
96. Value Proposition, Customer Segments:
Experiments
Talked to potential customers
Biochemical companies, Market research (15)
Senior Scientist
Vice-President, Technology Development R&D Director Senior Scientist
Senior Business Development Manager Research Scientist Market Research Analyst
97. Value Proposition, Customer Segments:
Results
Surfactants: new market ($24bn)
Monomer Monomer
manufacturer “Have you manufacturer
considered
surfactants
Polymer space?”
formulator Polymer Surfactant
- DSM formulator Formulator
Polymer Polymer Surfactant
user user user
Consumer facing Consumer facing
company company
Consumer Consumer
98. Value Proposition, Customer Segments: Iteration
Business Model Canvas 4.0
Problem - Non-
renewable
•Existing market
feedstock
Polymer
Solution – Bio-
manufacturers, Bi
based, sustainable
otech companies,
replacement
Surfactants,
Features - Bi-
Home &
functional,
Personal Care
customizable
sector
• „Drop-in‟
monomers
• New market -
•Diacids(chain
Novel bio-plastic
length: C10-C16)
companies?
•New
functionalities
•Multi-sided
(cyanide, amine)
market?
Channel hypothesis: Indirect channel of wholesale
Test: Talked to chemical distributors
100. Channels: Results
Pivot: Entry barriers are key
Monomer
manufacturer
Distributor
High entry barriers Polymer Surfactant Low entry barriers
formulator formulator
(Petro-based is (Market pull for green
hard to dislodge.) Distributor products)
Polymer Surfactant
user user
“Petro industry
Consumer facing
wishes that you
company
guys did not
exist!”
- Draths
Consumer
101. Channels: Iteration
Business Model Canvas 5.0
Problem - Non- Existing markets
renewable feedstock •Polymer
manufacturers
Solution – Bio-
based, sustainable •Biotech companies
replacement
•Regional supply of Customer in value
surfactant raw- chain
material Formulator
• Avoidance of single companies
material sourcing
(petro)
• Green Existing market
•Physical product sectors
Features - Bi- •Indirect channel •Surfactants
functional, customiz •Wholesale
able Distributors •Home & Personal
• „Drop-in‟ monomers Care sector
Customer Relationship Hypothesis: Co-create value proposition
Tests: Talked to surfactant/lubricant companies
102. Customer Relationships: Experiments
Here’s what we did…
Surfactants (4) Lubricants (4)
Business Marketing Leader
Research Scientist Technical Director
Senior Scientist
Catalyst Research
Principal Scientist Engineer
Director, R&D Tribology Section Leader
Other bio-based companies (6)
Biobased Chemicals Analyst
President, Personal Care
Program Manager
Vice-President, R&D
Senior Scientist, R&D Global Head, R&D
103. Customer Relationships: Results
Here’s what we found…
Monomer
manufacturer
Distributor
Surfactant users influence
Surfactant surfactant formulator
formulator decisions, so need to
partner with surfactant users
Surfactant first!
user
Decision Green Panel – Focus on
Makers
reducing petroleum based
Consumer facing products
company
Consumer
Market Pull
(Sustainability
agenda)
104. Customer Relationships: Iteration
Business Model Canvas 6.0
Problem - Non- •Co-create value
renewable feedstock proposition
Solution – Bio- • Customer goodwill Customer in value
based, sustainable and trust chain
replacement • Customer Formulator
•Regional supply of communities companies
surfactant raw- •Trade-shows, PR
material •Conferences, surve
• Avoidance of single ys Existing market
material sourcing
sectors
(petro)
•Surfactants
• Green
•High-performance
•Lubricants
Features - Bi-
•Home & Personal
functional,
Care sector
customizable
• „Drop-in‟ monomers
Revenue Model Hypothesis: Value-based pricing, licensing
Tests: 1. Developed a product sheet
2. Talked to 7 surfactant companies
3. Talked to 6 production economics experts
107. Revenue model: Result 2
Scale up is the key
Less than 100 c/lb is achievable
Optimized scale up (~500,000 lb/day)
“You give us
1kg, we can
evaluate.”
Earlyvangelists
108. Revenue Model: Iteration
Business Model Canvas 7.0
•Production, yiel
d, quality
- Cheapest bio-mass
•Match customer‟s
suppliers
product specs
• Constant
- Contractual scale-
innovation
up
-Technology
providers
-Utility providers
- Surfactant Users
(P&G)
•Sell bio-based monomers
Partners Hypothesis: Bio-mass suppliers, scale-up, technology
• Added value pricing based on customization of
providers, utility providers, surfactant users products
•Create demand by partnering with Surfactant
Tests: Talked to potential partners Users and then sell to Formulators
• Licensing
109. Partners: Hypothesis
Here’s what we hypothesized…
Market Biomass
Research supplier
Partners Monomer
Start-up manufacturers
Incubators
Distributor
Scale-up Surfactant
providers formulator
Surfactant
Technology
Decision user
partners
Makers
Consumer facing
company
Consumer
110. Partners: Experiments
Here’s what we did…
Market Start-up Scale-up Technology
Research (3) Incubators (4) providers (4) partners (3)
111. Partners: Iterate
Business Model Canvas 8.0
-Market Research
Agencies
- Start-up incubators
Cheapest bio-mass
suppliers
- Contractual scale-
up
-Technology
providers
-Utility providers
- Surfactant Users
(P&G)
What‟s next?
State funding (i6 grant)
Federal funding (SBIR)
116. Business Model Canvas 1.0
•Co-create
•Production, yi value proposition
eld, quality Problem - Non- • Customer •Existing
•Match renewable goodwill and market Polymer
- Bio-mass
customer‟s feedstock for trust manufacturers,
suppliers
product specs making polymer • Customer Biotech
Solution communities companies,
- Contractual
(Product) – Bio-
scale-up
based and • New market -
sustainable Novel bio-plastic
-Technology •Manufacturing replacement companies?
providers facility Features - Bi- •Physical
•IP functional and product •Multi-sided
-Utility providers • Human customizable •Indirect channel market?
resources, capit •Wholesale
al
• Sell bio-based monomers
•Fixed – Capital • Added value pricing based on
•Variable – Manufacturing, Bio-mass customization of products
• Licensing?
117. Business Model Canvas 2.0
Problem - Non- •Co-create
•Production, yi value proposition •Existing
renewable
eld, quality • Customer market Polymer
feedstock for
•Match goodwill and manufacturers,
- Bio-mass making polymer
customer‟s trust Biotech
suppliers Solution
• Customer companies,
product specs (Product) – Bio-
communities Surfactant
- Contractual based and
manufacturers
scale-up sustainable
•Manufacturing replacement
• New market -
-Technology facility Features - Bi-
Novel bio-plastic
providers •IP functional and •Physical companies?
• Human customizable product
-Utility providers resources, capit • „Drop-in‟ •Indirect channel •Multi-sided
al monomers •Wholesale market?
•SRI (Market •Diacids
Info)
• Sell bio-based monomers
•Fixed – Capital • Added value pricing based on
•Variable – Manufacturing, Bio-mass customization of products
• Licensing?
118. Business Model Canvas 3.0
Problem - Non-
renewable •Co-create
•Production, yi feedstock value proposition •Existing
eld, quality Solution – Bio- • Customer market Polymer
- Bio-mass •Match based, sustainable goodwill and manufacturers,
suppliers customer‟s replacement trust Biotech
product specs Features - Bi- • Customer companies,
- Contractual functional, customi communities Surfactant
scale-up zable manufacturers
•Manufacturing • „Drop-in‟
-Technology facility monomers • New market -
providers •IP •Diacids(chain •Physical Novel bio-plastic
• Human length: C10-C16) product companies?
-Utility providers resources, capit •New •Indirect channel
al functionalities •Wholesale •Multi-sided
•SRI (Market (cyanide, amine) market?
Info)
•State funding, SBIR funding
•Sell bio-based monomers
•Fixed – Capital
• Added value pricing based on
•Variable – Manufacturing, Bio-mass
customization of products
• Licensing
119. Business Model Canvas 4.0
Problem - Non-
renewable •Co-create
•Production, value proposition •Existing market
feedstock
• Customer Polymer
yield, quality Solution – Bio-
•Match goodwill and manufacturers, Bi
- Bio-mass based, sustainable
customer‟s trust otech companies,
suppliers replacement
product specs • Customer Surfactants,
Features - Bi-
communities Home &
- Contractual functional, customi
Personal Care
scale-up zable
sector
•Manufacturing • „Drop-in‟
-Technology facility monomers
• New market -
providers •IP •Diacids(chain •Physical Novel bio-plastic
• Human length: C10-C16) product companies?
-Utility providers resources, capit •New •Indirect channel
al functionalities •Wholesale •Multi-sided
•SRI IHS (cyanide, amine)
market?
(Market Info)
•State funding, SBIR funding
•Sell bio-based monomers
•Fixed – Capital
• Added value pricing based on
•Variable – Manufacturing, Bio-mass
customization of products
• Licensing
120. Business Model Canvas 4.3
Problem - Non- Existing markets
renewable feedstock •Polymer
•Co-create value
manufacturers
•Production, yiel proposition
Solution – Bio-
d, quality • Customer
based, sustainable •Biotech companies
•Match customer‟s goodwill and trust
- Bio-mass suppliers replacement
product specs • Customer
•Local supply of Customer in value
communities
- Contractual scale- surfactant raw- chain
up material Formulator
• Avoidance of single companies
-Technology material sourcing
providers (petro)
•Manufacturing • Green Existing market
-Utility providers facility •Physical product sectors
•IP Features - Bi- •Indirect channel •Surfactants
• Human functional, •Wholesale
resources, capital customizable Distributors •Home & Personal
•IHS (Market Info) • „Drop-in‟ monomers Care sector
•Sell bio-based monomers
•Fixed – Capital • Added value pricing based on customization of
•Variable – Manufacturing, Bio-mass products
• Licensing
121. Business Model Canvas 5.0
Problem - Non- Existing markets
renewable feedstock •Polymer
•Co-create value
manufacturers
•Production, yiel proposition
Solution – Bio-
d, quality • Customer
based, sustainable •Biotech companies
•Match customer‟s goodwill and trust
- Bio-mass suppliers replacement
product specs • Customer
•Regional supply of Customer in value
communities
- Contractual scale- surfactant raw- chain
up material Formulator
• Avoidance of single companies
-Technology material sourcing
providers (petro)
•Manufacturing • Green Existing market
-Utility providers facility •Physical product sectors
•IP Features - Bi- •Indirect channel •Surfactants
• Human functional, customiz •Wholesale
resources, capital able Distributors •Home & Personal
•IHS (Market Info) • „Drop-in‟ monomers Care sector
•Sell bio-based monomers
•Fixed – Capital • Added value pricing based on customization of
•Variable – Manufacturing, Bio-mass products
• Licensing
122. Business Model Canvas 6.0
Problem - Non- •Co-create value
renewable feedstock proposition
Solution – Bio- • Customer goodwill
•Production, yiel Customer in value
based, sustainable and trust
d, quality chain
replacement • Customer
•Match customer‟s Formulator
- Bio-mass suppliers •Regional supply of communities
product specs companies
surfactant raw- •Trade-shows, PR
- Contractual scale- material •Conferences, surve
up • Avoidance of single ys Existing market
material sourcing
sectors
-Technology (petro)
•Surfactants
providers • Green
•Manufacturing •High-performance
facility •Physical product •Lubricants
-Utility providers
•IP Features - Bi- •Indirect channel
• Human •Wholesale •Home & Personal
functional, customiz
resources, capital Distributors Care sector
able
•IHS (Market Info) • „Drop-in‟ monomers
•Sell bio-based monomers
•Fixed – Capital • Added value pricing based on customization of
•Variable – Manufacturing, Bio-mass products
• Licensing
123. Business Model Canvas 7.0
Problem - Non- •Co-create value
renewable feedstock proposition
•Production, yiel
Solution – Bio- • Customer goodwill
d, quality Customer in value
- Cheapest bio-mass based, sustainable and trust
•Match customer‟s chain
suppliers replacement • Customer
product specs Formulator
•Regional supply of communities
• Constant companies
- Contractual scale- surfactant raw- •Trade-shows, PR
innovation
up material •Conferences,
• Avoidance of single surveys Existing market
-Technology material sourcing
sectors
providers (petro)
•Surfactants
• Green
-Utility providers •Manufacturing •High-performance
facility •Physical product •Lubricants
- Surfactant Users •IP Features - Bi- •Indirect channel
• Human •Wholesale •Home & Personal
(P&G) functional, customiz
resources, capital Distributors Care sector
able
•IHS (Market Info) • „Drop-in‟ monomers
•Sell bio-based monomers
• Added value pricing based on customization of
•Fixed – Capital products
•Variable – Manufacturing, Bio-mass •Create demand by partnering with Surfactant
Users and then sell to Formulators
• Licensing
124. Business Model Canvas 8.0
Problem - Non- •Co-create value
-Market Research
renewable feedstock proposition
Agencies •Production, yiel
Solution – Bio- • Customer goodwill
d, quality Customer in value
based, sustainable and trust
- Start-up incubators •Match customer‟s chain
replacement • Customer
product specs Formulator
•Regional supply of communities
Cheapest bio-mass • Constant companies
surfactant raw- •Trade-shows, PR
suppliers innovation
material •Conferences, surve
• Avoidance of single ys
- Contractual scale- Existing market
material sourcing
up sectors
(petro)
•Surfactants
• Green
-Technology •Manufacturing •High-performance
providers facility •Physical product •Lubricants
•IP Features - Bi- •Indirect channel
-Utility providers • Human •Wholesale •Home & Personal
functional, customiz
resources, capital Distributors Care sector
able
- Surfactant Users •IHS (Market Info) • „Drop-in‟ monomers
(P&G)
•Sell bio-based monomers
•Fixed – Capital •Create demand by partnering with Surfactant
•Variable – Manufacturing, Bio-mass Users and then sell to Formulators
• Licensing
125.
126. Total Contacts: 96
Red Ox’s Electrochemical Desalination Cell
1. desalinates brine, a waste product from oil & gas and other industries
2. generates electricity quietly and
3. produces bulk inorganics that can be sold as commodities.
André Taylor (PI) David Kohn (EL) Tom Livingston (IM)
National Science Foundation Innovation Corps Program May 23, 2012
127. Problem:
Saline brine.
What is it?
Water that is saltier than sea water.
It is produced as a waste product of many industrial
processes.
127
128. Why is it a problem?
Saline brine is:
1. Environmentally harmful
2. Heavily regulated
3. Costly to treat and dispose of.
129. What we thought
1. Desalination 2. Oil and gas production
Photo 1: Kay Bailey Hutchison desalination plant Photo 2: a hydraulic fracturing site near
in El Paso Tx. Morgantown Pa.
129
131. What we learned:
1. Desalination 2. Oil and gas production
Photo 1: Kay Bailey Hutchison desalination plant Photo 2: a hydraulic fracturing site near
in El Paso Tx. Morgantown Pa.
132. Key Partners Key Activities Value Customer Customer
-R & D Propositions Relationships Segments
-Manufacturers -Engineering -Turns waste cost -Service -Inland and coastal
-Utilities customization into revenue -Customization desalination plants
-Regulators -Decreased input -Link to value add -Industrial brine
-Learn regulatory
-Utility Commissions costs / volatility in industrial producers
landscape
-Quiet electricity ecosystem -Hydrofracking
-Foster relationships
-Inland and coastal on-site -Improve public operations
with stakeholders
desalination plants image
-Hiring & retention
-Industrial brine -Decreased liability -Chemical
producers Key Resources -Better public Channels distributors
-Hydrofracking image -Chemical End Users
-People
operations -Decreased -B2B marketing -Chemical Producers
-Intellectual
permitting time -Service
property
-Chemical agreements
-CO2 sequestration -Licensing
distributors -Brand -Utilities
-Energy efficiency arrangements
-Chemical Producers -Relationships with -Fuel Cell Mfgs
stakeholders and -DOESN’T CAUSE
partners EARTHQUAKES
Cost Structure Revenue Streams
-People -Manufacture / Capital -Royalties from licenses -Chemical sales
-R & D -Operation and -Service contracts -Electricity sales
–Prototyping maintenance -Engineering consulting -REC sales
-Legal fees -Sales and Marketing fees -Brine treatment
(IP, Licensing, Regulatory) -Strategic Partnerships contracts
133. Key Partners Key Activities Value Customer Customer
-R & D Propositions Relationships Segments
-Manufacturers -Engineering -Turns waste cost -Service -Water Treatment
-Membrane Mfgs customization into revenue -Customization for Hydrofracking
-Utilities -Decreased -Link to value add (Especially
-Know regulatory Produced Water)
-Regulators disposal costs in industrial
landscape -Inlandand coastal
-Engineering firms -Decreased input ecosystem
-Foster relationships desalination plants
-Inland and coastal with stakeholders costs / volatility -Improve public
-Quiet electricity image -Industrial brine
desalination plants -Hiring & retention
on-site producers
-Industrial brine
producers Key Resources -Decreased liability Channels
- Electric Utilities (for
-Hydrofracking -People -Better public
-B2B marketing energy efficiency
operations -Intellectual image FOR
-Possibly investments)
-Chem. distributors property CLIENTS
-Decreased distributors/
-Chemical Producers -Chemical
permitting time ? conferences
-Brand distributors
-Service
-Relationships with -Chemical End Users
-Other frac water -DOESN’T CAUSE agreements
stakeholders and -Chemical Producers
treatment startups partners EARTHQUAKES -Licensing
arrangements
Cost Structure Revenue Streams
-People -Manufacture / Capital -Royalties from licenses -Chemical sales
-R & D & Prototyping -Operation and -Service contracts -Electricity sales
-Legal fees maintenance -Strategic Partnerships -REC sales
(IP, Licensing, Regulatory) -Sales and Marketing -Brine treatment
contracts
134. Traditional methods to dispose of saline brine include:
Deep well injection Evaporation Pits
Photo 4: a small deep well injection rig Photo 5 : a typical wastewater evaporation pit
135. Thought: Problem in the Marcellus
Texas:~50,000 Class II Disposal Wells (at least
80% for enhanced recovery)
Pennsylvania: 8 Class II Disposal Wells
138. Service
Well Owner Providers
(Fracking, O
nsite
recycling) Engineering
Firms
Regulators
(Water
Rights, Dispos Primary
al, Permitting) Treatment
Facility
Technology
Developers /
Vendors Secondary
Treatment
Contractor
Disposal
Companies
139. Disposal
Produced Dilution with
Water Freshwater
Reuse to
Frac Another
Well
Primary
How high can
Treatment they go?
This is where we Tertiary
fit in Treatment
Current state of Discharge
the art are
evaporators and Must be
crystallizers drinking water
quality
140. Drilling Flowback Produced
Water Water Water
Water from drilling First 30 days of Produced over
muds used to drill production well’s operating
well life (4-30 years)
Medium TDS
High TSS Very high TDS
~5-20 % of injected (usually 100,000
Small ppm or higher)
quantity, weird
stuff in it ~5-20 % of injected
141. Class II Wells Primary and
Tertiary
Treatment
Cost of 0.50-1.50 10.00-12.00 5.00-6.00
Disposal
($/bbl)
Transport 4.00-16.00 2.00-4.00 1.00-4.00
Cost ($/bbl)
Total 4.50-17.50 12.00-16.00 6.00-10.00
($/bbl)
143. North American
Produced Water Market
TAM: $5 bn/yr
SAM: $3 bn
Target: $0.5 bn
Our projections:
~ $21 million/year revenues from one
10,000 barrel per day plant
<5% of current treatment and disposal in PA
144. Disposal
Produced Dilution with
Water Freshwater
Reuse to
Frac Another
Well
Primary
Treatment
Tertiary
= ~$1/bbl/hr Treatment
Discharge
146. Risks
1. Market risk: increasing reuse lowers disposal rate
2. Technology risk
3. Unable to sell into chemical markets
146
147. Key Partners Key Activities Value Customer Customer
-R & D Propositions Relationships Segments
-Manufacturers -Engineering -Turns waste cost into -Water Treatment
-Integrators customization revenue -Make it easy for for Oil and Gas
-Membrane Mfgs -Decreased them to get rid of (Especially
-Know regulatory disposal costs and their waste Produced Water)
-Engineering firms
landscape volume -Brand = good PR -Service Providers
-Foster relationships -Decreased for Oil and Gas
-Hydrofracking
with stakeholders transport costs -Oil and Gas
operations
-Hiring & retention -Decreased input Owner/Operators
-Service providers
for oil and gas costs / volatility and
Key Resources Channels
industry freshwater volume
-Oil and Gas -People -Quiet electricity
Owner/Operators -Intellectual -B2B marketing -Chemical
property -Better public -Possibly distributors
-Other frac water image for clients distributors/ -Chemical End Users
treatment startups -Brand -Decreased conferences -Chemical Producers
-Relationships with permitting time -Oil &gas well
-Environmental stakeholders and service providers/
Groups/Regulators -Doesn’t Cause
partners Earthquakes manufacturers
Cost Structure Revenue Streams
-People -Manufacture / Capital -Royalties from licenses -Chemical sales
-R & D & Prototyping -Operation and -Service contracts -Electricity sales
-Legal fees maintenance -Strategic Partnerships -REC sales
(IP, Licensing, Regulatory) -Sales and Marketing -Brine treatment
contracts
148. Key Partners Key Activities Value Customer Customer
-R & D Propositions Relationships Segments
- Produced Water -Engineering -Service Providers
-Decreased
Treatment customization -Make it easy for for Oil and Gas
disposal costs and
companies them to get rid of Water Treatment
volume
-Know regulatory their waste for Oil and Gas
-Service providers -Decreased
landscape -Brand = good PR (Especially
for oil and gas transport costs
-Foster relationships Produced Water)
industry -Valuable
with stakeholders -Oil and Gas
-Oil and Gas Coproducts
-Hiring & retention Owner/Operators
Owner/Operators -Quiet electricity
RESEACH ARMS Key Resources Channels
-People
-Manufacturers -Intellectual -Better public -Chemical -Chemical
-Membrane Mfgs property image for clients Distributors distributors
-Engineering firms -Decreased -Oil &gas well -Chemical End Users
-Brand permitting time service providers -Chemical Producers
-Relationships with -Doesn’t Cause and water
-Environmental stakeholders and Earthquakes treatment
Groups/Regulators partners companies
Cost Structure Revenue Streams
-People -Manufacture / Capital -Royalties from licenses -Chemical sales
-R & D & Prototyping -Operation and -Service contracts -Electricity sales
-Legal fees maintenance -Strategic Partnerships -REC sales
(IP, Licensing, Regulatory) -Sales and Marketing -Brine treatment
148
contracts
162. Value Proposition - Products
• Which are part of your value proposition?
– (e.g. manufactured goods, commodities, produce, ...)
• Which intangible products are part?
– (e.g. copyrights, licenses, ...)
• Which financial products?
– (e.g. financial guarantees, insurance policies, ...)
• Which digital products?
– (e.g. mp3 files, e-books, ...)
163. Value Proposition - Services
• Which core services are part of your value proposition?
– (e.g. consulting, a haircut, investment advice, ...)
• Which pre-sales or sales services?
– (e.g. help finding the right solution, financing, free delivery service, ...)
• Which after-sales services?
– (e.g. free maintenance, disposal, ...)
164. Pain Killers
Reduce or eliminate wasted
time, costs, negative emotions, risks - during
and after getting the job done
165. Pain Killers - Hypotheses
• Produce savings?
– (e.g. time, money, or efforts, …)
• Make your customers feel better?
– (e.g. kills frustrations, annoyances, things that give them a headache, ...)
• Fix underperforming solutions?
– (e.g. new features, better performance, better quality, ...)
• Ends difficulties and challenges customers encounter?
– (e.g. make things easier, helping them get done, eliminate resistance, ...)
• wipe out negative social consequences?
– (e.g. loss of face, power, trust, or status, ...)...
• Eliminate risks
– (e.g. financial, social, technical risks, or what could go awfully wrong, ...)
166. Pain Killer – Is it a Problem or Need?
• Are you solving a Problem?
• Are you fulfilling a Need?
• For who?
• How do you know?
167. Pain Killer - Ranking
• Rank each pain your products and services kill according
to their intensity for the customer.
• Is it very intense or very light?
• For each pain indicate the frequency at which it occurs
168. Gain Creators
How do they create benefits the customer
expects, desires or is surprised by, including
functional utility, social gains, positive
emotions, and cost savings?
169. Gain Creators- Hypotheses
• Create savings that make your customer happy?
– (e.g. in terms of time, money and effort, ...)
• Produce expected or better than expected outcomes?
– (e.g. better quality level, more of something, less of something, ...)
• Copy or outperform current solutions that delight
customer?
– (e.g. regarding specific features, performance, quality, ...)
• Make your customer‟s job or life easier?
– (flatter learning curve, usability, accessibility, more services, lower cost of
ownership, ...)
• Create positive consequences that customer desires?
– (makes them look good, produces an increase in power, status, ...).
170. Gain Creator- Ranking
• Rank each gain your products and services create
according to its relevance to the customer.
• Is it substantial or insignificant?
• For each gain indicate the frequency at which it occurs.
172. Define Minimum Viable Product – Physical
• First, tests your understanding of the problem (pain)
• Next tests your understanding of the solution (gain)
– Proves that it solves a core problem for customers
• The minimum set of features needed to learn from
earlyvangelists
- Interviews, demos, prototypes, etc
- Lots of eyeball contact
173. Define the Minimum Viable Product –
Web/Mobile
• NOW build a “low fidelity” app for customer feedback
– tests your understanding of the problem
• LATER build a “high fidelity” app tests your
understanding of the solution
– Proves that it solves a core problem for customers
– The minimum set of features needed to learn from
earlyvangelists
- Avoid building products nobody wants
- Maximize the learning per time spent
174. The Art of the MVP
• A MVP is not a minimal product
• “But my customers don‟t know what they want!”
• At what point of “I don‟t get it!” will I declare defeat?
176. Value Proposition – Common Mistakes
• It‟s just a feature of someone else‟s product
• It‟s a “nice to have” instead of a “got to have”
• Not enough customers care
177. Questions for Value Proposition
• Competition: What do customers do today?
• Technology / Market Insight: Why is the problem
so hard to solve?
• Market Size: How big is this problem?
• Product: How do you do it?
178. Key Questions for Value Prop
• Problem Statement: What is the problem?
• Ecosystem: For whom is this relevant?
• Competition: What do customers do today?
• Technology / Market Insight: Why is the problem
so hard to solve?
• Market Size: How big is this problem?
• Product: How do you do it?
180. Technology and Market Insight
Technology Insight Market Insight
• Moore‟s Law Value chain disruption
• New scientific Deregulation
discoveries Changes in how
• Typically applies to people work, live and
hardware, clean interact and what they
techand biotech expect
181. Examples of Technical Insight
• Topological analysis
enables highly dimensional
data to be analyzed without
predetermining number of
feature sets
Mass produced components
can be used to create a
miniaturized fluorescence
microscope
182. Examples of Market Insight
• People want to play more involved
games than what is currently offered
• Facebook can be the distribution for
such games
Masses of people are more likely to micro-
blog than blog
The non-symmetric relationships will allow
companies and individuals to self-promote
and will impact distribution
European car sharing sensibilities could be
adopted in North America
People, particularly in urban
environments, no longer wanted to own
cars but wanted to have flexibility.
183. Types of Value Propositions
Comes from Technical Insight Comes from Market Insight
More Efficient
Lower Better
cost Better
Smaller Distribution
Bundling
Simpler
Faster
Better
Branding
184. Insight
• All of you are starting with technical insight
• All of you will get out of the building and get data
• A few of view will get market insight
186. Value proposition
Problem Solution Features of value
proposition
• Non- • Sustainable, bio-based • Bi-functional molecules
renewable, petroleum replacement • Flexibility in chain length
derived feedstock for • Higher performance • Flexibility in branching
surfactant, lubricant • Improved cold
industry temperature tolerance of
detergents, lubricants
187. Hand weed control is a Nightmare
Crews of 100s needed
Labor getting harder to get
Back-breaking task
2-3 weedings per crop
Food contamination risk
$250-1,000 per acre
Confidential
188. Circulating Tumor Cells (CTCs): Initial Idea
Circulating tumor cells Oncologists & Pathologists
Cancer cells that have Does my patient have any
detached from the CTCs?
tumor and are How aggressive are they?
circulating in the blood
stream
Capture and grow CTCs
Video technology to characterize aggressiveness
188 188
190. We are unique in our ability to culture CTCs
Technology Capability
Company Product Technology Channel
Isolate Count Analyze Culture
Parsortix Filter Kits
CellSearch Antibody Kits
Vita-Assays Substrate Kits
Mvs360 Antibody Device
OncoCEE Microfluidics CLIA labs
LiquidBiopsy Antibody CLIA labs
ISET device Filter Device
On-Q-ITY
chip
Microfluidics Device
ApoStreamTM
Technology
Microfluidics Device
- Substrate CLIA?
*This is an abbreviated list
190 190
Class 8 - Update 3.19.2012
191. Cell culture value proposition
Identify and
enumerate CTCs
Characterize
growth potential
Culture Test
Chemotherapies
CTCs
Test CTCs for
biomarkers
191 191
192. Disposal
Produced Dilution with
Water Freshwater
Reuse to
Frac Another
Well
Primary
How high can
Treatment they go?
This is where we Tertiary
fit in Treatment
Current state of Discharge
the art are
evaporators and Must be
crystallizers drinking water
quality
193.
194.
195. The Problem & Our Solution
De-mineralization
X
Problem: No products that
reverses demineralization Our solution:
effectively Remineralization peptides
that restore lost mineral
196. The Lean LaunchPad
Lecture 3
Customer Segments
Who Are Your Customers?
What Job Do They Want You to Do?
6/22/12
202. The Customer Segment
Gains
Persona
• Jobs
/Archetyp
• Problem or
Need e
Pains
Market Type
203. Gain Creators
Gains
Products
&Services MVP Persona
• Jobs
/Archetyp
• Problem
or Need e
Pain Pains
Killers
Product/Market
Fit
204. Jobs to Be Done
Problems/Needs
What is the customer segment trying to get done?
Is it a problem or a need?
205. Customer Segments – Jobs/Needs
• What functional or social jobs are getting done?
– (e.g. perform or complete a specific task, solve a specific problem or trying
to look good, gain power or status, ...)
• What emotional jobs?
– (e.g. esthetics, feel good, security, ...)
• What basic needs are you helping your customer satisfy?
– (e.g. entertainment, communication, sex, ...)
206. Buyer/Co-Creator/Transferor
• Are they a buyers
– (e.g. comparing offers, deciding, buying, taking delivery of a product or
service, ...)
• Are they co-creators
– (e.g. co-designing with solution providers, contributing value to the
solution, ...)
• Are they transferors'
– (how customers dispose of a product, transfer it to others, or resell, ...)
207. Customer Segment Jobs - Rank
• Rank each job according to its significance to the
customer.
• Is it crucial or is it trivial?
• For each job indicate the frequency at which it occurs.
• Outline in which specific context a job is done, because
that may impose constraints or limitations
– (e.g. while driving, outside, ...)
209. Customer Segments – Pains
• What do your customers find too costly?
– (e.g. takes a lot of time, costs too much, requires substantial efforts, ...)
• How are current solutions underperforming?
– (e.g. lack of features, performance, malfunctioning, ...)
• What are the customers main difficulties and challenges?
– (difficulties getting things done, resistance, ...)
• What‟s keeping your customer awake at night?
– (e.g. big issues, concerns, worries, ...)
210. Customer Segments – Pains
• What barriers are keeping customers from adopting?
– (e.g. upfront investment costs, learning curve, resistance to change, ...)
• What makes your customers feel bad?
– (e.g. frustrations, annoyances, things that give them a headache, ...)
• What risks do customers fear?
– (e.g. financial, social, technical risks, or what could go awfully wrong, ...
211. Customer Gains
benefits the customer expects, desires or is
surprised by. includes functional utility, social
gains, positive emotions, and cost savings
212. Customer Segments – Gains
• Which savings would make your customer happy?
– (e.g. in terms of time, money and effort, ...)
• What outcomes do they expect and what would go beyond
their expectations?
– (e.g. quality level, more of something, less of something, ...)
• How do current solutions delight your customer?
– (e.g. specific features, performance, quality, ...)
• What would make your customer‟s job or life easier?
– (e.g. flatter learning curve, more services, lower cost of ownership, ...)
213. Customer Segments – Gains
• What positive social consequences do they desire?
– (e.g. makes them look good, increase in power, status, ...)
• What are customers looking for?
– (e.g. good design, guarantees, specific or more features, ...)
• What do customers dream about?
– (e.g. big achievements, big reliefs, ...)
• How does your customer measure success and failure?
– (e.g. performance, cost, ...)
• What would increase the likelihood of adopting a solution?
– (e.g. lower cost, less investments, lower risk, better quality, performance,
design, ...)
215. Define Customer Archetype/Persona
• Who are they?
– Position / title / age / sex / role
• How do they buy?
– Discretionary budget (name of budget and amount)
• What matters to them?
– What motivates them?
• Who influences them?
– What do they read/who do they listen to?
• Draw a Day in the Life of the customer
217. Type of Market Changes Everything
Existing Resegmented New Clone
Market Market Market Market
Editor's Notes
320 SBIR Phase 2 companiesGot $500K50% from academiaMix of technologies20% of you will get phase 2b20% of those will succeed13 of you will succeedMost of you think you are in execution modeMost will be a few years old – thinking they are in execution~25 will be a lot olderNot all in the audience will be founders, some will be employeesGraphene Frontiers is the perfect exampleStart with their slidesEmphasize that this process not just works for software but anything with customer/market riskFix the serendipitous DOW meetingGroun flour pharma as a backup
Then I will say that until now, we had been focusing on Tech Development and Integrated Bio/Chem companies like DSM, Elevance, Solazyme. After talking to some of these companies, we realized that we need to shift our focus!
CS - We hope to determine that if our product/value proposition matches their needs.
This week’s changes are highlighted in dark blue (IHS instead of SRI, and home and personal care sector also added).
Main entry barriersCostPerformance as compared to existing surfactantsScout new technology viaInternet searchingNetworkingTrade magazines
CS - We hope to determine that if our product/value proposition matches their needs.
CS - We hope to determine that if our product/value proposition matches their needs.
CS - We hope to determine that if our product/value proposition matches their needs.
CS - We hope to determine that if our product/value proposition matches their needs.
This week’s changes are highlighted in dark blue (IHS instead of SRI, and home and personal care sector also added).
Verbalize: Our initial customers will be existing brine treatment companies.
Verbalize: Our initial customers will be existing brine treatment companies.
Verbalize: Our initial customers will be existing brine treatment companies.
First – how would you define product? (go through different teams)
Market insight is becoming more and more a requirement
Generally a product / value proposition question
Generally impacts some part of your business model diagram (usually NOT the product component)
Others: Brand/Status, easier to access (distribution); fun; bundling (phone + camera) faster, simpler, smaller, lower cost, more efficient
First – how would you define product? (go through different teams)
We initially believed we were a visualization company with a novel approach to characterizing cancer Create value by enumerating and characterizing the aggressiveness of CTCsTarget customers in hospital (i.e., pathologist, oncologist, patients) Use a CLIA-based service model to deliver value to customersUse direct sales channels to reach customers in the hospital
Leading up to this slide, we need to be developing the case for a pivot into a cell culture company. John didn’t seem clear on how/why we decided this.
Change technology column to: Dead vs live cellsThe point of this slide is simply that right now culturing is a unique proposition. Do not focus on all competitors or what they do or how we will compete. Make the simple point of for now we have a unique proposition.
Value Proposition of Cell CulturingCell culture node in the middleBubbles appearing around showing value prop of cell culturingSimilar to mammoptics slide 19
Piggyback on infrastructure
While we have looked at one company in the market, lets take a broader look at the entire market.The US protein expression kit market was estimated at 200 M in 2008 and had experienced 20% growthThe global market for cells and cells lines was over 1.4B in 2011 and experiencing 10% growth
What oncologists do, what pathologists do. Focus on oncologists.Need a new approach to get interviews with oncologists. Hit the rolodex, plan interviews far in advance, daisy-chain to new contactsPathologists do not order tests, and usually don’t decide where to source a test from, so are less important to our business
Opportunity to innovate in the EHR Future of medicine is in EHR no competitive products that are compatible with HERIs a great opportunity and we need to understand how to capitalize and offer the first an only HER enabled pumpNew CPT code $2-3MM; Approval not guaranteed ~2-3 years review process (lost sales)
Then I will say that until now, we had been focusing on Tech Development and Integrated Bio/Chem companies like DSM, Elevance, Solazyme. After talking to some of these companies, we realized that we need to shift our focus!
This is how our product would be deployed in the cosmetic market and how the money flows …This only possible because we can offer and inexpensive and simple device that can be broadly deployed.The example of the market size is taken from Prestige and In-home sales.