4. Agenda
1. What we used to believe / What we now know
2. Business Models and Customer Development
3. Class Example
4. The Evolution of the Curriculum
9. Lifestyle Startups
Work to Live their Passion
Startup
• Serve known customer with
known product
• Work for their passion
10. Small Business Startups
Work to Feed the Family
Small
Startup
Business
• Serve known customer with
known product
• Feed the family
11. Small Business Startups
Work to Feed the Family
Small
Startup
Business
Exit Criteria
• known customer - Business Model found
known product
- Profitable business
• Feed the family
- Existing team
< $500K in revenue
- Not venture-backable
12. Social Entrepreneurship Startups
Social Large
Startup Non-Profit
• Solve pressing social problems
• Social Enterprise: Profitable
• Social Innovation: New Strategies
• Not venture-backable
13. Scalable Startup
Born to Be Big
Search Execute
Scalable Large
Startup Company
Goal is to solve for:
unknown customer and
unknown features
14. Scalable Startup
Search Execute
Scalable Large
Startup Company
Goal is to solve for: Exit Criteria
unknown customer and - Business model found
unknown features - Total Available Market > $500m
- Can grow to>$100m/year
- Can be Venture capital funded
15. Buyable Startup
Search Sell
Scalable $2 to $50M
Startup Acquisition
Goal is to solve for: - Sell to larger company
Internet, Mobile, Gaming Apps - Angel or early stage VC
16. Large Company Sustaining Innovation
Innovate or Evaporate
Sustaining Innovation
Scalable Large
Transition
Startup Company
• Existing Market / Known customer
•Known product feature needs
17. Large Company Disruptive Innovation
New Large
Transition
Division Company
Disruptive Innovation
•New Market
•New tech, customers, channels
18. Large Company Disruptive Innovation
Large
New Division Transition
Company
Disruptive Innovation
•Build
•Partner
•Acquire
- IP
- Talent
- Product
- Customers
- Business
41. Tradition – Hire Marketing
Concept/ Product Alpha/Beta Launch/
Seed Round Dev. Test 1st Ship
- Create Marcom - Hire PR Agency - Create Demand
Marketing Materials - Early Buzz - Launch Event
- Create Positioning - “Branding”
42. Tradition – Hire Sales
Concept/ Product Alpha/Beta Launch/
Seed Round Dev. Test 1st Ship
- Create Marcom - Hire PR Agency - Create Demand
Marketing Materials - Early Buzz - Launch Event
- Create Positioning - “Branding”
• Hire Sales VP • Build Sales
Sales • Hire 1st Sales Staff Organization
43. Tradition – Hire Bus Development
Concept Product Alpha/Beta Launch/
Dev. Test 1st Ship
- Create Marcom - Hire PR Agency - Create Demand
Marketing Materials - Early Buzz - Launch Event
- Create Positioning - “Branding”
• Hire Sales VP • Build Sales Channel /
Sales • Pick distribution Distribution
Channel
Business • Hire First • Do deals for FCS
Development Bus Dev
44. Tradition – Hire Engineering
Concept Product Alpha/Beta Launch/
Dev. Test 1st Ship
- Create Marcom - Hire PR Agency - Create Demand
Marketing Materials - Early Buzz - Launch Event
- Create Positioning - “Branding”
• Hire Sales VP • Build Sales Channel /
Sales • Pick distribution Distribution
Channel
Business • Hire First • Do deals for FCS
Development Bus Dev
Engineering • Write MRD • Waterfall • Q/A •Tech Pubs
45. Waterfall / Product Management
Execution on Two “Knowns”
Requirements
Product Features: known
Design
Implementation
Verification
Customer Problem: known Maintenance
Source: Eric Ries
http://startuplessonslearned.blogspot.com
46. Waterfall / Product Management
Execution on Two “Knowns”
Requirements
Product Features: known
Design
Implementation
Verification
Customer Problem: known Maintenance
Source: Eric Ries
http://startuplessonslearned.blogspot.com
52. Search Execution
Strategy Business Model
Operating Plan +
Hypotheses
Financial Model
Process Customer & Product Management
& Waterfall
Agile Development Development
58. Founders run a
Customer Development Team
No sales, marketing and business
development
59. Search Execution
Strategy Business Model
Operating Plan +
Hypotheses
Financial Model
Customer Development, Product Management
Process
Agile Development Agile or Waterfall Development
Customer Functional Organization
Organization
Development Team, by Department
Founder-driven
65. Search Execution
Strategy Business Model
Operating Plan +
Hypotheses
Financial Model
Process Customer Development, Product Management
Agile Development Agile or Waterfall Development
Organization Customer Development Functional Organization
Team, Founder-driven by Department
Education Creativity/Innovation, Organizational Behavior,
Business Model Design, HR Mgmt, Accounting,
Customer Development, Modeling, Strategy,
Operations, Leadership,
Startup team building,
Marketing, Manufacturing
Entrepreneurial Finance,
Agile Development,
Customer Funnel:
Get/Keep/Grow Market
73. Business Model Patterns
Replace Cases
Nespresso
club
production
Nespresso
machines
Nespressopo
ds
distribution
channels Nespresso
.com
production
coffee
facilites
B2C 1 x machine
distribution sales
73
76. Now imagine these classes virtual and
networked independent of location
77. Search Execution
Strategy Business Model
Operating Plan +
Hypotheses
Financial Model
Process Customer Development, Product Management
Agile Development Agile or Waterfall Development
Organization
Customer Development Functional Organization
Team, Founder-driven by Department
Education Business Model Design, Organizational Behavior,
Customer Development, HR Mgmt, Accounting,
Startup team building, Modeling, Strategy,
Entrepreneurial Finance, Operations, Leadership,
Agile Development, Marketing, Manufacturing
Marketing
Instructional Experiential, constructivist, Case, Lecture, Small
Strategies learner-centered, Group, Mentorship
inquiry-based
79. Search
Strategy Business Model
Hypotheses
Process Customer Development,
Agile Development
Organization
Customer Development
Team, Founder-driven
Education Business Model Design,
Customer Development,
Startup team building,
Entrepreneurial Finance,
Agile Development,
Marketing
Instructional Experiential, constructivist,
Strategies learner-centered, inquiry-
based
80. Search Execution
Strategy Business Model
Operating Plan +
Hypotheses
Financial Model
Process Customer Development, Product Management
Agile Development Agile or Waterfall Development
Organization
Customer Development Functional Organization
Team, Founder-driven by Department
Education Business Model Design, Organizational Behavior,
Customer Development, HR Mgmt, Accounting,
Startup team building, Modeling, Strategy,
Entrepreneurial Finance, Operations, Leadership,
Agile Development, Marketing, Manufacturing
Marketing
Instructional Experiential, constructivist, Case, Lecture, Small Group,
Strategies learner-centered, inquiry- Mentorship
based
118. Business Model Canvas
building
block building
building
building block
block
building block
building block
block
building
building block
building block building
block block
building building building building
block block block block
129. Customer Development is
how you search for the model
Search Execution
Customer Customer Customer Company
Discovery Validation Creation Building
Pivot
131. Web/Mobile Versus Physical
Customer Customer
Discovery Validation
Pivot
•Web/Mobile startups run faster
•Different process steps for web vs. physical
•Customer Relationships are radically different
136. How Does This Really Work?
Lean LaunchPad Class
8 Weeks From an Idea to a Business
137. Search
Strategy Business Model
Hypotheses
Process Customer Development,
Agile Development
Organization Customer Development
Team, Founder-driven This Class
Education Business Model Design,
Customer Development,
Startup team building,
Entrepreneurial Finance, Agile
Development, Marketing
Instructional Experiential, constructivist,
Strategies learner-centered,
inquiry-based
138. dentalOptics
Amit Desai, Aaswath Raman,
AshwinMadgavkar, AlokVasudev
Revolutionizing dental diagnostics
through non-invasive imaging
Final Presentation
Interviewed: 72 people
139. The A-Team
Amit Desai AshwinMadgavkar Aaswath Raman AlokVasudev
Ph.D., Mat. Sci MBA/M.S. Ph.D., App. Physics Ph.D., EE
Cambridge, BCG, UT Austin Microsoft, Harvard UT Austin
NC State
Mentor: Ethan Bloch
dentalOptics
141. Original Idea : Inside-Out Dental
Lighting
Bring the light-source
inside the mouth
Provide better, more
consistent illumination
dentalOptics
142. Overview
I. Understanding our Customers
II. Finding Customer & Value Proposition Fit
III. Building the Business:
Channels, Partners & Regulators
IV. Introducing.. periOptics
dentalOptics
143. Overview
I. Understanding our Customers
II. Finding Customer & Value Proposition Fit
III. Building the Business:
Channels, Partners & Regulators
IV. Introducing.. periOptics
dentalOptics
144. Version 0 The A-Team
• Prototyping
• • Personal
• Manufacturers • Design
Improved • Dentists
• diagnostics service
Manufacturing • Hygienists
• Resellers • Marketing • Training &
• Sales • Better • Specialists
customization demos
• Distributors • Service
• Marketers • Superior
patient • Chains
• Trade
• Stanford
experience • Direct sales • Dental
organizations
• Trade schools
• IP • Lower price shows • Hospitals
• Human
• Dental
• Our network
schools
• Human resources • Compliance • Product sales
• Manufacturing • Warranties &
• Marketing support • Licensing (physical & IP)
• Sales • Legal • Accessory sales
dentalOptics
146. Three major dentist archetypes
Most typical dentist
• Primarily concerned with patient care
Care
• Worried about costs
providers • Optimizes lifestyle and income
Uses technology to up-sell additional procedures
• Typically in high-income areas
“Bentley”
• State-of-the-art facilities and technologies
dentists • Early adopter of dental devices
Equipment handled by purchasing department
• Uses financial metrics to make decisions
“Chain”
• Technologies standardized across all offices
dentists
dentalOptics
147. Version 0 The A-Team
• Prototyping
• • Personal
• Manufacturers • Design
Improved • Dentists
• Manufacturing diagnostics service
• Hygienists
• Hypotheses
Resellers Tested:
• Marketing • Training &
• Sales • Better • Specialists
customization demos
• Distributors • Service
• Intra-oral lighting
• provides value for all
Marketers • Superior
patient • Chains
dental professionals
• Trade experience • Direct sales • Dental
• Channels • Stanford
organizations
• Trade
• IP • Lower price
schools
shows • Hospitals
• Human
• Dental
• Our network
schools
• Human resources • Compliance • Product sales
• Manufacturing • Warranties &
• Marketing support • Licensing (physical & IP)
• Sales • Legal • Accessory sales
dentalOptics
148. Immediate changes
• Current lighting was satisfactory for most uses
• However dentists expressed interest in better lighting for
particular sets of procedures
dentalOptics
149. Immediate changes
• Current lighting was satisfactory for most uses
• However dentists expressed interest in better lighting for
particular sets of procedures
• Redid customer segmentation:
Segment by Procedure Length
dentalOptics
150. Version 0 The A-Team
• Prototyping
• • Personal
• Manufacturers • Design
Improved • Dentists
• diagnostics service
Manufacturing • Hygienists
• Resellers • Marketing • Training &
• Sales • Better • Specialists
customization demos
• Distributors • Service
• Marketers • Superior
patient • Chains
• Trade
• Stanford
experience • Direct sales • Dental
organizations
• Trade schools
• IP • Lower price shows • Hospitals
• Human
• Dental
• Our network
schools
• Human resources • Compliance • Product sales
• Manufacturing • Warranties &
• Marketing support • Licensing (physical & IP)
• Sales • Legal • Accessory sales
dentalOptics
151. Version 0+ The A-Team
• Prototyping • Personal
• Manufacturers • Design • Improved service • Procedure
• Manufacturing diagnostics • Training & length
• Resellers • Marketing demos
• Sales • Better • Continuing
• Distributors • Service customization education - Short
- Medium
• Marketers • Superior
patient
- Long
• Trade experience
•
• Stanford Direct sales
organizations
• IP • Lower price • Trade
• Human shows
• Our network • Reduced time • Distributor
• Human resources • Compliance • Product sales
• Manufacturing • Warranties &
• Marketing support • Licensing (physical & IP)
• Sales • Legal • Accessory sales
dentalOptics
152. Version 1 The A-Team
• Prototyping • Personal
• Manufacturers • Design • Improved service • Procedure
• Manufacturing diagnostics • Training & length
• Hypothesis
Resellers Tested:
• Marketing demos
• Sales • Better • Continuing
• Distributors • Service customization education - Short
• Lighting needs differ - Medium
• Marketers on procedure
based • Superior
patient
- Long
•
length
Trade experience
organizations • Stanford • Direct sales
• IP • Lower price • Trade
• Human shows
• Our network • Reduced time • Distributor
• Human resources • Compliance • Product sales
• Manufacturing • Warranties &
• Marketing support • Licensing (physical & IP)
• Sales • Legal • Accessory sales
dentalOptics
154. Procedure length learnings
Procedure length Short (< 1 hr)
Moderate
(1-2 hrs)
Existing lighting solutions
Long (> 2 hrs) Surgical microscope
Loupe light
Clamps
Anesthesia
Patient comfort / movement
no longer an issue
dentalOptics
155. Procedure length learnings
Procedure length Short (< 1 hr)
Identified key procedures:
Root canals
Crack detection
Moderate Color matching
(1-2 hrs)
Done by all
dentists
Long (> 2 hrs) Lighting critical
Segment by Procedure Type
dentalOptics
156. Version 1 The A-Team
• Prototyping • Personal
• Manufacturers • Design • Improved service • Procedure
• Manufacturing diagnostics • Training & length
• Resellers • Marketing demos
• Sales • Better • Continuing
• Distributors • Service customization education - Short
- Medium
• Marketers • Superior
patient
- Long
• Trade experience
organizations • Stanford • Direct sales
• IP • Lower price • Trade
• Human shows
• Our network • Reduced time • Distributor
• Human resources • Compliance • Product sales
• Manufacturing • Warranties &
• Marketing support • Licensing (physical & IP)
• Sales • Legal • Accessory sales
dentalOptics
157. Version 1 The A-Team
• Prototyping • Improved • Personal
• Manufacturers • Design diagnostics service • Procedure
• Manufacturing • Training & type
• Resellers • Marketing demos
• Superior - Root canal
• Sales • Continuing
patient
• Distributors • Service education - Crack
experience
detection
• Marketers
• Reduced - Color
• Trade procedure matching
organizations • Stanford time • Direct sales
• IP • Trade
• Human shows
• Our network • Distributor
• Human resources • Compliance • Product sales
• Manufacturing • Warranties &
• Marketing support • Licensing (physical & IP)
• Sales • Legal • Accessory sales
dentalOptics
158. $200 MM/yr US market size
$25 B dental
equipment industry
• 180,000 dentists
• 2300 visits per year average
• Consumable for each patient TAM: $2B
• ~$5 cost per consumable
• 10% of visits
• $0-100 cost per tool
$200 M serviceable
• 20% of dentists
diagnostic tool market
Source: US BLS, ADA, dentist interviews, industry research dentalOptics
159. $200 MM/yr US market size
$25 B dental
equipment industry
• 180,000 dentists
• 2300 visits per year average
• Consumable for each patient TAM: $2B
• ~$5 cost per consumable
• 10% of visits
• $0-100 cost per tool
$200 M serviceable
• 20% of dentists
diagnostic tool market
Consumables are key
Source: US BLS, ADA, dentist interviews, industry research dentalOptics
160. Version 1 The A-Team
• Prototyping • Improved • Personal
• Manufacturers • Design diagnostics service • Procedure
• Manufacturing • Training & type
• Resellers • Marketing demos
• Superior - Root canal
• Sales • Continuing
patient
• Distributors • Service education - Crack
experience
detection
• Marketers
• Reduced - Color
• Trade procedure matching
organizations • Stanford time • Direct sales
• IP • Trade
• Human shows
• Our network • Distributor
Key Learning:
•• Human resources component drastically
Consumable • Compliance • Product sales
• improves revenue potential &
Manufacturing • Warranties • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics
161. Overview
I. Understanding our Customers
II. Finding Customer & Value Proposition Fit
III. Building the Business:
Channels, Partners & Regulators
IV. Introducing.. periOptics
dentalOptics
162. Version 2+ The A-Team
• Prototyping • Improved • Personal
• Manufacturers • Design diagnostics service • Procedure
• Manufacturing • Training & type
• Hypothesis Tested:
Resellers • Marketing
• Superior demos
• Sales • Continuing - Root canal
patient
• Distributors • Service education - Crack
• Lighting needs differ experience
detection
• Marketers on procedure type
based • Reduced - Color
• Trade procedure matching
organizations • Stanford time • Direct sales
• IP • Trade
• Human shows
• Our network • Distributor
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics
163. Segmenting by Procedure Types
Intra-oral light
benefit Procedure
Increased
visibility in Root canal
tight spaces
Reduce
procedure
time
Multiple teeth Crack Dentists
at once detection
Improve
Diagnostic
Capability
More natural Color
light matching
dentalOptics
164. Best response: Transillumination
Intra-oral light
+ imaging benefit Procedure
Track
crack/defect Root canal
Reduce progress
procedure
time
Multiple teeth Transillumination Dentists
Improve at once for Cracks
Preventative
Diagnostic
Capability
Proactive
Color
detection vs.
Drive patient waiting for matching
loyalty and patient pain
return visits
dentalOptics
165. Prototyping
Transilluminated tooth using fiber or LED source
dentalOptics
168. Physical prototypes help!
• Handing dentists a crude clay mockup got us better, more actionable
feedback
• A great way of gauging whether new functionality satisfies a need
dentalOptics
169. Interest, but not excitement
Dentists generally liked the
prototype Key Takeaways
Dentist #
Imaging back teeth is essential
5
Market would be somewhat
4 limited / niche
3
2
1
None Neutral Very Positive
Interest in prototype
dentalOptics
170. Version 2+ The A-Team
• Prototyping • Improved • Personal
• Manufacturers • Design diagnostics service • Procedure
• Manufacturing • Training & type
• Hypothesis Tested:
Resellers • Marketing
• Superior demos
• Sales • Continuing - Root canal
patient
• Distributors • Service education - Crack
• Lighting needs differ experience
detection
• Marketers on procedure type
based • Reduced - Color
• Trade procedure matching
organizations • Stanford time • Direct sales
• IP • Trade
• Human shows
• Our network • Distributor
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics
171. Version 2+ The A-Team
• Prototyping • Personal
• • Reduced service • Crack
• Manufacturers Design
• Manufacturing procedure • Training &
time
detection
• Resellers • Marketing demos
• Sales • Continuing
• Distributors • Service • Improve education
preventative
• Marketers diagnostics
• Trade • Increase # of
organizations • Stanford • Direct sales
procedures
• IP • Trade
• Human • Provide a shows
• Our network patient record • Distributor
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics
172. Keeping our ear to the ground..
We were tipped off to a potentially larger diagnostic market:
dentalOptics
173. Keeping our ear to the ground..
We were tipped off to a potentially larger diagnostic market:
Non-invasive gum disease
detection
“This would be a game changer!”
“A new standard of care”
dentalOptics
174. This should get poked into your
gums 192 times during a dental
visit
…there must be a better way
dentalOptics
175. Version 2+ The A-Team
• Prototyping • Personal
• • Reduced service • Crack
• Manufacturers Design
• Manufacturing procedure • Training &
time
detection
• Resellers • Marketing demos
• Sales • Continuing
• Distributors • Service • Improve education
preventative
• Periodontal
• Marketers diagnostics
imaging
• Trade • Increase # of
organizations • Stanford • Direct sales
procedures
• IP • Trade
• Human • Provide a showsCustomer Insight:
• Our network patient record • Distributor
• Periodontal
imaging could be
• Human resources • Compliance • Product sales larger market
a
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics
176. Periodontal care right now
Considerable undertreatment
70% of offices don’t regularly do a full
probe test of all teeth! Time & effort
50% of US population has mild-severe
periodontitis, only 5-10% of are
treated
“The number-one reason dentists are
sued is failure to diagnose periodontal
disease”*
30% of patients don’t feel the need for
the recommended treatment*
Increases with aging population
dentalOptics
*K. Esler, Sidekick (2009)
177. Version 3+ The A-Team
• Prototyping • Personal
• Design • Reduced service • Crack
• Manufacturers
• Manufacturing procedure • Training &
time
detection
• Hypothesis Tested:
Resellers • Marketing demos
• Sales • Continuing
• Distributors • Service • Improve education
• Periodontal imaging is of preventative
• Periodontal
• Marketers interest to
greater diagnostics
imaging
•
dentists
Trade • Increase # of
organizations • Stanford • Direct sales
procedures
• IP • Trade
• Human • Provide a shows
• Our network patient record • Distributor
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics
178. Version 3+ The A-Team
• Prototyping • Personal
• Accuracy
• Manufacturers • Design service • Crack
• Manufacturing • Reduced time • Training & detection
• Resellers • Marketing demos
• Sales • Patient comfort • Continuing
• Distributors • Service education
✔
• Increase # of
procedures • Periodontal
• Marketers
imaging
• Improve records
• Trade
organizations • Stanford • Direct sales
• Patient
• IP education
• Trade
• Human shows
• Our network • Reduced • Distributor
malpractice
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics
179. Version 3+ The A-Team
• Prototyping • Personal
• Manufacturers • Accuracy
• • Design service
Manufacturers
• Manufacturing • Training &
• Periodontal
• Reduced time
• Resellers • imaging
• Resellers Marketing demos
• Sales • Patient comfort • Continuing
•
• Distributors
Distributors • Service education
• Increase # of
•
• Marketers
Marketers New hypothesis: procedures
• Improve records
• Trade
Trade
organizations
organizations •• Stanford
Insurance companies • Direct sales
• Patient
• IP • Trade
could be strategic partners
education
• Insurance • Human shows
companies • Our network • Reduced • Distributor
malpractice
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics
180. Overview
I. Understanding our Customers
II. Finding Customer & Value Proposition Fit
III. Building the Business:
Channels, Partners & Regulators
IV. Introducing.. periOptics
dentalOptics
181. Version 4+ The A-Team
• Prototyping • Personal
• Manufacturers • Accuracy
• Design service
• Manufacturing • Training &
• Periodontal
• Reduced time
Hypotheses Tested:
• Resellers • Marketing imaging
demos
• Sales • Patient comfort • Continuing
• Distributors • •
Service Insurance companies
• Increase # of
education
• Marketers would embrace this
procedures
technology
• Improve records
• Trade • FDA compliance is not • Direct sales
organizations • Stanford
• Patient
prohibitive
• IP education
• Trade
• Insurance • Human shows
companies • Our network • Reduced • Distributor
malpractice
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics
182. Key Partner: Insurance
Largest dental insurance
provider in California
“Periodontal probing is the single most inaccurate piece of data
we get from dentists. Fraud and abuse are common”
dentalOptics
183. Key Partner: Insurance
Largest dental insurance
provider in California
“Periodontal probing is the single most inaccurate piece of data
we get from dentists. Fraud and abuse are common”
Dental Policy Committee
• Meets regularly to evaluate new technologies
• Determines which technologies will be added to annual contracts
based on efficacy and cost savings to insurance company
Willing to recommend use of new technology
Need more clinical data, but are enthusiastic about the idea!
dentalOptics
184. What we make
Device cost
(one time)
~$2000
Dental
Dentist
Optics
Disposables
~$2.50 per patient
dentalOptics
185. What the dentist normally makes
$250
Insurance
Membership
$250
Co-pay
Dentist Patient
Equipment / Variable Costs
Note: Assumes 50/50 copay-insurance split
dentalOptics
186. What we’d add for the dentist
Device creates
$250 additional
Insurance periodontal
procedures
Device cost
(one time)
Membership
~$2000 $250
Co-pay
Dental
Dentist Patient
Optics
Disposables
~$2.50 per patient
Equipment / Variable Costs
Note: Assumes 50/50 copay-insurance split
dentalOptics
187. Three classes of FDA Devices
Criteria FDA Requirements
Minimal health and safety Need to register with FDA but
Class I risks, established precedent not get approval before putting it
(eg, dental on the market
pick, gloves, toothbru
sh)
Presents safety and health risks Submit 510-K application to
Class II that aren't completely controlled FDA, include detail about
(eg, dental by GMP (good manufacturing device, marketing
fillings, ceramics, drill processes) materials, device safety
s) features, and other paperwork
Invasive, inflammable, or Very thorough process similar to
presents other significant drug approval. Requires clinical
Class III significant safety risks. Often trails and mountains of
(eg, stent, implantabl
times a new type of device paperwork
e pacemaker)
dentalOptics
188. Some regulatory risk
Device key risk: Proxy suggests our device
misdiagnosis will be class II
Device carries little direct risk Intra-oral, non-invasive laser light
• Intra-oral, non-invasive probe caries (tooth decay) detector
• Uses non-harmful wavelengths
of radiation Approved as class II medical
device. Clinical tests conducted to
prove accuracy
Key risk: misdiagnosis
• Clinical evidence required to
establish efficacy
Source: Iowa Dental Supply dentalOptics
189. Class II FDA approval process
Month 0 3 6 9 12 15 18
Feasibility study Class II device FDA trials and approval
• Construct device • Determine predicate device(s)
prototype
• Enroll 4-7 sites and 10+ periodontists in study
• Determine device
• Fix critical end-points based on device capability (eg,
diagnostic capabilities
1 mm measurement error)
• Begin FDA 510(k)
• Submit 510(k) to FDA and obtain approval
documentation
• Enroll 1-2 periodontists
in preliminary efficacy
study
Without a predicate
Trial Size 30 patients 200-400 patients 1000-2000 patients
Costs $200 K $200 - 400 K dentalOptics
$1,000 – 2,000 K
190. Version 4+ The A-Team
• Prototyping • Personal
• Manufacturers • Accuracy
• • Design service
Manufacturers
• Manufacturing • Training &
• Periodontal
• Reduced time
Hypotheses Tested:
• Resellers • imaging
• Resellers Marketing demos
• Sales • Patient comfort • Continuing
• Distributors •
• Distributors •
Service Insurance companies
• Increase # of
education
•
• Marketers
Marketers
would embrace this
procedures
technology
• Improve records
• Trade
Trade • FDA compliance is not • Direct sales
organizations
organizations • Stanford
• Patient
prohibitive
• IP • Trade
✔
education
• Insurance • Human shows
companies • Our network • Reduced • Distributor
malpractice
•
•
•
Human resources
Manufacturing
•
•
Compliance
Warranties &
✔ •
•
Product sales
Licensing (physical & IP)
Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics
191. Version 4+ The A-Team
• Prototyping • Personal
• Manufacturers • Accuracy
• Design service
• Manufacturing • Training &
• Periodontal
• Reduced time
• Resellers • Marketing imaging
demos
• Sales • Patient comfort • Continuing
• Distributors • Question asked:
Service education
• Increase # of
• Marketers procedures
• How do we sell our
• Improve records
• Trade product?
organizations • Stanford • Direct sales
• Patient
• IP education
• Trade
• Insurance • Human shows
companies • Our network • Reduced • Distributor
malpractice
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics
192. Channels
Direct Sales Big Distributors
Private Practice Institutional Purchasing
Dentist Dentist Department
dentalOptics
193. Channels
Direct Sales Big Distributors
80% Market Share
30% Margin
Private Practice Institutional Purchasing
Dentist Dentist Department
dentalOptics
194. Channels
Continuing
Education Magazines Trade
Courses & Email Shows
Direct Sales Big Distributors
80% Market Share
30% Margin
Private Practice Institutional Purchasing
Dentist Dentist Department
dentalOptics
195. Version 4+ The A-Team
• Prototyping • Personal
• Manufacturers • Accuracy
• Design service
• Manufacturing • Training &
• Periodontal
• Reduced time
• Resellers • Marketing imaging
demos
• Sales • Patient comfort • Continuing
• Schein/Patt. • Service education
• Increase # of
• Marketers procedures
• Improve records
• Trade
• Stanford • Direct sales
organizations •
• IP
Patient • Trade
education
• Insurance • Human shows
companies • Our network • Reduced • Patterson/S
malpractice chein
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics
196. Version 4+ The A-Team
• Prototyping • Personal
• Manufacturers • Accuracy
• Design service
• Manufacturing • Training &
• Periodontal
• Reduced time
• Resellers • Marketing imaging
demos
• Sales • Patient comfort • Hypothesis
Continuing Tested:
• Distributors • Service education
• Increase # of
• Marketers procedures • Value Propositions are
• Trade • Improve records strong enough to sell
• Stanford • Direct sales
products
organizations •
• IP
Patient • Trade
education
• Insurance • Human shows
companies • Our network • Reduced • Patterson/S
malpractice chein
• Human resources • Compliance • Product sales
• Manufacturing • Warranties & • Licensing (physical & IP)
• Marketing support • Accessory sales
• Sales • Legal • Consumable sales
dentalOptics
205. Our Product: periOptics
$2000 per unit
$2.50 per silicone sleeve
Distributed through:
Patterson Dental &
Direct
Imaging Resolution:
< 1mm
dentalOptics
206. $400 MM annual total addressable market
for Periodontal Diagnostic Device
Total addressable market ($MM)
450
$320 MM $400 MM
400
350
300
250
200
150
100 $75 MM
50
0
Device sales Consumables Total
• Device cost - $2000 • $2.5 consumables per
• Amortized over 4 years patient
• 128 MM patients per year dentalOptics
Source: Department of Health and Human Services
207. Growth Plan
Month 0 6 12 18 24
Regulatory Feasibility study Class II device FDA trials and approval
Product
Early Prototype Dev. Product Cycle I Product Cycle II
Development
Scale-up
Planning with Manufacturers
Preparation
Costs $300 K $1.5-2 M
dentalOptics
208. Growth Plan
Month 0 6 12 18 24
Regulatory Feasibility study Class II device FDA trials and approval
Product
Early Prototype Dev. Product Cycle I Product Cycle II
Development
Scale-up
Planning with Manufacturers
Preparation
Costs $300 K $1.5-2 M
Unit Economics Cost to Dentist:
$2000
Cost of Goods Margin Distributor
$500* $900 $600
Revenue
*At scale: 10K units dentalOptics
209. Next Step: Evaluate Technical Options
Optical Acoustic
J Clin Periodontol 2003; 30: 849–854
Printed in Denmark. All rights reserved
function dentalOptics
Periodontal ultrasonogra
210. Lessons Learned
Physical prototypes engage potential customers
Consumables are key to revenue models in dental devices
Listen to your customers for new directions
Caregivers don’t think exclusively like businesspeople: the
patient experience is paramount
“Hi, I’m a Stanford student…” gets you a conversation with
pretty much anyone
dentalOptics
211. Lean LaunchPad – Student Selection
• Students apply as a team
– Their application is their business model canvas
– Interdisciplinary business and engineering teams
• We select for teams, notideas
212. Lean LaunchPad - Class Organization
• Teams present every week
– Teaching team critiques
• Teams spend tens of hours outside the classroom
– They keep a blog of their customer discovery
• Lectures are minimalist
• Syllabus and slides on-line