The document provides guidance on strategic alliances and first customers for entrepreneurs, outlining the importance of letting business strategy drive alliance decisions, being ready to invest in first customers to drive product maturity and sales, and selecting first customers that are innovative early adopters who can provide valuable feedback.

1. Strategic Alliances &
First Customers
Aharon Aharon

2. Speaker’s Bio
“Entrepreneur” in IBM research - 14 years
VLSI, CAD + finance, HR, legal, admin, IT, etc
5 years in Zoran
COO
2 Years in Seabridge
CEO
7 years in Discretix
Chairman
7 years in Camero
Founder, CEO and now chairman
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3. Financial Survival:
a Financial Toolbox for the Entrepreneur
Strategic Alliances First Customers
Let business strategy drive Crucial for your product
alliance decisions maturity and sales
Design the alliance to fit Have a product ... timing
the strategy Be ready to invest (not
Grow relationships, don’t area for saving/ROI)
“do deals” Be ready to listen
Set multiple contacts Be reasonably flexible
Maintain control on your Build possibility to scale
destiny up (infrastructure)
Build internal culture to Scale up cautiously
support alliances
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4. Camero: Imaging Through the Wall
Milestones & Products
Xaver™™800
Xaver™ 800
6th release
3rdrelease
Aug. 2009
Oct. 2008
Xaver™ 800
Xaver™ 400
1st release
4th release
Aug. 2006 June 2009
Xaver™ 400
1st release
June 2008
March 2004 Dec. 2006 Aug. 2009
A Round $7M B Round $14M C Round $4M
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5. Strategic Alliances

6. Why - Strategic Alliance?
Faster, more cost effective growth option by
leveraging the assets of others
Get access to new
Strength
Capabilities
Experience
Access to potential customers
Access to brand
Potential M&A
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7. Possible Strategic Alliances
Duration M&A
Co-marketing Integrator
Co-Production
Joint Venture
Co-R&D
Strategic
Investor
Competitive supplier
Supplier
1 time
deal Intensiveness
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8. Strategic Alliance Characteristics
Long term
Evolving
Incomplete
More than 50% of alliances fail ...
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9. Selection Process Stages
1. Set strategic goal
Core competencies and financial/schedule limitations
2. Partner search
Match goal, skills, size, etc
3. Negotiation
Build and respect value, make things happen (Vs. being “right”)
Put high level structure, “term sheet”
4. Found
Invest in relationship, build trust
5. Operation
Communicate, periodical reviews, exchange (people, information)
6. Adjustments
Review, change
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10. Selection Process Rules
Negotiate with relationship in mind
Alliance managers and leaders
Relationships and communication at all levels
Build the right atmosphere at both sides
Periodic, planned, personal meetings
People exchange, information sharing
“Blameless reviews” of alliance health
Be flexible: expect the unexpected
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11. Some “Thumb” Rules
Relationship needs champions (leaders and visionaries)
at both sides
There is always a gap between optimum and reality
Build value and share vision
Be short on today’s money
Be generous in sharing future success
Check your partner strength, stability and possible
contribution
Check how the partnership contributes in a substantial
way to his business
Build multiple contacts at both sides at all hierarchies
Try reach out to higher hierarchy at partner’s side
Always have more than one option
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12. Two Case Studies: MTI & GD
Duration M&A
GD
Co-marketing Integrator
Co-Production
Joint Venture
Co-R&D
Strategic
Investor
Competitive supplier
Supplier
MTI
1 time
deal Intensiveness
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13. Case Study – MTI
Challenge
Unique UWB antenna design to meet product requirement
Possible solutions
Organic (schedule: 9-12 months, cost: $500-700K, risk!)
4-5 companies WW
Short list: 3 companies
Reasoning: technology, motivation, relationship, cost, IP
2 Israel, 1 Ukraine
Agreement
MTI – Israel based, joint IP
Limited upfront, generous royalties
Champions
Experience/Lessons learned
Very successful in the last 7 years
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14. Case Study – General Dynamics
Primary challenge
Distribution in US DoD
Possible solutions
About dozen companies/integrators working with the US DoD
Short list: 3 companies
Reasoning: access, motivation, relationship, investment, people
Dream Vs. Reality
SAIC, L3, GD ATP
Agreement
Exclusive on US DoD
Reasonable commercial terms
Set-aside projects
Thresholds target based, limited in time
Experience/Lessons learned
Too early engagement (early 2007)
Too fast on Exclusivity (small business potential)
Successful mainly after PoR (moving to “Integrator” status)
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15. First Customers

16. Product Assumptions
Product type Product Lifecycle
Technology product Proof of concept
Prototype
Emerging market
Beta “product”
Clear need
Enhanced beta “product”
Well identified market
segments
Mass production product
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17. Marketing Segment Strategy
Single segment strategy
Multiple segments
Total segments
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18. Marketing Penetration Strategy
First in
Early entry
Laggard entry
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19. Customer Delivered Value
Total Total
Customer Customer
Value Cost
Product Monetary
Services Time
Personnel Change
Image Perception
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20. First In Strategy
You Customer
Willingness and ability to take Willingness and ability to take
risks risks
Technological competence Strong demand
Heavy promotion Strive to stay ahead
Create primary demand Champion
Invest (resources, headcount) Technological savvy
Flexibility Entrepreneurial spirit
Respect to customer Influential
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21. Single Market Strategy
Identify the right vertical market segment
Identify 2-3 potential customers
Early adaptors
Strong demand
Passion and patience
Small enough but valued and prestige
Identify internal champion
Create multiple contacts (beyond technology)
Ability to scale up (internal or influential)
Start working with a single customer
Extend to 4-5 after initial (successful) stage
Scale up
Build carefully infrastructure to support it
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22. Case Study – Camero Market Segments
Many potential customers, different product
requirements and different needs
Military
Special Ops Regular Army
Police and Law Enforcement
FBI/SWAT Local Police
Fire & Rescue
First Responders Fire Departments
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23. First customers–DSTL & TSWG
1. DSTL (March 2006) 2. TSWG (June 2007)
Customer Type Customer Type
UK MoD R&D US HLS R&D
Link to customer Link to customer
Via prestigious LP Via prestigious aBoD, consultant
Contact to customer
Contact to customer
All levels, directly
Technical, mainly via LP
Agreement
Deal Reasonable version Xaver 800 (1.2)
Early version Xaver 800 (0.96) Early version Xaver 400 (1.1)
Feedback Feedback
Initial, and after Lead to Tracker, and Xaver 400
Experience/Lessons learned Experience/Lessons learned
Too early engagement Informative feedback
Not able to get a real feedback Created a major change in roadmap
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24. First customer – REF (June 2009)
Customer Type
US DoD Army/SF
Link to customer
Directly with GD mentoring (“kosher” stamp)
Contact to customer
All levels
Deal
Late and mature version of Xaver 400 (1.4)
Investment
Numerous visits, hundreds of pages for RFP answer, full training course
Feedback
Took time to establish links to get feedback
Experience/Lessons learned
Optimal timing
Excellent vehicle
Scalability on sales
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25. Summary
Strategic Alliances First Customers
Let business strategy drive Crucial for your product
alliance decisions maturity and sales
Design the alliance to fit Have a product ... timing
the strategy Be ready to invest (not
Grow relationships, don’t area for saving/ROI)
“do deals” Be ready to listen
Set multiple contacts Be reasonably flexible
Maintain control on your Build possibility to scale
destiny up (infrastructure)
Build internal culture to Scale up cautiously
support alliances
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