agile, business model, corporate innovation, customer development, lean, lean startup, lean launchpad, stanford, steve blank, video, engr 245

2. dermalytics™
data from your skin, trackable progress towards skin health
40% of people with skin care needs incorrectly describe their skin. introducing
state of the art technology to quantitatively analyze your skin, track progress and
prevent damage before it occurs.
Brandon Wilson
Software
School of Engineering
Jennia N. Rajaei
Product
School of Medicine
Siqi Mou
Strategy & Finance
School of Business
Chloe Johnson
Marketing
School of Business
Total Interviews:
120

3. PORTRAY - personalized skincare
Original idea
Understand customer’s skin with
analysis machine
Use data to create a product
formulation
1
2
Build custom skincare product based on
analysis3

4. We had lots of initial
hypotheses about
our customers

5. After talking to
consumers, we
realized many of our
initial hypotheses
were wrong.

6. Fundamentals

7. Fundamentals

8. This is not an MVP
Fundamentals

9. This is an MVP
This MVP enabled us to
test multiple hypotheses
rapidly and cheaply
allowing us to quickly
collect data and iterate if
necessary.
Fundamentals

10. What do people want from their skincare
products?
Hypothesis
People prefer organic based products
Experiment
Customer Interviews + A/B testing with product
designs
Results
“I would put cow
manure on my face if it
worked”
Consumers generally don’t
care what is in their products,
as long as they see results!
“I don’t care if I’m putting
shitloads of chemicals on my
face as long as their
effective”
% with strong preference
Value Proposition

11. Customer Segment Discoveries (29 interviews)
● Less likely to try new products
● More skeptical that customized skincare would
work
● Worried about undoing current progress
● More likely to try new products
● Open to changing current regimen
Customer Segment

12. Product Development
Hydration
Redness
Pore size
How do you make a skincare product?

13. Product Development
Hydration
Redness
Pore size
How do you make a skincare product?

14. Core Value Proposition Learning
After 300+ online respondents & 37 in person interviews
- 41% of respondents identified skin irritation as their most pressing
skin concern
- 90% of interviewees stated that they did not believe that a
customized skin care product would be effective in improving skin
quality
- Coupling interview learnings with literature search on key measures
of skin irritation
- The only skincare problem we know how to address via
product formulation →
HYDRATION
Value Proposition Learning

15. Major Pivot 1 - Core Value Proposition :
Hydration + Customized Formula

16. -
Distributers: Direct to
Consumer (through online
platform), plan to grow
with partnerships with
traditional retailers to offer
in person customization
(Sephora, Peninsula
beauty, Bloomingdales)
Magazines: InStyle,
Women’s Health, Vogue,
Porter
Suppliers: private label
manufacturers, organic
farms
What we can offer:
revenue, branding,
innovative offering
We use both facial analysis
software (exists today) and
interview to analyze what
skin needs which generates
an ingredient & product list
customized. Activities:
- Online platform
management
- Product recommendation
and formulation
-Manufacturing
management through
private labels
-Inventory management
Funding to cover dev and
manufacturing costs,
skincare expertise to
customize products,
technology support, IP for
custom formulations
Product sale
• Individual orders
• Subscription
• Tiered pricing based on volume
ordered
• Fixed: salaries of permanent team members, private
label contract fee, high-tech machine cost
(imported from Korea), marketing cost
• R&D costs
• Variable: unit cost for each product including
ingredients and mixing process
Pain point:
Lack of customized
hydration
No over the counter
skincare products are
custom build, and
working with
dermatologists to
develop a skin care
routine is very expensive.
Value:
Skincare products built to
meet customers’
individualized needs,
based on
recommendations and
our expertise. Meets skin
sensitivities and helps
balance treatments to
their specific needs.
50% skincare purchases
are made based on
friends’ recs
-Initial customers
acquired through
marketing and networks
- Incentive programs for
customers to post and
share their skincare
offerings (super-user and
skincare celebrities)
- Partnerships with
retailers, eventually own
brick and mortar stores
1. Skincare enthusiasts
that are first
adopters, love to try
new trends. Allocate
significant personal
expenditures to try
and be up-to-date on
customers.
Customers want targeted
interactions
- Online
- Directly with experts in
brick and mortar
locations
Shifted to hydration
with a much more
limited offering

17. 2
3
Hydration MVP
1Hypothesis
People want customized hydration products
Experiment
26 customer interviews.
“hydration” vs. “skin health”
Results
● People do not care about “hydration”
● “Skin health” had much better reception
● What people WERE interested in, was the skin
health data
“My skin is dehydrated??
I’ll just drink more water!”

18. 2
3
Hydration MVP
1Hypothesis
People want customized hydration products
Experiment
26 customer interviews.
“hydration” vs. “skin health”
Results
● People do not care about “hydration”
● “Skin health” had much better reception
● What people WERE interested in, was the skin
health data
“My skin is dehydrated??
I’ll just drink more water!”
After talking to our mentors and
conducting 40 customer interviews,
we decided to ditch product

19. -
Distributers: Direct to
Consumer (through online
platform), plan to grow
with partnerships with
traditional retailers to offer
in person customization
(Sephora, Peninsula
beauty, Bloomingdales)
Magazines: InStyle,
Women’s Health, Vogue,
Porter
Suppliers: private label
manufacturers, organic
farms
What we can offer:
revenue, branding,
innovative offering
We use both facial analysis
software (exists today) and
interview to analyze what
skin needs which generates
an ingredient & product list
customized. Activities:
- Online platform
management
- Product recommendation
and formulation
-Manufacturing
management through
private labels
-Inventory management
Funding to cover dev and
manufacturing costs,
skincare expertise to
customize products,
technology support, IP for
custom formulations
Product sale
• Individual orders
• Subscription
• Tiered pricing based on volume
ordered
• Fixed: salaries of permanent team members, private
label contract fee, high-tech machine cost
(imported from Korea), marketing cost
• R&D costs
• Variable: unit cost for each product including
ingredients and mixing process
Pain point:
No over the counter
skincare products are
custom build, and
working with
dermatologists to
develop a skin care
routine is very expensive.
Value:
Skincare products built to
meet customers’
individualized needs,
based on
recommendations and
our expertise. Meets skin
sensitivities and helps
balance treatments to
their specific needs.
50% skincare purchases
are made based on
friends’ recs
-Initial customers
acquired through
marketing and networks
- Incentive programs for
customers to post and
share their skincare
offerings (super-user and
skincare celebrities)
- Partnerships with
retailers, eventually own
brick and mortar stores
1. Skincare enthusiasts
that are first
adopters, love to try
new trends. Allocate
significant personal
expenditures to try
and be up-to-date on
customers.
1. Individuals with skin
sensitivities and
allergies to common
skincare compounds
(PEG) which often
require
personalization.Customers want targeted
interactions
- Online
- Directly with experts in
brick and mortar
locations
We scrapped almost
everything, but had
learned something very
important!
Customers didn’t
understand their skin
or what products to
buy

20. Actually it looked more like this

21. We decided to turn to the data

22. And when customers were like…

23. Our path was clear...

24. Major Pivot 2 - Core Value Proposition :
Skin Data Device & Analysis

25. MVP Testing (In Person Product Demos)
Test Test Test
- Experiments - cheap and fast
- Most were done in powerpoint or
with little coding
- Talk to people and analyze their
reactions and comments

26. A/B Testing Galore
Single sensor Bluetooth connectivity In-app purchasing
vs.
vs.

27. A/B Testing Galore
Single sensor Bluetooth connectivity In-app purchasing
vs.
vs.

28. A/B Testing Galore
Single sensor Bluetooth connectivity In-app purchasing
vs.
vs.

29. A/B Testing Galore
Single sensor Bluetooth connectivity In-app purchasing
vs.
vs.

30. A/B Testing Galore
Single sensor Bluetooth connectivity In-app purchasing
vs.
vs.
After 90+ customer interviews,
we have finally identified what
people want in our product

31. Demographics + Behavioral
- Female
- Ages 18-35
- College educated
- $75k+ income
- Active on social media
- Online shopping
- $100+/mo on products
- Subscription services
Attitudinal
- Cares about appearance; watches diet and
exercise
- Generally OK skin with occasional blemish
- Tries new products to balance out minor
issues (dry patches, blemish)
- Interested in taking control of skin to counter
patchwork approach she has today
Hi I’m Lyla! I’m 28 and work for a marketing firm in LA. My
appearance is important for work so I try to be careful.
I try lots of skincare products but still have random zits and
dry patches now and again. I’m still not sure what works for
my skin.
Customer Archetype (after 120 interviews)

32. Key Partners : Decreasing CAC
Name Media Platform Following Cost Purchase rate CAC
BB1 YouTub
e
Instagram
Twitter
Facebook
Snapchat
10-20k
2.5k
1k
1k
1.5k
867,879
158,000
30,900
24,987
N/A
BB2 YouTub
eInstagram
Twitter
Facebook
1,487,625
72,600
605,000
1,606,291
5.5%, 188k $1.9
4
7.2%, 302k35k $1.6
1
2.1%, 6.8k $31.694.5k
3.6%, 8.4k
0.9%
1.4%
1.3%
1.8%
$8.28
Metrics That Matter

33. After 100+ interviews, we had 20 beta sign-ups!
$$$$

34. -
- Manufacturers (based
in Shenzhen)
- Fulfillment center
- Brands / wholesalers
- YouTube channels
and Beauty Bloggers
- Earned media,
customer
relationships
What we offer them
- Payment for the
manufacturing and
scale
- Access to innovative
products
Offer a skincare device
Activities:
- Device design and
design patent
- Online platform
- Data analysis
- Product
recommendation
Funding to cover dev and
manufacturing costs,
skincare expertise to
customize products,
technology support
- Affiliate marketing 10-15% revenue from
product sale
- Device sale for $150
- Premium subscription for APP for $10 /
month
• Developer team for application (Front-end, UI, back-
end engineer) ~ 160K per month
• BOM costs of 10-15 / device with 1000+ minimum
• Office space and servers
• CAC - $5
• Fulfillment costs of $5-6/product
Pain point:
Many women can’t
accurately describe their
skin (40% out of those
interviewed) and struggle
to identify which
products will work best
for you
Value:
Give you data on your
skin’s health, enable you
to track progress of your
skin routine, provide
recommendations and
routine advice, allow you
to purchase products that
will best fit your skin
- Youtube advertising
- Earned media with
expected CAC of $5
- Mix of online
advertising
- Partnerships with
brands and retailers
Skincare enthusiasts that
are first adopters, love to
try new trends. Allocate
significant personal
expenditures to try and
be up-to-date on
customers.
→Transition point in life
where they are
starting to identify skin
issues (35+)
→Middle to upper
income
→Female
→Well educated
professional
- Direct to consumer
- Partner in store
We’ve
learned a
lot

35. But what does this really all mean?

36. Get OUT of the building!
If we had stuck with our BMC
- Women will buy bespoke skincare
products for a 200% mark-up
- It will be cost effective to custom
develop a product for each person
based off of our own formulations
- Women want another skincare
solution

37. Experiment ALL the time
Test Test Test
- Experiments should be cheap and
fast
- Most were done in powerpoint or
with little coding
- Talk to people and see how they
react

38. Product market fit feels like this…
Oil + hydration
Wow!!!

39. We speak different languages!?
❖ We are from different backgrounds (science vs business) and therefore have
different short and long term visions
❖ It is important to be aware of them to manage difference and create synergy

40. When we argue …
We should have gone straight to customer interviews to validate one thought
process vs. another

41. When we got yelled at…
This is what we call… “Tough L ve”