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Steve Blank discusses how startups can fail less by focusing on customer development and business models rather than execution alone. He outlines the key insights: 1. Most startups fail due to a lack of customers, not product development issues. Customer development is a search strategy to test hypotheses about the problem and solution. 2. A business model is made up of hypotheses that need to be tested, not assumptions. Customer development helps test the hypotheses through interviews, demos, and pivots if needed. 3. Rather than managing processes, founders should run a customer development team to search for a repeatable and scalable business model. Functional organizations by department are less effective than a founder-driven customer development team.

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How to Fail Less Business Models and Customer Development Steve Blank www.steveblank.com @sgblank
As Smart As You Are Most of You Will Fail
This Talk is How to Fail Less
Agenda 1. What we used to believe / What we now know 2. Business Models and Customer Development 3. Customer Development Details 4. Examples
What We Used to Believe Strategy
All I Need to Do is Execute the Plan
All I Need to Do is Execute the Plan
All I Need to Do is Make the Forecast
All I Need to Do is Make the Forecast
What We Now Know Strategy
Planning comes before the plan
Business Models
Business Models
Search Execution Business Model Operating Plan + Strategy Hypotheses Financial Model
What We Used to Believe Process
We Built Startups by Managing Processes Product Management + Waterfall Engineering
Product Introduction Model Concept/ Product Alpha/Beta Launch/ Seed Round Dev. Test 1st Ship
Product Introduction Model Concept/ Product Alpha/Beta Launch/ Seed Round Dev. Test 1st Ship
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
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
What We Now Know Strategy
More startups fail from a lack of customers than from a failure of product development
Customer Development A Search Strategy
Search Execution Strategy Business Model Operating Plan + Hypotheses Financial Model Process Customer & Product Management & Agile Development Agile Development
What We Used to Believe Organization
Hire and Build a Functional Organization
What We Now Know Organization
Founders run a Customer Development Team No sales, marketing and business development
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
Search Strategy Business Model Hypotheses Process Customer Development, Agile Development Organization Customer Development Team, Founder-driven
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
Part 2 Business Models and Customer Development
What’s A Startup?
A temporary organization designed to search for a repeatable and scalable business model
A temporary organization designed to search for a repeatable and scalable business model
A temporary organization designed to search for a repeatable and scalable business model
A temporary organization designed to search for a repeatable and scalable business model
A temporary organization designed to search for a repeatable and scalable business model A Startup aims to become a company
What’s a Business Model?
But, Realize They’re Hypotheses
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
9 Guesses Guess Guess Guess Guess Guess Guess Guess Guess Guess
Turning Hypotheses Into Facts
The Four Steps – The Startup Path Customer Development
Customer Development Test the Problem, Then the Solution
Customer Development The Minimum Viable Product
Customer Development The Pivot
Customer Development is how you search for the model
Customer Discovery
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
Customer Validation
Customer Validation Step 1: Get Ready to Sell
Customer Validation Step 2: Sell to EarlyVangelists
Customer Validation Step 3: Develop Positioning
Customer Validation Step 4: Pivot or Proceed
Part 3 How Does this Really Work?
Pivot Example Robotic Weeding Talked 75 Customers in 8 Weeks
Our initial plan Confidential
20 interviews, 6 site visits… We got OUR Boots dirty Mowing Interviewed: • Golf: Stanford Golf course • Parks: Stanford Grounds Supervisor, head of maintenance and lead operator (has crew of 6) • Toro dealer (large mower manufacturer) • User of back-yard mowing system • Maintenance Services for City of Los Altos • Colony Landscaping (Mowing service for stadiums) Weeding Visited two farms in Salinas Valley to better understand problem Interviewed: • Bolthouse Farms, Large Agri-Industry in Bakersfield • White Farms, Large Peanut farmer in Georgia • REFCO Farms, large grower in Salinas Valley • Rincon Farms, large grower in Salinas Valley • Small Organic Corn/Soy grower in Nebraska • Heirloom Organics, small owner/operator, Santa Cruz Mts • Two small organic farmers at farmers market • Ag Services of Salinas, Fertilizer applicator
Business Plan Autonomous Vehicles for Mowing & Weeding - Innovation Dealers sell, installs Mowing - Dealers - Customer We reduce and supports - Owners of (Mowing and Ag) Education operating cost customer public or - Vehicle OEMs - Dealer training - Labor reduction commercially (John - Better utilization Co. trains used green Deere, Toro, Jaco of assets (eg mow dealers, supports spaces (e.g. golf bsen, etc) or weed at nights) dealers courses) - Improved - Landscaping - Research labs Engineers on performance (less - Mowing Dealers service provider Autonomous rework, food - Ag Dealers vehicles, GPS, pat safety) Weeding h-planning - Farmers with manual weeding operations Dealer discount Asset sale COGS seek a 50-60% Gross Margin Our revenue stream derives from selling the Heavy R&D investment equipment
Found weeding in organic crops is HUGE problem; 50 - 75% of costs Crews of 100s-1000 Back-breaking task (Ilegal) labor harder to get 1-5 weedings per year/field $250-3,500 per acre and increasing Food contamination risk
Decision to make – mowing vs weeding Application If ROI is < 1 Labor costs Autonomous TAM yr they will significant? would solve buy problem? Mowing of Yes. Yes Yes Adjusted up to Professionally xxx large fields run organizations Weeding in Agri Industry: YES! for TAM increased YES! organic crops Not necessarily to $2.6 B (Total Agriculture organic) Large They are Key need is Growers: Yes spending weed vs. crop Target Market $500/ac! differentiation (organic Small specialty) Growers: No 162 M/yr 18%/yr growth
Autonomous vehiclesWEEDING - Innovation Dealers sell, installs - Low density - Ag Dealers - Customer We reduce and supports vegetable - Ag Service Education operating cost customer growers providers - Dealer training - Labor reduction - High density (100 to 1) Co. trains dealers, vegetable - Research labs - Reduced risk of supports dealers growers contamination - Thinning - Mitigate labor operations Engineers on availability - Ag Dealers - Conventional Machine Vision concerns - Ag Service vegetables Two problems: providers - Identification - Elimination Dealer discount Asset sale COGS seek a 50-60% Gross Margin Our revenue stream derives from selling the Heavy R&D investment equipment
1 Week – 1 CarrotBot Confidential
CarrotBot • Machine Vision data collection platform – Monochrome & Color Cameras – Laser-line sweep (depth measurement) – Encoders CarrotBot 1.0 (position/velocity) – Onboard data acquisition & power
The Business Plan Canvas Updated •Technology •Farming Design conventions. •Marketing •Demo, demo, a •Demo and nd demo!! customer •Cost •Proximity is •Organic •Research Labs feedback paramount Farmers Reduction •Equipment •Weeding •Remove labor Manufacturers Service force pains •Distribution Providers •Eliminate bio- Network •Conventional waste hazards •Service •IP – Patents Farmers Providers •Video •Dealers Classifier Files •Direct Service •Robust •Indirect Service Technology • … then Dealers •Asset Sale Value-Driven •Direct Service with equipment rental •… then Asset Sale
Visit Highlights Carrot vs. Weeds Due to small root systems, carrots have no chance against weeds
Visit Highlights Organic Broccoli, closely cultivated. Weeds close to plants are hand-picked
Visit Highlights State of the Art in Weeding Technology for Organic Crops
Customer Hypothesis Pre-Test Large Growers Us Dealer Industrial Growers Hypothesis Confirmed • Growers interested in own equipment Industrial • Industrial (10,000s of acres) Growers • Large (1,000s of acres) Post-Test • Willing to pay $100k for one unit Large Growers • Smaller growers (100s of acres) usually Us Dealer subcontract the labor services or rent Service equipment Providers • All purchases through local dealers Equipment •Customer service is essential Rental
Customer Map #1 – Industrial Growers Example: Bolthouse Farms – Large Industrial Carrot Producer – 8K acres/yr End User • Equipment Operator Influencer • Local Farm Mgr • Cliff Kirkpatrick, visited Recommender • Director, Ag Technology Equipment Operator • Justin Grove, interviewed Decision • VP, Growing Operations Maker Approver • CFO, CEO (Jeff Dunn) Cliff, Farm Mgr
Customer Map #2 – Service Providers Example: Ag Services – Service Provider, Salinas Valley End User • Equipment Operator Influencer • Grower Recommender • Service Mgr Me (left), Marty (middle, Service Mgr), Doug (right, Grower) Decision Maker • ?? (service mgr’s boss) & Approver
The Business Plan Canvas Updated •Technology •Farming Design conventions. •Marketing •Demo, demo, •Mid/Large •Demo and and demo!! Organic Farmers customer •Cost •Proximity is •Agricultural •Research Labs feedback paramount Reduction corporations •Equipment •Remove labor •Weeding Service Manufacturers force pains Providers •Distribution •Eliminate bio- Network •Service •IP – Patents waste hazards •Mid/Large Providers •Video •Direct Service Conventional Classifier Files •Indirect Service Farmers •Robust • … then Dealers Technology •Direct Service with equipment rental Value-Driven •($1,500/d; 120d/yr ) •Low density: $1,500/d •High density: $6,000/d
World Ag Expo interviews: the need is real and wide spread • 10+ interviews at show – Everyone confirmed the need – Robocrop, UK based, crude competitor sells for $171 K • Revenue Stream – Mid to small growers prefer a service – Large growers prefer to buy, but OK with service until technology is proven – Charging for labor cost saved is OK, as we provide other benefits (food safety, labor availability) Confidential
The Business Plan Canvas Updated •Technology •Farming Design conventions. •Marketing •Demo, demo, a •Mid/Large •Research Labs •Demo and nd demo!! Organic Farmers •Equipment customer •Cost •Proximity is •Agricultural Manufacturer feedback Reduction paramount corporations •Distribution •Remove labor •Weeding Service Network force pains Providers •Service •Eliminate bio- Providers •IP – Patents waste hazards •Mid/Large •2 or 3 Key •Video •Direct Service Conventional Farms Classifier Files •Indirect Service Farmers •Robust • … then Dealers Technology Value-Driven •Direct Service with • R&D equipment rental • Bill of Materials •Low density: $1,500/d • Training & Service •High density: $6,000/d • Sales
Autonomous weeding - Final - Innovation Direct - Low density - Ag Service - Customer We reduce - Provide high vegetable providers Education operating cost quality service at growers - Dealer training - Labor reduction competitive price - High density - Research (100 to 1) vegetable Institutes (eg UC - Reduced risk of growers Davis, Laser contamination - Thinning Zentrum - Mitigate labor operations Hannover) Engineers on availability Direct - Conventional Machine Vision concerns - Alliance with vegetables - 3-4 key farms Two problems: service providers - Identification - Eventually sell - Elimination through dealers Costs for service provision Service provision COGS seek a 50-60% Gross Margin - Charge by the acre with modifier according to Heavy R&D investment weed density - Eventually move to asset sale
Business Plan Autonomous Vehicles for Mowing - Innovation Dealers sell, installs Mowing - Dealers (Mowing - Customer We reduce and supports - Owners of and Ag) Education operating cost customer public or - Vehicle OEMs (John - Dealer training - Labor reduction commercially Deere, Toro, Jacobse - Better utilization Co. trains dealers, used green n, etc) of assets (eg mow supports dealers spaces (e.g. golf or weed at nights) courses) - Research labs - Improved - Landscaping Engineers on performance (less - Mowing Dealers service provider Autonomous rework, food - Ag Dealers vehicles, GPS, pat safety) Weeding h-planning - Farmers with manual weeding operations Dealer discount Asset sale COGS seek a 50-60% Gross Margin Our revenue stream derives from selling the Heavy R&D investment equipment
How Does This Really Work? NSF Lean LaunchPad Class 10 Weeks From an Idea to a Business
Graphene Frontiers We are a nanotechnology materials company with a proprietary process for producing high quality, low cost, large area graphene films at commercial scale
Background: Graphene Applications “Wonder Material” Graphene • Nano Material Subject of 2010 Nobel Prize in Physics • 2D Carbon: Strong, Flexible, Conductive, Transparent • Enables Next Generation Thin, Flexible Devices Flexible Transparent Thin, Flexible Touch Screen, Displays Electrodes Solar Cells
Problem: Lab Scale Not Enough Graphene Production Must Scale Up to Commercial Levels before Integration into Consumer Products Becomes a Reality…
Solution: Scalable Production Process Our Patent-Pending APCVD Graphene Production Process: •Operates at ambient pressure, reducing cost enabling flexible design •Industrial scale, continuous roll-to- roll production possible •Graphene sheet size limited only by CVD furnace dimensions •Same or better quality vis-à-vis LPCVD graphene •Graphene growth at 900-1000 °C, lower than other methods
Market: Size and Growth Nascent Graphene Market is Ready to Explode: Commercial Scale Production will be Catalyst • Thin, Flexible Displays • Solar Thin Film • Touch Screens Thin, Flexible Display • Thermal Management for Electronics Thermal Management $8.2B • Basic Materials and Research $6.4B • Microscopy (TEM) Sample Supports GF TAM: $1.2B Research/ Market for Thin Film Solar Mat’l/Other Graphene $4.6B $1.4B Films/Sheets $52M Graphene Frontiers Process & Product Offering • GF APCVD Process will Accelerate Graphene Adoption Curve 2012 2016
Team: Graphene Frontiers EL:Zhengtang Luo, PhD – Chief Science Officer 10+ years experience in synthesis of carbon nanomaterials and product development for applications in the area of materials chemistry, chemical separation and electronic devices. Mentor: Mike Patterson – CEO Experienced entrepreneurial leader, manager, and trusted adviser to startups and Fortune 500 companies, providing expertise in growth strategy and international operations. Patterson is an Executive MBA candidate (Entrepreneurial Management, April 2012) at the Wharton School, University of Pennsylvania. PI: A.T. Charlie Johnson, PhD – Founder, Scientific Advisory Board Known internationally for his work in graphene electronics and carbon nanotube electronics. IP from his lab on DNA-carbon nanotube devices for use in an electronic nose system pursued by Nanosense. An author of over 130 peer-reviewed articles, Johnson holds two issued patents, with 18 other patents submitted.
Recap • Graphene technology will change the world... • …but not until it is available in commercial volumes • We believe that APCVD is the best path to industrial scale • Whoever meets this challenge will be first mover in a fast growing market with multi-billion dollar potential • We are the right team with the right technology to do it
What’s Next: Strategy and Roadmap 1H 2012 2012 2013+ Commercial Roll-to- Application Phase 4” Scale-Up Roll Design & Prototype Development Product/ TEM Grids Process Licensing Intellectual Property Materials Business Thin, Flexible Displays Revenue 12” x 12” Sheet Roll-to-Roll Mfg. Application R&D Milestone Production Industrial Scale Team “World Leader in Perfect CVD Graphene Activity Scale-Up Sheet Size Continuous Process Innovation” Increase Area Increase Throughput New Applications
What’s Next: Secure Partnerships + Investment Distribution Active Customer Manufacturing Partners Conversations Partners Seed Investment Needed
Enter I-Corps: Beginning Hypotheses Here’s What We Thought: – Graphene can be used for just about anything – All of the big manufacturers are just waiting for our product – The market for graphene will explode in 2012 – We will become the world’s largest graphene manufacturer
So Here’s What We Did… • Research to identify target companies: Build the list – Web, industry/research reports, personal network, “Who else should we talk to?” • Calls to personal/professional/alumni network: “Do you know anyone…?” • Intros, warm calls, cold calls, cold calls, more calls
So Here’s What We Did… • Google AdWords Campaign + Survey Monkey – 3 days, 8,555 Impressions, 34 people clicking through to our site, ZERO contacts/closes. Retrospect: What were we trying to learn??? • Serendipity: Casual conversation turns to Graphene Frontiers at alumni event: “That’s terrific! You know, I work at DuPont. Here’s my card… send me your deck and let me know how I can help.” –Tom Connelly, Chief Innovation Officer, DuPont
So Here’s What We Did… • 48 Companies Engaged, 70+ Conversations: – Lockheed Martin, GrafTech, Inventables, alphaMOS, FirstNano, Pannam Imaging, FujiFilm, Solutia, Dontech, Tramonto Circuits, Adamant Technologies, Intel, XG Sciences, Graphene Technologies, Densitron, Hotatouch, Touch International, Magic Touch, NJY Technology, Pangea Ventures, Display Search, Dow, DuPont, 3M, Corning, BASF, WL Gore, Morgan AM&T, Plextronics, SPI Supplies, New Metals and Chemicals, G.E., Innovalight, Siemens, Nelson-Miller, Essilor USA, Nexans, E-ink, Gamma Dynamics, Plastic Logic, Cabot Corporation, Thin Diamond, Knighthawk Engineering, Kopietz Consulting, DISPLAX, NineSigma, Evaporated Coatings, LiquaVista • 80 LLL Posts, 61 Comments/Responses – 79% comments positive or factual, 21% “Constructive”
So Here’s What We Learned… • Atmospheric pressure production is key value-add – Not “high-quality”, not single-layer • Many big companies are on the sidelines doing limited product dev, waiting for a proven production method • We need to focus on scaling up (bigger & faster) • We need a partner to break into consumer electronics • Cost matters, but not as much as we thought
So Here’s What We Learned… • TEM grids are viable, near term but small market – Will rely on distribution partner • Displays will be next big thing – Focus on flexible/foldable thin displays – May require partnership with OEMs or sub-contractors • Extensive product characterization is next step – Transparency, haze, sheet resistance for displays (3M, Dow, DuPont) – Minimize layers and contamination for TEM (SPI, Halcyon)
• R&D • Warranty • Earlyvangelists • Defense • Scale up system design • Service/Maint. • (Customer/Partner) • MEMS • Graphene production Material Agree • Equipment Mfg • Chem/Bio Detect. • IP creation/licensing • Thermal Conduct. • Joint Marketing • Universities • Researchers • Internal application • Elect. Conduct • Branding • Downstream • Optoelectronics development • Strength fabrication • Transparent companies • “Semiconductor” Conduct. (Touch) • Suppliers • IP* (Patent/License) • Flexible • Solar Cell Electrodes • Team/Expertise • Transparent • Thermal Mgmt • Credibility/Rep • Distributor • Supercapacitor Process • CVD Equipment • Direct Sales • Battery • Low Cost • Inputs (gas/foil) • Online • TEM support • Higher Quality • Lab space • License • Polymer/Composite • Large Area • Website • Partner/JV • CVD Equip Mfg • “Industrializable” • Design/Engineering • Bundle • Flexible Mfg • Team • Material Sales • Add’l IP • Lab space • License/Royalty • Applications • Capital equipment • Equipment Sales • SBIR • Consulting • Angel • Maintenance • VC • Design • Ben Franklin
The Business Model Canvas • Lead Customer • R&D • Warranty • Equipment Mfg Material • Scale up system • Service/Maint. • Universities • Thermal Conduct. • Defense design Agree • Downstream • Elect. Conduct • MEMS • Graphene product. • Joint Marketing fabrication • Strength • Chem/Bio Sensor • IP creation/ • Branding companies • “Semiconductor” • Researchers licensing • Education • Suppliers • Flexible • Optoelectronics • Internal app. dev. • Transparent • Transparent Conduct. (Touch) Process • Solar Cell • Low Cost Electrodes • Higher Quality • Thermal Mgmt • IP* (Patent/License) • Large Area • Supercapacitor • Distributor • Team/Expertise • “Industrializable” • Battery • Direct Sales • Credibility/Rep • Flexible Mfg • TEM support • Online • CVD Equipment • Polymer/Compos. • License • Inputs (gas/foil) • CVD Equip Mfg • Partner/JV • Lab space • Bundle • Website • Design/Engineering • Team • Lab space • Material Sales • Maintenance • Capital equipment • License/Royalty • Design • Direct Sales/Travel • Equipment Sales • Add’l IP • Consulting • Applications
The Business Model Canvas Equipment Mfg Scale up Low Cost Education Thermal Mgmt Solutions Universities Customization Higher Quality Service/Maint. Transparent Production Conduct. Downstream Large Area (Touch) fabrication companies Chem/Bio “Industrializable” IP License Sensor CVD Equipment Direct Sales Facilities/Lab License/Royalty Capital equipment Personnel Material Sales Direct Sales/Travel Lab space
The Business Model Canvas Equipment Mfg Scale up Low Cost Education Thermal Mgmt Solutions Universities Customization Higher Quality Service/Maint. Transparent Production Conduct. Downstream Large Area (Touch) fabrication companies Chem/Bio “Industrializable” IP License Sensor CVD Equipment Direct Sales Facilities/Lab License/Royalty Capital equipment Personnel Material Sales Direct Sales/Travel Lab space
The Business Model Canvas Equipment Mfg Scale up Low Cost Education Thermal Mgmt Solutions Universities Customization Higher Quality Service/Maint. Transparent Production Conduct. Downstream Large Area (Touch) fabrication companies Chem/Bio “Industrializable” IP License Sensor CVD Equipment Direct Sales Facilities/Lab License/Royalty Capital equipment Personnel Intermediate product Material Sales Direct Sales/Travel Lab space
Graphene Frontiers Business Model Canvas – PRIOR VERSION (10.18) Scale up Equipment Mfg Low Cost Education Thermal Mgmt Solutions Customization Service/Maint. Universities Higher Quality Transparent Collaborative R Conduct. Production &D (Touch) Downstream Large Area fabrication Membrane companies switches “Industrializable” IP License Replace ITO CVD Equipment Direct Sales Facilities/Lab Chem/Bio Sensor License/Royalty Capital equipment Personnel Intermediate product Material Sales Direct Sales/Travel Lab space
This Week: Split, then Pivot
Graphene Frontiers Business Model Canvas “A” Research Transfer Process Academic Papers Groups Optimization Atomically Thin and Robust Electron Trade Shows Microscopists TEM Equipment Higher Quality Mfg. “Clean” IP CVD Equipment Facilities/Lab “Free” Revenue Sharing (Selling Byproduct) w/Distributor
Graphene Frontiers Business Model Canvas “B” Scale up Equipment Foldable / Education Flexible Mfg Bendable Transparent Customization Service/Maint. Conductor Universities Higher Quality Collaborative R&D Downstream Large Area Fabrication Companies “Industrializable” IP License Low Cost CVD Equipment Facilities/Lab Intermediate License/Royalty Capital Equipment Personnel product Direct Sales/Travel Lab space
Graphene Frontiers Business Model Canvas “B” Scale up Equipment Foldable / Education Flexible Mfg Bendable Transparent Customization Service/Maint. Conductor Universities Higher Quality Collaborative R&D Downstream Large Area Fabrication Companies “Industrializable” IP License Low Cost CVD Equipment Facilities/Lab Intermediate License/Royalty Capital Equipment Personnel product Direct Sales/Travel Lab space
How to Build A Startup Idea Business Model Size Opportunity Customer Development
How to Build A Startup Business Size of the Customer Customer Idea Model(s) Opportunity Discovery Validation
How to Build A Startup Size of the Business Size of the Business Customer Customer Idea Opportunity Model(s) Opportunity Model(s) Discovery Validation Theory Practice
How to Build A Startup Size of the Business Size of the Business Customer Customer Idea Opportunity Model(s) Opportunity Model(s) Discovery Validation
How to Build A Startup Size of the Business Size of the Business Customer Customer Idea Opportunity Model(s) Opportunity Model(s) Discovery Validation • First test the problem • Next test the solution
How to Build A Startup Size of the Business Size of the Business Customer Customer Idea Opportunity Model(s) Opportunity Model(s) Discovery Validation
Why Do We Do This?
Make Your Lives Extraordinary
Additional Resources • I-Corps class summary: http://steveblank.com/2012/03/26/the-national-science- foundation-innovation-corps-what-america-does-best/ • I-Corps team presentations: http://www.slideshare.net/sblank/tagged/i-corps • Resources for startups: http://steveblank.com/tools-and- blogs-for-entrepreneurs/ • Books for startups: http://steveblank.com/books-for- startups/ • Additional resources: http://steveblank.com/slides/

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Tec 050312

  • 1.
    How to FailLess Business Models and Customer Development Steve Blank www.steveblank.com @sgblank
  • 2.
    As Smart AsYou Are Most of You Will Fail
  • 3.
    This Talk isHow to Fail Less
  • 4.
    Agenda 1. What we used to believe / What we now know 2. Business Models and Customer Development 3. Customer Development Details 4. Examples
  • 5.
    What We Usedto Believe Strategy
  • 6.
    All I Needto Do is Execute the Plan
  • 7.
    All I Needto Do is Execute the Plan
  • 8.
    All I Needto Do is Make the Forecast
  • 9.
    All I Needto Do is Make the Forecast
  • 10.
    What We NowKnow Strategy
  • 11.
  • 12.
  • 13.
  • 14.
    Search Execution Business Model Operating Plan + Strategy Hypotheses Financial Model
  • 15.
    What We Usedto Believe Process
  • 16.
    We Built Startupsby Managing Processes Product Management + Waterfall Engineering
  • 17.
    Product Introduction Model Concept/ Product Alpha/Beta Launch/ Seed Round Dev. Test 1st Ship
  • 18.
    Product Introduction Model Concept/ Product Alpha/Beta Launch/ Seed Round Dev. Test 1st Ship
  • 19.
    Waterfall / ProductManagement Execution on Two “Knowns” Requirements Product Features: known Design Implementation Verification Customer Problem: known Maintenance Source: Eric Ries http://startuplessonslearned.blogspot.com
  • 20.
    Waterfall / ProductManagement Execution on Two “Knowns” Requirements Product Features: known Design Implementation Verification Customer Problem: known Maintenance Source: Eric Ries http://startuplessonslearned.blogspot.com
  • 21.
    What We NowKnow Strategy
  • 22.
    More startups failfrom a lack of customers than from a failure of product development
  • 23.
    Customer Development A Search Strategy
  • 24.
    Search Execution Strategy Business Model Operating Plan + Hypotheses Financial Model Process Customer & Product Management & Agile Development Agile Development
  • 25.
    What We Usedto Believe Organization
  • 26.
    Hire and Builda Functional Organization
  • 29.
    What We NowKnow Organization
  • 30.
    Founders run a Customer Development Team No sales, marketing and business development
  • 31.
    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
  • 32.
    Search Strategy Business Model Hypotheses Process Customer Development, Agile Development Organization Customer Development Team, Founder-driven
  • 33.
    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
  • 34.
    Part 2 BusinessModels and Customer Development
  • 35.
  • 36.
    A temporary organization designed to search for a repeatable and scalable business model
  • 37.
    A temporary organization designed to search for a repeatable and scalable business model
  • 38.
    A temporary organization designed to search for a repeatable and scalable business model
  • 39.
    A temporary organization designed to search for a repeatable and scalable business model
  • 40.
    A temporary organization designed to search for a repeatable and scalable business model A Startup aims to become a company
  • 41.
  • 43.
  • 44.
    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
  • 45.
    9 Guesses Guess Guess Guess Guess Guess Guess Guess Guess Guess
  • 46.
  • 48.
    The Four Steps– The Startup Path Customer Development
  • 50.
    Customer Development Test theProblem, Then the Solution
  • 53.
    Customer Development The Minimum Viable Product
  • 55.
  • 57.
    Customer Development is howyou search for the model
  • 58.
  • 59.
    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
  • 61.
  • 62.
    Customer Validation Step 1: Get Ready to Sell
  • 63.
    Customer Validation Step 2: Sell to EarlyVangelists
  • 64.
    Customer Validation Step 3: Develop Positioning
  • 65.
    Customer Validation Step 4: Pivot or Proceed
  • 66.
    Part 3 How Doesthis Really Work?
  • 67.
    Pivot Example Robotic Weeding Talked 75 Customers in 8 Weeks
  • 68.
    Our initial plan Confidential
  • 69.
    20 interviews, 6site visits… We got OUR Boots dirty Mowing Interviewed: • Golf: Stanford Golf course • Parks: Stanford Grounds Supervisor, head of maintenance and lead operator (has crew of 6) • Toro dealer (large mower manufacturer) • User of back-yard mowing system • Maintenance Services for City of Los Altos • Colony Landscaping (Mowing service for stadiums) Weeding Visited two farms in Salinas Valley to better understand problem Interviewed: • Bolthouse Farms, Large Agri-Industry in Bakersfield • White Farms, Large Peanut farmer in Georgia • REFCO Farms, large grower in Salinas Valley • Rincon Farms, large grower in Salinas Valley • Small Organic Corn/Soy grower in Nebraska • Heirloom Organics, small owner/operator, Santa Cruz Mts • Two small organic farmers at farmers market • Ag Services of Salinas, Fertilizer applicator
  • 70.
    Business Plan Autonomous Vehicles for Mowing & Weeding - Innovation Dealers sell, installs Mowing - Dealers - Customer We reduce and supports - Owners of (Mowing and Ag) Education operating cost customer public or - Vehicle OEMs - Dealer training - Labor reduction commercially (John - Better utilization Co. trains used green Deere, Toro, Jaco of assets (eg mow dealers, supports spaces (e.g. golf bsen, etc) or weed at nights) dealers courses) - Improved - Landscaping - Research labs Engineers on performance (less - Mowing Dealers service provider Autonomous rework, food - Ag Dealers vehicles, GPS, pat safety) Weeding h-planning - Farmers with manual weeding operations Dealer discount Asset sale COGS seek a 50-60% Gross Margin Our revenue stream derives from selling the Heavy R&D investment equipment
  • 71.
    Found weeding inorganic crops is HUGE problem; 50 - 75% of costs Crews of 100s-1000 Back-breaking task (Ilegal) labor harder to get 1-5 weedings per year/field $250-3,500 per acre and increasing Food contamination risk
  • 72.
    Decision to make– mowing vs weeding Application If ROI is < 1 Labor costs Autonomous TAM yr they will significant? would solve buy problem? Mowing of Yes. Yes Yes Adjusted up to Professionally xxx large fields run organizations Weeding in Agri Industry: YES! for TAM increased YES! organic crops Not necessarily to $2.6 B (Total Agriculture organic) Large They are Key need is Growers: Yes spending weed vs. crop Target Market $500/ac! differentiation (organic Small specialty) Growers: No 162 M/yr 18%/yr growth
  • 73.
    Autonomous vehiclesWEEDING - Innovation Dealers sell, installs - Low density - Ag Dealers - Customer We reduce and supports vegetable - Ag Service Education operating cost customer growers providers - Dealer training - Labor reduction - High density (100 to 1) Co. trains dealers, vegetable - Research labs - Reduced risk of supports dealers growers contamination - Thinning - Mitigate labor operations Engineers on availability - Ag Dealers - Conventional Machine Vision concerns - Ag Service vegetables Two problems: providers - Identification - Elimination Dealer discount Asset sale COGS seek a 50-60% Gross Margin Our revenue stream derives from selling the Heavy R&D investment equipment
  • 74.
    1 Week –1 CarrotBot Confidential
  • 75.
    CarrotBot • Machine Visiondata collection platform – Monochrome & Color Cameras – Laser-line sweep (depth measurement) – Encoders CarrotBot 1.0 (position/velocity) – Onboard data acquisition & power
  • 76.
    The Business PlanCanvas Updated •Technology •Farming Design conventions. •Marketing •Demo, demo, a •Demo and nd demo!! customer •Cost •Proximity is •Organic •Research Labs feedback paramount Farmers Reduction •Equipment •Weeding •Remove labor Manufacturers Service force pains •Distribution Providers •Eliminate bio- Network •Conventional waste hazards •Service •IP – Patents Farmers Providers •Video •Dealers Classifier Files •Direct Service •Robust •Indirect Service Technology • … then Dealers •Asset Sale Value-Driven •Direct Service with equipment rental •… then Asset Sale
  • 77.
    Visit Highlights Carrot vs. Weeds Due to small root systems, carrots have no chance against weeds
  • 78.
    Visit Highlights Organic Broccoli,closely cultivated. Weeds close to plants are hand-picked
  • 79.
    Visit Highlights State ofthe Art in Weeding Technology for Organic Crops
  • 80.
    Customer Hypothesis Pre-Test Large Growers Us Dealer Industrial Growers Hypothesis Confirmed • Growers interested in own equipment Industrial • Industrial (10,000s of acres) Growers • Large (1,000s of acres) Post-Test • Willing to pay $100k for one unit Large Growers • Smaller growers (100s of acres) usually Us Dealer subcontract the labor services or rent Service equipment Providers • All purchases through local dealers Equipment •Customer service is essential Rental
  • 81.
    Customer Map #1– Industrial Growers Example: Bolthouse Farms – Large Industrial Carrot Producer – 8K acres/yr End User • Equipment Operator Influencer • Local Farm Mgr • Cliff Kirkpatrick, visited Recommender • Director, Ag Technology Equipment Operator • Justin Grove, interviewed Decision • VP, Growing Operations Maker Approver • CFO, CEO (Jeff Dunn) Cliff, Farm Mgr
  • 82.
    Customer Map #2– Service Providers Example: Ag Services – Service Provider, Salinas Valley End User • Equipment Operator Influencer • Grower Recommender • Service Mgr Me (left), Marty (middle, Service Mgr), Doug (right, Grower) Decision Maker • ?? (service mgr’s boss) & Approver
  • 83.
    The Business PlanCanvas Updated •Technology •Farming Design conventions. •Marketing •Demo, demo, •Mid/Large •Demo and and demo!! Organic Farmers customer •Cost •Proximity is •Agricultural •Research Labs feedback paramount Reduction corporations •Equipment •Remove labor •Weeding Service Manufacturers force pains Providers •Distribution •Eliminate bio- Network •Service •IP – Patents waste hazards •Mid/Large Providers •Video •Direct Service Conventional Classifier Files •Indirect Service Farmers •Robust • … then Dealers Technology •Direct Service with equipment rental Value-Driven •($1,500/d; 120d/yr ) •Low density: $1,500/d •High density: $6,000/d
  • 84.
    World Ag Expointerviews: the need is real and wide spread • 10+ interviews at show – Everyone confirmed the need – Robocrop, UK based, crude competitor sells for $171 K • Revenue Stream – Mid to small growers prefer a service – Large growers prefer to buy, but OK with service until technology is proven – Charging for labor cost saved is OK, as we provide other benefits (food safety, labor availability) Confidential
  • 85.
    The Business PlanCanvas Updated •Technology •Farming Design conventions. •Marketing •Demo, demo, a •Mid/Large •Research Labs •Demo and nd demo!! Organic Farmers •Equipment customer •Cost •Proximity is •Agricultural Manufacturer feedback Reduction paramount corporations •Distribution •Remove labor •Weeding Service Network force pains Providers •Service •Eliminate bio- Providers •IP – Patents waste hazards •Mid/Large •2 or 3 Key •Video •Direct Service Conventional Farms Classifier Files •Indirect Service Farmers •Robust • … then Dealers Technology Value-Driven •Direct Service with • R&D equipment rental • Bill of Materials •Low density: $1,500/d • Training & Service •High density: $6,000/d • Sales
  • 86.
    Autonomous weeding -Final - Innovation Direct - Low density - Ag Service - Customer We reduce - Provide high vegetable providers Education operating cost quality service at growers - Dealer training - Labor reduction competitive price - High density - Research (100 to 1) vegetable Institutes (eg UC - Reduced risk of growers Davis, Laser contamination - Thinning Zentrum - Mitigate labor operations Hannover) Engineers on availability Direct - Conventional Machine Vision concerns - Alliance with vegetables - 3-4 key farms Two problems: service providers - Identification - Eventually sell - Elimination through dealers Costs for service provision Service provision COGS seek a 50-60% Gross Margin - Charge by the acre with modifier according to Heavy R&D investment weed density - Eventually move to asset sale
  • 87.
    Business Plan Autonomous Vehicles for Mowing - Innovation Dealers sell, installs Mowing - Dealers (Mowing - Customer We reduce and supports - Owners of and Ag) Education operating cost customer public or - Vehicle OEMs (John - Dealer training - Labor reduction commercially Deere, Toro, Jacobse - Better utilization Co. trains dealers, used green n, etc) of assets (eg mow supports dealers spaces (e.g. golf or weed at nights) courses) - Research labs - Improved - Landscaping Engineers on performance (less - Mowing Dealers service provider Autonomous rework, food - Ag Dealers vehicles, GPS, pat safety) Weeding h-planning - Farmers with manual weeding operations Dealer discount Asset sale COGS seek a 50-60% Gross Margin Our revenue stream derives from selling the Heavy R&D investment equipment
  • 88.
    How Does ThisReally Work? NSF Lean LaunchPad Class 10 Weeks From an Idea to a Business
  • 89.
    Graphene Frontiers We area nanotechnology materials company with a proprietary process for producing high quality, low cost, large area graphene films at commercial scale
  • 90.
    Background: Graphene Applications “Wonder Material” Graphene • Nano Material Subject of 2010 Nobel Prize in Physics • 2D Carbon: Strong, Flexible, Conductive, Transparent • Enables Next Generation Thin, Flexible Devices Flexible Transparent Thin, Flexible Touch Screen, Displays Electrodes Solar Cells
  • 91.
    Problem: Lab ScaleNot Enough Graphene Production Must Scale Up to Commercial Levels before Integration into Consumer Products Becomes a Reality…
  • 92.
    Solution: Scalable ProductionProcess Our Patent-Pending APCVD Graphene Production Process: •Operates at ambient pressure, reducing cost enabling flexible design •Industrial scale, continuous roll-to- roll production possible •Graphene sheet size limited only by CVD furnace dimensions •Same or better quality vis-à-vis LPCVD graphene •Graphene growth at 900-1000 °C, lower than other methods
  • 93.
    Market: Size andGrowth Nascent Graphene Market is Ready to Explode: Commercial Scale Production will be Catalyst • Thin, Flexible Displays • Solar Thin Film • Touch Screens Thin, Flexible Display • Thermal Management for Electronics Thermal Management $8.2B • Basic Materials and Research $6.4B • Microscopy (TEM) Sample Supports GF TAM: $1.2B Research/ Market for Thin Film Solar Mat’l/Other Graphene $4.6B $1.4B Films/Sheets $52M Graphene Frontiers Process & Product Offering • GF APCVD Process will Accelerate Graphene Adoption Curve 2012 2016
  • 94.
    Team: Graphene Frontiers EL:ZhengtangLuo, PhD – Chief Science Officer 10+ years experience in synthesis of carbon nanomaterials and product development for applications in the area of materials chemistry, chemical separation and electronic devices. Mentor: Mike Patterson – CEO Experienced entrepreneurial leader, manager, and trusted adviser to startups and Fortune 500 companies, providing expertise in growth strategy and international operations. Patterson is an Executive MBA candidate (Entrepreneurial Management, April 2012) at the Wharton School, University of Pennsylvania. PI: A.T. Charlie Johnson, PhD – Founder, Scientific Advisory Board Known internationally for his work in graphene electronics and carbon nanotube electronics. IP from his lab on DNA-carbon nanotube devices for use in an electronic nose system pursued by Nanosense. An author of over 130 peer-reviewed articles, Johnson holds two issued patents, with 18 other patents submitted.
  • 95.
    Recap • Graphene technologywill change the world... • …but not until it is available in commercial volumes • We believe that APCVD is the best path to industrial scale • Whoever meets this challenge will be first mover in a fast growing market with multi-billion dollar potential • We are the right team with the right technology to do it
  • 96.
    What’s Next: Strategyand Roadmap 1H 2012 2012 2013+ Commercial Roll-to- Application Phase 4” Scale-Up Roll Design & Prototype Development Product/ TEM Grids Process Licensing Intellectual Property Materials Business Thin, Flexible Displays Revenue 12” x 12” Sheet Roll-to-Roll Mfg. Application R&D Milestone Production Industrial Scale Team “World Leader in Perfect CVD Graphene Activity Scale-Up Sheet Size Continuous Process Innovation” Increase Area Increase Throughput New Applications
  • 97.
    What’s Next: SecurePartnerships + Investment Distribution Active Customer Manufacturing Partners Conversations Partners Seed Investment Needed
  • 98.
    Enter I-Corps: BeginningHypotheses Here’s What We Thought: – Graphene can be used for just about anything – All of the big manufacturers are just waiting for our product – The market for graphene will explode in 2012 – We will become the world’s largest graphene manufacturer
  • 99.
    So Here’s WhatWe Did… • Research to identify target companies: Build the list – Web, industry/research reports, personal network, “Who else should we talk to?” • Calls to personal/professional/alumni network: “Do you know anyone…?” • Intros, warm calls, cold calls, cold calls, more calls
  • 100.
    So Here’s WhatWe Did… • Google AdWords Campaign + Survey Monkey – 3 days, 8,555 Impressions, 34 people clicking through to our site, ZERO contacts/closes. Retrospect: What were we trying to learn??? • Serendipity: Casual conversation turns to Graphene Frontiers at alumni event: “That’s terrific! You know, I work at DuPont. Here’s my card… send me your deck and let me know how I can help.” –Tom Connelly, Chief Innovation Officer, DuPont
  • 101.
    So Here’s WhatWe Did… • 48 Companies Engaged, 70+ Conversations: – Lockheed Martin, GrafTech, Inventables, alphaMOS, FirstNano, Pannam Imaging, FujiFilm, Solutia, Dontech, Tramonto Circuits, Adamant Technologies, Intel, XG Sciences, Graphene Technologies, Densitron, Hotatouch, Touch International, Magic Touch, NJY Technology, Pangea Ventures, Display Search, Dow, DuPont, 3M, Corning, BASF, WL Gore, Morgan AM&T, Plextronics, SPI Supplies, New Metals and Chemicals, G.E., Innovalight, Siemens, Nelson-Miller, Essilor USA, Nexans, E-ink, Gamma Dynamics, Plastic Logic, Cabot Corporation, Thin Diamond, Knighthawk Engineering, Kopietz Consulting, DISPLAX, NineSigma, Evaporated Coatings, LiquaVista • 80 LLL Posts, 61 Comments/Responses – 79% comments positive or factual, 21% “Constructive”
  • 102.
    So Here’s WhatWe Learned… • Atmospheric pressure production is key value-add – Not “high-quality”, not single-layer • Many big companies are on the sidelines doing limited product dev, waiting for a proven production method • We need to focus on scaling up (bigger & faster) • We need a partner to break into consumer electronics • Cost matters, but not as much as we thought
  • 103.
    So Here’s WhatWe Learned… • TEM grids are viable, near term but small market – Will rely on distribution partner • Displays will be next big thing – Focus on flexible/foldable thin displays – May require partnership with OEMs or sub-contractors • Extensive product characterization is next step – Transparency, haze, sheet resistance for displays (3M, Dow, DuPont) – Minimize layers and contamination for TEM (SPI, Halcyon)
  • 104.
    • R&D • Warranty • Earlyvangelists • Defense • Scale up system design • Service/Maint. • (Customer/Partner) • MEMS • Graphene production Material Agree • Equipment Mfg • Chem/Bio Detect. • IP creation/licensing • Thermal Conduct. • Joint Marketing • Universities • Researchers • Internal application • Elect. Conduct • Branding • Downstream • Optoelectronics development • Strength fabrication • Transparent companies • “Semiconductor” Conduct. (Touch) • Suppliers • IP* (Patent/License) • Flexible • Solar Cell Electrodes • Team/Expertise • Transparent • Thermal Mgmt • Credibility/Rep • Distributor • Supercapacitor Process • CVD Equipment • Direct Sales • Battery • Low Cost • Inputs (gas/foil) • Online • TEM support • Higher Quality • Lab space • License • Polymer/Composite • Large Area • Website • Partner/JV • CVD Equip Mfg • “Industrializable” • Design/Engineering • Bundle • Flexible Mfg • Team • Material Sales • Add’l IP • Lab space • License/Royalty • Applications • Capital equipment • Equipment Sales • SBIR • Consulting • Angel • Maintenance • VC • Design • Ben Franklin
  • 105.
    The Business ModelCanvas • Lead Customer • R&D • Warranty • Equipment Mfg Material • Scale up system • Service/Maint. • Universities • Thermal Conduct. • Defense design Agree • Downstream • Elect. Conduct • MEMS • Graphene product. • Joint Marketing fabrication • Strength • Chem/Bio Sensor • IP creation/ • Branding companies • “Semiconductor” • Researchers licensing • Education • Suppliers • Flexible • Optoelectronics • Internal app. dev. • Transparent • Transparent Conduct. (Touch) Process • Solar Cell • Low Cost Electrodes • Higher Quality • Thermal Mgmt • IP* (Patent/License) • Large Area • Supercapacitor • Distributor • Team/Expertise • “Industrializable” • Battery • Direct Sales • Credibility/Rep • Flexible Mfg • TEM support • Online • CVD Equipment • Polymer/Compos. • License • Inputs (gas/foil) • CVD Equip Mfg • Partner/JV • Lab space • Bundle • Website • Design/Engineering • Team • Lab space • Material Sales • Maintenance • Capital equipment • License/Royalty • Design • Direct Sales/Travel • Equipment Sales • Add’l IP • Consulting • Applications
  • 106.
    The Business ModelCanvas Equipment Mfg Scale up Low Cost Education Thermal Mgmt Solutions Universities Customization Higher Quality Service/Maint. Transparent Production Conduct. Downstream Large Area (Touch) fabrication companies Chem/Bio “Industrializable” IP License Sensor CVD Equipment Direct Sales Facilities/Lab License/Royalty Capital equipment Personnel Material Sales Direct Sales/Travel Lab space
  • 107.
    The Business ModelCanvas Equipment Mfg Scale up Low Cost Education Thermal Mgmt Solutions Universities Customization Higher Quality Service/Maint. Transparent Production Conduct. Downstream Large Area (Touch) fabrication companies Chem/Bio “Industrializable” IP License Sensor CVD Equipment Direct Sales Facilities/Lab License/Royalty Capital equipment Personnel Material Sales Direct Sales/Travel Lab space
  • 108.
    The Business ModelCanvas Equipment Mfg Scale up Low Cost Education Thermal Mgmt Solutions Universities Customization Higher Quality Service/Maint. Transparent Production Conduct. Downstream Large Area (Touch) fabrication companies Chem/Bio “Industrializable” IP License Sensor CVD Equipment Direct Sales Facilities/Lab License/Royalty Capital equipment Personnel Intermediate product Material Sales Direct Sales/Travel Lab space
  • 109.
    Graphene Frontiers BusinessModel Canvas – PRIOR VERSION (10.18) Scale up Equipment Mfg Low Cost Education Thermal Mgmt Solutions Customization Service/Maint. Universities Higher Quality Transparent Collaborative R Conduct. Production &D (Touch) Downstream Large Area fabrication Membrane companies switches “Industrializable” IP License Replace ITO CVD Equipment Direct Sales Facilities/Lab Chem/Bio Sensor License/Royalty Capital equipment Personnel Intermediate product Material Sales Direct Sales/Travel Lab space
  • 110.
  • 111.
    Graphene Frontiers BusinessModel Canvas “A” Research Transfer Process Academic Papers Groups Optimization Atomically Thin and Robust Electron Trade Shows Microscopists TEM Equipment Higher Quality Mfg. “Clean” IP CVD Equipment Facilities/Lab “Free” Revenue Sharing (Selling Byproduct) w/Distributor
  • 112.
    Graphene Frontiers BusinessModel Canvas “B” Scale up Equipment Foldable / Education Flexible Mfg Bendable Transparent Customization Service/Maint. Conductor Universities Higher Quality Collaborative R&D Downstream Large Area Fabrication Companies “Industrializable” IP License Low Cost CVD Equipment Facilities/Lab Intermediate License/Royalty Capital Equipment Personnel product Direct Sales/Travel Lab space
  • 113.
    Graphene Frontiers BusinessModel Canvas “B” Scale up Equipment Foldable / Education Flexible Mfg Bendable Transparent Customization Service/Maint. Conductor Universities Higher Quality Collaborative R&D Downstream Large Area Fabrication Companies “Industrializable” IP License Low Cost CVD Equipment Facilities/Lab Intermediate License/Royalty Capital Equipment Personnel product Direct Sales/Travel Lab space
  • 114.
    How to BuildA Startup Idea Business Model Size Opportunity Customer Development
  • 115.
    How to BuildA Startup Business Size of the Customer Customer Idea Model(s) Opportunity Discovery Validation
  • 116.
    How to BuildA Startup Size of the Business Size of the Business Customer Customer Idea Opportunity Model(s) Opportunity Model(s) Discovery Validation Theory Practice
  • 117.
    How to BuildA Startup Size of the Business Size of the Business Customer Customer Idea Opportunity Model(s) Opportunity Model(s) Discovery Validation
  • 118.
    How to BuildA Startup Size of the Business Size of the Business Customer Customer Idea Opportunity Model(s) Opportunity Model(s) Discovery Validation • First test the problem • Next test the solution
  • 119.
    How to BuildA Startup Size of the Business Size of the Business Customer Customer Idea Opportunity Model(s) Opportunity Model(s) Discovery Validation
  • 120.
    Why Do WeDo This?
  • 122.
    Make Your LivesExtraordinary
  • 123.
    Additional Resources • I-Corpsclass summary: http://steveblank.com/2012/03/26/the-national-science- foundation-innovation-corps-what-america-does-best/ • I-Corps team presentations: http://www.slideshare.net/sblank/tagged/i-corps • Resources for startups: http://steveblank.com/tools-and- blogs-for-entrepreneurs/ • Books for startups: http://steveblank.com/books-for- startups/ • Additional resources: http://steveblank.com/slides/

Editor's Notes

  • #2 320 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
  • #91 The Background: Graphene is an amazing material that will improve and disrupt entire industries, including electronics and clean energy
  • #92 Problem statement: None of these things will happen unless and until graphene can be produced in large quantities – Commercial Scale
  • #93 Solution: We can do this. Our technology offers the best path forward to enable commercial scale production of graphene films at low cost.
  • #94 Market Opportunity: We believe that there is significant demand for graphene, but the market will not develop and companies will not design products that incorporate graphene until a reliable source is identified
  • #95 Rock Stars.
  • #96 We may have been overconfident.
  • #97 So here’s the plan.
  • #98 We’re now ready to raise money to scale up and develop our continuous manufacturing prototype, and we have several heavy hitters who are waiting to see us succeed…
  • #99 We may have been overconfident.
  • #100 We:--Made a target list--asked for introductions and referrals--worked our networks--made a BUNCH of calls
  • #101 --Not successful: AdWords--Very successful: Luck!!
  • #102 The numbers
  • #103 The Payoff:--What we thought was important wasn’t important to our potential customers and partners--The market *will not grow* until someone can prove that they can supply graphene--The source must be reliable, and the cost must be within reason**WE NEED TO DEMONSTRATE SCALE**
  • #104 We can make money TODAY with TEM Grids and material sales… distributors are clamoring for our stuffWe have work to do to meet display requirementsBig companies are willing to help us get there
  • #105 Version 1: Crazy, right?? We realized that we had work to do, so we completely revamped our slide before we presented it to our classmates by…
  • #106 …using a cleaner template and underlining a few words. We settled on this as Graphene Frontiers Canvas #1 and thought that we would WOW the audience with how much detail we had and how broad our scope and opportunity was.We projected this on the screen and were promptly booed off the stage. Sooo….. v2 was born:
  • #107 Lesson #1: Focus.We narrowed our scope to the three applications we believed were most promising and set out to test our assumptions
  • #108 We were a bit too hesitant to fail fast and close doors, but we did recognize early on that we were probably not going to become “the Alcoa of nanocarbon”
  • #109 We also heard from customers that we would need to integrate into existing production lines… high volume manufacturers may be reluctant to buy vast quantities of material… they probably want to license and make their own.We also learned that ITO and silver nanowires were the competition for touch screen and displays, but we were beginning to quantify the differentiators
  • #110 We heard that collaborative R&amp;D would be a necessity—we will need to help companies use our material in their product development.Membrane switches—a new opportunity we evaluated, was quickly ruled out.
  • #111 The big week:Near term opportunity: TEM GridsMedium term opportunity: Thin, flexible displays
  • #112 Canvas A: TEM GridsWe’re partnering with SPI, a microscopy supply distributor, and have developed a Minimum Viable Product that is undergoing beta testing and evaluation.We will provide them with graphene on copper foil (a byproduct of our work to scale up production), and they will transfer to the grids, QC, package, market, sell, etc. and we have agree in principle on a revenue sharing deal
  • #113 Canvas “B”: Flexible transparent conductors for Displays
  • #114 We learned that we needed to partner with manufacturers to incorporate graphene into product development, and *SCALE UP IS CRITICAL*Cost is not as important as we thought earlier,: We don’t need to beat ITO, we need to do what it can’t do (flexible, impervious to oxygen, etc.)