1 sabin & thorne deadlines sabin prize thorne prize letter of interest jan 31* feb 23*...

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Sabin & Thorne Deadlines

Sabin Prize Thorne Prize

Letter of Interest

Jan 31* Feb 23*

Application Due

March 24 March 30

Finalists Present

April 16 April 26

*if you want a mentor

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My Training Workshops

• Today: Researching your Business

• Next Fri, Jan 31st : Financial projections

• Feb 21st : Writing & Presentations

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Researching Your Business Idea

January 24, 2014

Sabin & Thorne Prizes

About Me

• Teach Entrepreneurship – SOM & FES

• Used to work on Wall Street• Attended SOM, then consulted• Joined a Yale-funded

“incubator” • Also, do consulting to start-ups

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Past Sabin Judges

• Andrew Sabin, prize funder & investor

• Rosemary Ripley – NGEN – investor

• Konstantine Drakonakis – Launch Capital - investor

• Ralph Earle – Assabet, consultant to investors, investor

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Judges are Investors by Day

And Investors Want to:• Hit a homerun (big financial

upside)• Avoid known losers (high

failure rates)• Minimize risks (pick the surest

thing)• Back winners (proven track

records)

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Ideal Investor Characteristics

• Unique Product / Service • Large potential market• Rapid growth prospects

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Unattractive Sectors

• Restaurants -- one location

> Too many cooks

> 80% bankruptcy rate

• Retailing -- one location

> Too easy to enter

> 80% bankruptcy

rate

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More Unattractive Choices

• Consulting

> No economies of scale

> No need to raise $ from

others

• Some International Businesses

> Depends on the judges /

investors

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Avoid

• Competing with “love” or “ego”

projects

> Artists

> Farmers

> Moviemaking

> Sports teams

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Most Important Question

• If the idea is so great...• Why hasn’t anyone done it

before?

• Might be – Technology didn’t exist before

• Or – your unique combination of skills

• Might be – it just won’t work• Or – it can’t make $

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The Best Ideas

Come from your own experiences…

A problem you’ve faced…• School, jobs• Hobbies, family

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Application Issues to Address

• Idea (what is it – why is it appealing)

• What is the Market? Customer interest?

• What is original (unique advantage)

• What is your strategy – to execute?

• What environmental or social benefit?

• Who is on your team?• How much $ do you need? Use

of prize?

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Themes of the Day

You want to communicate an idea that:

• Addresses a big, exciting opportunity

• In a new, unique, innovative way

• That is feasible and believable• With great people on your

team

To Win Contests (or Raise $)

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Idea: Big, ExcitingOpportunity

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The Opportunity

• What are the annual sales $s?

• Are they increasing? • Important trends?• Problems that need fixing?

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Caution: You Need Data, Sources!

• Your opinion about a need has little value

• You want to win contests….• Do research! • Industry reports, articles,

interviews, etc.

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Caution: Look at the Right Market!

GreenCleaning.com will sell all brands of environmentally friendly cleaning products – on one website.

Cleaning product sales in the US were $28 billion in 2013.

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GreenCleaning’s Market

• Green cleaning products Say, 5% of all cleaning products $1.4 billion

• Sell them (not make them) Say, for a 10% commission

$140 million - not $28 billion!

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Research Customer Interest

• Who are the customers?• How many are there?• What do they want?• What can you do for them?

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Caution: Don’t Assume!

• Your ideas about customer have little value

• You want to win contests….• Do research! • Specifically, do interviews &

surveys

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Testing Customer Interest

Develop a one page product description

• What does it do ?• How does it work ?• List the main features• List main benefits -- to

customers

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Find Out:

> Do they like your product ?

> What do they like best? Least?

> Will they buy/use it when it is

ready ?

> Will they pay the price you’re

asking?

> Do they have any issues /

concerns ?

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Caution: Get the Customer Right!

GreenCleaning will sell its own brand of environmentally friendly cleaning products – in retail stores.

• Who is the customer?

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Caution: Get the Customer Right!

• The customer = stores• Stores’ customers = consumer

• You must appeal to the consumers

• But you also must understand all customer needs – and meet them

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Caution: Get the Customer Right

GreenCleaning.com will sell all brands of environmentally friendly cleaning products – on one website – for a commission.

• Who is the customer?• Cleaning product companies

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For Your Application

• Describe your venture (what will it do)

• Also, the Market need / opportunity

• And the Customer (who will pay for it)

• Include your research data• Quote your interviews• Present your survey data

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Unique: Innovative,Competitive Advantage

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What is Innovative?

• How is your idea – unique?• Different from the competition?• Different – from alternatives?

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What is Innovative?

• Always more competition - than you think

• Compare major features of your product> To all competitors’ products

> To doing things “the old way”

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Construct a Competitor Grid

Reason Co. A Co. B Our Co.

Price X X

Reliability X X X

Env Benefit X X

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Caution: Be Objective!

• You saying you are better = little value

• You want to win contests...!• Why, objectively, are you

better?• Did customers say you were

better?• Admit where you are not better

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Don’t Cherry Pick!

Feature Co. A Co. B Our Co.

What we’re good at #1

X X

What we’re good at #2

X X

What we’re good at #3

X X

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Key Avenues For Investigation

• Why has no one done this

before ? Technology didn’t exist?

New regulations or incentives?

It won’t work for some reason….?

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Unique, Big Idea: Example

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• Fresh farmed tilapia fillets• Purified and filtered re-

circulated water• “Seafood Safe” and Organic• 100% organic feed

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Evidence of Opportunity - over 3 years:• US seafood consumption up 12% - $12

billion• US tilapia consumption up 110% - $400

million• Demand for organic meat & fish up

120%

Over 70% of Americans would by organic seafood if available; 60% ‘strongly

prefer’ domestic

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Customers • Wholesale Suppliers of

restaurants, grocery & fish stores

• Also, Trader Joe’s, Whole Foods

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Talking to customers:• 450 chefs and 150 retailers

Most prefer environmentally friendly fish

• Local restaurant owner: “customers care”

• Wholesaler: “Not enough good farms”

• EcoFish: “I will buy all you have to sell”

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Competition• 96% of tilapia

– imported, mostly frozen, not organic

• Most US farm-raised – small, not organic

The Good Fish tilapia will be more expensive vs. competitors

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Feasibility: Making it Happen

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The Goal

• Show this isn’t “just an idea”

• You have a plan • You’ve made some moves

• You know what the next moves are

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Issues to Cover

1. How will you make your product?

2. How will you get customers to buy it?

3. How will you start – and expand?

4. Who will run your business?

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Make a List

• What are your product “inputs”?

• What kind of facilities do you need?

• How will you deliver to customers?

• How will you provide ongoing service?

Research the answers!

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Inputs: series of tanks (“Pod System”), organic vegetarian fish food, ice for packing fish

Staff: Monitor equipment, move, clean, fillet fish

Facilities: heated warehouse space Delivery: Customers pick up Other: Waste and offal disposal

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Sales (& Marketing)

How do you get customers’ attention

• Advertising• Sales force• “PR”• Partenerships

And Make the Sale?

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Sales Force

• In-store• Telesales• Professional

• In-store• Telesales• Professional

• Track record• Industry

contacts• Product

Expertise

• Track record• Industry

contacts• Product

Expertise

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Traditional Advertising

• Mailings• Yellow Pages• Email• Print Ads• Television

• Mailings• Yellow Pages• Email• Print Ads• Television

• Newspaper inserts

• Coupons• Flyers• Catalogs• Radio

• Newspaper inserts

• Coupons• Flyers• Catalogs• Radio

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Internet Advertising

• Web Sites• Key word search• Sponsored Links• Ads with online

trade journals• You Tube Ads

• Web Sites• Key word search• Sponsored Links• Ads with online

trade journals• You Tube Ads

• Banner, pop-up ads

• Blogs• Groupon• Pinterest• Facebook• Twitter

• Banner, pop-up ads

• Blogs• Groupon• Pinterest• Facebook• Twitter

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Web Sites

• Not a sales tool, on its own• Must drive people to it• Search engine

optimization?• Buying key words?

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Develop Partnerships

• Get schools – to help sell to students

• Get doctors – to recommend to patients

• Churches, libraries, non-profits, etc.

Keep in Mind:

They will only partner with you if there is something in it for them!

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Find Out:

• Will they partner with you? • What do they want?

A share of your Sales?

An exclusivedeal?

To do good?

Another servicefor their

customers?

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Green Brides

“Partnered” with the Wedding Institute

• Green Bride made an online course

• Wedding Institute sells it to students

Wedding Institute getsFree contentHalf the $ from the courses

Green Bride getsExposure to wedding plannersHalf the $ from the course

Wedding Wire agreed to the partnership

It’s clear what both sides get

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Selling Strategy Hire Sales Force Visit customers, explain the benefits List in organic seafood directories Advertise with trade associations Host events, tours, tastings

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How will you Start – and Expand?

Start in New Haven then go to Hartford?Start with one product, then add?

Sell in one store, then more?

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How will you Start – and Expand?

• Start small• Prove you can do it -- then

expand

CT

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What have you done so far?

• If you’ve done something – risk is lower

• Do you have a sample product?• A first customer?• A potential customer – in

writing?

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Your Team

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Investors will Say: Keys to Success

People People People !

People People People !

More important than everything else -- combined

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Your Team

• Who are the Yale members?• What roles will they play?• What skills, experience do they

have…• Directly relevant to your

business

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Admit gaps

• Who are you missing – but will hire?

• Advisory board or board of directors?

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Environmental or Social Benefit

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Same Rule Applies

Judges (investors) will want:• To hit a home run (big upside)

Key Question: How do you quantify theOpportunity/Benefit?

Key Question: How do you quantify theOpportunity/Benefit?

Answer: It depends on your Unique Business!

Answer: It depends on your Unique Business!

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Hit on the Same Themes

• Big, exciting opportunity• Unique, innovative• Feasibility – a plan of execution• The right team – with

knowledge, skills

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Key Challenge

Come up with a metric of benefit:…Lives saved – or water

conserved…test scores improved – or

energy saved…incomes raised – or emissions

reducedOr, where no metric exists:…explain why the business will

matter…what will be better – because of

it?

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Final Words of Advice

• Do your homework Use data, research – talk to

customers Not just your opinions

• Try to do something – now - to risk

• Think like an investor!