venture secrets—building a compelling value proposition for your research
TRANSCRIPT
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Venture Secrets: Building a Compelling Value Proposition for Your Research Frank Rimalovski Executive Director, NYU Entrepreneurial Institute Managing Director, NYU Innovation Venture Fund Instructor, NSF Innovation Corps (I-Corps) Mar 25, 2015
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April&8th:&Meet&an&Entrepreneur:&Rachel&Meyer!Co$Founder!Shoots!&!Roots!
Upcoming!Series!@!the!Leslie!eLab!
Mid&May:&Life&Science&VC&1st&Pitch&Invita?on&Only&Preference&for&BioVenture&Speaker&Series&ADendees!
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Agenda
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1. What makes for a successful startup?
2. What we used to believe
3. What we now know: The right way to start (up)
4. Benefits to this approach
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What makes for a successful startup?
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Commercialization Myth
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Basic & Applied
Research
Scientific Discovery/Invention/ IP Creation
Venture Formation & Growth
@NYUEntrepreneur The “valley of death”
Commercialization Reality
Basic & Applied
Research
Scientific Discovery/ Invention/ IP Creation
Customer Discovery & Prototype
Dev
Business Model &
Team Formation
Venture Formation & Growth
• Customer/market discovery • Engineering/prototypes • Mentors and advisors • Collaborative spaces • Business leadership • Legal counsel • Capital
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Two parts to Translational Medicine 1. Advancing the science/technology
2. Finding a repeatable business model
u Current efforts focus on #1
u Successful efforts require both
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Answers are Outside Your Lab
u You may be smartest person in your lab
u Not smarter than collective intelligence of your potential customers, partners, payers & regulators
u Can’t learn by reading papers or lectures
u Experts are overrated
You need to get outside your building
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It’s Bigger Than the Revenue Model
u Testing hypotheses makes substantive changes to biz model before you do science/design o Define clinical utility o Who core & tertiary users/buyers/payers are o Sales & marketing process required for initial
revenues and downstream commercialization o Data required for future partnerships/collaborations o Intellectual property risks o Regulatory pathways o Reimbursement strategies o Roles of partners
u Affects your biological & clinical hypotheses 9
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Need to do this before finishing the science or building/designing the product
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Evidence-based Entrepreneurship (aka the Lean Startup)
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What We Used to Believe
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Startups are a Smaller Version of a Large Company
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Start with an Operating Plan and Financial Model
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All I Need to Do is Make the Forecast
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What We Now Know
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“Everyone has a plan until they get punched in the face!”
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Planning comes before the plan
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Business Model Canvas
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“More startups fail from a lack
of customers than from a
failure of product
development.”
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So what do we do?
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Customer Development
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A temporary organization designed to search
for a repeatable and scalable business model
A startup is…
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What is a Business Model?
How a company creates value for itself
while delivering products or services for
customers
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What is a Business Model?
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9 Guesses
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Guess
Guess
Guess
Guess
Guess
Guess
Guess
Guess Guess
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Testing Hypotheses
u Apply the scientific method to customer discovery
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Observe phenomena
Formulate hypothesis
Test hypothesis via rigorous experiments
Establish theory based on repeated validation of
results
Modify hypothesis PIVOT!
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Customer Development is how you search for the business model
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First test the problem, then test the solution
Customer Development
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Value Proposition What Problem Are You Solving?
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Value Proposition
describes the benefits customers can expect from a bundle of products and services
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Customer Segment Who Cares?
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Customer Profile
Who are they and why would they buy?
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Problem-Solution Fit
Fit
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So where does my technology come in?
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It’s not about your technology!
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So where does my technology come in?
Customers don’t care about technology They are trying to solve a problem
Customer discovery is about identifying that problem & exploring how you could solve it
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Value Proposition What Problem Are You Solving?
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Key Questions for Value Prop u Problem Statement: What is the problem?
u Technology / Market Insight: Why is the problem so hard to solve?
u Product: How do you solve it today?
u Competition: Who is delivering that solution?
u Clinical utility: What level of improvement in efficacy/safety/cost/etc. is needed?
u Market Size: How big is this problem?
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Customer Segment Who Cares?
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Define Customer Archetype u Who are they?
o Position / title / age / sex / role
u How/where do they buy? o Discretionary budget (name of
budget and amount)
u What matters to them? o What motivates them?
u Who influences them? o What do they read/who do they
listen to?
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What is your potential customer trying to get done?
Jobs to be Done
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…they want a quarter-inch hole!"
“People don't want to buy a quarter-inch drill…
SOLUTION (WHAT)
JOB (WHY)
Innosight LLC
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Who has what job to be done?
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“Make me efficient at my work”
FUNCTIONAL
“Convey my professional status”
SOCIAL
“Make me confident that I can get the job
done”
EMOTIONAL
“Help me perform like a professional”
JOB
• Prestigeà show that I use the latest starting with my equipment
• Valueà demonstrate my ability to recognize value
• Confidenceà ensure that I can count on my equipment
• Versatilityà give me the ability to work in different conditions
• Accuracy à the ability to only effect targeted tissue
• Speedà help me complete the task quickly
Innosight LLC
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Customer Profiles
Innosight LLC
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put yourself in the customers’ shoes
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Who’s the Customer in a Company?
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Reimbursement!
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Who’s the Customer in a Company?
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Who’s the Customer in a Company?
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Who’s the Customer in a Company?
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How Do They Interact to Buy?
u Organization Chart
u Influence Map
u Sales Road Map
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Customer
Ecosystem of people you need to understand, satisfy and
appeal to in order to get them to buy your product.
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Technology Lifecycle Adoption Curve
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Your Business Model Will Change…
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Product / Solution Fit
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Case Study: The Smart Needle
Source: Paul Yock, NIH I-Corps 2014
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Great concept: transducer inside needle
…just listen to localize blood vessel
Source: Paul Yock, NIH I-Corps 2014
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Source: Paul Yock, NIH I-Corps 2014
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What’s the need?
A way to localize arteries and veins to improve the speed and accuracy of needle sticks
Source: Paul Yock, NIH I-Corps 2014
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A way to localize arteries and veins to improve the speed and accuracy of needle sticks
Need statement:
• fast
• accurate
• needle size no bigger than current
• maintain sterility
Need criteria:
Source: Paul Yock, NIH I-Corps 2014
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What we missed!
The existing approach was cheap!
Source: Paul Yock, NIH I-Corps 2014
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A cost-effective way to localize arteries and veins to improve the speed and accuracy of needle sticks
Need statement:
• (where is there real value in time saved?)
• Accurate
• Needle size no bigger than current
• Maintain sterility
Need criteria:
Source: Paul Yock, NIH I-Corps 2014
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For most patients it’s not worth it to add the expense of extra technology to save a little time
The real need is in high-risk patients: trauma, acute MI, neonatal ICU
amico.com
Do
vemed
.com
Source: Paul Yock, NIH I-Corps 2014
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A cost-effective way to localize arteries and veins to improve the speed and accuracy of needle sticks in high-risk patients
Need statement:
• Less than $25 additional per patient
• Accurate
• Needle size no bigger than current
• Maintain sterility
Need criteria:
Source: Paul Yock, NIH I-Corps 2014
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We missed something else!
The technique must be user-friendly and easy to learn
Source: Paul Yock, NIH I-Corps 2014
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A cost-effective way to localize arteries and veins to improve the speed and accuracy of needle sticks in high-risk patients
Need statement:
• Less than $25 additional per patient
• Require minimal new skill & training
• Accurate
• Needle size no bigger than current
• Maintain sterility
Need criteria:
Source: Paul Yock, NIH I-Corps 2014
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The Bottom Line
Validating your need at the outset is the single most cost-effective strategy for minimizing risk!
It provides the basis for all subsequent technical, clinical and business strategy decisions
Source: Paul Yock, NIH I-Corps 2014
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I’ve figured out who I’m selling to and what pain point I’m solving!
I’m ready to start building and
selling… Right?!
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? ✔ ✔?
?
?
? ? ?
Not so fast!
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? ✔ ✔?
?
?
? ? ?
Especially in the Life Sciences…
You can’t have a valid business until you test
both sides of the canvas!
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Key Activities What’s Most Important for the Business?
• Pre-clinical studies
• Clinical Trials • FTO • Regulatory
Pathway • CPT Coding
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Key Resources What are your most important assets?
• Data package
• Intellectual Property
• Non-dilutive funding
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Key Partners Who are your Partners and Suppliers?
• Patent counsel • Clinical sites • CROs/
designers • Contract Mfg • Foundations • Patient Adv
Groups How will these relationships work?
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Channels How does your product get to customers?
• Distributors • Direct sales • Business
development
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Customer Relationships How do you Get, Keep and Grow Customers?
• SAB • KOLs • Papers • Conferences • PR
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Revenue Streams How do you make money?
• Reimbursement? • Capital purchase/lease • ???
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Cost Structure What are the Costs and Expenses?
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The Minimum Viable Product
Customer Development
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Help start the process of learning as quickly & cheaply as possible
The Minimum Viable Product
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What is this?
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What is this?
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What is this?
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Why create an MVP?
u Answer questions & generate new ones
u Validate your assumptions
u Compare alternatives
u Fail early & cheaply u Visualize your ideas & share with others
o Team o Customers o Investors
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Why use this approach?
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1. Find go-to-market strategy…
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…and do it more quickly
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2. Design an MVP
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Start the process of learning as quickly & cheaply as possible
Minimum Viable Product
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3. Build a Team
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“Co-founder skills are the first derivative of the business model canvas”
SteveBlank.com
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4. Raise Funds
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POC Grants
Compe99ons
Seed Funds
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5. Launch a better business
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What’s next?
Leslie eLab • 6,000 sq ft NYU
Startup Hub • Daily workshops
& speakers • Collaborative
workspaces • Prototyping lab • Entrepreneur-in-
residence • 16 Washington Pl
10am-10pm M-F
Innovation Corps (I-Corps) • Prior NSF
(& soon NIH) grantees
• 7-weeks • $50,000 for
NSF I-Corps • Immersive,
experiential startup training
Rolling Applications
5-Day Lean Launchpad
Class • 5-day immersive
class (for credit) • Grad students • Co-taught by
Steve Blank • Applied learning
for your startup • Team-based Offered last week
in Aug (24-28)
Summer Launchpad Accelerator
• 10-week program • For graduating
students • $7,500 & space • Entrepreneur &
investor mentors • Lean Startup
bootcamp Apps due Apr 17
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Questions?
[email protected] @nyuentrepreneur nyu.edu/entrepreneur nyuentrepreneur.com 16 Washington Place
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Helping startups start up