NSF I-Corps The Lean LaunchPad Lecture 8: Resources, Activities & Costs Version 6/13/12 Key Activities What’s Most Important for the Business?
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NSF I-Corps The Lean LaunchPad Lecture 8: Resources, Activities & Costs Version 6/13/12 Key Activities What’s Most Important for the Business? © 2012 Steve Blank Key Resources What’s Are Your Most Important Assets? Cost Structure What are the Costs and Expenses © 2012 Steve Blank Key Resources Four Critical Resources • • • • Physical Financial Human Intellectual Physical Resources • company facilities – office space, company location • product/services – supply of silicon wafers or iron ore, or thousands of feet of warehouse space? • Many physical goods are capital intensive Financial Resources • • • • • • • • • Friends and Family Crowdfunding Angels Venture Capital Corporate partners Others: SBA or SBIR grants Lease-lines Factoring Vendor-financing Human Resources • qualified employees • mentors, teachers, coaches, advisors Mentors, Teachers, Coaches • Mentors, teachers, coaches advance your personal career – If you want to learn a specific subject find a teacher – If you want to hone specific skills or reach an exact goal hire a coach – If you want to get smarter and better over your career find someone who cares about you enough to be a mentor Advisors • Advisors are people you need to help advance your company’s success – Founders fail when they believe their visions are facts – Listening to experienced advice can help you sort through whether your vision is a hallucination – Getting an advisory board (by expanding your circle of accumulated wisdom past their investors) is so important that it’s an explicit step in the Customer Development process Qualified Employees/Culture • Are the difference between a good idea that never went anywhere and a billion dollar firm MBA295F Customer Development 16 Executive Traits by Stage EntrepreneurialDriven Learning and Discovery Mission-Oriented Management Process-Managed Execution and Growth Personal Contribution Superstar Leader Manager of plans, goals, process, and personnel Time Commitment 24/7 As needed Long term 9 to 5 Planning Opportunistic and agile Mission- and goaldriven Process-, and goaldriven Process Hates and eliminates As needed, driven Implements and uses by mission Management Style Autocratic, star system Distributed to departments May be bureaucratic Span of Control Hands-on Mission-driven, synchronized Distributed down the organization Focus High and passionate vision Mission Execution Uncertainty/Chaos Brings order out of chaos Focuses on fast response Focuses on repeatability Executive Traits by Stage Executive Traits by Stage Executive Traits by Stage Intellectual Property Trademark protects branding & marks • Trademark gives you the right to prevent others from using “confusingly similar” marks and logos • Trademark protection lasts as long as you use the mark • The more you use the mark, the stronger your protection • Trademark registration is optional, but has significant advantages if approved • Country by country Copyright protects creative works of authorship • Copyright gives right to prevent others from copying, distributing or making derivatives of your work – Protects “expressions” of ideas but does not protect the underlying ideas • (Way) more than just technology: – songs, books, movies, photos, etc. • Copyright protection lasts practically forever • Copyright does not prevent independent development • Registration is optional, but is required to sue for infringement Trade Secrets • Information that is kept secret and has economic value to the business • Coke recipe, customer lists, product road maps. • No registration required • Can last for as long as you take reasonable steps to keep confidential Contract • Protection agreed to by contract • No registration process • You have whatever protection is defined in the contract (e.g., NDA gives you certain rights to protection of your confidential information) • The protection lasts for the time period defined in the contract Patents • A government granted monopoly – prevents others from making, using or selling your invention – Even if the other’s infringement was innocent or accidental • Invention must be non-obvious • Protection lasts typically for 15-20 years • Application and examination is required – Typical cost for application and exam is $10-30k – Typical time for application and exam is 1-4 years • Must file in U.S. within one year of sale, offer for sale, public disclosure or public use • Provisional application alternative What Can be Patented? • Just about anything . . . – Circuits, hardware – Software, applied algorithms – Formulas, designs – User interfaces – Applications, systems – Business processes (sometimes) • But not these . . . – – Scientific principles Pure mathematical algorithms • And, pending Supreme Court Case raises concerns regarding patentability of “methods” inventions Costs Metrics that Matter Search vs. Execution Metrics • Existing companies execute plans • Startups search for them • Income Statement, Balance Sheet, etc are execution documents • You first need to derive the metrics that matter Metrics That Matter • Value proposition: product cost, mkt size/share, competition? • Customer Relationships: customer acquisition costs, conversion rates, lifetime value? • Market Type: revenue curves • Operating Costs: basic operating costs of the business? • Channel: Channel margin, promotion, shelf-space charges? • Revenue Streams: average selling price, # of customers/year, achievable revenue? • Burn Rate: per month? When will the company run out of cash? Robotic Agriculture Resource, Activities Example We’ve hit our first milestones Jun 2011 Mar 2013 First unit Jun 2012 Dec 2011 Technology Track Post-processed Image recognition Real-time image recognition First unit Prototype Customer Discovery Track Select 1st target crop Testing agreement Customer trial and with top producer customer order Finance Track Friends and family round $125 K F&F Applied for grants Seed Round $800 K Seed Confidential Series A $3-5 M Series A Medical Device Resource, Activities & Cost Example MammOptics Financial / Operations Timeline 2012 Cash Reserve Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q2 2016 2015 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2017 Q4 $20M Series A $3.5 MM Proof of Concept Q3 Q4 Q1 Q2 / IPO Q3 M&A $50 MM Financial timeline System Launch Regulatory / Clinical Beta Prototype Laboratory Prototype Q2 Series B $9 MM $15M Initialize Q1 2018 Series D $35 MM Series C $30.5 MM $30M $5M Marketable Product BetaVersion Testing Second Release 1st Release Test 2nd Release Test Publication Publication Clinical Milestones Design Milestones Q1 Q2 2014 $40M $10M Regulatory/ IP Milestones 2013 Pilot Studies US Interim Trials US Pivotal Clinical Trials Clinical Results Post-Market Clinical Studies Non-Specific Codes Provisional Patent Technology Licensing IRB / IDE IC and Processin g Patents FDA – Class II – 510 (k) with Clinical Trials Cat III CPT Application and System Patents Specific Codes (Cat. I CPT / APC) Initial Product Launch 34 12/4/2009 MammOptics Financial / Operations Timeline 2012 Cash Reserve Q1 Q2 Q3 Q4 2013 Q1 Q2 Q3 Q4 2014 Q1 Q2 Q3 Q4 2016 2015 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2017 Q4 Q1 Q2 2018 Q3 Q4 Q1 Q2 $40M $30M $20M $15M $10M $5M Proof of Concept Clinical Milestones Design Milestones Initialize Regulatory/ IP Milestones Provisional Patent Technology Licensing 35 12/4/2009 Q3 MammOptics Financial / Operations Timeline 2012 Cash Reserve Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q2 Q3 Q4 2016 2015 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2017 Q4 Q1 Q2 2018 Q3 Q4 Q1 Q2 $30M $20M $15M $5M Series A $3.5 MM System Initialize Proof of Concept Beta Prototype Laboratory Prototype Clinical Milestones Design Milestones Q1 Q2 2014 $40M $10M Regulatory/ IP Milestones 2013 BetaVersion Testing Pilot Studies Provisional Patent Technology Licensing 36 12/4/2009 Q3 MammOptics Financial / Operations Timeline 2012 Cash Reserve Q1 Q2 Q3 Q4 2013 Q1 Q2 2014 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 $20M Series B $9 MM $15M Series A $3.5 MM System Design Milestones Q2 2018 $30M $5M Clinical Milestones Q1 2017 $40M $10M Regulatory/ IP Milestones Q3 Q4 2016 2015 Regulatory / Clinical Beta Prototype Laboratory Prototype Marketable Product BetaVersion Testing Pilot Studies IRB / IDE IC and Processin g Patents Application and System Patents 37 12/4/2009 Q3 MammOptics Financial / Operations Timeline 2012 Cash Reserve Q1 Q2 Q3 Q4 2013 Q1 Q2 2014 Q3 Q4 Q1 Q2 2016 2015 Q3 Q4 Q1 Q2 Q3 Q4 Q1 $40M Series C $30.5 MM $30M $20M Series B $9 MM $15M $10M $5M System Regulatory/ IP Milestones Clinical Milestones Design Milestones Regulatory / Clinical Second Release 1st Release Test Publication Pilot Studies IRB / IDE IC and Processin g Patents US Interim Trials US Pivotal Clinical Trials Cat III CPT Application and System Patents 38 Q2 Q3 2017 Q4 Q1 Q2 Q3 Q4 2018 Q1 Q2 Q3 MammOptics Financial / Operations Timeline 2012 Cash Reserve Q1 Q2 Q3 Q4 2013 Q1 Q2 Q3 Q4 2014 Q1 Q2 2016 2015 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2017 Q4 $40M $30M $20M Q1 Q2 2018 Q3 Q4 Q1 Q2 Series D $35 MM Series C $30.5 MM $15M $10M $5M Launch Design Milestones Second Release Clinical Milestones Regulatory / Clinical Publication 2nd Release Test Publication US Pivotal Clinical Trials Clinical Results Non-Specific Codes Regulatory/ IP Milestones US Interim Trials FDA – Class II – 510 (k) with Clinical Trials Initial Product Launch 39 12/4/2009 Q3 MammOptics Financial / Operations Timeline 2012 Cash Reserve Q1 Q2 Q3 Q4 2013 Q1 Q2 Q3 Q4 2014 Q1 Q2 Q3 Q4 2016 2015 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2017 Q4 $40M Q1 Q2 2018 Q3 Q4 Q1 Q2 / IPO Q3 M&A $50 MM Series D $35 MM $30M $20M $15M $10M $5M Launch Design Milestones Regulatory / Clinical Regulatory/ IP Milestones Clinical Milestones Publication Clinical Results Post-Market Clinical Studies Non-Specific Codes FDA – Class II – 510 (k) with Clinical Trials Specific Codes (Cat. I CPT / APC) Initial Product Launch 12/4/2009 MammOptics Financial / Operations Timeline 2012 Cash Reserve Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q2 2016 2015 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2017 Q4 $20M Series A $3.5 MM Proof of Concept System Q3 Q4 Q1 Q2 / IPO Q3 M&A $50 MM Launch Regulatory / Clinical Beta Prototype Laboratory Prototype Q2 Series B $9 MM $15M Initialize Q1 2018 Series D $35 MM Series C $30.5 MM $30M $5M Marketable Product BetaVersion Testing Second Release 1st Release Test 2nd Release Test Publication Publication Clinical Milestones Design Milestones Q1 Q2 2014 $40M $10M Regulatory/ IP Milestones 2013 Pilot Studies US Interim Trials US Pivotal Clinical Trials Clinical Results Post-Market Clinical Studies Non-Specific Codes Provisional Patent Technology Licensing IRB / IDE IC and Processin g Patents FDA – Class II – 510 (k) with Clinical Trials Cat III CPT Application and System Patents Specific Codes (Cat. I CPT / APC) Initial Product Launch 41 12/4/2009 Apple Resource, Activities & Cost Example Digital Hub Product User PARTNER NETWORK component makers, shipping & logistic suppliers KEY ACTIVITIES build whole devices both h/w & s/w Digital Lifestyle VALUE PROPOSITON solutions for differentiated customers professional & consumer KEY brand - Apple, RESOURCES PowerMac, iMac COST STRUCTURE Invest in R&D Digital Platform CUSTOMER RELATIONSHIPS differentiated markets DISTRIBUTION CHANNELS online store Computers, software & services REVENUE STREAMS CUSTOMER SEGMENTS High-end mass market Digital Hub Product User PARTNER NETWORK component makers, shipping & logistic suppliers KEY ACTIVITIES build whole devices both h/w & s/w Digital Lifestyle VALUE PROPOSITON solutions for differentiated customers professional & consumer KEY brand - Apple, RESOURCES PowerMac, iMac COST STRUCTURE Invest in R&D Digital Platform CUSTOMER RELATIONSHIPS differentiated markets DISTRIBUTION CHANNELS online store Computers, software & services REVENUE STREAMS CUSTOMER SEGMENTS High-end mass market Product User PARTNER NETWORK component makers KEY ACTIVITIES VALUE PROPOSITON CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS build whole devices both h/w & s/w solutions for differentiated customers professional & consumer differentiated markets High-end mass market Shipping & logistic suppliers KEY brand - Apple, RESOURCES PowerMac, iMac DISTRIBUTION CHANNELS Wholesalers, retailers, resellers innovative designers online store IP & patents & agreements COST STRUCTURE Invest in R&D Computers, software & services REVENUE STREAMS Product User PARTNER NETWORK Digital Hub KEY ACTIVITIES KEY RESOURCES COST STRUCTURE VALUE PROPOSITON CUSTOMER RELATIONSHIPS DISTRIBUTION CHANNELS REVENUE STREAMS CUSTOMER SEGMENTS Product User PARTNER NETWORK Digital Hub KEY ACTIVITIES KEY RESOURCES COST STRUCTURE Digital Lifestyle VALUE PROPOSITON CUSTOMER RELATIONSHIPS DISTRIBUTION CHANNELS REVENUE STREAMS CUSTOMER SEGMENTS Product User PARTNER NETWORK Digital Hub KEY ACTIVITIES KEY RESOURCES COST STRUCTURE Digital Lifestyle VALUE PROPOSITON Digital Platform CUSTOMER RELATIONSHIPS DISTRIBUTION CHANNELS REVENUE STREAMS CUSTOMER SEGMENTS