Business model, market and exit strategies

1. www.medtechchallenge.com

2. • Understand business models and go to market
strategies
• Understand exit strategies

4. a plan for the successful
operation of a business,
identifying sources of revenue,
the intended customer base,
products

7. Take a stab at your Business Model
Canvas

9. Basic Types of
Business Models
MANUFACTURER
Distributor
Retailer
Franchise

10. But, you need a bit more
granularity than that…

11. The LICENSINGMODEL
Sign over rights to commercialisation to another party

12. The Add-On Model
Competitively priced core offering
Numerous extras that drive up the final price

13. The Advertising Model
Offer advertisers access to highly targeted consumer
niches (often in the absence of selling their goods or
services)

14. The AFFILIATE MODEL
Someone who helps sell a product in return for
commission, even if they never actually take ownership
(or even handle) the product

15. The BAIT AND HOOKMODEL
Disproportionate amounts of the value are captured on
components, refills, etc.
Switching costs results in monopolistic pricing

16. The FREEMIUMMODEL
Give away something for free in return for your personal
details so they can then market to you so you will buy from
them in the future

17. The LOW COST MODEL
Drive significant volumes of customers by charging a very low
price

18. The LOSSLEADER MODEL
You lose money selling at that price, but it enables a different
lucrative opportunity

19. The PREMIUM MODEL
You charge so much for it (either vanity or necessity drivers)
that your profit margins are astronomical and cover the fact
that your customer base is quite limited

20. The PAY AS YOU GO MODEL
Actual usage is metered and you pay on the basis of what you
consume

21. The RECURRING REVENUE MODEL
Secure the customer on a long term contract so that they are
consuming your product or service well into the future

22. The DEMAND AGGREGATION MODEL
Assemble all the sellers and buyers for some stuff in the same
virtual location

23. The PERSON-TO-person exchanges
Connect one person that has something someone else wants
with the person who wants it

24. The ONE-OFF EXPERIENCE MODEL
Nowism offering unique experiences to customers at a given
place during a specific event
Social media + offline event organisers, pop-up stores, online
retailers

25. Disruption
It is happening everywhere
• Education ► TED Ed
• Finance ► Bitcoin, ApplePay
• Technology ► Nest
• Media ► Spotify, Netflix
• Telco ► WhatsApp
• Medical ► Automata
• Travel ► Airbnb

27. AND TECHNOLOGYROADMAPSTOO

28. A go-to-market strategy (GTM strategy) is an
action plan that specifies how a company will
reach customers and achieve competitive
advantage. The purpose of a GTM strategy is
to provide a blueprint for delivering a
product or service to the end customer,
taking into account such factors as pricing
and distribution.

29. …to sell

30. Go-To-Market Strategy
1. Define market value proposition
2. Identify primary target market
3. Review existing market channels
4. Create detailed channel approach

31. Basic
building blocks
Business Summary
Product Strategy
Channel Strategy
MarketingStrategy
Customerexperience
Technical requirements
Evaluation
Timeline &Execution

33. Strategic objectives
o Create awareness, first customers
o Maximize market share
o Defend market share (against competitors)
o Maximum profitability

35. Technology roadmaps
A planning process for a specific product or
service to identify
o Technical processes
o Technology gaps
o Opportunities & risks
o Critical requirements, targets
o Technology alternatives
o Milestones for meeting those targets

36. Basic
building blocks
Business & technicalassets
Cost/complexity drivers
Product hypothesis
Product requirements
Product planning
Timeline
Risk & mitigationstrategies

37. Market Segment Est. Revenue Market Trends Target Customers Customer Needs Technology Reqs.
Market
Segment
#1
$25M
Market
Segment
#2
Low cost
competitors
J&J
Cook Medical
Next-gen product to
maintain market share
New market
Novel surface
coating
Powerful ICT
platform
cancer
wound
care
Your product is a bunch of hypotheses that need to be validated
• Start by listing the higher level ones and refine as you go along
What product would you need to build for which market segment?

38. Start to define your user requirements/product features and priority
level for product launch versus subsequent generations
Start to define your engineering requirements
Version 1.0 – Product Launch
User Requirements Product Features Priority Level
Small device envelope Portable
Minimal training Simple user interface
Cost Reduction Modular components
Low
High
Medium

39. Take a stab at your Product
Requirements list
Version 1.0 – Product Launch
User Requirements Product Features Priority Level
Small device envelope Portable
Minimal training Simple user interface
Cost Reduction Modular components
Low
High
Medium

40. 1.0 Product Planning
Task Deliverables Inputs Owner Approval Start End
1.1 Business Case Tech Roadmap Market Analysis Exec Mgmt Board Nov’13 Feb’14
1.2 Funding $50k grant Proposal Prod Dev Exec Mgmt Dec’13 Feb’14
2.0 Product Design
Task Deliverables Inputs Owner Approval Start End
2.1 Suppliers Select supplier(s) RFP Prod Dev Exec Mgmt Dec’13 Jan’14
2.2 Functional specs Fnctnl design specs Prod Req Doc Prod Dev Exec Mgmt Jan’14 Feb’14
2.3 Prototype Fnctnl prototype Prod Req Doc Prod Dev Exec Mgmt Feb’14 Jun’14
2.4 Documentation Doc Plan
2.5 Quality Q&A Plan
2.5 Development Dev & Manuf Plan
3.0 Product Development
Task Deliverables Inputs Owner Approval Start End
3.1 Product Build PRD, MRD, Specs
3.2 User Materials
3.3 Cost Analysis Dev costs
3.4 Pricing Cost structures
3.5 Profitability Expected rev/costs

41. 4.0 Product Testing
Task Deliverables Inputs Owner Approval Start End
4.1 Alpha Testing QA Test Plan
4.2 QA Testing Doc Beta Plan
4.3 Beta Testing Final Prod Acceptance
5.0 Product Training
Task Deliverables Inputs Owner Approval Start End
5.1 Internal
5.2 Channel
6.0 Product Promotion
Task Deliverables Inputs Owner Approval Start End
6.1 Availability Prod Release @ conf.
6.2 Press Kit
6.3 Analysis
6.5 Demos
6.6 Presentations
6.7 Conferences
7.0 Product Packing & Distribution
Task Deliverables Inputs Owner Approval Start End
7.1 Packaging
7.2 Distribution

42. JANUARY MARCH MAY JULY SEPTEMBER NOVEMBER
FEBRUARY APRIL JUNE AUGUST OCTOBER DECEMBER

43. Year 1
Year 2
Year 3
Year 4• Xxxxx
• Xxxxx
• xxxxx
• Xxxxx
• Xxxxx
• xxxxx
• Xxxxx
• Xxxxx
• xxxxx
• Xxxxx
• Xxxxx
• xxxxx

44. High level example
1. Product that is the focus
of the roadmap
2. Critical system
requirements & their
targets
3. Major technology areas
4. Technology drivers &
their targets
Energy-efficient vehicle
MPG, reliability, safety, cost
Targets: 100mgp by 2017 &
150mpg by 2025
Materials, engine controls,
sensors, modeling,
simulation

45. High level example
5. Technology alternatives
6. Recommend technology
to pursue
7. Create the technology
roadmap report
Technology alternatives
that can satisfy these
targets identified with
estimated timeline for how
it will mature with respect
to the technology driver
targets. Identify decision
points for when it will be
dropped from further
consideration.

47. An exit strategy is a contingency
plan that is executed by an investor,
trader, venture capitalist or business
owner to liquidate a position in a
financial asset or dispose of tangible
business assets once certain
predetermined criteria for either has
been met or exceeded

48. Merger & Acquisition (M&A)
• Win-win for bordering companies with complementary skills, assets,
resources
• Large company can more quickly grow revenue or access customers
than create new products organically

49. Initial public offering(IPO)
• Offering sale of stock in the business on public markets (like the ASX)

50. Sell to another person
• Offering sale of stock in the business on public markets (like the ASX)

51. Sell to YourEmployees
• An employee stock option plan can direct payroll into a trust to
purchase investments, like company stock

52. Milking the cow
• Distribute profits as dividends to investors
• Pay off investors
• Hire someone else to run it

53. Liquidation & close
• Close the business doors and liquidate assets

54. Exit Tips
• Most of the time, companies are sold, not
bought, and require an active sales process
• Deals can unravel if they drag on – cold feet
phenomenon
• Every step should have a deadline
• Establish trust and open communication –friction
is the enemy
• Clean house before the visitors arrive

55. Exit Tips
• Don’t get greedy – holding out for all increases
your chances of getting none
• Plan for the exit early – the end game should be
part of your overall operating strategy
• Negotiate tough but fair – remember that you
may be working for the acquirer when the dust
settles

56. Strategy for your exit strategy
• Deal Strategy – who? When? How? Why?
• Positioning & Pitch – making them want you
• Packaging & Valuation – the whole nine yards
• Process Management – Set meetings, generate momentum,
manage communications
• Execution – get heat on the deal

57. What is your exit
strategy?

59. • Getting the business model right is critical
• Investors want to know exactly how you’ll make money
so they can understand how they will make money
• Go to market strategies and technology roadmaps are
critical living documents
• Knowing the exit strategy upfront helps you make better
decisions the entire journey

60. • Refine your business
model canvas
• Refine your business
model figure

61. Dr. Laura Faulconer
COO
laura@stcaustralia.org
0413 467 201