@NYUEntrepreneur The Bottom Line Validating Venture Secrets—Building a Compelling Value Proposition for Your Research

@NYUEntrepreneur 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

@NYUEntrepreneur2 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!

@NYUEntrepreneur Agenda 3 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

@NYUEntrepreneur What makes for a successful startup?

@NYUEntrepreneur Commercialization Myth 5 Basic & Applied Research Scientific Discovery/ Invention/ IP Creation Venture Formation & Growth

@NYUEntrepreneurThe “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

@NYUEntrepreneur 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 7

@NYUEntrepreneur 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

@NYUEntrepreneur 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

@NYUEntrepreneur Need to do this before ﬁnishing the science or building/designing the product

@NYUEntrepreneur Evidence-based Entrepreneurship (aka the Lean Startup) 11

@NYUEntrepreneur What We Used to Believe

@NYUEntrepreneur Startups are a Smaller Version of a Large Company

@NYUEntrepreneur Start with an Operating Plan and Financial Model

@NYUEntrepreneur

@NYUEntrepreneur All I Need to Do is Make the Forecast

@NYUEntrepreneur What We Now Know

@NYUEntrepreneur “Everyone has a plan until they get punched in the face!”

@NYUEntrepreneur Planning comes before the plan

@NYUEntrepreneur Business Model Canvas

@NYUEntrepreneur “More startups fail from a lack of customers than from a failure of product development.”

@NYUEntrepreneur24 So what do we do?

@NYUEntrepreneur Customer Development

@NYUEntrepreneur A temporary organization designed to search for a repeatable and scalable business model A startup is…

@NYUEntrepreneur What is a Business Model? How a company creates value for itself while delivering products or services for customers

@NYUEntrepreneur What is a Business Model?

@NYUEntrepreneur 9 Guesses 29 Guess Guess Guess Guess Guess Guess Guess Guess Guess

@NYUEntrepreneur Testing Hypotheses u Apply the scientiﬁc method to customer discovery 31 Observe phenomena Formulate hypothesis Test hypothesis via rigorous experiments Establish theory based on repeated validation of results Modify hypothesis PIVOT!

@NYUEntrepreneur Customer Development is how you search for the business model

@NYUEntrepreneur First test the problem, then test the solution Customer Development 33

@NYUEntrepreneur Value Proposition What Problem Are You Solving?

@NYUEntrepreneur Value Proposition describes the beneﬁts customers can expect from a bundle of products and services

@NYUEntrepreneur Customer Segment Who Cares?

@NYUEntrepreneur Customer Proﬁle Who are they and why would they buy?

@NYUEntrepreneur Problem-Solution Fit Fit

@NYUEntrepreneur So where does my technology come in?

@NYUEntrepreneur It’s not about your technology! 40

@NYUEntrepreneur 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

@NYUEntrepreneur Value Proposition What Problem Are You Solving?

@NYUEntrepreneur 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?

@NYUEntrepreneur Customer Segment Who Cares?

@NYUEntrepreneur 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?

@NYUEntrepreneur What is your potential customer trying to get done? Jobs to be Done 46

@NYUEntrepreneur …they want a quarter-inch hole!" People don't want to buy a quarter-inch drill… SOLUTION (WHAT) JOB (WHY) Innosight LLC

@NYUEntrepreneur Who has what job to be done? 48

@NYUEntrepreneur “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

@NYUEntrepreneur Customer Proﬁles Innosight LLC

@NYUEntrepreneur put yourself in the customers’ shoes

@NYUEntrepreneur Who’s the Customer in a Company?

@NYUEntrepreneur Reimbursement!

@NYUEntrepreneur Who’s the Customer in a Company?

@NYUEntrepreneur How Do They Interact to Buy? u  Organization Chart u  Inﬂuence Map u  Sales Road Map

@NYUEntrepreneur58

@NYUEntrepreneur Customer Ecosystem of people you need to understand, satisfy and appeal to in order to get them to buy your product.

@NYUEntrepreneur Technology Lifecycle Adoption Curve 60

@NYUEntrepreneur Your Business Model Will Change… 61

@NYUEntrepreneur Product / Solution Fit

@NYUEntrepreneur Case Study: The Smart Needle Source: Paul Yock, NIH I-Corps 2014

@NYUEntrepreneur Great concept: transducer inside needle …just listen to localize blood vessel Source: Paul Yock, NIH I-Corps 2014

@NYUEntrepreneur Source: Paul Yock, NIH I-Corps 2014

@NYUEntrepreneur 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

@NYUEntrepreneur 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

@NYUEntrepreneur What we missed! The existing approach was cheap! Source: Paul Yock, NIH I-Corps 2014

@NYUEntrepreneur 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

@NYUEntrepreneur 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 Dovemed.com Source: Paul Yock, NIH I-Corps 2014

@NYUEntrepreneur 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

@NYUEntrepreneur We missed something else! The technique must be user-friendly and easy to learn Source: Paul Yock, NIH I-Corps 2014

@NYUEntrepreneur 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

@NYUEntrepreneur 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

@NYUEntrepreneur 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?!

@NYUEntrepreneur ? ✔ ✔ ? ? ? ? ? ? Not so fast!

@NYUEntrepreneur ? ✔ ✔ ? ? ? ? ? ? Especially in the Life Sciences… You can’t have a valid business until you test both sides of the canvas!

@NYUEntrepreneur Key Activities What’s Most Important for the Business? •  Pre-clinical studies •  Clinical Trials •  FTO •  Regulatory Pathway •  CPT Coding

@NYUEntrepreneur Key Resources What are your most important assets? •  Data package •  Intellectual Property •  Non-dilutive funding

@NYUEntrepreneur 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?

@NYUEntrepreneur Channels How does your product get to customers? •  Distributors •  Direct sales •  Business development

@NYUEntrepreneur Customer Relationships How do you Get, Keep and Grow Customers? •  SAB •  KOLs •  Papers •  Conferences •  PR

@NYUEntrepreneur Revenue Streams How do you make money? •  Reimbursement? •  Capital purchase/lease •  ???

@NYUEntrepreneur Cost Structure What are the Costs and Expenses?

@NYUEntrepreneur The Minimum Viable Product Customer Development 85

@NYUEntrepreneur Help start the process of learning as quickly & cheaply as possible The Minimum Viable Product 86

@NYUEntrepreneur What is this? 87

@NYUEntrepreneur 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 90

@NYUEntrepreneur Why use this approach?

@NYUEntrepreneur 1. Find go-to-market strategy… 92

@NYUEntrepreneur …and do it more quickly 93

@NYUEntrepreneur 2. Design an MVP 94 Start the process of learning as quickly & cheaply as possible Minimum Viable Product

@NYUEntrepreneur 3. Build a Team 95 “Co-founder skills are the ﬁrst derivative of the business model canvas” SteveBlank.com

@NYUEntrepreneur 4. Raise Funds 96 POC Grants Compe99ons Seed Funds

@NYUEntrepreneur 5. Launch a better business 97

@NYUEntrepreneur 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 98

@NYUEntrepreneur Questions? entrepreneur@nyu.edu @nyuentrepreneur nyu.edu/entrepreneur nyuentrepreneur.com 16 Washington Place 99

@NYUEntrepreneur Helping startups start up

@NYUEntrepreneur The Bottom Line Validating Venture Secrets—Building a Compelling Value Proposition for Your Research

New York University

@NYUEntrepreneur The Bottom Line Validating