Transcript Slide 1

Engineering 245
The Lean LaunchPad
Lecture 6: Partners
Professors Steve Blank, Ann Miura-Ko, Jon Feiber
http://e245.stanford.edu/
key activities
value
proposition
customer
relationships
key
partners
customer
segments
cost
structure
revenue
streams
key
resources
channels
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images by JAM
KEY PARTNERS
which partners and suppliers leverage your model?
who do you need to rely on?
Test Hypotheses: Key Partners
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What defines a “Partner?”
• Shared economics
• Mutual success / failure
• Co-development/invention
• Common customer
But remember - you’re a startup
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Why have partners?
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Faster time to market
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Broader product offering
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More efficient use of capital
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Unique customer knowledge or expertise
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Access to new markets
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Partners – Physical Channels
• Strategic alliances
• Joint new business development efforts
• “Coopetition,” (cooperation between competitors)
• Key supplier relationships
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Partners – Strategic Alliances
• Reduce the list of things your startup needs to build or
provide to offer a complete product or service.
• Use partners to build the “whole product”
• using 3rd parties to provide a customer with a complete solution
• complement your core product with other products or services
• Training, installation, service, etc
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Partners – Joint Business Development
• Joint promotion of complementary products
• Share advertising, marketing, and sales programs
• One may be the dominant player
• Intel offered advertising fees to PC Vendors
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Partners – Coopetition
• Joint promotion of competitive products
• Competitors might join together in programs to grow
awareness of their industry
• Tradeshows
• Industry Associations
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Partners – Key Suppliers
• Outsource suppliers
• Backoffice, supply chain, manufacturing
• Direct suppliers
• Components, raw materials, etc.
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Startup mistake
Strategic alliances and joint partnerships
Not needed for Earlyvangelists
Are needed for Mainstream customers
Usually fail
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Traffic Partners – Virtual Channels
• Long-term agreements with other companies
• deliver long-term, predictable levels of customers
• “Cross referral” or swapping basis
• Paid on a per-referral basis
• Partners drive traffic using text-links, with onsite promotions, and
with ads on the referring site
• Partners sometimes exchange email lists
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Partnership Disaster: Boeing
Collaborative
Looked great
on paper.
Worst
business
decision of the
21st century
(so far!)
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Mobile Location Based Applications
Collaborative Partner
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Managing partners - risks
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Impendence mismatch
Longest of partners schedule becomes your longest item
No clear ownership of customer
Products lack vision – shared product design
Different underlying objectives in relationship
Churn in partners strategy or personnel
IP issues
Difficult to unwind or end
Why Will a Large Company Partner?
• You give them a competitive “leg-up”
• In sales
• Or “halo-effect”
• You are on their technology road-map
• You’re an economic opportunity for them
• potential customer of large company
• can leverage their existing products and sales
• Change agent for the large company
You need to understand their motivation
Should I take an investment from a
Large Company?
• They are interested in their bottom line, not yours
• Their objectives are not to make you a large company
• Who’s the sponsor? What’s the motivation?
• Needs to come from the business side
• Not the venture side
• Try to get sales deals not investment
• Or try to offer warrants based on sales success
Startup Partner Strategies
• Don’t confuse partners for Earlyvangelists vs. mainstream
• Don’t confuse big company partnering with startup strategy
• Find the one that gives you an unfair advantage
– Air Supply strategy
• Recognize you don’t matter to a large partner
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Team Deliverable for Next Week
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What partners will you need?
Why do you need them
Why will they partner with you?
What’s the cost of the partnership?
Talk to actual partners
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Summarized in a 5 Minute PowerPoint Presentation
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Ground Fluor Pharmaceuticals
This is your brain on fluorine
Team: Kiel Neumann (EL)
Stephen DiMagno (PI)
I-Corps 11/15/11
Allan Green (Mentor)
Manufacture
Clinical Trials
GMP precursor manufactures
GMP cassette manufacturers
Radiopharmacies
St. Jude Children’s Research Hospital
Sloan Kettering
UCSF
I-Corps 11/15/11
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The Business Model Canvas
Nuclear Medicine and
Radiology
departments
cGMP manufacturers
Radiopharmacies
Pharmaceutical
development
companies
SOPs for precursors
and drugs
Recruit clinical sites
In vivo animal studies
Develop regulatory
plan for pre IND
meeting
ID cGMP CRO
Fund-raising
IP
PoP data
IP
PoP data
Regulatory plan
Understanding of
the regulatory
process
Contract cGMP precursor manufacture
Salary, Rents
Clinical trials
Accessibility (RCY)
Purity
Speed
PET/SPECT
Multiplatform
Sensitivity (nca)
Specific compounds
General
methodology for
adding fluorine to
lead compounds of
interest
Technical Assistance
(Image Atlas)
FDA regulatory support
Equipment producers
Prescribing physicians
Technical assistance
Radiologist who
perform studies
Direct sales of precursor
Drug developers
Sales of packaged
precursor in cassettes
Cassette manufacturers
Sales of intermediates
Technology license
Product license (royalty)
I-Corps 11/15/11
Radiopharmacies
Radiologists
Food Chain
• F-dopa iodonium intermediate
• F-dopamine iodonium intermediate
We provide accessibility
Reagents
GMP Cassette or
Components
GMP Compliant
Synthesizer
PET
Radiopharmacy
distributor
•ABX
•Eckert & Ziegler
•GE MX module for TracerLab
•Siemens Explora
•TracerLab/ GE
•Eckert & Ziegler
•Siemens Explora
•Neoprobe
•Synthra
•Siemens PETNet
•GE Amersham
•Cardinal Health
•AAA
•Iason
I-Corps 11/15/11
Could license
precursor synthesis
for incorporation in
cassettes
Require GMP precursor
(or cassette) to develop
our product with their
synthesizer
Only want GMP
precursor in cassettes
without development
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GMP
Precursor
Finished
Imaging
Finished
Agent
Imaging
Finished
Agent
Imaging
Finished
Agent
Imaging
Finished
Agent
Imaging
Finished
Agent
Imaging
Agent
GMP
Cassette
$10’s per cassette
One time setup
$140,000
Revenue
neutral
thereafter
$300 per cassette
Licensing fee or
nominal royalty
($50) per
cassette
Patients
Hospitals
$1700 per dose
~100 doses/cassette
$500 fee per
dose at existing
price structure
I-Corps Presentation 11/15
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Richmond
Chemical
Albany
Molecular
GMP
Precursor
Contract
Manufacture
SRI
International
One time setup
$50-140K
I-Corps Presentation 11/15
Nebraska
GMP Facility
GMP
Precursor
Finished
Imaging
Finished
Agent
Imaging
Finished
Agent
Imaging
Finished
Agent
Imaging
Finished
Agent
Imaging
Finished
Agent
Imaging
Agent
GMP
Cassette
$10’s per cassette
One time setup
$140,000
Revenue
neutral
thereafter
$300 per cassette
Licensing fee or
nominal royalty
($50) per
cassette
Patients
Hospitals
$1700 per dose
~100 doses/cassette
$500 fee per
dose at existing
price structure
I-Corps Presentation 11/15
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ABX
Synthra
Precursor use
license
GMP
Cassette
Eckert&
Ziegler
Siemens
Explora
I-Corps Presentation 11/15
GMP
Precursor
Finished
Imaging
Finished
Agent
Imaging
Finished
Agent
Imaging
Finished
Agent
Imaging
Finished
Agent
Imaging
Finished
Agent
Imaging
Agent
GMP
Cassette
$10’s per cassette
One time setup
$140,000
Revenue
neutral
thereafter
$300 per cassette
Licensing fee or
nominal royalty
($50) per
cassette
Patients
Hospitals
$1700 per dose
~100 doses/cassette
$500 fee per
dose at existing
price structure
I-Corps Presentation 11/15
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Cardinal
Health
Iason
Fee per dose
Technology license
Siemens
Finished
Drug
AAA
GE
Healthcare
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2.2 million doses per year
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%10 of the market is 200,000 doses
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$500 per dose = $100 million
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Current sales $2 M/year because production is
limited and costs are high.
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Confidential financial Gannt chart prepared
I-Corps 11/15/11
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• F-dopa iodonium intermediate
• Subcontracted manufacture (licensed)
Precursor Sale • Small profit ($10/cassette)
• Current price - $300/cassette. One
cassette might provide 50-100 doses
GMP Cassette of finished drug. License precursor
incorporation in the cassette.
Sales
Drug
Production
I-Corps 11/15/11
• Current sales ~ $1000-$1500/dose.
Potential manufacturing cost per dose
(FDG) $200/dose.
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ARKA Thermal Solution
High Performance Heat Pipe Technology
 Ideation/Consulting Firm that offers design and
prototyping solutions in Thermal Management
 Scan and respond to market needs and provide
innovative product solutions.
 Offer solutions to industries and organizations
proactively by seeking new avenues to utilize heat
pipe technology
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Week 6 Canvas
Business Model
(For First Product Idea – LED thermal management module)
Market
Manufacturer
(Extension)
Arka Thermal
Communication of
Design and
Prototypes
Money Flow
Physical Product
Flows
Other
Potential
Markets
Joint
Venture
Design
Sources
What Partners will we need?
• Our partner in the new model is a Thermal Solutions
manufacturer who is looking to extend into the heat pipe
market.
• We require partners with production and distribution expertise
• The distribution of this product also requires access to a
dedicated sales force.
Why will they partner with us?
• Arka Thermal offers design expertise in heat pipe design
• Based on its talent, Arka Thermal proposes to offer novel and
high-efficiency heat pipe solutions proactively to the market.
1st Product Idea
 LED Thermal Dissipation Module
Offers higher lumen intensity with a longer life enabled by novel
thermal dissipation technology.
Replacement of current high lumen incandescent bulbs with LED
equivalents without light quality/output compromises.
Offer a novel thermal dissipation technology module that can be used
in different LED product families
Cost and Risks
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Arka Thermal
The cost of the partnership lies is the design and prototype creation (for pitching purposes)
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Research and Development costs: we need to provide contemporary design that OEMS can incorporate easily in their systems.
Effectiveness: the products needs to be efficient, meet standards and form specifications. The cost in this case is testing, certification and design
upgrades to reflect OEM needs.
Recruiting and maintaining high level talent in ideation and design
The highest risk comes from not responding proactively to market change, or being first mover. Loss of design exclusivity. It is essential
that design be protected.
The Manufacturer may choose to work outside of Arka Thermal’s contracts with in-house or other design agencies that offer more
benefits
Cost and Risks
• Manufacturer
 The initial cost of setup and maintaining a product extension.
 Risk lies in moving into a crowded established market. The market
might not require our services.
Manufacturer
Incentives
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Impediments
Potential increased sales
• Investments in joint
through joint venture creation
venture is substantial
with Arka
• ROI cannot be established
Extended product line with
at this point
access to Arka Designs,
increased product extension • Presence of in-house R&D
development possibilities
Outsourcing R&D for product • Solutions from other
providers might be more
extension to Arka (greater
efficiency due to
lucrative
specialization)
• Standards preclude use of
Customized solutions for
heat pipes/ diminished
each customer of the
interest in heat pipes
Manufacturer
Benefits of Exclusive Partnership
• Arka Thermal gains a partner with production and distribution
expertise in thermal solutions manufacturing
• Manufacturer can extend product line through joint venture
and explore new markets
Interviews
Action
Customer Interaction Meetings:
1. Regional Senior C/A Client Manager
2. Dr. Peter Foller, Former Director of
R&D chemical and Optical, PPG
3. Eilis Rosenbaum and Jonathan Levine,
Hydrate Researchers
4. Pine Liu, Entrepreneur in Smart
Sensor Monitoring
5. Jim Miller, CMU Researcher
6. Frank Stienke, Schlumberger Affiliate
Hypothesis Testing:
1. Custom semiconductor grower
2. Funding organization
Motion
Planned Customer Interaction
Meetings:
1. Two C/A plant visits
2. Eilis Jill Rosenbaum and Jonathan
Levine, Hydrate Researchers
3. Morty, CMU Facilities
Planned Hypothesis Testing:
1. Wayne Meier, Matric Engineering
Services
2. Diane L. Magin, BlackBox
3. Daedalus Designs
C/A Market
Industrial Plants
Plant #1
Plant #2
Plant #3
Internal Pilot
Test
APPROVED
1.
2.
3.
4.
Technology Supplier
[Product Form]
Bundled into larger product
Standalone
SenSevere can make bundle
Monitoring
Pilot Commercial
Customer Test
CONDITIONAL
APPROVAL
Pricing
Detection limit of the sensor required is different for
each step of the process. Discussions are in cell
technologies
Each step process has different risk premium associated
Cell Technologies
Drying Towers
#GOAL
Price the same product differently based on what we
protect as opposed to an agglomerate value add.
Tunable sensor sensitivity
Liquifaction
US Sensors Industry: $9.8B
Projected Growth: 6.1%/year
Operating
Specifications
Downtime /
incident
Time
betw/Incidents
Average cost / year
from incidents
# of Units
Market Size:
[/year]
$73,250,000
C/A Market
Cost / cell
Price
Year
Type
%
Revenue
[/year]
1
Innovators
2.5
$271,500
Operating costs for 1st year projected to be
$200,000
2
Early Adopters
16
$8,785,000
3
Early Majority
50
$27,463,500
4
Late Majority
84
$46,141,500
Partner Margin:
25%
Prototyping COG
Sales Profit:
[/year]
$50,662,996
Other Markets!
#KILLER APP
#GOAL
Chlorine production
Achieve sales in both ends of the spectrum and all other applications fall within
possible demonstrated capability
Laboratory
Industrial
1. Hydrate research
2. Micro-temperature
measurement and
heating
3. Wireless smart
building control
1. C/A
2. Transformer gas
monitoring
3. Wireless smart building
control