Building a Compelling Value Proposition
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This document discusses building a compelling value proposition for research startups. It emphasizes the importance of customer development and evidence-based entrepreneurship using the Lean Startup methodology. Customer development involves testing hypotheses about problems, solutions, customer segments and business models through building minimum viable products and getting customer feedback. This helps reduce risks and guides technical and business strategy decisions. The document provides examples and advice for developing a value proposition, identifying customer jobs to be done, and validating both sides of the business model canvas before fully developing products or services.
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Building a Compelling Value Proposition
- 1. @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
- 3. @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
- 4. @NYUEntrepreneur What makes for a successful startup?
- 5. @NYUEntrepreneur Commercialization Myth 5 Basic & Applied Research Scientific Discovery/ Invention/ IP Creation Venture Formation & Growth
- 6. @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
- 7. @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
- 8. @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
- 9. @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
- 10. @NYUEntrepreneur Need to do this before finishing the science or building/designing the product
- 11. @NYUEntrepreneur Evidence-based Entrepreneurship (aka the Lean Startup) 11
- 12. @NYUEntrepreneur What We Used to Believe
- 13. @NYUEntrepreneur Startups are a Smaller Version of a Large Company
- 14. @NYUEntrepreneur Start with an Operating Plan and Financial Model
- 15. @NYUEntrepreneur
- 16. @NYUEntrepreneur All I Need to Do is Make the Forecast
- 17. @NYUEntrepreneur What We Now Know
- 18. @NYUEntrepreneur
- 19. @NYUEntrepreneur “Everyone has a plan until they get punched in the face!”
- 20. @NYUEntrepreneur
- 21. @NYUEntrepreneur Planning comes before the plan
- 23. @NYUEntrepreneur “More startups fail from a lack of customers than from a failure of product development.”
- 24. @NYUEntrepreneur24 So what do we do?
- 26. @NYUEntrepreneur A temporary organization designed to search for a repeatable and scalable business model A startup is…
- 27. @NYUEntrepreneur What is a Business Model? How a company creates value for itself while delivering products or services for customers
- 28. @NYUEntrepreneur What is a Business Model?
- 30. @NYUEntrepreneur
- 31. @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!
- 32. @NYUEntrepreneur Customer Development is how you search for the business model
- 33. @NYUEntrepreneur First test the problem, then test the solution Customer Development 33
- 34. @NYUEntrepreneur Value Proposition What Problem Are You Solving?
- 35. @NYUEntrepreneur Value Proposition describes the benefits customers can expect from a bundle of products and services
- 36. @NYUEntrepreneur Customer Segment Who Cares?
- 37. @NYUEntrepreneur Customer Profile Who are they and why would they buy?
- 39. @NYUEntrepreneur So where does my technology come in?
- 40. @NYUEntrepreneur It’s not about your technology! 40
- 41. @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
- 42. @NYUEntrepreneur Value Proposition What Problem Are You Solving?
- 43. @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?
- 44. @NYUEntrepreneur Customer Segment Who Cares?
- 45. @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?
- 46. @NYUEntrepreneur What is your potential customer trying to get done? Jobs to be Done 46
- 47. @NYUEntrepreneur …they want a quarter-inch hole!" People don't want to buy a quarter-inch drill… SOLUTION (WHAT) JOB (WHY) Innosight LLC
- 48. @NYUEntrepreneur Who has what job to be done? 48
- 49. @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
- 51. @NYUEntrepreneur put yourself in the customers’ shoes
- 52. @NYUEntrepreneur Who’s the Customer in a Company?
- 54. @NYUEntrepreneur Who’s the Customer in a Company?
- 55. @NYUEntrepreneur Who’s the Customer in a Company?
- 56. @NYUEntrepreneur Who’s the Customer in a Company?
- 57. @NYUEntrepreneur How Do They Interact to Buy? u Organization Chart u Influence Map u Sales Road Map
- 59. @NYUEntrepreneur Customer Ecosystem of people you need to understand, satisfy and appeal to in order to get them to buy your product.
- 60. @NYUEntrepreneur Technology Lifecycle Adoption Curve 60
- 61. @NYUEntrepreneur Your Business Model Will Change… 61
- 63. @NYUEntrepreneur Case Study: The Smart Needle Source: Paul Yock, NIH I-Corps 2014
- 64. @NYUEntrepreneur Great concept: transducer inside needle …just listen to localize blood vessel Source: Paul Yock, NIH I-Corps 2014
- 65. @NYUEntrepreneur Source: Paul Yock, NIH I-Corps 2014
- 66. @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
- 67. @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
- 68. @NYUEntrepreneur What we missed! The existing approach was cheap! Source: Paul Yock, NIH I-Corps 2014
- 69. @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
- 70. @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
- 71. @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
- 72. @NYUEntrepreneur We missed something else! The technique must be user-friendly and easy to learn Source: Paul Yock, NIH I-Corps 2014
- 73. @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
- 74. @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
- 75. @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?!
- 76. @NYUEntrepreneur ? ✔ ✔ ? ? ? ? ? ? Not so fast!
- 77. @NYUEntrepreneur ? ✔ ✔ ? ? ? ? ? ? Especially in the Life Sciences… You can’t have a valid business until you test both sides of the canvas!
- 78. @NYUEntrepreneur Key Activities What’s Most Important for the Business? • Pre-clinical studies • Clinical Trials • FTO • Regulatory Pathway • CPT Coding
- 79. @NYUEntrepreneur Key Resources What are your most important assets? • Data package • Intellectual Property • Non-dilutive funding
- 80. @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?
- 81. @NYUEntrepreneur Channels How does your product get to customers? • Distributors • Direct sales • Business development
- 82. @NYUEntrepreneur Customer Relationships How do you Get, Keep and Grow Customers? • SAB • KOLs • Papers • Conferences • PR
- 83. @NYUEntrepreneur Revenue Streams How do you make money? • Reimbursement? • Capital purchase/lease • ???
- 84. @NYUEntrepreneur Cost Structure What are the Costs and Expenses?
- 85. @NYUEntrepreneur The Minimum Viable Product Customer Development 85
- 86. @NYUEntrepreneur Help start the process of learning as quickly & cheaply as possible The Minimum Viable Product 86
- 90. @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
- 91. @NYUEntrepreneur Why use this approach?
- 92. @NYUEntrepreneur 1. Find go-to-market strategy… 92
- 93. @NYUEntrepreneur …and do it more quickly 93
- 94. @NYUEntrepreneur 2. Design an MVP 94 Start the process of learning as quickly & cheaply as possible Minimum Viable Product
- 95. @NYUEntrepreneur 3. Build a Team 95 “Co-founder skills are the first derivative of the business model canvas” SteveBlank.com
- 96. @NYUEntrepreneur 4. Raise Funds 96 POC Grants Compe99ons Seed Funds
- 97. @NYUEntrepreneur 5. Launch a better business 97
- 98. @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