What Angels and Entrepreneurs Need to Know About Steve Blank’s Lean Launchpad Welcome! February 25, 2015
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1 Mission: Fuel the success of angel groups and accredited individuals active in the early-stage landscape • World’s largest trade group for angel investors o 220+ angel groups o 12,000 accredited investors o Voice of accredited individuals, portals, and family offices • 50 US states + Canada • Research/ education partner
Member Groups & Accredited Platforms
New Dominion Angels
2 ACA Partners
Our Speaker - and a little about him
Allan May Vice Chair, Angel Resource Institute Chair, Life Science Angels
3 Lean May Save Your Life: Lean Launchpad/NSF I-Corps
• What We Used to Believe • What We Now Know • The Lean Startup • Commercialization Insights • Technology Readiness Level • Investment Readiness Level
What We Used to Believe Search vs. Execution
4 Startups are Smaller Versions of Large Companies
Start With an Operating Plan and Financial Model
5 21 Years Executing the Plan
Actual Photo of What Happened When My Plan Had First Contact With Customers
6 No Business Plan survives first contact with customers
7 What We Used to Believe
All I Need is the 5-Year Forecast
8 VC’s and the Soviet Union are the only people to require 5-Year Plans
What We Now Know
9 Startups Are Not Smaller Versions of Large Companies
Startups Are Not Smaller Versions of Large Companies Large Companies Execute Known Business Models
10 Startups Are Not Smaller Versions of Large Companies Startups Search for Unknown Business Models
What’s A Startup?
11 A temporary organization designed to search for a repeatable and scalable business model
A temporary organization designed to search for a repeatable and scalable business model
12 A temporary organization designed to search for a repeatable and scalable business model
A temporary organization designed to search for a repeatable and scalable business model
13 Startups Fail Because They Confuse Search with Execute
Startups need their own tools, different from those used in existing companies
14 Startups need their own tools, different from those used in existing companies
The Lean Startup
15 The Lean Startup
A much better way to build a business
Taking you from an Idea to a Business The Lean Startup In Three Steps
16 1. Frame Hypotheses
• Frame Hypotheses
1. Frame Hypotheses
• Frame Hypotheses Business Model Canvas
Partners Activities Get/Keep/ Grow Product / Customers Service
Resources Channel
Costs Revenue
17 2. Test Hypotheses
• Frame Hypotheses Business Model Canvas
• Test Hypotheses
2. Test Hypotheses
• Frame Hypotheses Business Model
• Test Hypotheses Customer Development
18 3. Build Incrementally & Iteratively
• Frame Hypotheses Business Model
• Test Hypotheses Customer Development
• Build the product Agile Engineering incrementally & Iteratively
Insight Life Science/Health Care Commercialization in the 21st Century
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19 Commercialization Insights
• Commercialization efforts have two components 1. The science/technology 2. The business model • Current Commercialization efforts focus on #1
• Successful efforts require the team to do both
Current Thinking about Translational Medicine
Use Outside Consultants
Intellectual Regulatory Property Product Development Mentors Technology Development Process Project Business financing Management Development
License Startup
20 Add Evidence-based Commercialization
Inward-facing
Add Evidence-based Commercialization
Value Add a parallelReimburs Propositio ement Customers (users, n Outward-Facing payers, etc.)
CommercializationCommercialization Process Development Process
Regulation Partners Intellectual Property Inward-facing
21 Add Evidence-based Commercialization
Outward-facing By the Founding Team
Reimburs Value ement Proposition Customers (users, payers, etc.)
Commercialization Development Process
Regulation Partners Intellectual Property Inward-facing
Accelerating Commercialization: – Requires Parallel Paths
Technology Progress Clinical Trials, etc.
Commercialization Progress
Mentorship Workshops/Webinars
seed $’s
physical space & equipment
22 Answers to Hypotheses are Outside The Lab
• You may be the smartest person in your lab • But you are not smarter than the collective intelligence of your potential customers, partners, payers and regulators • You can’t learn this by reading papers or listening to lectures
Need a process for hypotheses testing
Insight Commercialization Evidence Requires Outward Focus
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23 EXAMPLE: ”Value Proposition” and the Customer Discovery Process
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Value Proposition inherently includes Value AND a specific Customer A Value Proposition describes the net impact of the cost/improvement equation associated with a new offering in terms that are meaningful to decision makers and sufficiently convincing to elicit a change in their behavior There will be a separate Value Proposition for every Customer
I-Corps @ NIH - Allan May 48
24 Testing Value Propositions Requires Formulating A “Clinical Needs Statement” A one-sentence hypothesis that clearly articulates the basic problem, the target population, and the outcome you are solving for
I-Corps @ NIH - Allan May 49
Validating A Needs Statement is Done Via Customer Discovery
Quantify the Value Proposition for each Customer Focus Customer Discovery efforts on: The disease state (what is known; what is not) The landscape of existing solutions (what’s available; what has been tried before and did/didn’t it work) Identifying Customers (Stakeholders) Defining the true Market Must Have versus Nice to Have Core patient group versus Possible patient use For whom would it be malpractice NOT to use your solution
I-Corps @ NIH - Allan May 50
25 Download A Free Book!
By Giff Constable (Frank Rimkowski, Ed.) http://www.talkingtohumans.com/
Insight We Know How To Build these Programs
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26 I-Corps @ NIH
class design components
The Tactics • Organize P.I.’s into Commercialization Teams • Active NIH SBIR and STTR Phase I grantees • Teams of 3 • C-Level (CEO, CTO, COO) Officer • Industry Expert • Principal Investigator • Offer a 10-week training program • Get them out of the building
27 Rapid Learning
• Out of the building 10-15 hours/weekly
• Formal methodology for customer interaction
• Evidence-based decisions
• Focus on rapid learning
100 customers/partners in ten weeks
I-Corps Commercialization Strategy
• Define clinical utility up front • before spending millions • Understand core customers & sales/mktg process • for initial clinical sales and downstream commercialization • Assess IP and regulatory risk • before design and build • Gather data essential to customer partnerships/collaboration/purchases • before doing extensive engineering or science • Identify financing vehicles before you need them
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28 Commercialization affects biological and clinical hypotheses
• As you validate the commercial hypotheses you make substantive changes to one or more parts of your initial business model • And this new data on commercialization affects your biological and clinical hypotheses
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Class – key design components
• Framework for results • Experiential • Evidence-based • Mentor supported • Team Teaching
29 Lean Framework
• Business Model Canvas • Articulate initial Hypotheses • Weekly Progress Scorecard • Customer Development • Test hypotheses in front of customers • Hypothesis > Experiment > Data > Insight • Agile Development • Build Minimum Viable Product
Experiential
• Getting out of the building – 10-15 hours/weekly
• Formal methodology for customer interaction
• Focus on Minimal Viable Products and Pivots
• Getting out of the building is a big idea
• It accelerates speed of translation
30 Teams Present Results Weekly
Update Business Model Canvas Weekly
31 Use Canvas As a Weekly Scorecard
Week 1
Week 2
Week 3
Insight 100% Visibility on Progress LaunchPad Central
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32 LaunchPad Central
• Needed a way to “Look over their shoulders”
• Central place for cohort “Command and Control”
• Got it wrong multiple times
• Finally built custom tool for the NSF • LaunchPad Central
33 Cohort Leaderboard
Customer Interviews
34 Hypotheses to Test
Invalidated Hypotheses
35 Weekly Canvas Updates
36 NASA
NASA/DOD Technology Readiness Level (TRL)
• Formal Way to assess project maturity • Quantify Relative Risks • Data Driven • Adopted by NASA, DOD, FAA, ESA…
37 NASA/DOD Technology Readiness: Levels 1 & 2
Basic Technology Research • Basic principles observed • Technology concept formulated
Concept
NASA/DOD Technology Readiness Levels 3 & 4
Research to prove Feasibility • Experimental proof of concept • Breadboard validation in lab
Research
Concept
38 NASA/DOD Technology Readiness Levels 5 & 6
Demo Prototype • Breadboard validation outside the building • System demo in real-world
Demo
Research
Concept
NASA/DOD Technology Readiness Levels 7, 8, 9
Deployment • System Development • System deployed in real-world
Demo
Research
Concept
39 Investment Readiness Level
We can do the same for Commercialization/New Venture Activities
Investment Readiness Level
Emphasis is on data
40 Investment Readiness Level
• A Formal Way to Quantify Relative Risks • Data Driven • Analog to NASA/DOD Technology Readiness Level (TRL)
DIAGNOSTICS The Investment Readiness Level
41 Diagnostics Investment Readiness Level Example
Reimbursement/IP/Regulatory/Costs Validated Clinical Trial/Technical Validation Minimum Viable Product/Regulatory
Left-side of the Canvas/IP Strategy
Right-side of the Canvas/ Revenue Model/Reimbursement Est. Reimbursement/CPT Code
Product/Market Fit
First Pass Canvas
THERAPEUTICS The Investment Readiness Level
42 Therapeutics Investment Readiness Level Example
Path to Revenues, OP Plan, on target activity, therapeutics effect & liabilities
High Fidelity MVP, customer partners highly engaged Business Case Defined, recruit talent gaps, select investors
Left-side of the Canvas: KOL network, IP review, partner due diligence
Right-side of the Canvas: present data to 5 customers, proof of relevance Product/Market Fit: timeline to pre & clinical data, cost & value at data pts Problem/Solution validation w/pharma/biotech, present indepth data
Low Fidelity MVP, KOL’s, pre & Clinical Paths ID’d, tech validated
Define clinical problem & early customer data, CRO’s, IP check
MEDICAL DEVICES The Investment Readiness Level
43 Medical Device Investment Readiness Level Example
Clear exit strategy Targeted market rollout plan Unit economics - Margin Validated
Existing reimbursement
Regulatory certainty/difficulty IP: Patentability, Freedom to Operate
Technical solution, data & MVP Compelling clinical need + substantial market
Effective team?
DIGITAL HEALTH The Investment Readiness Level
44 Digital Health Investment Readiness Level Example
Metrics That Matter High Fidelity MVP Market Opportunity
Left-side of the Canvas
Right-side of the Canvas Product/Market Fit Problem/Solution validation
Low Fidelity MVP
First Pass Canvas
Technology Investment Readiness Level Readiness Level
Metrics that Matter
Validate Left side of Canvas
Validate Right side of Canvas
Product/Market Fit
Problem/Solution
Hypotheses
45 UCSF Class Summary
• 26 teams: therapeutics, devices, diagnostics, digital- health • 2,355 in-person customer interviews • 952 hypotheses tested • 423 Pivots
NIH Class Summary
• 21 teams: therapeutics, devices, diagnostics • 1,920 in-person customer interviews • 833 hypotheses tested • 195 Pivots
46 NSF Class Summary
• 400 teams • 39,789 in-person customer interviews • 15,432 hypotheses tested • 3,735 Pivots
Conclusion
The Lean Startup is a Successful much better way to build commercialization a business requires a startup to 1. Frame Hypothesis assess evidence based 2. Test Hypothesis 1. Investment Readiness 3. Build Incrementally (outward focus) and Iteratively 2. Technological The emphasis is on data Readiness (inward focus)
47 Audience Resources
Allan May’s email - [email protected] Life Science Angels - http://lifescienceangels.com/ Angel Resource Institute - http://www.angelresourceinstitute.org/
For more information on Steve Blank’s Lean Launchpad Steve Blank - www.steveblank.com
Thanks
48 Thank you! Audience Questions
March 11, 2015: Invest Like a Super Angel March 25, 2015: What Angels and Entrepreneurs Need to Know Before You Syndicate a Deal Webinar programs archived at: www.angelcapitalassociation.org/events/webinars/
Additional Resources
Marianne Hudson Christopher Mirabile Executive Director Managing Director, Launchpad; Vice Chair, Angel Capital Angel Capital Association Association http://www.angelcapitalassociation.org http://www.angelcapitalassociation.org/ /news-forbes/ news-inc/
49 2015 ACA Summit April 14-16, San Diego, CA Leverage Our Decade of Investing Expertise Summit Keynoter Steve Blank REGISTER ONLINE www.angelcapitalassociation.org/2015summit ACA Members: $820 early bird, $895 after February 3 • COME LEARN THE LATEST Non-Members: $1120 early bird, $1195 after February 3 INVESTING IDEAS Additional fees apply for programs on Tuesday, April 14 • FIND CONNECTIONS THAT ACCOMMODATIONS MATTER A room block is reserved for Summit attendees at the • PROGRAM HIGHLIGHTS Marriott Marquis San Diego Marina, 333 West Harbor Drive, San Diego, CA. • Pre-Summit (April 14)
Act by March 27secure your discounted room ($229) or ($249). • ACA Summit (April 15-16)
Reservations can be made by calling the hotel at 619-234-1500 (reference “ACA”) or via the ACA Summit website.
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