1 Evidence-Based Approach to Reduce Spinout Risk Errol Arkilic...
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Transcript of 1 Evidence-Based Approach to Reduce Spinout Risk Errol Arkilic...
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Evidence-Based Approach to Reduce Spinout Risk
Errol Arkilic ([email protected])
Founding and Former Lead I-Corps Program Director
The views expressed in this material are those of the author and do not necessarily reflect the views of the National Science Foundation
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Commercialization*
Commercialization is the process or cycle of introducing a new product or production method into the market.
*Wikipedia: July 2014
3
Entrepreneurship*
• Entrepreneurship is the process of starting a business or other organization. The entrepreneur chooses/develops a business model, acquires the human and other required resources and is fully responsible for it success or failure.
*Wikipedia: July 2014
The design, invention, development and/or implementation of new or altered products, services, processes, systems, organizational structures, or business models for the purpose of creating new value for customers and financial returns for the firm
Innovation*
*Innovation MeasurementA Report to the Secretary of CommerceJanuary 2008
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Why is this hard?
Part IThe Unknown
The design, invention, development and/or implementation of new or altered products, services, processes, systems, organizational structures, or business models for the purpose of creating new value for customers and financial returns for the firm
Innovation*
*Innovation MeasurementA Report to the Secretary of CommerceJanuary 2008
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NSF
Academia
Small Business
Investors
Industry
Valley of Death
Re
sou
rces
Ava
ilab
le (
$)
Discovery Development Commercialization
Level of Development
FromAngus Kingon
Technology Innovation Spectrum
(The Theory)I-Corps
Taxes
NSFSTTR
NSFSBIR
8
NSF
NSFSTTR
NSFSBIR
Academia
Small Business
Investors
Industry
Valley of Death
Re
sou
rces
Ava
ilab
le (
$)
Discovery Development Commercialization
Level of Development
FromAngus Kingon
Technology Innovation Spectrum
(The Theory)I-Corps
Taxes
9
NSF
Academia
Small Business
Re
sou
rces
Ava
ilab
le (
$)
Discovery Development Commercialization
Level of Development
FromAngus Kingon
Technology Innovation Spectrum
(The Reality)I-Corps
?
How do we explore the unknown
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In general we look for a new law by following the following process:
Then, we compute the consequencesFirst, we guess it
Then, we compare the computation results to natureWe compare it directly to observationIf it disagrees with experiment, it’s wrongThat simple statement is the key to science
Or how smart you are, or who made the guessIt doesn’t make a difference how beautiful your guess is
If it disagrees with experiment, its wrongThat’s all there is to it
-Richard Feynman
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Why is this hard?
Part IIThe Confusion
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Entrepreneurship*
Entrepreneurship is the process of starting a business or other organization. The entrepreneur chooses/develops a business model, acquires the human and other required resources and is fully responsible for it success or failure.
*Wikipedia: July 2014
Startups Fail because they Confuse Search with Execution-Steve Blank
Execution:
• Repeatable Internal Processes• Knowns:
– Customers, Features, Channels, Pricing• Management:
– Formal / The Suits– Characterized by “Only the Paranoid Survive”
• Customer Creation + Company Building• Goals are set quarterly
Search:
• What Process?• Knowns:
– Runway• Management:
– No management, but founders with leadership/vision– Characterized by “Stark Raving Terror”
• Collecting and analyzing: Search and Pivot• Customer Discovery + Customer Validation• Goal: To get to a sustainable business model
Where are You in the Life Cycle
Search
Execution
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Why is this hard?
Part III“Third-party” Risk
Business Model Canvas
?
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Key Resources
• Access to: Capital• Intellectual Property• Service Providers• Facilities• Talent
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Venture Capital
Angels / Friends & Family
Private Equity
Company Profits
Non-profits / Grants
The Government
Commercial Banks
Sources of Funding for Innovation
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Venture Capital Threshold
Angel Capital ThresholdEconomicDevelopmentFunds Threshold
NSFSBIR/STTRThreshold
Technology Risk
Market Risk
People RiskFinance Risk
Friends,Family (and Fools)Threshold
What is your Enterprise Risk Profile?
Senior DebtThreshold
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…and you say to your BOD
• The market never materialized• We ran out of resources before we got traction
• We couldn’t master the product market fit
• Our Channel partners were too slow to adopt our innovation
• Our customers couldn’t understand the value we provided them
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Why is this harder than it should be?
Part IVThe Misunderstanding
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Academia
Small Business
Investors
Industry
Valley of Death
Re
sou
rces
Ava
ilab
le (
$)
Discovery Development Commercialization
Level of Development
FromAngus Kingon
The World According to Vannevar Bush
Basic Research Applied Research
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The World According to Donald StokesSe
arch
for F
unda
men
tal/
Dee
p U
nder
stan
ding
Consideration for Use
High
Low
HighLow
Pasteur’s Quadrant
“Anything that won’tsell, I don’t want toinvent. Its sale is proof of utility, and utilityis success ” -Edison
“Everything wecall real is made up of thingsthat can’t be regardedas real” -Bohr
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The World According to Pasteur
There is no such thing as applied sciences, only applications of science.-Louis Pasteur, 1871
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Five Takeaways
• Innovation contains the unknown (by definition)• Address unknowns using the Scientific Method• Use the Business Model Canvas (lab notebook)• Don’t Confuse Search with Execution• Do Use-Inspired Research
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Thank You,Questions?