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What Angels and Entrepreneurs Need to
Know About Steve Blank’s Lean Launchpad
Welcome!
February 25, 2015
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• Yes, you’ll get the slides
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Mission: Fuel the success of angel groups and accredited individuals active in the early-stage landscape
• World’s largest trade group for angel investorso 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
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ACA Partners
Our Speaker - and a little about him
Allan May Vice Chair, Angel Resource Institute Chair, Life Science Angels
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• What We Used to Believe
• What We Now Know
• The Lean Startup
• Commercialization Insights
• Technology Readiness Level
• Investment Readiness Level
Lean May Save Your Life: Lean Launchpad/NSF I-Corps
What We Used to Believe
Search vs. Execution
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Startups are Smaller Versions of Large
Companies
Start With an Operating Plan
and Financial Model
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21 Years Executing the Plan
Actual Photo of What Happened
When My Plan Had
First Contact With Customers
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No Business Plan survives first contact
with customers
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What We Used to Believe
All I Need is the 5-Year Forecast
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VC’s and the
Soviet Union
are the only
people to require
5-Year Plans
What We Now Know
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Startups Are Not Smaller Versions of Large
Companies
Startups Are Not Smaller Versions of Large
CompaniesLarge Companies Execute
Known Business Models
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Startups Are Not Smaller Versions of Large
CompaniesStartups Search for Unknown
Business Models
What’s A Startup?
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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
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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
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Startups Fail Because They Confuse Search with
Execute
Startups need their own tools, different from those
used in existing companies
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Startups need their own tools, different from those
used in existing companies
The Lean Startup
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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
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1. Frame Hypotheses
• Frame Hypotheses
1. Frame Hypotheses
• Frame Hypotheses Business Model Canvas
Customers
Revenue
Partners
Activities
Resources
Costs
Channel
Get/Keep/GrowProduct /
Service
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2. Test Hypotheses
• Frame Hypotheses
• Test Hypotheses
Business Model Canvas
2. Test Hypotheses
• Frame Hypotheses
• Test Hypotheses
Business Model
Customer Development
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3. Build Incrementally & Iteratively
• Frame Hypotheses
• Test Hypotheses
• Build the product incrementally & Iteratively
Business Model
Customer Development
Agile Engineering
Insight Life Science/Health Care
Commercialization in the 21st
Century
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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
Technology Development Process
Regulatory
financing
Project Management
Product Development
IntellectualProperty
BusinessDevelopment
Current Thinking about Translational Medicine
Mentors
Use Outside Consultants
License Startup
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Add Evidence-based
Commercialization
Inward-facing
Add Evidence-based Commercialization
Reimbursement
Partners
Customers (users, payers, etc.)
Commercialization Development
Process
Value Propositio
n
Intellectual Property
Inward-facing
Regulation
Add a parallel Outward-Facing
Commercialization Process
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Add Evidence-based Commercialization
Reimbursement
Partners
Customers (users, payers, etc.)
Commercialization Development
Process
Value Proposition
Intellectual Property
Inward-facing
Outward-facingBy the Founding Team
Regulation
physical space & equipment
seed $’s
MentorshipWorkshops/Webinars
Technology ProgressClinical Trials, etc.
CommercializationProgress
Accelerating Commercialization: – Requires Parallel Paths
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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
InsightCommercialization Evidence Requires
Outward Focus
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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
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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 MarketMust 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
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Download A Free Book!
By Giff Constable (Frank Rimkowski, Ed.)
http://www.talkingtohumans.com/
InsightWe Know How To Build
these Programs
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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
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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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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
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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
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Teams Present Results Weekly
Update Business Model Canvas Weekly
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Use Canvas As a Weekly Scorecard
Week 2
Week 1
Week 3
Insight100% Visibility on Progress
LaunchPad Central
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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
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Cohort
Leaderboard
Customer
Interviews
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Hypotheses
to Test
Invalidated
Hypotheses
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Weekly
Canvas
Updates
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NASA
NASA/DOD
Technology Readiness Level (TRL)
• Formal Way to assess project maturity
• Quantify Relative Risks
• Data Driven
• Adopted by NASA, DOD, FAA, ESA…
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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
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NASA/DOD Technology Readiness Levels 5 & 6
Demo Prototype • Breadboard validation outside the building• System demo in real-world
Research
Concept
Demo
NASA/DOD Technology Readiness Levels 7, 8, 9
Deployment• System Development• System deployed in real-world
Research
Concept
Demo
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Investment Readiness Level
We can do the same for
Commercialization/New
Venture Activities
Investment Readiness Level
Emphasis is on data
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Investment Readiness Level
• A Formal Way to Quantify Relative Risks
• Data Driven
• Analog to NASA/DOD
Technology Readiness Level (TRL)
DIAGNOSTICSThe Investment Readiness Level
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Diagnostics Investment Readiness Level
Example
First Pass Canvas
Product/Market Fit
Revenue Model/Reimbursement Est.
Left-side of the Canvas/IP Strategy
Minimum Viable Product/Regulatory
Reimbursement/IP/Regulatory/Costs Validated
Right-side of the Canvas/
Reimbursement/CPT Code
Clinical Trial/Technical Validation
THERAPEUTICSThe Investment Readiness Level
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Left-side of the Canvas: KOL network, IP review, partner due diligence
Define clinical problem & early customer data, CRO’s, IP check
Problem/Solution validation w/pharma/biotech, present indepth data
Business Case Defined, recruit talent gaps, select investors
High Fidelity MVP, customer partners highly engaged
Path to Revenues, OP Plan, on target activity, therapeutics effect & liabilities
Low Fidelity MVP, KOL’s, pre & Clinical Paths ID’d, tech validated
Product/Market Fit: timeline to pre & clinical data, cost & value at data pts
Right-side of the Canvas: present data to 5 customers, proof of relevance
Therapeutics Investment Readiness Level
Example
MEDICAL DEVICESThe Investment Readiness Level
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Existing reimbursement
Effective team?
Technical solution, data & MVP
Unit economics - Margin Validated
Targeted market rollout plan
Clear exit strategy
Medical Device Investment Readiness Level
Example
Compelling clinical need + substantial market
IP: Patentability, Freedom to Operate
Regulatory certainty/difficulty
DIGITAL HEALTHThe Investment Readiness Level
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Digital Health Investment Readiness Level
Example
First Pass Canvas
Low Fidelity MVP
Product/Market Fit
Left-side of the Canvas
Market Opportunity
High Fidelity MVP
Metrics That Matter
Right-side of the Canvas
Problem/Solution validation
Technology
Readiness Level
Problem/Solution
Hypotheses
Product/Market Fit
Validate Right side of Canvas
Validate Left side of Canvas
Metrics that Matter
Investment
Readiness Level
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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
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NSF Class Summary
• 400 teams
• 39,789 in-person customer interviews
• 15,432 hypotheses tested
• 3,735 Pivots
Conclusion
The Lean Startup is a much better way to build a business
1. Frame Hypothesis
2. Test Hypothesis
3. Build Incrementally and Iteratively
The emphasis is on data
Successful commercialization requires a startup to assess evidence based
1. Investment Readiness
(outward focus)
2. Technological Readiness (inward focus)
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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
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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
Executive Director
Angel Capital Association
Christopher Mirabile
Managing Director, Launchpad;
Vice Chair, Angel Capital
Association
http://www.angelcapitalassociation.org
/news-forbes/http://www.angelcapitalassociation.org/
news-inc/
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2015 ACA Summit
April 14-16, San Diego, CALeverage Our Decade
of Investing Expertise
ACA Annual Partners
• COME LEARN THE LATEST
INVESTING IDEAS
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MATTER
• PROGRAM HIGHLIGHTS
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REGISTER ONLINEwww.angelcapitalassociation.org/2015summit
ACA Members: $820 early bird, $895 after February 3
Non-Members: $1120 early bird, $1195 after February 3
Additional fees apply for programs on Tuesday, April 14
ACCOMMODATIONSA room block is reserved for Summit attendees at the
Marriott Marquis San Diego Marina, 333 West Harbor Drive, San
Diego, CA.
Act by March 27secure your discounted room ($229) or ($249).
Reservations can be made by calling the hotel at
619-234-1500 (reference “ACA”) or via the ACA Summit website.
Summit Keynoter Steve Blank
ACA Summit Sponsors
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