A presentation by Steve Blank

1. Demolishing the Status Quo in
Entrepreneurial Education

2. I Write a Blog
www.steveblank.com

3. This Talk is Based On
Business Model Generation
Four Steps to the Epiphany
The Lean Startup

4. This Talk
• What’s a Startup?
• Search versus Execution
• Entrepreneurship As a Mgmt Science
• B-Schools = Large company mgmt
• Incubators = the transition
• E-School = the conclusion

5. First -
What’s A Startup?
Six Types of Startups

6. Lifestyle Startups
Work to Live their Passion
Startup
• Serve known customer with
known product
• Pay for their passion

7. Small Business Startups
Work to Feed the Family
Small
Startup
Business
• Serve known customer with
known product
• Feed the family

8. Small Business Startups
Work to Feed the Family
Small
Startup
Business
Exit Criteria
• known customer - Business Model found
known product
- Profitable business
• Feed the family
- Existing team
< €100K in revenue

9. Small Business Startups
Small
Startup
Business
- Business Model found
- Profitable business
- Existing team
< $10M in revenue
• 5.7 million small businesses in the U.S. <500 employees
• 99.7% of all companies
• ~ 50% of total U.S. workers
http://www.sba.gov/advo/stats/sbfaq.pdf

10. Scalable Startup
Search
Scalable Large
Startup Company
Goal is to solve for:
unknown customer and
unknown features

11. Scalable Startup
Born to Be Big
Search Execute
Scalable Large
Startup Company
Exit Criteria
- Business model found
- Total Available Market > €300m
- Can grow to €50/year

12. Scalable Startup
Search Execute
Scalable Large
Startup Company
- Total Available Market > $500m
- Company can grow to $100m/year
- Business model found
- Focused on execution and process
- Typically requires “risk capital”
• In contrast a scalable startup is designed to grow big
• Typically needs risk capital
• What Silicon Valley means when they say “Startup”

13. The Transition – Founders Leave
Scalable Large
Transition
Startup Company
Search Build Execute
Founders depart
- Operating executives
- Professional Mgmt
- Process
- Beginning of scale

14. Buyable Startup
Born to Be Big
Search Sell
Scalable €3 to 30M
Startup Acquisition
Goal is to solve for:
Internet, Mobile, Gaming Apps

15. Buyable Startup
Search Sell
Scalable €3 to e0M
Startup Acquisition
Goal is to solve for: Sell to larger company
Internet and Mobile Apps

16. What’s A Startup?
Search Execute
Scalable Large
Startup Company
-Business Model found
- i.e. Product/Market fit
- Repeatable sales model
- Managers hired
A Startup is a temporary organization used to search
for a repeatable and scalable business model

17. Large Company Sustaining Innovation
Innovate or Evaporate
Sustaining Innovation
Scalable Large
Transition
Startup Company
• Existing Market / Known customer
•Known product feature needs

18. Large Company Disruptive Innovation
New Large
Transition
Division Company
Disruptive Innovation
•New Market
•New tech, customers, channels

19. Large Company Disruptive Innovation
New Large
Transition
Division Company
Disruptive Innovation
•Build
•Acquire
- IP
- Talent
- Product
- Customers
- Business

20. Social Entrepreneurship Startups
Social Large
Startup Non-Profit
• Solve pressing social problems
• Social Enterprise: Profitable
• Social Innovation: New Strategies

21. Each of these startups
require different skills
They Can Not Be Taught the Same Way

22. Search Versus Execution
Why Accountants Don’t Run Startups

23. Startups Search and Pivot
The Search for the Business Model
Scalable Large
Transition
Startup Company
Business Model found
- customer needs/product features found
i.e. Product/Market fit
-Found by founders, not employees
- Repeatable sales model
- Managers hired

24. Startups Search, Companies Execute
The Search for the Business Model The Execution of the Business Model
Scalable Large
Transition
Startup Company
-Business Model found - Cash-flow breakeven
- Product/Market fit - Profitable
- Repeatable sales model
- Managers hired
- Rapid scale
- New Senior Mgmt
~ 150 people

25. Metrics Versus Accounting
The Execution of the Business Model
Scalable Large
Transition
Startup Company
Traditional Accounting
-Balance Sheet
- Cash Flow Statement
- Income Statement

26. Metrics Versus Accounting
The Search for the Business Model The Execution of the Business Model
Scalable Large
Transition
Startup Company
Startup Metrics
- Customer Acquisition Cost Traditional Accounting
- Balance Sheet
- Viral coefficient - Cash Flow Statement
- Customer Lifetime Value - Income Statement
- Average Selling Price/Order Size
- Monthly burn rate
- etc.

27. Customer Validation Versus Sales
The Execution of the Business Model
Scalable Large
Transition
Startup Company
Sales
-Sales Organization
- Scalable
- Price List/Data Sheets
- Revenue Plan

28. Customer Validation Versus Sales
The Search for the Business Model The Execution of the Business Model
Scalable Large
Transition
Startup Company
Customer Validation
- Early Adopters Sales
- Sales Organization
- Pricing/Feature unstable - Scalable
- Not yet repeatable - Price List/Data Sheets
-“One-off’s” - Revenue Plan
- Done by founders

29. Customer Development Versus
Product Management
The Execution of the Business Model
Scalable Large
Transition
Startup Company
Product Management
- Delivers MRD’s
- Feature Spec’s
- Competitive Analysis
- Prod Mgmt driven

30. Customer Development Versus
Product Management
The Search for the Business Model The Execution of the Business Model
Scalable Large
Transition
Startup Company
Customer Development Product Management
- Delivers MRD’s
- Hypothesis Testing - Feature Spec’s
- Minimum Feature Set - Competitive Analysis
- Pivots
- Founder-driven

31. Engineering Versus
Agile Development
The Execution of the Business Model
Scalable Large
Transition
Startup Company
Engineering
- Requirements Docs.
- Waterfall Development
- QA
- Tech Pubs

32. Engineering Versus
Agile Development
The Search for the Business Model The Execution of the Business Model
Scalable Large
Transition
Startup Company
Agile Development Engineering
- Requirements Docs.
- Continuous Deployment - Waterfall Development
- Continuous Learning - QA
- Self Organizing Teams - Tech Pubs
- Minimum Feature Set
- Pivots

33. Startups Model, Companies Plan
The Execution of the Business Model
Scalable Large
Transition
Startup Company
Business Plan
-Plan describes “knowns”
- Known features for line extensions
- Known customers/markets
- Known business model

34. Startups Model, Companies Plan
The Search for the Business Model The Execution of the Business Model
Scalable Large
Transition
Startup Company
Business Model -Plan describes “knowns”
- Known features for line extensions
- Unknown customer needs - Known customers/markets
- Unknown feature set - Known business model
- Unknown business model
- Model found by iteration

35. Startups Are Not Small Versions of
Large Companies
Scalable Large
Transition
Startup Company
Search Build Execute
Yet our curriculums assume they are –
we teach that the knowledge is interchangeable

36. Entrepreneurship as a
Management Science
E-School instead of B-School

37. Business as a Management Science
• 1601 East India Company
• 300 years of companies
without MBA credentials
•1908 Harvard first MBA

38. Business School Topics
Business School
Scalable Large
Transition
Startup Company
-Execution
- Strategy
- Accounting
- Products
- Engineering
- Management
-Administration

39. Business School Courses
Business School
Scalable Large
Transition
Startup Company
Courses
-Managerial Finance/Accounting
- Managing Groups and Teams
- Financial Accounting
- Operations
- Modeling for Optimization
- Global Value Chain Strategies

40. B-School Results?
• U.S. corporations went from local to national
then international
•Cadre of experienced managers to match
• Experts on finance and growth (Dupont/GM)
B-Schools made the 20th Century
the American business century

41. Business School Focus on
Large Company Strategies
Execution versus Search

42. Business School Limitations
•Most Professors consult for large corporations
• Most believe startups are just smaller versions of
large companies
• Most B-school entrepreneurship programs are
side-shows

43. Irony:
21st Century Job Growth will Come
from New Ventures

44. Incubators
a Reaction to the lack of Practical
University Entrepreneurship
• 1959 Josephy Mancuso - Batavia Industrial Ctr.
• 1996 IdeaLab
•2005 Y-Combinator
•2011 100+ Incubators world-wide

45. Startup Incubators
•Hands-on (experience vs. theory)
• Goal: create a company and jobs
• Full-time residential, stipend-based program
• Curriculum: product development + best practices

46. What’s Missing?
A Repeatable Methodology
Not Just War Stories

47. Startups Are Not Smaller Versions
of Large Companies
Large Companies Execute Known
Business Models

48. Startups Are Not Smaller Versions
of Large Companies
Startups Search for Unknown
Business Models

49. E-School
•Complete curriculum with Hands-on emphasis
• Goal: methodology for startup creation
• Can be taught anywhere
- University
- Incubator
- Remotely
• Curriculum: about the search for a business model

50. The Business Model:
Any company can be described in
9 building blocks

51. CUSTOMER SEGMENTS
which customers and users are you serving?
which jobs do they really want to get done?

52. VALUE PROPOSITIONS
what are you offering them? what is that
getting done for them? do they care?

53. CHANNELS
how does each customer segment want to be
reached? through which interaction points?

54. CUSTOMER RELATIONSHIPS
what relationships are you establishing with each
segment? personal? automated? acquisitive? retentive?

55. REVENUE STREAMS
what are customers really willing to pay for? how?
are you generating transactional or recurring revenues?

56. KEY RESOURCES
which resources underpin your business model?
which assets are essential?

57. KEY ACTIVITIES
which activities do you need to perform well in
your business model? what is crucial?
57

58. KEY PARTNERS
which partners and suppliers leverage your model?
who do you need to rely on?

59. COST STRUCTURE
what is the resulting cost structure?
which key elements drive your costs?

60. key value customer
activities proposition relationships
key customer
partners segments
cost revenue
structure key streams
resources channels
60
images by JAM

61. sketch out your
business model

62. sketch out your
business models

63. But,
Realize They’re Hypotheses

64. 9 Guesses
Guess
Guess Guess
Guess
Guess
Guess Guess
Guess Guess

65. Customer Development
The founders
^Get Out of the Building

66. Customer Development
The Search For the Business Model
Customer Customer Customer Company
Discovery Validation Creation Building
Pivot

67. Customer Discovery
Customer Customer Customer Company
Discovery Validation Creation Building
• Stop selling, start listening
• Test your hypotheses
• Continuous Discovery
• Done by founders

68. Turning Hypotheses to Facts
Test Hypotheses:
•Product
• Market Type
• Competition

69. Test
Hypotheses:
•Problem
• Customer
• User
• Payer

70. Test Hypotheses:
•Channel

71. Test
Hypotheses Test
Test : Hypothese
Test Hypotheses: •Demand s:
Hypothese •Product Creation •Problem
s: • Market •
•Channel Type Customer
• • Test • User
(Customer Competitive Hypotheses: • Payer
) •Channel
• Test Hypotheses: Test Hypotheses:
(Problem) •Size of •Pricing Model /
Opportunity/Market Pricing

72. Test
Agile Hypotheses Test
Test : Hypothese
Test Developme
Hypotheses: •Demand s:
nt
Hypothese •Product Creation •Problem
s: • Market •
•Channel Customer Type Customer
• Developme • Test • User
(Customer nt Team Competitive Hypotheses: • Payer
) •Channel
• Test Hypotheses: Test Hypotheses:
(Problem) •Size of •Pricing Model /
Opportunity/Market Pricing

73. The Minimum Viable Product (MVP)
• Smallest feature set that gets you the most …
- orders, learning, feedback, failure…

74. The Pivot
•The heart of Customer Development
•Iteration without crisis
•Fast, agile and opportunistic

75. Pivot Cycle Time Matters
•Speed of cycle minimizes cash needs
•Minimum feature set speeds up cycle time
• Near instantaneous customer feedback
drives feature set

76. The Pivot
A Pivot is the change of one or more
Business Model Canvas Components

77. The Pivot
Product Strong clinical
Development Doctors: data
IP Earlier Training
Leading doctors A Pivot is the change of one or more
Clinical trials
FDA
detection Maintenance
Conferences
Key Opinion Price OB/GYNs
Leaders
Business Model Canvas Components PCPs
Publishing Accuracy CME courses
3rd party
manufacturers Patients:
Distributors Radiation Free
Breast Cancer Non-Invasive
IP Direct Sales to
Foundations hospitals
Leading doctors
ACOG Distributor
Technical
ACS
Expertise
Product Development
Clinical trials Capital Equipment Sales
Operating Costs and disposable item
Marketing Costs Per use fees

78. How Does This Really Work?
Stanford Lean LaunchPad Class

79. How Does This Really Work?
Stanford Lean LaunchPad Class
8 Weeks From an Idea to a Business

80. Pivot Example
Robotic Weeding
Talked 75 Customers in 8 Weeks

81. Our initial plan

82. 20 interviews, 6 site visits…
We got OUR Boots dirty
Weeding
Visited two farms in Salinas Valley to better understand problem
Interviewed:
• Bolthouse Farms, Large Agri-Industry in Bakersfield
• White Farms, Large Peanut farmer in Georgia
• REFCO Farms, large grower in Salinas Valley
• Rincon Farms, large grower in Salinas Valley
• Small Organic Corn/Soy grower in Nebraska
• Heirloom Organics, small owner/operator, Santa Cruz Mts
• Two small organic farmers at farmers market
• Ag Services of Salinas, Fertilizer applicator
Mowing
Interviewed:
• Golf: Stanford Golf course
• Parks: Stanford Grounds Supervisor, head of maintenance and
lead operator (has crew of 6)
• Toro dealer (large mower manufacturer)
• User of back-yard mowing system
• Maintenance Services for City of Los Altos
• Colony Landscaping (Mowing service for stadiums)

83. Business Plan
Autonomous Vehicles for Mowing & Weeding
- Innovation Dealers sell, Mowing
- Dealers - Customer We reduce installs and - Owners of
(Mowing and Education operating cost supports customer public or
Ag) - Dealer training - Labor reduction commercially
- Vehicle OEMs - Better Co. trains dealers, used green
(John Deere, utilization of supports dealers spaces (e.g. golf
Toro, Jacobsen, assets (eg mow or courses)
etc) weed at nights) - Landscaping
Engineers on - Improved - Mowing
service provider
- Research labs Autonomous performance (less Dealers
vehicles, GPS, rework, food - Ag Dealers Weeding
path-planning safety) - Farmers with
manual weeding
operations
Dealer discount Asset sale
COGS seek a 50-60% Gross Margin Our revenue stream derives from selling the
Heavy R&D investment equipment

84. Found weeding in organic crops is HUGE
problem; 50 - 75% of costs
Crews of 100s-1000
Back-breaking task
(Ilegal) labor harder to get
1-5 weedings per year/field
$250-3,500 per acre and
increasing
Food contamination risk

85. Decision to make – mowing vs weeding
Application If ROI is < 1 Labor costs Autonomous TAM
yr they will significant? would solve
buy problem?
Mowing of Yes. Yes Yes Adjusted up to
Professionally xxx
large fields run
organizations
Weeding in Agri Industry: YES! for TAM increased
YES! organic crops Not necessarily to $2.6 B (Total
Agriculture organic)
Large They are Key need is
Growers: Yes spending weed vs. crop Target Market
$500/ac! differentiation (organic
Small specialty)
Growers: No 162 M/yr
18%/yr growth

86. Autonomous vehiclesWEEDING
- Innovation Dealers sell, - Low density
- Ag Dealers - Customer We reduce installs and vegetable
- Ag Service Education operating cost supports customer growers
providers - Dealer training - Labor reduction - High density
(100 to 1) Co. trains dealers, vegetable
- Research labs - Reduced risk of supports dealers growers
contamination - Thinning
- Mitigate labor operations
Engineers on availability - Ag Dealers
- Conventional
Machine Vision concerns - Ag Service
vegetables
Two problems: providers
- Identification
- Elimination
Dealer discount Asset sale
COGS seek a 50-60% Gross Margin Our revenue stream derives from selling the
Heavy R&D investment equipment

87. 1 Week – 1 CarrotBot

88. CARROTBOT
 Machine Vision data
collection platform
 Monochrome & Color
Cameras
 Laser-line sweep
(depth measurement)
 Encoders CarrotBot 1.0
(position/velocity)
 Onboard data
acquisition & power

89. The Business Plan Canvas Updated
•Technology •Farming
Design conventions.
•Marketing •Demo, demo,
•Demo and and demo!!
customer •Cost •Proximity is •Organic
•Research Labs feedback paramount Farmers
Reduction
•Equipment •Weeding
•Remove labor
Manufacturers Service
force pains
•Distribution Providers
•Eliminate bio-
Network •Conventional
waste hazards
•Service •IP – Patents Farmers
Providers •Video •Dealers
Classifier Files •Direct Service
•Robust •Indirect Service
Technology • … then Dealers
•Asset Sale
Value-Driven •Direct Service with
equipment rental
•… then Asset Sale

90. Visit Highlights
Above: Organic Carrots, 7wks.
Top right: Conventional carrots
Bottom Right: Very weedy. Will require
multiple passes of hand weeding

91. Visit Highlights
Carrot vs. Weeds
Due to small root systems, carrots have no chance against weeds

92. Visit Highlights
Organic Broccoli, closely
cultivated. Weeds close
to plants are hand-

93. Visit Highlights
State of the Art in Weeding Technology

94. Customer Hypothesis
Pre- Large
Test Growers
Us Dealer
Industrial
Growers
Industrial Hypothesis Confirmed
• Growers interested in own equipment
Growers • Industrial (10,000s of acres)
Post- • Large (1,000s of acres)
Large • Willing to pay $100k for one
Test Growers unit
Us Dealer
Service • Smaller growers (100s of acres)
Providers usually subcontract the labor services
or rent equipment
Equipment
Rental • All purchases through local dealers
•Customer service is essential

95. Customer Map #1 – Industrial Growers
Example: Bolthouse Farms – Large Industrial Carrot
Producer – 8K acres/yr
End User • Equipment
Operator
Influencer • Local Farm Mgr
• Cliff Kirkpatrick,
visited
Recommender • Director, Ag Equipment
Technology Operator
• Justin Grove,
interviewed
Decision
Maker • VP, Growing
Operations
Approver • CFO, CEO (Jeff
Dunn)
Cliff, Farm Mgr

96. Customer Map #2 – Service Providers
Example: Ag Services – Service Provider, Salinas
Valley
End User • Equipment
Operator
Influencer • Grower
Recommender • Service Mgr
Me (left), Marty (middle, Service
Mgr), Doug (right, Grower)
Decision Maker
& Approver
• ?? (service mgr’s
boss)

97. The Business Plan Canvas Updated
•Technology •Farming
Design conventions.
•Marketing •Demo, demo, •Mid/Large
•Demo and and demo!! Organic Farmers
customer •Cost •Proximity is •Agricultural
•Research Labs feedback paramount
Reduction corporations
•Equipment
•Remove labor •Weeding Service
Manufacturers
force pains Providers
•Distribution
•Eliminate bio-
Network
•Service •IP – Patents
waste hazards •Mid/Large
Providers •Video •Direct Service Conventional
Classifier Files •Indirect Service Farmers
•Robust • … then Dealers
Technology
•Direct Service with
equipment rental
Value-Driven •($1,500/d; 120d/yr )
•Low density: $1,500/d
•High density: $6,000/d

98. World Ag Expo interviews:
the need is real and wide spread
• 10+ interviews at show
– Everyone confirmed the need
– Robocrop, UK based, crude
competitor sells for $171 K
• Revenue Stream
– Mid to small growers prefer a
service
– Large growers prefer to buy, but
OK with service until technology
is proven
– Charging for labor cost saved is
OK, as we provide other benefits
(food safety, labor availability)

99. The Business Plan Canvas Updated
•Technology •Farming
Design conventions.
•Marketing •Demo, demo, •Mid/Large
•Research Labs •Demo and and demo!! Organic Farmers
•Equipment customer •Cost •Proximity is •Agricultural
Manufacturer feedback Reduction paramount corporations
•Distribution •Remove labor •Weeding Service
Network force pains Providers
•Service •Eliminate bio-
Providers
•IP – Patents
waste hazards •Mid/Large
•2 or 3 Key
•Video •Direct Service Conventional
Farms
Classifier Files •Indirect Service Farmers
•Robust • … then Dealers
Technology
Value-Driven •Direct Service with
• R&D equipment rental
• Bill of Materials •Low density: $1,500/d
• Training & Service •High density: $6,000/d
• Sales

100. Autonomous weeding - Final
- Innovation Direct - Low density
- Ag Service - Customer We reduce - Provide high vegetable
providers Education operating cost quality service at growers
- Dealer training - Labor reduction competitive price - High density
- Research (100 to 1) vegetable
Institutes (eg UC - Reduced risk of growers
Davis, Laser contamination - Thinning
Zentrum - Mitigate labor operations
Hannover) Engineers on availability Direct
- Conventional
Machine Vision concerns - Alliance with
vegetables
- 3-4 key farms Two problems: service providers
- Identification - Eventually sell
- Elimination through dealers
Costs for service provision Service provision
COGS seek a 50-60% Gross Margin - Charge by the acre with modifier according to
Heavy R&D investment weed density
- Eventually move to asset sale

101. MammOptics
Final project presentation for E 245 Winter 2011

102. MammOptics
Initial Idea
Breast cancer Mammography
Leading cause of cancer in women 15%-25% false negatives rate
190,000 diagnosis every year US 25% false positives rate
41,000 deaths every year US Requires X-ray radiation
Increasing diagnosis rates Low resolution
MammOptics
Novel technology based on
RF-modulated optical
spectroscopy
- Earlier
detection
- Non-
radiative

103. MammOptics
Technology Comparison
Invasivenes False False Device Time
Risk Resolution
s Pos. Neg. Cost Required
MammOptics I.I.T.Y.I.W.H.T.K.Y
Mammography High High .6 cm 25% 30% 20-50k 20 min.
MRI Medium Medium .1 cm 70% 5% 1000k 45 min.
Ultra-Sound Very Low Very Low >.6 cm >30% >40% 5-15k 20 min.

104. MammOptics
Business Model Canvas 1 of 4
Product Strong clinical
Development data
IP Training
Hospitals
Clinical trials Maintenance
Leading doctors Pioneering
FDA Radiation-free
3rd party radiologists in
Earlier detection
manufacturers hospitals
Non-invasive
Distributors
IP
Leading doctors Direct sales to
Technical hospitals
Expertise
Product Development
Clinical trials
Capital equipment sales
Operating Costs
and disposable item

105. MammOptics
Business Model Canvas 1 1 of 4
Business Model Canvas of 4
Product Strong clinical
Development data
IP Training
Hospitals
Clinical trials Maintenance
Leading doctors Pioneering
FDA Radiation-free
3rd party radiologists in
Earlier detection
manufacturers hospitals
Non-invasive
Distributors
IP
Leading doctors Direct sales to
Technical hospitals
Expertise
Product Development
Clinical trials
Capital equipment sales
Operating Costs
and disposable item

106. Finding the right customer
From radiologists to gynecologists

107. MammOptics
Excursions into hospitals
Debra Ikeda
Leading Jason Davies
doctors Jafi Alissa Lipson
Sunita Pal
6 women >40
Patients
8 women <40
Alicia X-ray
Technicians
mammography
Hospital Paul Billings
Managers Holly V. Gautier

108. MammOptics
Hospital purchasing decision tree

109. MammOptics
Hospital purchasing decision tree

110. MammOptics
Private practice purchasing decision tree

111. MammOptics
Private practice purchasing decision tree

112. MammOptics
Business Model Canvas 2 of 4
Product Doctors: Strong clinical
Development Earlier data
Hospitals (Capital IP detection Training
Spending Clinical trials Price Maintenance Pioneering
Committee) FDA Accuracy Doctors
Leading doctors Hospitals
3rd party Patients: OB/GYNs
manufacturers Radiation Free PCPs
Distributors Non-Invasive
IP Direct Sales to
Research doctors
Leading doctors
Hospitals
Technical
Expertise
Product Development
Clinical trials Capital Equipment Sales
Operating Costs and disposable item

113. MammOptics
Business Model Canvas 2 of 4
Product Doctors: Strong clinical
Development Earlier data
Hospitals (Capital IP detection Training
Spending Clinical trials Price Maintenance Pioneering
Committee) FDA Accuracy Doctors
Leading doctors Hospitals
3rd party Patients: OB/GYNs
manufacturers Radiation Free PCPs
Distributors Non-Invasive
IP Direct Sales to
Research doctors
Leading doctors
Hospitals
Technical
Expertise
Product Development
Clinical trials Capital Equipment Sales
Operating Costs and disposable item

114. Getting to our customer
he world of direct sales and medical marketing

115. MammOptics
Interviews
Breast Cancer Be Bright Pink
Advocacy Groups Jennifer Glover
Dr. Cindy Woo
OB/GYNs Dr. Jags Powers
Dr. Aaron
Shuvkan
Katrina Bell
Medical Sales Tanay Dudhela
Jed Hwang
FDA/Clinical Phyllis Whitely
Trials Carl Simpson

116. MammOptics
Marketing
Key Opinion
Leaders (KOLs)
American College
of Obstetricians
Medical Journals
and Gynecologists
(ACOG)
Market
Adoption
Breast Cancer Continuing
Advocacy Groups Medical Education
Conferences

117. MammOptics
Marketing
Strong influence on
doctors via ACOG Key Opinion Leaders
Standard of Care Strongly (KOLs)
American College influenced by
of Obstetricians
and Gynecologists KOLs Medical Journals
(ACOG)
Access to
ACOG by Market
former Adoption
member
American College
of Obstetricians Continuing
and Gynecologists Medical Education
(ACOG)
Conferences

118. MammOptics
Marketing Researchers
Researchers with strong
conducting peer
important Key Opinion Leaders
recommendati
clinical trials (KOLs)
Researchers ons
American College Outsourced
of Obstetricians with survey Journals
Medical
numerous
and Gynecologists
(ACOG) research
publications
Market
Adoption
American College
of Obstetricians Continuing
and Gynecologists Medical Education
(ACOG)
Conferences

119. MammOptics
Marketing
Focus on
Key Opinion Leaders prominent
(KOLs) Needtwo big
journals
publications
American College
of Obstetricians
Medical Journals
and Gynecologists
(ACOG)
Market Choose KOL as
Adoption Principal
Investigators (PI)
American College
of Obstetricians Continuing
and Gynecologists Medical Education
(ACOG)
Conferences

120. MammOptics
Marketing
Key Opinion Leaders
(KOLs)
American College
of Obstetricians
Medical Journals
and Gynecologists
(ACOG)
Effective
Market method for
Adoption educating
doctors
American College
of Obstetricians Workshop must Continuing
and Gynecologists Medical Education
(ACOG) be approved by
ACOG
Doctors
Conferences
required to Taught by
attend objective
workshops medical

121. MammOptics
Marketing
Key Opinion Leaders
(KOLs)
American College
of Obstetricians
Medical Journals
and Gynecologists
(ACOG)
Market
Adoption
American College
of Obstetricians Continuing
ACOG Education
and Gynecologists Medical
(ACOG) Annual
Opportunity Clinical
for feedback Conferences Meeting
from doctors Miami Breast
Cancer
Conference

122. MammOptics
Marketing
Key Opinion Leaders
(KOLs)
American College
of Obstetricians
Medical Journals
and Gynecologists
(ACOG)
Trusted
information Market
source for Adoption
patients
Breast Cancer Continuing
Advocacy Groups Access to Medical Education
media
Critical opinion outlets
Conferences
leader for
technology
adoption

123. MammOptics
Channel Strategies and Costs
High value Direct Sales Individual
Individual
medical products Doctors
Doctors
(e.g. cardiovascular
stents) • Doctor education
• Direct feedback from
doctors
• Very expensive
Commodity Purchasing
Purchasing
Distributors Administrators
Administrators
medical products
(e.g. latex gloves)
• No doctor
education
• No customer
feedback
• Inexpensive

124. MammOptics
Channel Strategies and Costs
Sales strategy 1 Sales strategy 2
5 dedicated sales people Continue with core
$150,000 each/year group of sales
people
Hire nurses or technicians
with established Use women’s
relationships healthcare
equipment
Early adopter feedback distributor
Already established
network of
customers

125. MammOptics
Pricing Strategy
Equipment Lease model Per-use Consumable
model
Cost of the
$50,000 $5,000 $5,000 $25,000
device
Service per $3,000 $10,000 0 0
year
Per-use fee 0 0 $50 0
Consumable 0 0 0 $20

126. MammOptics
Pricing Strategy
Equipment Lease model Per-use Consumable
model
Cost of the
$50,000 $5,000 $5,000 $25,000
device
Service per $3,000 $10,000 0 0
year
Per-use fee 0 0 $50 0
Consumable 0 0 0 $20

127. MammOptics
Customer Workflow
Current market Insurance
Mammography Radiologist
Technician Hospital
Administration
ACOG Doctor
ACS specialty
committee

128. MammOptics
Customer Workflow
Current market Insurance
But what would
happen if we
Mammography Radiologist
replace
mammography?
Technician Hospital
Administration
ACOG Doctor
ACS specialty
committee

129. MammOptics
Customer Workflow
Insurance
Mammography Radiologis
Breast Technicians Hospitals
t
Radiologists Loss of jobs Eliminates loss leader
Loss of jobs Puts emphasis on
biopsies
Technician Hospital
Administration
ACOG Doctor
ACS specialty
committee

130. MammOptics
Customer Workflow
Insurance
Mammography Radiologist
Technician Hospital
Administration
ACOG Doctor
ACS specialty
committee

131. MammOptics
Customer Workflow
Insurance
Mammography Radiologis
Insurance ACOG/ACS t
Same cost as mammography Improved healthcare
($140) (mammography weak technique)
Reduced number of biopsies
($1000) Technician Hospital
Administration
ACOG Doctor
ACS specialty
committee

132. MammOptics
Customer Workflow
Insurance
Mammography Radiologist
Technician Hospital
Administration
ACOG Doctor
ACS specialty
committee

133. MammOptics
Customer Workflow
Insurance
Patient PCP Mammography Radiologist
OB/GY
N
Technician Hospital
MammOptics Administration
ACOG Doctor
ACS specialty
committee

134. MammOptics
Customer Workflow
Insurance
Patient PCP Mammography Radiologis
PCP OB/GYNs OB/GY Patient MammOptics
t
N
Increased revenue Improved healthcare Revenue
More complete patient care Comfort
Technician Hospital
MammOptic Administration
s
ACOG Doctor
ACS specialty
committee

135. MammOptics
Customer Workflow
Insurance
Patient PCP Mammography Radiologist
OB/GY
N
Technician Hospital
MammOptics Administration
ACOG Doctor
ACS specialty
committee

136. MammOptics
Business Model Canvas 3 of 4
Product Strong clinical
Development Doctors: data
IP Earlier Training
Clinical trials detection Maintenance
Leading doctors FDA Conferences
Key Opinion Price OB/GYNs
Publishing Accuracy CME courses PCPs
Leaders
3rd party
manufacturers Patients:
Distributors Radiation Free
Breast Cancer Non-Invasive
IP Direct Sales to
Foundations hospitals
Leading doctors
ACOG Distributor
Technical
ACS
Expertise
Product Development
Clinical trials Capital Equipment Sales
Operating Costs and disposable item
Marketing Costs Per use fees

137. MammOptics
Business Model Canvas 3 of 4
Product Strong clinical
Development Doctors: data
IP Earlier Training
Clinical trials detection Maintenance
Leading doctors FDA Conferences
Key Opinion Price OB/GYNs
Reimburseme Accuracy CME courses PCPs
Leaders ntPublishing
3rd party
manufacturers Patients:
Distributors Radiation Free
Breast Cancer Non-Invasive
IP Direct Sales to
Foundations hospitals
Leading doctors
ACOG Distributor
Technical
ACS
Expertise
Product Development
Clinical trials Capital Equipment Sales
Operating Costs and disposable item
Marketing Costs Per use fees

138. Building the company
The backstage of a medical device company

139. MammOptics
Interviews
Stanford
FDA Clinical Trials StatisticsSteve
Axelrod
Marga Ortigas-
Wedekind
Manufacturing Nick Mourlas
Don
Archambault
Shannon Bergstedt
Reimbursement
Ali Habib
Venture
Dana Mead
Capitalists
Bill Starling
Doctors/Sales Dr. Aron
Shuftan
Jed Hwang

140. MammOptics
Partners
Manufacturing
Choose
manufacturing
facility close to
home

141. MammOptics
Partners
Manufacturing Reimbursement
Difficult to get
coverage for
new product.

142. MammOptics
Reimbursement Partners
Insurances
CPT Codes
$75-$150

143. MammOptics
Partners
Manufacturing Reimbursement
510K vs. PMA
Largest cost
Biggest
financial risk
FDA Clinical
Trials

144. MammOptics
Clinical Trials
Stage 1 Feasibility
Pilot trials Comparison
50 patients with
$600K mammograph
y
6 months
12/4/2009

145. MammOptics
Clinical Trials
Stage 2
Interim trials Prove superior
safety-efficacy
Stage 1 500 patients & sensitivity
Pilot trials $7.2M
6 months 15 months
12/4/2009

146. MammOptics
Clinical Trials
Stage 2
Interim trials
Stage 1 Stage 3 FDA class II,
Pilot trials FDA pivotal 510(K) w/ trials
trials Focus on
1500 patients superiority &
$20.5M economic end-
points
6 months 15 months 24 months
12/4/2009

147. MammOptics
Clinical Trials
Stage 4
Post-market
Stage 2
studies
Interim trials 2000 patients
Stage 1 Stage 3 $26.8M
Pilot trials FDA pivotal
trials Specific Cat III
CPT/ACP Codes
Market traction
6 months 15 months 24 months 24 months
12/4/2009

148. MammOptics
Clinical Trials
Stage 4
Post-market
Stage 2
studies
Interim trials
$26.8M
Stage 1 $7.2M Stage 3
Pilot trials FDA pivotal
trials
$600K
$20.5M
6 months 15 months 24 months 24 months
12/4/2009

149. MammOptics
Clinical Trials
12/4/2009

150. MammOptics
Partners
Manufacturing Reimbursement
Financial
timeline
Funding FDA Clinical
Trials

151. MammOptics
Financial / Operations Timeline
2012 2013 2014 2015 2016 2017 2018
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2/ IPO
M&A Q3
$40M
Series D $50 MM
Cash Reserve
$30M Series C
$30.5 MM $35 MM
$20M
$15M
Series B
$9 MM
$10M
Series A
$5M $3.5 MM
Initialize System
Financial Regulatory / Clinical Launch
Proof of Beta Marketable
Milestones
timeline
Second Release
Design
Concept Prototype Product
Beta-
Laborator Versio 1st 2nd Release
y n Release Test
Prototype Testin Test Publicatio
g Publicatio n
Milestones
n
Clinical
Pilot Clinical Post-Market Clinical
Studie US Interim Trials US Pivotal Clinical Results Studies
s Trials
Non-Specific Codes
Regulatory/ IP
Provision
IRB / Cat III FDA – Class II – 510 (k) Specific Codes
Milestones
al Patent
IDE CPT with Clinical Trials (Cat. I CPT / APC)
Applicatio
IC and Initial
n and
Technolog Processin Product
System
y g Patents Launch
Patents
Licensing 151 12/4/2009

152. MammOptics
Financial / Operations Timeline
2012 2013 2014 2015 2016 2017 2018
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
$40M
Cash Reserve
$30M
$20M
$15M
$10M
$5M
Initialize
Proof of
Milestones
Design
Concept
Milestones
Clinical
Provision
Regulatory/ IP
Milestones
al Patent
Technolog
y
Licensing 152 12/4/2009

153. MammOptics
Financial / Operations Timeline
2012 2013 2014 2015 2016 2017 2018
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
$40M
Cash Reserve
$30M
$20M
$15M
$10M
Series A
$5M $3.5 MM
Initialize System
Proof of Beta
Milestones
Design
Concept Prototype
Beta-
Laborator Versio
y n
Prototype Testin
g
Milestones
Clinical
Pilot
Studie
s
Regulatory/ IP
Provision
Milestones
al Patent
Technolog
y
Licensing
153 12/4/2009

154. MammOptics
Financial / Operations Timeline
2012 2013 2014 2015 2016 2017 2018
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
$40M
Cash Reserve
$30M
$20M
$15M
Series B
$9 MM
$10M
Series A
$5M $3.5 MM
System Regulatory / Clinical
Beta Marketable
Milestones
Design
Prototype Product
Beta-
Laborator Versio
y n
Prototype Testin
g
Milestones
Clinical
Pilot
Studie
s
Regulatory/ IP
IRB /
Milestones
IDE
Applicatio
IC and
n and
Processin
System
g Patents
Patents
154 12/4/2009

155. MammOptics
Financial / Operations Timeline
2012 2013 2014 2015 2016 2017 2018
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
$40M
Cash Reserve
$30M Series C
$20M
$30.5 MM
$15M
Series B
$9 MM
$10M
$5M
System Regulatory / Clinical
Milestones
Second Release
Design
1st
Release
Test
Publicatio
Milestones
n
Clinical
Pilot
Studie US Interim Trials US Pivotal Clinical
s Trials
Regulatory/ IP
IRB / Cat III
Milestones
IDE CPT
Applicatio
IC and
n and
Processin
System
g Patents
Patents
155

156. MammOptics
Financial / Operations Timeline
2012 2013 2014 2015 2016 2017 2018
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
$40M
Series D
Cash Reserve
$30M Series C
$30.5 MM $35 MM
$20M
$15M
$10M
$5M
Regulatory / Clinical Launch
Milestones
Second Release
Design
2nd Release
Test
Publicatio
Publicatio n
Milestones
n
Clinical
Clinical
US Interim Trials US Pivotal Clinical Results
Trials
Non-Specific Codes
Regulatory/ IP
FDA – Class II – 510 (k)
Milestones
with Clinical Trials
Initial
Product
Launch
156 12/4/2009

157. MammOptics
Financial / Operations Timeline
2012 2013 2014 2015 2016 2017 2018
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2/ IPO
M&A Q3
$40M
Series D $50 MM
Cash Reserve
$30M
$35 MM
$20M
$15M
$10M
$5M
Regulatory / Clinical Launch
Milestones
Design
Publicatio
n
Milestones
Clinical
Clinical Post-Market Clinical
Results Studies
Non-Specific Codes
Regulatory/ IP
FDA – Class II – 510 (k) Specific Codes
Milestones
with Clinical Trials (Cat. I CPT / APC)
Initial
Product
Launch
12/4/2009

158. MammOptics
Financial / Operations Timeline
2012 2013 2014 2015 2016 2017 2018
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2/ IPO
M&A Q3
$40M
Series D $50 MM
Cash Reserve
$30M Series C
$30.5 MM $35 MM
$20M
$15M
Series B
$9 MM
$10M
Series A
$5M $3.5 MM
Initialize System Regulatory / Clinical Launch
Proof of Beta Marketable
Milestones
Second Release
Design
Concept Prototype Product
Beta-
Laborator Versio 1st 2nd Release
y n Release Test
Prototype Testin Test Publicatio
g Publicatio n
Milestones
n
Clinical
Pilot Clinical Post-Market Clinical
Studie US Interim Trials US Pivotal Clinical Results Studies
s Trials
Non-Specific Codes
Regulatory/ IP
Provision
IRB / Cat III FDA – Class II – 510 (k) Specific Codes
Milestones
al Patent
IDE CPT with Clinical Trials (Cat. I CPT / APC)
Applicatio
IC and Initial
n and
Technolog Processin Product
System
y g Patents Launch
Patents
Licensing 158 12/4/2009

159. MammOptics
Business Model Canvas 4 of 4
Product Strong clinical
Development Doctors: data
IP Earlier Training
Clinical trials detection Maintenance
KOLs FDA Conferences
3rdparty Price OB/GYNs
Reimburseme Accuracy CME courses PCPs
manufacturers nt Publishing
Distributors Immediate
Breast Cancer Results
Foundations
ACOG Patients:
IP Radiation Free Direct Sales to
ACS hospitals
Leading doctors Non-Invasive
Clinical trial Distributor
Technical
designer Online
Expertise
Product Development
Clinical trials Per use fees
Operating Costs
Marketing Costs

160. MammOptics
Business Model Canvas 4 of 4
Product Strong clinical
Development data
IP Training
Clinical trials Maintenance
KOLs FDA Conferences
3rdparty Earlier detection OB/GYNs
Reimburseme Non invasive CME courses PCPs
manufacturers nt Publishing
Breast Cancer Price
Foundations Accuracy
ACOG Immediate Results
ACS Direct Sales to
IP
Clinical trial hospitals
Leading doctors
designer Distributor
Technical
Expertise Online
Product Development
Clinical trials Per use fees
Operating Costs
Marketing Costs

161. MammOptics
Business Model Canvas 1
Product Strong clinical
Development data
IP Training
Hospitals
Clinical trials Radiation-free Maintenance Pioneering
Leading doctors
FDA Earlier detection Doctors
3rd party
Non invasive Hospitals
manufacturers
Distributors
IP Direct Sales to
Leading doctors hospitals
Technical
Expertise
Product Development
Clinical trials Capital Equipment Sales
Operating Costs and disposable item

162. MammOptics
Business Model Canvas 2
Product Strong clinical
Development data
IP Training
Clinical trials Radiation-free Maintenance Pioneering
Hospitals
FDA Earlier detection Doctors
Leading doctors
Non invasive Hospitals
3rd party
manufacturers
Distributors
Research IP Direct Sales to
Hospitals Leading doctors hospitals
Technical
Expertise
Product Development
Clinical trials Capital Equipment Sales
Operating Costs and disposable item

163. MammOptics
Business Model Canvas 3
Product Doctors: Strong clinical
Development Earlier data
Hospitals (Capital IP detection Training
Spending Clinical trials Price Maintenance Pioneering
Committee) FDA Accuracy Doctors
Leading doctors Hospitals
3rd party Patients:
manufacturers Radiation Free
Distributors Non-Invasive
IP Direct Sales to
Research hospitals
Leading doctors
Hospitals
Technical
Expertise
Product Development
Clinical trials Capital Equipment Sales
Operating Costs and disposable item

164. MammOptics
Business Model Canvas 4
Product Doctors: Strong clinical
Development Earlier data
Hospitals (Capital IP detection Training
Spending Clinical trials Price Maintenance Pioneering
Committee) FDA Accuracy Doctors
Leading doctors Immediate Hospitals
3rd party Results OB/GYNs
manufacturers PCPs
Distributors Patients:
IP Radiation Free Direct Sales to
Research hospitals
Leading doctors Non-Invasive
Hospitals
Technical
Breast Cancer
Expertise
Foundations
Product Development
Clinical trials Capital Equipment Sales
Operating Costs and disposable item

165. MammOptics
Business Model Canvas 5
Product Strong clinical
Development Doctors: data
IP Earlier Training
Clinical trials detection Maintenance
Leading doctors FDA Conferences
Key Opinion Price OB/GYNs
Reimburseme Accuracy CME courses PCPs
Leaders ntPublishing
3rd party
manufacturers Patients:
Distributors Radiation Free
Breast Cancer Non-Invasive
IP Direct Sales to
Foundations hospitals
Leading doctors
ACOG Distributor
Technical
ACS
Expertise
Product Development
Clinical trials Capital Equipment Sales
Operating Costs and disposable item
Marketing Costs