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BioTech Startup School@KU

BioTech Startup School@KU. Spring 2019 KUMC Introduction and Module 1. Welcome. Cory Berkland Distinguished Professor Pharmaceutical Chemistry. Wally Meyer Director Entrepreneurship Programs. Richard Barohn, MD Vice Chancellor for Research, KUMC; President, Research Institute;

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BioTech Startup School@KU

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  1. BioTech Startup School@KU Spring 2019 KUMC Introduction and Module 1

  2. Welcome Cory Berkland Distinguished Professor Pharmaceutical Chemistry Wally Meyer Director Entrepreneurship Programs Richard Barohn, MD Vice Chancellor for Research, KUMC; President, Research Institute; University Distinguished Professor Lisa Friis Professor, Biomedical Track Co-Director Steve Soper Foundation Distinguished Professor Tricia Bergman Director of Strategic Partnerships; Industry Liaison

  3. Sponsors

  4. Overview of SS@KU

  5. Project Introductions • In 30 seconds…. • Introduce yourself • Describe your project • Tell us who benefits from the project and why

  6. Why Are You Here? • Learn biomedical commercialization concepts • Develop your innovation • Want to impact patient care • Seeking funding for your project • Want to start a business • Network

  7. Course Deliverables • A business case for your innovation • A clear and concise value proposition • Intellectual property strategy • Identified regulatory considerations and pathway • Monetization strategy • A competitive and market analysis • A playbook for launching/developing projects • Network of expert mentors

  8. Module 1: Identifying Your Innovation’s Commercial Potential Purpose: The purpose of this is to provide you with a roadmap, a process of how to assess the commercial value of your innovation and how to validate its value via the Value Proposition and Customer Discovery Questions, as they occur to you, are invited to assure understanding.

  9. What Do You Need to Commercialize Your Innovation? • Stakeholders • Who have a problem* • A solution to that problem which is different/better than current solutions *Big problem = big commercialization opportunity

  10. How Do You Know if You Have a Commercializable Innovation? • Assess the market • Size • Trend • Barriers to Entry • Customer Discovery • Evidence a problem exists • Validate your solution is competitively superior • Pivot/iterate until both are aligned • Follow the commercialization process

  11. Let’s Begin with #3 to Gain Perspective:The Commercialization Process

  12. OK, Now #1: Assess the market • Size • Large, measured in $ spent annually or # users • Definable segments • Trend • Growing, significant YOY % (min +5%/year) • Barriers to Entry • No dominant competitor • Proprietary position available • Scalable

  13. Information Sources for #1 • KU Libraries • Electronic databases • Business reports, articles, publications • KU Librarians • ‘The usual suspects’: • US Census (helps to have an NAICS code for your industry); also pack a lunch (you’ll be in there awhile) • IBIS Worldwide, Statista, Hoovers, Trade Associations, Published Surveys (fees), plenty more

  14. How Do You Know if You Have a Commercializable Innovation? • Assess the market  • Size • Trend • Barriers to Entry • Customer Discovery • Evidence a problem exists • Validate your solution is competitively superior • Pivot/iterate until both are aligned • Follow the commercialization process

  15. 2. Customer Discovery • Historically: “Build it and they will come.” • Problem with historical approach: you don’t know if you’re wrong until you’re out of money (and out of business). • Low cost/risk solution: talk to those most likely to enable your success – customers • Big idea: get customer to validate/help you design product • Challenges: • You have to talk to customers • To talk to customers you have to leave the building/apartment/dorm • To have a productive talk, you must follow proven guidelines

  16. Why Customer Discovery isimportant… * Based on an analysis of 101 startup post-mortems Source: CBInsights www.statista.com/chart/11690/the-top-reasons-startups-fail/

  17. Your #1Goal: Don’t build something that no one caresabout

  18. Your #1Goal: Don’t build something that no one caresabout How to make sure you don’t build something no one cares about? Talk to the customers (and stakeholders).

  19. Customer Discovery Process • Validate the problem you’re addressing • Is a real problem? • Are there other, bigger problems? • How often does this problem occur? • How are you dealing with this problem now? • What do you like/dislike about your current solution?

  20. Customer Discovery Process • Validate the problem you’re addressing • Is it a real problem? • Are there other, bigger problems? • How often does this problem occur? • How are you dealing with this problem now? • What do you like/dislike about the current solution? • Validate the proposed solution • What if there was a solution that looked like this (concept)? • Would you buy/try/use it? • What do you like/dislike about it?

  21. Customer Discovery Process • The Customer Discovery Process evidences: • The existence of a significant and repeating problem • The fit between your solution and the problem, defined as the Value Proposition • Your solution must provide incremental value to the currently applied solution • A Value Proposition is: • An easily understood rationale for an innovation. • An answer to the question “why”? • Provides the rationale for the innovation • The Value Proposition begins as a hypothesis and the scientific method is used to validate, reject or modify the hypothesis via Customer Discovery

  22. For example…. Customers have a _________(problem)and your ________ (proposed solution)is better than the alternatives. The result: compellingvalue

  23. Customers have a problemand your proposed solutionis better than the alternatives resulting in compellingvalue This statement is testable and each element can beevaluated

  24. Let’s define some terms • Customer – the stakeholder(s) that make, or are primarily affected by, the decision to use, or not use, aninnovation – NOTE: not limited to transactional (paying)customers, can be deciders, influencers, or others with indirect purchase/usage control • Problem - the outcome or situation you seek to change; can also be framed as anopportunity • Solution – the proposed innovation that addresses the problem (oropportunity) • Value - the benefit of adopting the proposed change; includes both the magnitude of the benefit and why it is compelling vs. alternatives (ie: savings) Note: Customers buy value, not technology

  25. The value of an innovationis usually proportional to the size of the ”market” it affects • How many people canbenefit? • What is the economicscale? • Commercialization resources are typically prioritized toward innovations with relatively largemarkets • (Which is why we first looked at the market size, trends and barriers to entry)

  26. Remember, our hypothesis…. Customers have a problemand your proposed solutionis better than the alternatives resulting in compellingvalue Who? What?

  27. For Example: Insurance/ Payers Pharma Family& friends Specialists Hospital Admin Patient (customer) Physician

  28. While the customer buys the product (orservice) we also need to know: • Who consumes theproduct? • Who gets paid to use or sell theproduct? • Who benefits from theproduct? • Who gains competitive advantage with theproduct? • Who is threatened by theproduct? • Who regulates theproduct?

  29. We need to know: • End User • Influencer • Recommender • DecisionMaker • Payer • Potential saboteurs ? Stakeholders

  30. Always includes the transactional customer • But also consider those who can drive, or block, the adoption of a Solution • Consider other decision makers--especially those who will make, or lose, money based on thedecision • – Who pays for the product may not be the same as who uses it or recommends itsuse • Include advocates or regulators who can compel decisionmakers

  31. Stakeholder Motivation and Decision Power Must also be Considered

  32. OK, we’ve nailed “Customers”; now let’s look at Value Customershave a problemand the proposed solutionis better than the alternatives resulting in compellingvalue

  33. Every start-up must also present itself as a solid value proposition to threestrategic“customers”: • Grant Officers: provide early stage development funding • Licensees/Acquirers: big companies buy/licensesmall companies for commercial rights to innovations • Investors: buy stock, expecting it to grow in value • While enthusiasm from patients and physicians is essential, a start-up must also sell itself (vision, team, technology) to grantors, investors and/or acquirers in order to recruit neededfunding • Advances state of the art? • Provides benefit to end users? • Right fit with investors’ businessmodel? • Strategically interesting toacquirers?

  34. Value Examples to Potential Acquirers/Licensees • More Critical • Facing competitive pressure and needs a breakthrough to defend market share • Seeking to enter a new market and is looking to jump start their productline • Blocked by competitor’s IP and needs an innovationto avoid patentinfringement • LessCritical • Responding to customer demand, benefits primarilyfrom extra revenue

  35. Testing the Value Proposition Hypothesis: Continuous Customer Discovery Value Proposition Pivot • Customer • Problem • Solution • Value Customer Discovery Analyze Tip for startups: You should spend 99 hours on this for every hour you haggle over the name and logo for your new company Some other tips

  36. Customer Discovery Process • Likely outcomes: • Scenario A: • No One Cares • Problem you’re addressing isn’t a problem • Problem you’re addressing isn’t a big enough problem • Scenario B: • Lots of folks care • The problem is big, real and needing a new solution • Your solution ain’t the preferred solution • What to do: • Pivot: • Learn about the real problem and modify your innovation to suit • Listen to what the customer/stakeholders say about your solution, modify to suit • Be prepared to iterate: most new ventures undergo multiple pivots

  37. How to Conduct Customer Discovery (you’re lucky…most people pay a lot of money for this advice)

  38. Tip #1: Encourage NegativeFeedback • No one wants to tell you that your baby is ugly, so make it as easypossible • Ask directly for their views on what is incorrect orworrisome • Don’t expect to get the hardest truths from friends andcolleagues • This is the moment to discover the wholetruth • An opportunity to find out howugly! • There is still time to fix it • Your #1goal: • Don’t fix/buildsomething that no one cares about

  39. Tip #2: Ask the RightQuestions • If one asks the wrong questions then the answers do not matter …and yet they don’t like thefilm ✔ Were the actorsgood? ✔ Was the plotengaging? ✔ Does the genre appeal toyou? • ✔ Was the film made with high productionvalue? • Open ended questions can help to point you in the rightdirection: • Did you like the film?Why? • What could have made the filmbetter? • Seek to learn something new Buildsomething that customers want!

  40. Tip #2: Ask the RightQuestions • “Do you want to watch a greatmovie”? • Of course the answer is yes…what have youlearned? • Don’t presume that you know what a “great movie”is • “Is my script going to make for a greatmovie”? • Good, but it risks a Yes/Noanswer • “What makes a greatmovie”? • Even better question – it is openended! • “Why don’t you like currentmovies”? • “What are some of your favoritemovies”?

  41. Tip #3: Look for Your AchillesHeel(s) • “…a weakness in spite of overall strength, which can lead todownfall” • Might there be misalignment between the Customer, Solution, Problem orValue? • Do Customers really care about theProblem? • Will the Solution actually solve theProblem? • Is the Value worth the effort tochange? • Does the Customer like theSolution? • Example: achildren's’ film…that is ratedR

  42. How to GetInterviews

  43. How to Get Interviews • Seek help: • Friends & colleagues (but don’t stopthere!) • LinkedIn – individuals &groups • Conferences – lists of speakers, posters &attendees • Journals – authors andeditors • Patient advocacygroups • Direct contact works (“coldcall”) • Play the student/academic card if youcan!

  44. Keep goodrecords Review your notesASAP • Details fade fast • Capture your insights while still fresh • For later review by team members or prospective investors • Date: when was the interview? • Who: interviewees name • Title: who are they? • Contact Info: so others can follow up if necessary • Interviewer: who did this interview? • Format: in person, by phone, by email, etc. • Notes: what was asked, what they said, quotes, etc.

  45. Summary Points forCustomer Interviews Bad • Selling your product orservice • Notlistening • Dead end questions • Biased, confirmationquestions • Interrupting • Missed opportunities to dig deeper • Good • Listen, then listenmore • Encourage criticism • Use probingquestions • Why-why-why-why-why • Rephrase answers to confirm • Seek furtherintroductions

  46. Get out of thebuilding!(GenchiGembutsu!)

  47. What’sNext Research your market size, trends, barriers to entry Study the competition Capture your innovation in concept form Construct your Value Proposition Schedule your customer discovery interviews immediately Conduct your Customer Discovery Use the SS@KU Value Proposition form 48

  48. The Value Proposition

  49. What’sNext Research your market size, trends, barriers to entry Study the competition Capture your innovation in concept form Construct your Value Proposition Schedule your customer discovery interviews immediately Conduct your Customer Discovery Use the SS@KU Value Proposition form Rinse and repeat Ask for help: 50 wmeyerjr@ku.edu

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