MS&E 273 Technology Venture Formation Opportunity Assessment Session 2 Opportunity Assessment

Definition of Entrepreneurship “The Pursuit of Opportunity Without Regard to Resources Controlled” Howard Stevenson Harvard Business School

Opportunity Assessment How to Think About Opportunities

What’s an Opportunity? Product or service you build a profitable company around, resulting in a positive return to investors.

What's an Assessment? A quick way for you to evaluate whether your opportunity is worth spending years of time and money on

What are the questions that need to be answered? What is the need you are trying to satisfy? Clearly define the need you are trying to satisfy, who the customer is, what drives the need and any other customer criteria that may be important

What are the questions that need to be answered? What is the potential market size? Size up the primary market, know the growth projections and current incumbents’ shares of the market, determine share you can acquire and identify possible secondary or tertiary markets

What are the questions that need to be answered? What is your competitive advantage? Scope out the competitive landscape and identify your competitive advantages (IP, processing expertise, new marketing channel or innovative use of existing one, etc.)

What are the questions that need to be answered? What is your marketing/sales channel? Define how you will bring your product to market and identify major hurdles to distribution/sales with possible solutions

What are the questions that need to be answered? What is your business model (i.e., how are you making money)? Clearly define your revenue model and show that you can make money (and how much) with this model

What are the questions that need to be answered? What resources do you need to launch this business? Estimate the capital resources you will need to launch this business and in what timeframe you will need these resources

What are the questions that need to be answered? What are the major show-stoppers? Highlight the major hurdles with the business concept and put forward solid arguments as to why you think you can overcome these hurdles

MS&E 273 Technology Venture Formation How do we get started?

Idea/Opportunity Brainstorming All ideas/opportunities are welcome But you are Stanford Engineers - start with an engineering idea! There are no “dumb” ideas Go off on tangents Each idea gets deeply explored, tossed or morphed Analyze - strengths, weaknesses, opportunities, threats

Have We Answered These? What is the need you are trying to satisfy? What is the potential market size? What is your competitive advantage? What is your marketing/sales channel? What is your business model (i.e., how are you making money)? What resources do you need to launch this business? What are the major show-stoppers?

Type of Venture Changes Everything InfoTech CleanTech MedTech Everything = market, customer, product, capital

InfoTech InfoTech It’s all about the Customer Market Trends Sales Channel Product Issues Capital Needs Software as service Cloud Computing Virtualization Mobility Low-cost service Viral propagation Direct/Indirect sales Embedded technology design wins Open source tools Cloud computing-scale Low-cost hardware Breakthrough technology $500K is the new $5M $50M or more InfoTech It’s all about the Customer

CleanTech CleanTech It’s all about Price and Regulations Market Trends Customer Adoption Product Issues Capital Needs Demand for energy rising faster than supply Global warming concern leading to carbon emissions regulation $6 trillion market VC shift to CleanTech Financial/tax incentives Renewable energy standards Carbon cap Not many off-the-shelf production tools Computational models inadequate – trial and error Production facilities often overseas Tens of millions Hundreds of millions CleanTech It’s all about Price and Regulations

MedTech/BioTech MedTech BioTech Incremental innovation - existing FDA and reimbursements codes Breakthrough innovation – new FDA and reimbursement codes and clinical trials Capital needs can vary dramatically – Tens of millions BioTech Discovered in science based research All drugs follow FDA Phase I, II, III, IV clinical trials Capital intensive – often over $100M MedTech It’s all about the FDA and Reimbursements BioTech It’s all about the Science

Get Started Now Form a Team Find an Idea Don’t Stop There

TA Announcements Enrollment forms due today – TAs will email 48 students and 12 on waitlist by midnight tonight Mandatory Mixer I on Wed Sep 23rd at 5PM outside of Treehouse (team formation) - you MUST come and sign the attendance sheet in order to secure a spot in the class Mandatory Mixer II on Thurs Sep 24th at 5PM outside of Treehouse – Send team name, team members (name & email), preferred mentor to TAs by 10pm on Thursday Sep 24th Team concept MUST be emailed to TAs no later than noon on Sep 28th We will assign mentors by midnight on the 28th with mentor introductions at the beginning of class next Tuesday (29th) – be sure to sit with your teammates in the next class Office hours -- sign-up on the teaching team website Faculty – Yang 278A & 278B, Tues 3-4PM Craig, Jia – will be posted on website shortly Slides, reading assignments & schedule will be posted online