1. NSF I-Corps The Lean LaunchPad Lecture 8: Resources, Activities & Costs Version 6/13/12

2. Key Activities What’s Most Important for the Business?

3. © 2012 Steve Blank

4. Key Resources What’s Are Your Most Important Assets?

6. Cost Structure What are the Costs and Expenses

7. © 2012 Steve Blank

8. Key Resources

9. Four Critical Resources Physical Financial Human Intellectual

10. Physical Resources company facilities –office space, company location product/services –supply of silicon wafers or iron ore, or thousands of feet of warehouse space? Many physical goods are capital intensive

11. Financial Resources Friends and Family Crowdfunding Angels Venture Capital Corporate partners Others: SBA or SBIR grants Lease-lines Factoring Vendor-financing

12. Human Resources qualified employees mentors, teachers, coaches, advisors

13. Mentors, Teachers, Coaches Mentors, teachers, coaches advance your personal career –If you want to learn a specific subject find a teacher –If you want to hone specific skills or reach an exact goal hire a coach –If you want to get smarter and better over your career find someone who cares about you enough to be a mentor

14. Advisors Advisors are people you need to help advance your company’s success –Founders fail when they believe their visions are facts –Listening to experienced advice can help you sort through whether your vision is a hallucination –Getting an advisory board (by expanding your circle of accumulated wisdom past their investors) is so important that it’s an explicit step in the Customer Development process

15. Qualified Employees/Culture Are the difference between a good idea that never went anywhere and a billion dollar firm

17. 16 MBA295F Customer Development in the High-Tech Enterprise Spring 2007

18. Executive Traits by Stage

22. Intellectual Property

23. Trademark protects branding & marks Trademark gives you the right to prevent others from using “confusingly similar” marks and logos Trademark protection lasts as long as you use the mark The more you use the mark, the stronger your protection Trademark registration is optional, but has significant advantages if approved Country by country

24. Copyright protects creative works of authorship Copyright gives right to prevent others from copying, distributing or making derivatives of your work –Protects “expressions” of ideas but does not protect the underlying ideas (Way) more than just technology: –songs, books, movies, photos, etc. Copyright protection lasts practically forever Copyright does not prevent independent development Registration is optional, but is required to sue for infringement

25. Trade Secrets Information that is kept secret and has economic value to the business Coke recipe, customer lists, product road maps. No registration required Can last for as long as you take reasonable steps to keep confidential

26. Contract Protection agreed to by contract No registration process You have whatever protection is defined in the contract (e.g., NDA gives you certain rights to protection of your confidential information) The protection lasts for the time period defined in the contract

27. Patents A government granted monopoly –prevents others from making, using or selling your invention –Even if the other’s infringement was innocent or accidental Invention must be non-obvious Protection lasts typically for 15-20 years Application and examination is required –Typical cost for application and exam is $10-30k –Typical time for application and exam is 1-4 years Must file in U.S. within one year of sale, offer for sale, public disclosure or public use Provisional application alternative

28. What Can be Patented? Just about anything... –Circuits, hardware –Software, applied algorithms –Formulas, designs –User interfaces – Applications, systems – Business processes (sometimes) But not these... –Scientific principles –Pure mathematical algorithms And, pending Supreme Court Case raises concerns regarding patentability of “methods” inventions

29. Costs Metrics that Matter

30. Search vs. Execution Metrics Existing companies execute plans Startups search for them Income Statement, Balance Sheet, etc areexecution documents You first need to derive the metrics that matter

31. Metrics That Matter Value proposition: product cost, mkt size/share, competition? Customer Relationships: customer acquisition costs, conversion rates, lifetime value? Market Type: revenue curves Operating Costs: basic operating costs of the business? Channel: Channel margin, promotion, shelf-space charges? Revenue Streams: average selling price, # of customers/year, achievable revenue? Burn Rate: per month? When will the company run out of cash?

32. Robotic Agriculture Resource, Activities Example

33. We’ve hit our first milestones Jun 2011 Dec 2011 Jun 2012 Mar 2013 First unit Seed Round Confidential Technology Track Customer Discovery Track Finance Track Post-processed Image recognition Prototype First unit Series A Customer trial and customer order Real-time image recognition Select 1 st target crop Friends and family round Applied for grants Testing agreement with top producer $125 K F&F $800 K Seed $3-5 M Series A

34. Medical Device Resource, Activities & Cost Example

35. $10M $15M 2012 Series A $3.5 MM Cash Reserve Clinical Milestones $5M Initialize Design Milestones Regulatory/ IP Milestones Q1Q2Q3Q4 2013 Q1Q2Q3Q4 2014 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 2015 2016 Series B $9 MM System 2017 Q1Q2Q1Q2Q3Q4 2018 Q3 Launch Series C $30.5 MM $30M $20M Regulatory / Clinical Series D $35 MM M&A / IPO $50 MM $40M 34 12/4/2009 Proof of Concept Pilot Studies IC and Processin g Patents Marketable Product Provisional Patent Beta- Version Testing Application and System Patents IRB / IDE Clinical Results Second Release Initial Product Launch Specific Codes (Cat. I CPT / APC) Non-Specific Codes 1 st Release Test 2 nd Release Test Publication Post-Market Clinical Studies Beta Prototype US Interim Trials FDA – Class II – 510 (k) with Clinical Trials Publication Financial / Operations Timeline Cat III CPT US Pivotal Clinical Trials Laboratory Prototype Technology Licensing MammOptics Financial timeline

36. $10M $15M 2012 Cash Reserve Clinical Milestones $5M Initialize Design Milestones Regulatory/ IP Milestones Q1Q2Q3Q4 2013 Q1Q2Q3Q4 2014 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 2015 2016 2017 Q1Q2Q1Q2Q3Q4 2018 Q3 $30M $20M $40M 35 12/4/2009 Proof of Concept Provisional Patent Financial / Operations Timeline Technology Licensing MammOptics

37. $10M $15M 2012 Series A $3.5 MM Cash Reserve Clinical Milestones $5M Initialize Design Milestones Regulatory/ IP Milestones Q1Q2Q3Q4 2013 Q1Q2Q3Q4 2014 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 2015 2016 System 2017 Q1Q2Q1Q2Q3Q4 2018 Q3 $30M $20M $40M 36 12/4/2009 Proof of Concept Provisional Patent Beta- Version Testing Laboratory Prototype Beta Prototype Technology Licensing Financial / Operations Timeline Pilot Studies MammOptics

38. $10M $15M 2012 Series A $3.5 MM Cash Reserve Clinical Milestones $5M Design Milestones Regulatory/ IP Milestones Q1Q2Q3Q4 2013 Q1Q2Q3Q4 2014 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 2015 2016 Series B $9 MM System 2017 Q1Q2Q1Q2Q3Q4 2018 Q3 $30M $20M $40M 37 12/4/2009 IC and Processin g Patents Marketable Product Beta- Version Testing Application and System Patents IRB / IDE Beta Prototype Financial / Operations Timeline Pilot Studies Regulatory / Clinical Laboratory Prototype MammOptics

39. $10M $15M 2012 Cash Reserve Clinical Milestones $5M Design Milestones Regulatory/ IP Milestones Q1Q2Q3Q4 2013 Q1Q2Q3Q4 2014 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 2015 2016 Series B $9 MM System 2017 Q1Q2Q1Q2Q3Q4 2018 Q3 Series C $30.5 MM $30M $20M Regulatory / Clinical $40M 38 IC and Processin g Patents Application and System Patents IRB / IDE Cat III CPT Second Release 1 st Release Test US Interim Trials US Pivotal Clinical Trials Publication Financial / Operations Timeline Pilot Studies MammOptics

40. $10M $15M 2012 Cash Reserve Clinical Milestones $5M Design Milestones Regulatory/ IP Milestones Q1Q2Q3Q4 2013 Q1Q2Q3Q4 2014 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 2015 2016 2017 Q1Q2Q1Q2Q3Q4 2018 Q3 Launch Series C $30.5 MM $30M $20M Regulatory / Clinical Series D $35 MM $40M 39 12/4/2009 Clinical Results Second Release Initial Product Launch Non-Specific Codes 2 nd Release Test Publication US Interim Trials FDA – Class II – 510 (k) with Clinical Trials Publication Financial / Operations Timeline US Pivotal Clinical Trials MammOptics

41. $10M $15M 2012 Cash Reserve Clinical Milestones $5M Design Milestones Regulatory/ IP Milestones Q1Q2Q3Q4 2013 Q1Q2Q3Q4 2014 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 2015 2016 2017 Q1Q2Q1Q2Q3Q4 2018 Q3 Launch $30M $20M Regulatory / Clinical Series D $35 MM M&A / IPO $50 MM $40M 12/4/2009 Clinical Results Initial Product Launch Specific Codes (Cat. I CPT / APC) Non-Specific Codes Publication Post-Market Clinical Studies FDA – Class II – 510 (k) with Clinical Trials Financial / Operations Timeline MammOptics

42. $10M $15M 2012 Series A $3.5 MM Cash Reserve Clinical Milestones $5M Initialize Design Milestones Regulatory/ IP Milestones Q1Q2Q3Q4 2013 Q1Q2Q3Q4 2014 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 2015 2016 Series B $9 MM System 2017 Q1Q2Q1Q2Q3Q4 2018 Q3 Launch Series C $30.5 MM $30M $20M Regulatory / Clinical Series D $35 MM M&A / IPO $50 MM $40M 41 12/4/2009 Proof of Concept Pilot Studies IC and Processin g Patents Marketable Product Provisional Patent Beta- Version Testing Application and System Patents IRB / IDE Clinical Results Second Release Initial Product Launch Specific Codes (Cat. I CPT / APC) Non-Specific Codes 1 st Release Test 2 nd Release Test Publication Post-Market Clinical Studies Beta Prototype US Interim Trials FDA – Class II – 510 (k) with Clinical Trials Publication Financial / Operations Timeline Cat III CPT US Pivotal Clinical Trials Laboratory Prototype Technology Licensing MammOptics

43. Apple Resource, Activities & Cost Example

44. KEY RESOURCES VALUE PROPOSITON DISTRIBUTION CHANNELS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS REVENUE STREAMSCOST STRUCTURE KEY ACTIVITIES PARTNER NETWORK Product User Digital Hub Digital Lifestyle Digital Platform Invest in R&D solutions for differentiated customers - professional & consumer High-end mass market software developers online store brand - Apple, PowerMac, iMac component makers, shipping & logistic suppliers build whole devices both h/w & s/w differentiated markets Computers, software & services audio-visual content producers & record labels iPod, iTunes software & content agreements purchase & mgmt of digital music, audio, video increase switching costs iTunes store control the supply chain increased investment in R&D iPod, music & related products Integrated phone, games & apps across devices reduce cost of sales increase switching costs - integration optimize supply chain content agreements - games & apps iTunes through wi-fi access app & game developers & cellular operators app & game developers iPhone, apps & related services book publishers & developers of digital content content agreements with book publishers all digital devices linked through software platform increased switching costs - shared information iTunes bookstore iPad, apps, books & related services book publishers & developers of digital content

45. KEY RESOURCES VALUE PROPOSITON DISTRIBUTION CHANNELS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS REVENUE STREAMSCOST STRUCTURE KEY ACTIVITIES PARTNER NETWORK Product User Digital Hub Digital Lifestyle Digital Platform Invest in R&D solutions for differentiated customers - professional & consumer High-end mass market software developers online store brand - Apple, PowerMac, iMac component makers, shipping & logistic suppliers build whole devices both h/w & s/w differentiated markets Computers, software & services audio-visual content producers & record labels iPod, iTunes software & content agreements purchase & mgmt of digital music, audio, video increase switching costs iTunes store control the supply chain increased investment in R&D iPod, music & related products Integrated phone, games & apps across devices reduce cost of sales increase switching costs - integration optimize supply chain content agreements - games & apps iTunes through wi-fi access app & game developers & cellular operators app & game developers iPhone, apps & related services book publishers & developers of digital content content agreements with book publishers all digital devices linked through software platform increased switching costs - shared information iTunes bookstore iPad, apps, books & related services book publishers & developers of digital content

46. KEY RESOURCES VALUE PROPOSITON DISTRIBUTION CHANNELS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS REVENUE STREAMSCOST STRUCTURE KEY ACTIVITIES PARTNER NETWORK solutions for differentiated customers - professional & consumer High-end mass market software developers Wholesalers, retailers, re- sellers online store brand - Apple, PowerMac, iMac innovative designers IP & patents & agreements component makers Shipping & logistic suppliers build whole devices both h/w & s/w software developers differentiated markets Invest in R&D Computers, software & services Product User

47. KEY RESOURCES VALUE PROPOSITON DISTRIBUTION CHANNELS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS REVENUE STREAMSCOST STRUCTURE KEY ACTIVITIES PARTNER NETWORK audio-visual content producers record labels iPod, iTunes software & content agreements retail stores purchase & mgmt of digital music, audio, video integration of information across devices control buying experience increase switching costs iTunes storechain of owned stores control the supply chain increased investment in R&D iPod, music & related products Product User Digital Hub

48. KEY RESOURCES VALUE PROPOSITON DISTRIBUTION CHANNELS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS REVENUE STREAMSCOST STRUCTURE KEY ACTIVITIES PARTNER NETWORK games & apps across devices easy access & purchase through iTunes reduce cost of sales increase switching costs - integration specialized services in retail stores optimize supply chain integrated phone iPhone content agreements extended to games & apps iTunes through wi-fi access app & game developers cellular network operators iPhone, apps & related services Product User Digital Hub Digital Lifestyle

49. KEY RESOURCES VALUE PROPOSITON DISTRIBUTION CHANNELS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS REVENUE STREAMSCOST STRUCTURE KEY ACTIVITIES PARTNER NETWORK Product User Digital Hub Digital Lifestyle content agreements with book publishers Digital Platform all digital devices linked through software platform Premium re- sellers book publishers 3rd party developers of digital content developers of digital content book publishers premium resellers control customer experience in resellers’ stores increased switching costs - shared information iPad & related services iTunes bookstore iPad, apps, books & related services