The Lean LaunchPad Class 4: Distribution Channels
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Transcript of The Lean LaunchPad Class 4: Distribution Channels
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The Lean LaunchPad
Class 4: Distribution Channels
Steve BlankJon FeiberJon Burke
http://i245.stanford.edu/
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CHANNELS
how does each customer segment want to be reached? through which interaction points?
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Test Hypotheses: Channel
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Two Critical Channel Questions
4
How do you want to sell your product?1
is subtle, but more important than the first: How does your customer want to buy your product?
2
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How Do You Want Your Product to Get to Your Customer?
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Yourself
Through someone else
Retail
Wholesale
Bundled with other goods or services
üüüüü
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How Does Your Customer Want to Buy Your Product from your Channel?
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• Same day
• Delivered and installed
• Downloaded
• Bundled with other products
• As a service
• …
üüüüüü
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Web Channels
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Physical Channels
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Types of Channels
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– OEM– VAR– Reseller– Distributor
Direct Indirect Licensing
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The Channel as a Customer
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– Some products are embedded in others (OEM)
– Some products are resold by others (VARs)– Some products are distributed by others– Who’s the customer?
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Distribution Complexity
11
Evangelists
ServiceTechnicians
Higher Value Added
Higher Volume Direct Sales
VARs
Retail
Web, Telesales
Systems Integrators
Mainframes
MinisLANs
PC ServersDesktop PCs
PrintersKeyboards
Toner
WANs
Global Systems
Solution Complexity
Mar
ketin
g C
ompl
exity
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How Are Channels Compensated?
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– Commission– Percentage of sales price– Discounted pre-purchase
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How Are Channels Motivated or Incented?
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– Money! – what makes them the most?– Training– Marketing to the channel– SPIF
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Channel Economics: “Direct” Sales
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Profit + SG&A + R&D
End
Con
sum
er
EU
Dis
coun
ts
RevenueList
Price
Source: Mark Leslie, Stanford GSB
Cost of Goods(Supply Chain)
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Channel Economics: Resellers
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Cost of Goods(Supply Chain) Profit + SG&A + R&D
End
Con
sum
er
EU
Dis
coun
ts
Reseller
RevenueList
Price
Source: Mark Leslie, Stanford GSB
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Profit + SG&A + R&D
Channel Economics: Distributors/Resellers
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End
Con
sum
er
EU
Dis
coun
ts
Reseller
Dis
trib
uto
r
RevenueList
Price
Source: Mark Leslie, Stanford GSB
Cost of Goods(Supply Chain)
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Channel Economics: OEM or IP Licensing
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Your Product Becomes Your Customer’s Cost of Goods Source: Mark Leslie, Stanford
GSB
End
Con
sum
er
ResellerProfit + SG&A + R&D
Cost of Goods
(Supply Chain)
EU
Dis
coun
ts
Reseller
Dis
trib
utor
Mas
ter
Dis
trib
utor
Profit + SG&A + R&D
Cost of Goods(Supply Chain)
Your RevenueList
Price
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Example: Book Publishing
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Publisher National Distributor Printer Wholesaler Retailer Customer
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Book Publishing
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•Percent of
Retail
• You get- 35% of retail- the distributor gets 10%- the wholesaler gets 15% - the retailer gets 40%
- less any discount they offer the customer
Publisher National Wholesaler Distributor Retailer Customer
35% 15% 10% 40%
$7.00 $3.00 $2.00 $8.00 $20.00
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Book Publishing Economics
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Publisher National Distributor Wholesaler Retailer Customer
Wholesale costs
Markup
Allowances
Payment guarantees
Payments
Bills
Credit guarantees
Payment guarantees
Return rights
Credits
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Book Publishing Delivery
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Publisher National Distributor Printer Wholesaler Retailer
Merchandise titles
Sell magazines
Acknowledge returns
Determine allocations
Dispose of returns
Prepare film (content)
Establish identity
Create demand
Prepare galleys
Receive Schedules Print
orders Bundle
counts Film
Print and ship
magazines
Deliver orders
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Nature of Product Impacts Channel: Physical or Virtual?
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– Access to customers changes dramatically– Logistics related to product complexity– People as products
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Bits vs. Atoms
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Bits
Physical
Product
Web Physical
Channel
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Product and Channel Are Bits
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Bits
Physical
Product
Web Physical
Channel
Rapid Agile and Customer development
Fastest to acquire early customers and scale
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Web 2.0 - Product/Channel Are Bits
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Bits
Physical
Product
Web Physical
Channel
Google Twitter Facebook Zynga Cloud Services
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Product Is Bits, but Channel Is People
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Bits
Physical
Product
Web Physical
Channel
Rapid Agile and Customer development
Fastest to acquire early customers and scale
Rapid Agile and Customer development
Traditional sales channel
May require installation
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Traditional Enterprise Software
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Bits
Physical
Product
Web Physical
Channel
Google Twitter Facebook Zynga Cloud Services
Microsoft SAP Oracle
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Physical Products Sold Over the Web
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Bits
Physical
Product
Web Physical
Channel
Rapid Customer development
Logistics, shipping and manufacturing critical
Customer service
Rapid Agile and Customer development
Fastest to acquire early customers and scale
Rapid Agile and Customer development
Traditional sales channel
May require installation
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Killing Traditional Storefronts
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Bits
Physical
Product
Web Physical
Channel
Google Twitter Facebook Zynga Cloud Services
Microsoft SAP Oracle
Zappos Amazon Cafepress Netflix Consumer electronics
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The Factories May Be in China
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Bits
Physical
Product
Web Physical
Channel
Rapid Customer development
Logistics, shipping and manufacturing critical
Customer service
Rapid Agile and Customer development
Fastest to acquire early customers and scale
Longer customer feedback cycle
May require large capital requirements for scale
Rapid Agile and Customer development
Traditional sales channel
May require installation
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We Still Make Things that Need Salespeople
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Bits
Physical
Product
Web Physical
Channel
Google Twitter Facebook Zynga Cloud Services
Cars Solar panels Wind turbines Bookstores Consumer electronics
Microsoft SAP Oracle
Zappos Amazon Cafepress Netflix Consumer electronics
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Team Deliverable by Tomorrow• Talk to 10-15 potential channel partners
• (Salesmen, OEM’s distributors, etc.) • What were your hypotheses about who/what your channel
would be? Did you learn anything different?• Did anything change about Value Proposition? • Update your Lean LaunchLab & Canvas• Draw your channel diagram
• Summarized in a 5 Minute PowerPoint Presentation
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Examples
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implantable drug infusion pumpswith remote physician control
for chronic pain patients at home
“the right dose at the right time and place”
Christian Gutierrez (EL), Ellis Meng (PI), Carol Christopher (IM), Tuan Hoang (FE)
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PatientsTraining
Hospitals
Unit sales
Trade shows
Clinicians
Institutions
Support Services
Pain clinics
Clinical dataKOLs Formulary Acceptance
FDA
IP
Advocacy Groups
Foundations
OEMs
Wireless Developers
Manufacturing Costs
Product Dev Costs
FDA/Clinical Trials
Chronic Pain v4 FS Team
Payors/ICA
Marketing Costs
Faster relief
Efficient patient management and Dosing flexibility
Access to high-value therapies and pharmacoeconomics
pharmacoeconomics
Support
Proprietary knowledge
Human Resources
Electronic records
Electronic health record providers
Bundled kits
CMS (Medicare)
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Getting out • Dr. Stan Louie, Drug Formulation Expert (USC Pharmacy)• Dr. Giovanni Cucchiaro, Anesthesiologist (CHLA)
• Dr. Diana Hull, Physician (Group Health in Washington state, formerly at Kaiser California)
• Thomas Hsu, Insurance Specialist (Network Medical Management; a California ICA)
• Two chronic pain patients – Pump user and creator of support forum– User of oral narcotics and patches
• Dr. Frances Richmond (Director Regulatory Science Program, USC)
• Richard Hull (formerly at company selling Lapband)
Clinicians
Institutions/patients
Regulatory
Entrepreneurs/Industry
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Patients
Product flow/Channel
Fluid SynchronyElectronic
Health Records
.Partners/
OEMS
Hospitals(AnesthesiologistsNeurosurgeons)
Pain Clinic(AnesthesiologistsNeurosurgeons)
Pump + Controller
Support Services
Bundled Kits
Electronic Records
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Channels (Direct)
• Direct to institutions• Some formularies involved in purchase decisions• Some doctors make purchase decision directly
• Device company/Doctor relationship is key • Heavily influenced by :
• Clinical study results • Regulatory approval• Reimbursement
Hospitals
Pain Clinics
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Patient Care Flow (Now)
Fluid Synchrony
Hospitals(AnesthesiologistsNeurosurgeons)
Pain Clinic(AnesthesiologistsNeurosurgeons)
Scheduled follow-up
Patient Discharged
Surgery/Rx/reprogramming
Trial period/ Home setting
Weeks/months Key factors: Reimbursement , state regulations
Pump + Controller
Support Services
Bundled Kits
Partners/OEMS
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Patient Care Flow (Proposed)
Fluid SynchronyElectronic
Health Records
.
Hospitals(AnesthesiologistsNeurosurgeons)
Pain Clinic(AnesthesiologistsNeurosurgeons)
Pump + Controller
Support Services
Bundled Kits
Electronic Records
Scheduled follow-up
Patient Discharged
Surgery/Rx/reprogramming
Trial period/ Home setting
Partners/OEMS
Weeks/months
Actionable feedbackto doctors/institutions
E-prescription / closing loop
Key factors: Reimbursement , state regulationsDays
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Regulatory considerations
PMA 510K
Trial size 100’s of patients 20-100
Costs Up to $100,000 per patient
$10-50 MM $1-10 MM
Time ~ 3-4 yrs + post approval follow-on
~ 2-3 yrs
• PMA approval with grouping of FDA approved drugs.• Clinical trials results used to obtain CMS (Medicare) approval• 510K restricts technology to predicate devices
• Can be more difficult to market against incumbents• European CE mark is easier to attain (safety and performance only)
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Take-aways• Channel is direct in this existing market
• Channel for e-health is more complex and evolving• State-to-state regulations can impact incentives
• Can pose problems as electronic records systems vary across the country
Next Steps• Understand costs associated with reaching
doctors/institutions directly• Understand structure of e-health channel• Develop regulatory pathway (timelines and cost profile)
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Ground Fluor Pharmaceuticals
Advanced Chemistry for Pharmaceutical Progress
Team: Kiel Neumann (EL)Stephen DiMagno (PI)Allan Green (Mentor)
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45
PET is a non-invasive medical diagnostic technique for cardiac, brain, and tumor imaging GFP technology makes new (unknown) and known (but clinically inaccessible) [18F]-labeled radiotracers readily available Fast, multiplatform, high efficiency synthesis of these fleeting, precious agents. Initial target indications: pediatric neuroblastoma, Parkinson’s disease.
Ground Fluor Pharmaceuticals
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General methodology for adding fluorine
to lead compounds of
interest
The Business Model Canvas
Accessibility (RCY)PuritySpeedPET/SPECTMultiplatformSensitivity (nca)Specific compounds
IPPoP dataRegulatory planUnderstanding of the regulatory process
Contract cGMP precursor manufactureSalary, RentsClinical trials
SOPs for precursors and drugsRecruit clinical sitesIn vivo animal studiesDevelop regulatory plan for pre IND meetingID cGMP CROFund-raising
cGMP manufacturerRadiopharmaciesNuclear Medicine and Radiology departments
Technical Assistance (Image Atlas)FDA regulatory support
Radiopharmacies
Equipment producers
Prescribing physicians
Radiologist who perform studies
Sales of intermediates
Technology license
Product license (royalty)
Drug developers
Pharmaceutical development companies
IPPoP data
Radiologists
Technical assistance
Direct sales of precursor
R&D and clinical studies presented in journals and meetings
Sales of precursor through global finished pharmaceutical distributor
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Face to Face meeting with president of small radiopharmaceutical company
Face to face with a clinician at Memorial Sloan-Kettering Face to face with Global Production Manager of Molecular
imaging for one of world’s largest radiopharmaceutical companies
OncoKinib collaboration between Geurbet, OncoDesign, and Ariana pharmaceuticals
Face to face meeting with head of R & D and International Production Manager from Linz, Austria
Eckert and Zeigler – German PET modular synthesis provider Face to face meeting with Executive Director and CEO of Scott
Tech Center in Omaha, NE Introductory teleconference to CEO of Innovation Accelerator
Out of the Building
50
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Significant Interest in our technology Radiopharmacies want GMP product
No interest in GMP reagent preparation Third-party manufacturers would use our developed
synthetic pathways Internal competition with one world radiopharmaceutical
leader Best to approach one of other two world leaders
Scott Tech Center Willing to offer free advice on startup strategy Provided introduction to Innovation Accelerator Offered introduction to Director of Venture Technology of
one of world’s leading radiopharmaceutical companies
Key Learnings
51
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General methodology for adding fluorine
to lead compounds of
interest
The Business Model Canvas
Accessibility (RCY)PuritySpeedPET/SPECTMultiplatformSensitivity (nca)Specific compounds
IPPoP dataRegulatory planUnderstanding of the regulatory process
Contract cGMP precursor manufactureSalary, RentsClinical trials
SOPs for precursors and drugsRecruit clinical sitesIn vivo animal studiesDevelop regulatory plan for pre IND meetingID cGMP CROFund-raising
cGMP manufacturerRadiopharmaciesNuclear Medicine and Radiology departments
Technical Assistance (Image Atlas)FDA regulatory support
Radiopharmacies
Equipment producers
Prescribing physicians
Radiologist who perform studies
Sales of intermediates
Technology license
Product license (royalty)
Drug developers
Pharmaceutical development companies
IPPoP data
Radiologists
Technical assistance
Direct sales of precursor
R&D and clinical studies presented in journals and meetings
Sales of precursor through global finished pharmaceutical distributor
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Channels
53
We provide accessibility
Only want GMP precursor in modules without development
Could license precursor synthesis for incorporation in modules
Require GMP precursor (or cassette) to develop our product with their synthesizer