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1
Sabin & Thorne Deadlines
Sabin Prize Thorne Prize
Letter of Interest
Jan 31* Feb 23*
Application Due
March 24 March 30
Finalists Present
April 16 April 26
*if you want a mentor
2
My Training Workshops
• Today: Researching your Business
• Next Fri, Jan 31st : Financial projections
• Feb 21st : Writing & Presentations
3
Researching Your Business Idea
January 24, 2014
Sabin & Thorne Prizes
About Me
• Teach Entrepreneurship – SOM & FES
• Used to work on Wall Street• Attended SOM, then consulted• Joined a Yale-funded
“incubator” • Also, do consulting to start-ups
4
5
Past Sabin Judges
• Andrew Sabin, prize funder & investor
• Rosemary Ripley – NGEN – investor
• Konstantine Drakonakis – Launch Capital - investor
• Ralph Earle – Assabet, consultant to investors, investor
6
Judges are Investors by Day
And Investors Want to:• Hit a homerun (big financial
upside)• Avoid known losers (high
failure rates)• Minimize risks (pick the surest
thing)• Back winners (proven track
records)
7
Ideal Investor Characteristics
• Unique Product / Service • Large potential market• Rapid growth prospects
8
Unattractive Sectors
• Restaurants -- one location
> Too many cooks
> 80% bankruptcy rate
• Retailing -- one location
> Too easy to enter
> 80% bankruptcy
rate
9
More Unattractive Choices
• Consulting
> No economies of scale
> No need to raise $ from
others
• Some International Businesses
> Depends on the judges /
investors
10
Avoid
• Competing with “love” or “ego”
projects
> Artists
> Farmers
> Moviemaking
> Sports teams
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Most Important Question
• If the idea is so great...• Why hasn’t anyone done it
before?
• Might be – Technology didn’t exist before
• Or – your unique combination of skills
• Might be – it just won’t work• Or – it can’t make $
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The Best Ideas
Come from your own experiences…
A problem you’ve faced…• School, jobs• Hobbies, family
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Application Issues to Address
• Idea (what is it – why is it appealing)
• What is the Market? Customer interest?
• What is original (unique advantage)
• What is your strategy – to execute?
• What environmental or social benefit?
• Who is on your team?• How much $ do you need? Use
of prize?
14
Themes of the Day
You want to communicate an idea that:
• Addresses a big, exciting opportunity
• In a new, unique, innovative way
• That is feasible and believable• With great people on your
team
To Win Contests (or Raise $)
15
Idea: Big, ExcitingOpportunity
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The Opportunity
• What are the annual sales $s?
• Are they increasing? • Important trends?• Problems that need fixing?
1717
Caution: You Need Data, Sources!
• Your opinion about a need has little value
• You want to win contests….• Do research! • Industry reports, articles,
interviews, etc.
18
Caution: Look at the Right Market!
GreenCleaning.com will sell all brands of environmentally friendly cleaning products – on one website.
Cleaning product sales in the US were $28 billion in 2013.
19
GreenCleaning’s Market
• Green cleaning products Say, 5% of all cleaning products $1.4 billion
• Sell them (not make them) Say, for a 10% commission
$140 million - not $28 billion!
20
Research Customer Interest
• Who are the customers?• How many are there?• What do they want?• What can you do for them?
2121
Caution: Don’t Assume!
• Your ideas about customer have little value
• You want to win contests….• Do research! • Specifically, do interviews &
surveys
22
Testing Customer Interest
Develop a one page product description
• What does it do ?• How does it work ?• List the main features• List main benefits -- to
customers
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Find Out:
> Do they like your product ?
> What do they like best? Least?
> Will they buy/use it when it is
ready ?
> Will they pay the price you’re
asking?
> Do they have any issues /
concerns ?
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Caution: Get the Customer Right!
GreenCleaning will sell its own brand of environmentally friendly cleaning products – in retail stores.
• Who is the customer?
25
Caution: Get the Customer Right!
• The customer = stores• Stores’ customers = consumer
• You must appeal to the consumers
• But you also must understand all customer needs – and meet them
26
Caution: Get the Customer Right
GreenCleaning.com will sell all brands of environmentally friendly cleaning products – on one website – for a commission.
• Who is the customer?• Cleaning product companies
27
For Your Application
• Describe your venture (what will it do)
• Also, the Market need / opportunity
• And the Customer (who will pay for it)
• Include your research data• Quote your interviews• Present your survey data
28
Unique: Innovative,Competitive Advantage
2929
What is Innovative?
• How is your idea – unique?• Different from the competition?• Different – from alternatives?
3030
What is Innovative?
• Always more competition - than you think
• Compare major features of your product> To all competitors’ products
> To doing things “the old way”
31
Construct a Competitor Grid
Reason Co. A Co. B Our Co.
Price X X
Reliability X X X
Env Benefit X X
32
Caution: Be Objective!
• You saying you are better = little value
• You want to win contests...!• Why, objectively, are you
better?• Did customers say you were
better?• Admit where you are not better
33
Don’t Cherry Pick!
Feature Co. A Co. B Our Co.
What we’re good at #1
X X
What we’re good at #2
X X
What we’re good at #3
X X
34
Key Avenues For Investigation
• Why has no one done this
before ? Technology didn’t exist?
New regulations or incentives?
It won’t work for some reason….?
35
Unique, Big Idea: Example
36
37
• Fresh farmed tilapia fillets• Purified and filtered re-
circulated water• “Seafood Safe” and Organic• 100% organic feed
38
Evidence of Opportunity - over 3 years:• US seafood consumption up 12% - $12
billion• US tilapia consumption up 110% - $400
million• Demand for organic meat & fish up
120%
Over 70% of Americans would by organic seafood if available; 60% ‘strongly
prefer’ domestic
39
Customers • Wholesale Suppliers of
restaurants, grocery & fish stores
• Also, Trader Joe’s, Whole Foods
40
Talking to customers:• 450 chefs and 150 retailers
Most prefer environmentally friendly fish
• Local restaurant owner: “customers care”
• Wholesaler: “Not enough good farms”
• EcoFish: “I will buy all you have to sell”
41
Competition• 96% of tilapia
– imported, mostly frozen, not organic
• Most US farm-raised – small, not organic
The Good Fish tilapia will be more expensive vs. competitors
42
Feasibility: Making it Happen
43
The Goal
• Show this isn’t “just an idea”
• You have a plan • You’ve made some moves
• You know what the next moves are
44
Issues to Cover
1. How will you make your product?
2. How will you get customers to buy it?
3. How will you start – and expand?
4. Who will run your business?
45
Make a List
• What are your product “inputs”?
• What kind of facilities do you need?
• How will you deliver to customers?
• How will you provide ongoing service?
Research the answers!
46
Inputs: series of tanks (“Pod System”), organic vegetarian fish food, ice for packing fish
Staff: Monitor equipment, move, clean, fillet fish
Facilities: heated warehouse space Delivery: Customers pick up Other: Waste and offal disposal
47
Sales (& Marketing)
How do you get customers’ attention
• Advertising• Sales force• “PR”• Partenerships
And Make the Sale?
48
Sales Force
• In-store• Telesales• Professional
• In-store• Telesales• Professional
• Track record• Industry
contacts• Product
Expertise
• Track record• Industry
contacts• Product
Expertise
49
Traditional Advertising
• Mailings• Yellow Pages• Email• Print Ads• Television
• Mailings• Yellow Pages• Email• Print Ads• Television
• Newspaper inserts
• Coupons• Flyers• Catalogs• Radio
• Newspaper inserts
• Coupons• Flyers• Catalogs• Radio
50
Internet Advertising
• Web Sites• Key word search• Sponsored Links• Ads with online
trade journals• You Tube Ads
• Web Sites• Key word search• Sponsored Links• Ads with online
trade journals• You Tube Ads
• Banner, pop-up ads
• Blogs• Groupon• Pinterest• Facebook• Twitter
• Banner, pop-up ads
• Blogs• Groupon• Pinterest• Facebook• Twitter
51
Web Sites
• Not a sales tool, on its own• Must drive people to it• Search engine
optimization?• Buying key words?
52
Develop Partnerships
• Get schools – to help sell to students
• Get doctors – to recommend to patients
• Churches, libraries, non-profits, etc.
Keep in Mind:
They will only partner with you if there is something in it for them!
53
Find Out:
• Will they partner with you? • What do they want?
A share of your Sales?
An exclusivedeal?
To do good?
Another servicefor their
customers?
54
Green Brides
“Partnered” with the Wedding Institute
• Green Bride made an online course
• Wedding Institute sells it to students
Wedding Institute getsFree contentHalf the $ from the courses
Green Bride getsExposure to wedding plannersHalf the $ from the course
Wedding Wire agreed to the partnership
It’s clear what both sides get
55
Selling Strategy Hire Sales Force Visit customers, explain the benefits List in organic seafood directories Advertise with trade associations Host events, tours, tastings
56
How will you Start – and Expand?
Start in New Haven then go to Hartford?Start with one product, then add?
Sell in one store, then more?
57
How will you Start – and Expand?
• Start small• Prove you can do it -- then
expand
CT
58
What have you done so far?
• If you’ve done something – risk is lower
• Do you have a sample product?• A first customer?• A potential customer – in
writing?
59
Your Team
60
Investors will Say: Keys to Success
People People People !
People People People !
More important than everything else -- combined
61
Your Team
• Who are the Yale members?• What roles will they play?• What skills, experience do they
have…• Directly relevant to your
business
62
Admit gaps
• Who are you missing – but will hire?
• Advisory board or board of directors?
63
Environmental or Social Benefit
64
Same Rule Applies
Judges (investors) will want:• To hit a home run (big upside)
Key Question: How do you quantify theOpportunity/Benefit?
Key Question: How do you quantify theOpportunity/Benefit?
Answer: It depends on your Unique Business!
Answer: It depends on your Unique Business!
65
Hit on the Same Themes
• Big, exciting opportunity• Unique, innovative• Feasibility – a plan of execution• The right team – with
knowledge, skills
66
Key Challenge
Come up with a metric of benefit:…Lives saved – or water
conserved…test scores improved – or
energy saved…incomes raised – or emissions
reducedOr, where no metric exists:…explain why the business will
matter…what will be better – because of
it?
67
Final Words of Advice
• Do your homework Use data, research – talk to
customers Not just your opinions
• Try to do something – now - to risk
• Think like an investor!