The Buerk Center for Entrepreneurship created a series of expert panel discussions for winter quarter to offer additional guidance to student teams entering the Hollomon Health Innovation Challenge (March 1) and the Alaska Airlines Environmental Innovation Challenge (March 30). Below is a recap from the Buerk Center’s Terri Butler on the first panel’s discussion of Market Framework and Customer Discovery.
“If I’ve been working on a product idea, how do I know if people will actually use it?” This is one of the many questions answered January 11 at the first in a three-part series of discussions designed to help student teams rapidly increase their knowledge of what’s needed to commercialize their ideas. Teams increase their chances of impressing competition judges by incorporating the lessons from these panels into their 5-7 page business summaries.
How do you know your idea will go the distance?
Panelist Valerie Carricaburu of VICIS advised, “the startups that I have been involved with have started with a problem. A lot of teams come up with a widget or technology and think it’s the coolest thing. My advice is start with a good problem rather than a good technology. Or, if you have a good technology, make sure it responds to a good problem. You need to work on something important.” This advice was repeated over and over throughout the evening discussion.
“Do a lot of interviews with people from industry, including potential customers, suppliers, partners, and competitors. It’s incredible how fast you will learn what their key pain points are. It might surprise you,” said Terri Butler of the Buerk Center. She directed teams to the Steve Blank video series Customer Discovery that are posted on the free “How to Build a Startup” course on Udacity. The course can teach teams to use open-ended interviewing so they can understand actual customer needs and learn how the market ecosystem works in the area they want to sell in. “Seek input from key opinion leaders, that is, people who are prominent in the area you are trying to sell in to,” said Mike Blume of Treadstone Healthcare. “You need to hear as many opinions as you can so you can triangulate all of the input to figure out what direction to take.”
Who is your actual customer?
“You need to talk to influencers who will help determine if a customer is going to buy the product. For example, you may have a device that’s going to improve the health of a patient. Even if the patient might is the one impacted, the decision maker might be the doctor or team of doctors or the hospital,” Valerie said. “So you need to talk to all those people to understand who the real customer is.”
Mike added, “Taking this a step further, you need to develop a business case for what you are doing. There are people in the hospital who are going to say this new shunt may be better, but it costs 5x as much. That means you have to do a justification with information about how many times does a shunt typically clog and what are the costs of that, what labor is involved, and what is the infectious disease risk. You will need to cost-justify your product or service.”
The panel facilitator Sandra Mumanachit, Foster School MBA candidate, added “in my experience, while consulting with a startup that had an asthma medication bottle cap for kids designed to remind them to use their medication, we used surveys to learn about our customers. We asked the kids what’s fun for them in a game, we surveyed parents to find out what they thought would be helpful, and then we interviewed the doctors to see if the information they would get from the device, such as how often the medications were used, would be useful. We used three different types of surveys for the three groups of key opinion leaders.”
Mike also said, “find what sticks and expect to constantly re-test and hone your product. Sometimes you run into a brick wall. That happens, but you can then pivot. Thomas Edison did that a few times so you will be in good company!”
Where can teams find the right people to talk to?
Terri mentioned the Buerk Center’s Startup Resources webpage and the link to the MentorConnect online system. Students can use their ID to log in and view bios of mentors and reach out to them with questions. Out of area students can email Amy Sallin ([email protected]) at the Buerk Center for a login ID. Valerie suggested checking out CoMotion and the long list of experienced mentors there. “Don’t be afraid to reach out to anyone via LinkedIn or through UW or other college alumni connections,” advised Sandra. “People will actually respond!”
Local industry organizations frequently have networking events teams can attend. The Cleantech Alliance is a great place to go for environment-related events. Life Science Washington has commercialization advisers and investor groups you can connect with if teams have a medical device or therapeutic project. Forums for discussions on the healthcare system are held at Cambia Grove. Panelists suggested teams just get out there and tell people they are a student team looking for some input on the project they are working on.
What about market sizing for a business summary?
A big question that came up was how to do the market sizing that’s needed in the 5-7 page business summaries. Terri mentioned the UW Foster Business Library where there are many top-notch market reports. Valerie cautioned, “pay attention to market size. You are not going to be able to sell to 500 billion people. What is the real market? Eliminate until you get to your own target market. Peel the onion, take out some pieces.” Mike added, “document your sources! Look at trends. Are they up or down? To get good numbers look at several sources. All you need is ballpark numbers at this stage.” Terri urged students to make an appointment with the five MBA business development consultants available for the competitions. “They can help you get oriented and point you in the direction for relevant data. Take full advantage of that and make an appointment.”
Sandra point out, “As you go through the process of market sizing, that process will inform the thing you are designing. Say you have a mobile app for women who are pregnant. About half the US population is women, but not all of them are candidates for pregnancy. How many can actually get pregnant? How many have a mobile device? How many would actually use the app? How many would actually care? It may be tempting to show your product applies to a really big group, but it’s better to have a smaller group that really cares and will really be helped.”
What do teams need to do to get to the next level?
“Talk to as many people as you can,” reiterated Valerie.
Terri added, “We also encourage teams to find team members with diverse skill sets. Go onto the Team Formation Web Portal if you need more team members.”
Questions? Email Terri Butler at [email protected].