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FINAL PRESENTATION March 6, 2011
Interviewed: 100 • End Users 50+ • Manufacturers 3 • Partners 25 Domain Experts: 22
Surveyed: 115
Our Team We are passionate kiters and realized we could make the sport
more accessible to others.
Coleman Buckley • M.S. Biology • B.S. Biology • Sponsored
Kitesurfer, 3yrs
Woods Buckley • M.S. MS&E • B.S. Earth
Systems • Surfer, 10yrs
Oliver Riihiluoma • M.S. ME • B.S. ME, minor C.S. • Sponsored Kitesurfer,
2yrs
Megan Lin • M.S. MS&E • B.S. Applied-Mathematics
& Economics • Prospective Kitesurfer
Our Original Idea
Retailers Online Brick mortar Kite Instructors Manufacturers Technology Distributors Industry Media
Professional Kite Surfers “Joe” Kite Surfer Prospective Kite Surfer
People Manufacturing IP Marketing & Sales Insurance
Kite sales + related gear
Kite design & manufacture Branding Professional sponsors
Retailers Online Brick & Mortar Peer to Peer Direct online
• Vendor assisted • Instructor assisted • Pro assisted
• Direct
Relationship with Retailers Media Pros Brand Technology
• High performance at low cost
• Ease of travel
0
0
0
0
0
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The Problem • A kiter needs multiple kites for different wind conditions • Kites are $1000+ = significant financial barrier to entry
• Solution is the The Origami System!
Our Product: An Adjustable Kite A light wind kite would be folded to decrease surface area and serve as a high wind kite. The kite adjustment would be quick and done prior to entering the water.
Our Product: An Adjustable Kite • A light wind kite would be folded to decrease surface area and serve as a high wind kite. The kite adjustment would be quick and done prior to entering the water. Engine Kites is a low-cost/niche entrant in a re-
segmented kite market. We make kite surfing financially and physically accessible for any extreme sports
enthusiast.
• Defining Our Scope
• Canvas #1: Finding the Right Customer
• Canvas #2: Understanding the Industry
• Canvas #3: Building the Company
The Journey
• Defining Our Scope • Market Sizing • Market Opportunity
• Canvas #1: Finding the Right Customer
• Canvas #2: Understanding the Industry
• Canvas #3: Building the Company
The Journey
• 1995: "Hurley and his group realized that the modern surfer
also loved fashion, skate, snow, music and art."
• Revenue 1993: $25 M • 1998: $70 M
The Proxies Brands associated with: equipment, accessories, clothing, sports gear, etc.
The Opportunity
Serviceable $12.1b Extreme
Sports Retail Sales
Phase 1: Gain industry credibility, sell quality, niche product Phase 2: Build the brand, launch new product lines and offerings
*not to scale
$2.6b Extreme Sports Equipment
We compared this to the U.S. Surf Industry:
$6.24b in retail sales in 2010
<15% of sales from equipment
Addressable $567m
(est current # kiters)
Defining Our Scope
• Canvas #1: Finding the Right Customer • Understanding our customer • Testing the value proposition
• Canvas #2: Understanding the Industry
• Canvas #3: Building the Company
The Journey
Our Original Idea
Retailers Online Brick mortar Kite Instructors Manufacturers Technology Distributors Industry Media
Professional Kite Surfers “Joe” Kite Surfer Prospective Kite Surfer
People Manufacturing IP Marketing & Sales Insurance
Kite sales + related gear
Kite design & manufacture Branding Professional sponsors
Retailers Online Brick & Mortar Peer to Peer Direct online
• Vendor assisted • Instructor assisted • Pro assisted
• Direct
Relationship with Retailers Media Pros Brand Technology
• High performane at low cost
• Ease of travel
0
0
0
0
0
0
0 10 4
Our Customers • Professional Kite Surfers
• Solely concerned with performance
• Average Kite Surfer • Performance and cost sensitive • “One less thing to carry” effect
• Prospective Kite Surfer • Cost sensitive • Learning barrier
Hypothesis:
Who kitesurfs? 45 Interviews & 115 Surveys
Male Dominated
>50% skateboard or snowboard regularly
$68,000 is the average income
>50% active gamers
60% College Grad
Most people try Kite Surfing at the recommendation of a friend.
Testing:
Pain Points 45 Interviews & 115 Surveys
Existing Kitesurfer Prospective Kitesurfer
Cost of Equipment ✓ ✓
Cost of Lessons ✓
Equipment Mobility ✓ ✓
Infrequency of Sessions (dependent on wind conditions)
✓
Safety Concerns ✓
Testing:
Our Customers • Professional Kite Surfers
• Solely concerned with performance
• Average Kite Surfer • Performance and cost sensitive • “One less thing to carry” effect
• Prospective Kite Surfer • Cost sensitive • Learning barrier
Results:
Joe “Dude” Marrama • Loves to ski, surf, rock climb • Salary ~100K/year • Looking for something to do
when the surf’s blown out • Intimidated by cost and learning
curve of kiting
“Companies need to offer more entry level packages."
Matt Sexton Founder Collegiate Kiteboarding Association
Customer Archetype:
Joe “Dude” Marrama • Loves to ski, surf, rock climb • Salary ~100K/year • Looking for something to do
when the surf’s blown out • Intimidated by cost and learning
curve of kiting
“Companies need to offer more entry level packages."
Matt Sexton Founder Collegiate Kiteboarding Association
Customer Archetype:
He bought our Kite!
• Defining Our Scope
• Canvas #1: Finding the Right Customer
• Canvas #2: Understanding the Industry • Building the kites • Understanding our channels, How do people buy kites? • Partner strategy
• Canvas #3: Building the Company
The Journey
Canvas #2
VARs Online Brick mortar Kite Instructors Manufacturers Technology OEM Distributors Industry Media Partner
• High performance and quality at low cost
• Ease of travel
Professional Kite Surfers “Joe” Kite Surfer Prospective Kite Surfer
People Manufacturing IP Marketing & Sales Warranty, replacement parts Insurance
Kite sales + related gear
Kite design & manufacture Branding Expos Professional sponsors
Retailers Online Brick & Mortar Peer to Peer Direct online Referrals?
• Vendor assisted
• Instructor assisted
• Pro assisted • Partner? • Direct
Partner? Relationship with Retailers Media Pros Brand & OEM Technology
Other boarders (snow, skate and surf)
4
45
0
0 0
0
0
45 45
Channel Flow
Retailers & Partners 35-45% markup
Website
Build & Deliver Kites
Design product Build Brand Create Demand Direct Sales
Merchandize Articulate Value
Deliver Orders
Distributor
$70
$400-$500 w/ bar and lines (20 kite production run)
Contracted manufacturer
$25
~$7,000 Software Program
$42/year
70% margin Direct
3 days
2+ weeks
35% margin
Unit Economics For Each Kite Sold Gross Revenue 1,000 Cost of Goods Sold Manufacturing 500 Distribution 25 Customer Acquisition 60 Total COGS 585 Gross Profit $415
Unit Economics
How did we calculate Customer Acquisition? Dependent on Sales Channel: • commission • retail space • website
Dependent on Marketing Strategy: • advertisement • free lessons
For Each Kite Sold Gross Revenue 1,000 Cost of Goods Sold Manufacturing 500 Distribution 25 Customer Acquisition 60 Total COGS 585 Gross Profit $415
Direct - Referrals - Retail, 30 interviews
• Most kite companies now sell direct
• Kiters rely on brand and industry reviews • New consumers use instructor recommendations
• Typical channel margin is 20-45% • Manufacturer/Retailer relationship is key, highly
political
Results:
Customer Reach Through Hotels Insight: on vacation, individuals typically not
considered part of the "Extreme Sports crowd" are still likely to try out extreme sports
Hypothesis:
Customer Reach Through Hotels Many hotels/resorts already offer kitesurfing
vacations and partner with kitesurfing equipment companies or kitesurfing lesson
providers. Receptive response to our pitch: free lessons &
commission on sales.
Results:
Customer Reach Through Major Label Idea: Partnering with a major label would give our
product immediate credibility
Hypothesis:
Customer Reach Through Major Label Reality check: Major labels aren't willing to take the risk
of partnering with an unproven brand and product.
Results:
The Kitesurfing marketplace is crowded. Hypothesis: No single company with significant (>20%) market share = low cost to entry
Hypothesis:
The Kitesurfing marketplace is crowded. Hypothesis: No single company with significant (>20%) market share = low cost of entry Yes, but... The market is saturated and more people are making kites than selling them and it is a monoculture.
Results:
• Defining Our Scope
• Canvas #1: Finding the Right Customer
• Canvas #2: Understanding the Industry
• Canvas #3: Building the Company • Lessons learned • Next steps
The Journey
Canvas #3
VARs Online Brick mortar Kite Instructors Manufacturers Industry Media Partner OEM Distributors
• High performance and quality at low cost
• Ease of travel • Up to date
wind conditions
• Reduced environmental impact
Professional Kite Surfers “Joe” Kite Surfer Prospective Kite Surfer
People Marketing & Sales Manufacturing IP Warranty, replacement parts Insurance Website Maintenance
Kite sales + related gear
Kite design & manufacture Branding Expos
Retailers Direct online Partner
• Vendor assisted • Instructor assisted • Direct • Website • Partner
Partner Industry Relationships Brand Technology Website
Accessories
2 5 13
13
50+
30
45+
3
7
5
Demand Generation • Website
• Wind conditions + news and social
• Effective Channel Management • Website, direct • Retailer & Partners (later)
• Build credibility, educate users • Free Beach lessons • Kite Expos • Pro Riders + Online Media • Ads and reviews in industry journals + presence on online forums
Hypothesis:
Price and Bundling • Validated Hook! People want Kitesurfing lessons!
• 100 email addresses for those interested in kite lessons • Instructors tells us paid lesson conversion rate to purchase: ~75%
• Validated Price Point! $1000 • However, people expect deals • Bundling with free lessons, repairs or other equipment is added benefit
Testing:
We sold some kites! 5 commitments to purchase • For those that did not buy...there
was a high demand to demo the product
Goal: • Sell 20 kites first, before building
them
Prospective Kiters
Results:
Experienced Kiters
"Looks interesting. I could see this marketed as a one kite quiver which would be really nice for travel. Price, it could go for the equivalent of a kite and a half I would think. Performance an durability would be key" "Rad idea for your kite I like the idea of having the ability to change kites without having to walk to your car and pump up another kite. as long as the
kite performance was the same I would say it would be worth at least 50% more"
"If this kite rocked it - just flew amazingly, and the price was significantly
less than the cost of two kites - I could see it being appealing. If the kite flew at a mediocre level, the cost was only minimally different than the cost of two kites...I'd definitely go for the 9m and 7m kites (more range and no alteration necessary)"
Performance takes priority.
Testing:
This was our plan... • Focus on building
awareness and user base in Bay Area before expanding. Main goal: build brand loyalty
• Contact earlyvangelists
• Explore partnerships
Hypothesis:
CLICK TO DEMO TODAY!
Free wind conditions brought to you by:
Please share your email to access to free wind conditions and latest product developments Email:
CLICK TO DEMO TODAY!
Site Value Prop: • Bay Area Kitesurfers want current wind conditions (100% of those interviewed) • Install approval granted for 3 pilot sites • Users must share email to access site data • Users can easily demo, purchase and register for lessons via
site
Unanticipated Challenges • Don Montague – “Godfather of kiting”
• Designed the software most kite companies use, set-up the first kite factory in China, hold multiple kite related patents, knows everybody and everything about the kite industry.
• Don's Insights: • Shared some interesting numbers
• ~100,000 kites sold/year, no company sells more than 20,000 units/year
• Materials costs have tripled in the last 5 years, pushing down margin
• Most companies just treading water, not making much profit. • High risk – lawsuits, recalls, etc. • Even if we get a toe-hold locally, difficult to expand
Results:
Moving Forward • At this time committing to building a company doesn't seem like a good idea.
• Value prop remains valid, new strategy is to license to existing brands, let them fight it out.
Pivot: • Patent and license kite design to other manufacturers • Offer Don a percentage of revenue from profits and have
him go to bat for us getting licenses sold.
Lessons Learned
• A good product doesn’t make a good business • Passion for your product AND customers is key • Team culture is critical • Value of getting out of the building • Accessibility of getting through to large businesses
The Canvas #1
Retailers • Online • Brick mortar • Kite Instructors Manufacturers • Technology Distributors Industry Media
• High performance at low cost
• Ease of
travel
Professional Kite Surfers “Joe” Kite Surfer Prospective Kite Surfer
People Manufacturing IP Marketing & Sales Insurance
Kite sales + related gear
Kite design & manufacture Branding Professional sponsors
Retailers • Online • Brick & Mortar • Peer to Peer Direct online
• Vendor assisted
• Instructor assisted
• Pro assisted • Direct
Relationship with • Retailers • Media • Pros Brand Technology
The Canvas #2
VARs Online Brick mortar Kite Instructors Manufacturers Technology OEM Distributors Industry Media Partner?
High performance and quality at low cost Ease of travel
Professional Kite Surfers “Joe” Kite Surfer Prospective Kite Surfer
People Manufacturing IP Marketing & Sales Warranty, replacement parts Insurance
Kite sales + related gear
Kite design & manufacture Branding Expos Professional sponsors
Retailers Online Brick & Mortar Peer to Peer Direct online Referrals?
Vendor assisted Instructor assisted Pro assisted Partner? Direct
Partner? Relationship with Retailers Media Pros Brand & OEM Technology
Other boarders (snow, skate and surf)
High performance and quality at low cost Ease of travel Up to date wind conditions Reduced environmental impact
Prospective Kite Surfer
Insurance
Kite sales + related gear
Other boarders (snow, skate and surf)
VARS Website online
Partners
Manufacturers OEMs?
Industry Media
Distributors
Branding Kite Expos Pro sponsors
Kite design & Manufacture
Industry Relationships
Brand
Technology
People
People
Manufacturing
IP
Marketing
Warranty, replacement
“Joe” Kitesurfer
Retailers
Direct
Partners
Vendor Assisted
Partner
Website
Accessories
Retailer Partner Product Marketing Engine Kites Customer
Website Maintenance
Website
Canvas # 3
High performance and quality at low cost Ease of travel Reduced environmental impact
Prospective Kite Surfer
Insurance
Kite sales + related gear
Other boarders (snow, skate and surf)
VARS Website online
Partners
Manufacturers OEMs?
Industry Media
Distributors
Branding Kite Expos Pro sponsors
Kite design & Manufacture
Industry Relationships
Brand
Technology
People
People
Manufacturing
IP
Marketing
Warranty, replacement
“Joe” Kitesurfer
Retailers
Direct
Partners
Vendor Assisted
Partner
Direct
Accessories
Retailer Partner Product Marketing Engine Kites Customer Canvas # 4
The Canvas #5
VARs Online Brick mortar Kite Instructors Manufacturers Industry Media Partner OEM Distributors
High performance and quality at low cost Ease of travel Up to date wind conditions Reduced environmental impact
Professional Kite Surfers “Joe” Kite Surfer Prospective Kite Surfer
People Marketing & Sales Manufacturing IP Warranty, replacement parts Insurance Website Maintenance
Kite sales + related gear
Kite design & manufacture Branding Expos
Retailers Direct online Partner
• Vendor assisted • Instructor assisted • Direct • Website • Partner
Partner Industry Relationships Brand Technology Website
Accessories
2 0 13 13
0
0
30+
0
1
Canvas #6
VARs Online Brick mortar Kite Instructors Manufacturers Industry Media Partner OEM Distributors
High performance and quality at low cost Ease of travel Up to date wind conditions Reduced environmental impact
Professional Kite Surfers “Joe” Kite Surfer Prospective Kite Surfer
People Marketing & Sales Manufacturing IP Warranty, replacement parts Insurance Website Maintenance
Kite sales + related gear
Kite design & manufacture Branding Expos
Retailers Direct online Partner
• Vendor assisted • Instructor assisted • Direct • Website • Partner
Partner Industry Relationships Brand Technology Website
Accessories
20 5 45
45+
50+
30
45+
3
7
5
Canvas #7
VARs Online Brick mortar Kite Instructors Manufacturers Industry Media
High performance and quality at low cost Ease of travel Up to date wind conditions Reduced environmental impact
Professional Kite Surfers “Joe” Kite Surfer Prospective Kite Surfer
People Marketing & Sales Manufacturing IP Warranty, replacement parts Insurance Website Maintenance
Kite sales + related gear
Kite design & manufacture Branding Expos
Retailers Direct online
Vendor assisted Instructor assisted Direct Website
Industry Relationships Brand Technology Website
Accessories
20 6 45 45
50+
30
5
3
8
7
Licensing? 1
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