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Doubletwist, Inc. Chapter 5, Case 2

Doubletwist, Inc. Chapter 5, Case 2. internet. business models . text and cases. Steven Young COS498. Overview of Doubletwist, Inc. Introduction. Doubletwist was named after the double helix configuration of DNA

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Doubletwist, Inc. Chapter 5, Case 2

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  1. Doubletwist, Inc. Chapter 5, Case 2 internet business models text and cases Steven Young COS498

  2. Overview of Doubletwist, Inc. Introduction Doubletwist was named after the double helix configuration of DNA Doubletwist was the biotechnology industry’s first ASP. Specifically, they would provide tools for bioinformatics, the rapidly growing field of biological computing (combining biology, computer science, and math) Provided access to research agents, databases, and other powerful tools to enable genomic analysis previously available to only the largest companies.

  3. Overview of Doubletwist, Inc. Mission and Vision Vision - Empower all life scientists and scientists in training to conduct genomic research Direction - Use the Internet as a computational engine to realize this vision

  4. Overview of Doubletwist, Inc. History • Formed as Pangea Systems in1993 by: • Stanford graduates Joel Bellenson (former head of the Stanford Sequencing laboratory) and • Dexter Smith (formerly a computer scientist in the industrial engineering department at Stanford) • These men realized that with the advent of sequencing technology, that they were witnessing a second “industrial revolution”. • They began developing sequencing databases for Stanford on a consulting basis, developed Incyte’s LifeSeq database and Oxford GlycoScience’s Rosetta proteome system for others - $$$ for others • Decided to go after VC money, and raised 7.5M in Feb 1997 from Mayfield Funds, Industrial Venture Partners, and Clyner Perkins, Caufield & Byers (all respected in the Biotechnology field) • The acquision of John Couch in 1997 – THE landmark for the company • Changed name to Doubletwist and pursued second round of VC in 1999 – handcuffed by crash of biotech industry in year – raised 19.7M • Third round of fundraising in 2000 – seeking 20M – 90M offered! Cut back some, eliminated others, spoke with investment bankers – prepared to go public, but did not due to uncertain markets, and no need for cash!

  5. Overview of Doubletwist, Inc. History (continued) John Couch • Hewlett Packard • Involved in development of hand-held calculator marketing • Apple • Director of New Products, • VP and General Manager of personal Office Systems Division • Pioneered Apples GUI computer • 7M / annually when he arrived, 1B / annually when he left • 10 Years off to create an educational foundation to fund technology in schools • Took over failed private school • Used 150 student K-12 school to prototype his ideas on technology education • Consulted for corporations and received goods for the school in payment • School thrived – gained reputation for digital curriculum and unique facilities including one of the earliest editing studios • School grew to 900 students and was profitable • Returned to business world with the advent of the Internet • Began consulting with Pangea Systems in 1997

  6. Goal Build a Life Sciences Portal • Gain mindshare • Create an affordable point-and-click environment which would anyone in the biotech or academic communities to do computational work without intermediaries to run algorithms against multiple databases • Early goal was mapping the human genome (3% of genome made of genes – special sequences of hundreds or thousands of base pairs which provide the templates for all the proteins that the body needs to produce.

  7. Doubletwist, Inc. Strategy Democratize genomics by providing all life scientists with a secure and comprehensive research environment and community via the internet (some 200,000 life scientists (bottom of the pyramid) without this access, representing a market of 1.4B (based on 10K/commercial scientist and 1K/academic scientist.

  8. Doubletwist, Inc. Strategy (continued) John Couch – changing the company and culture (attitudes and processes) • Was a linear process • Market research and validation • Wrote a detailed product definition • Build the product (6-12 months) • QA • Beta testing • Product release • Now… • Integration of marketing and development functions • Do discovery, market testing, and validation while doing development (engineering group most affected) • Tackle for projects simultaneously • More urgency, flexibility, awareneess

  9. Doubletwist, Inc. Strategy (continued) “More companies die from indigestion than starvation” (Bill Hewlett) – so slow down burn rate – 1M down to 600K / month “You don’t attack a well-built fortress” (Bill Hewlett and Dave Packard) – so - Pursue partnerships with research content companies (data and tools), e-commerce sites which served life scientists, and companies relevant to community building. Partnerships were critical to maintain a competitive edge! Quickly develop products and react to market conditions Hire young, bright enthusiastic people (don’t worry about lack of experience) – must pass the passion test Seek people with systems skills, and not just applications skills

  10. Sales Strategy After moving to ASP model… • Shorten sales cycle • Increase the number of potential users • Capture PR generated leads • Convert users of free service (Bronze-level) to higher value paid service (Silver-level)

  11. The FactsValue Proposition Provide life scientists with a secure and comprehensive research environment and community via the Internet. Enable sophisticated genomic analysis regardless of level of genomic expertise or access to robust computing power • Bring intelligence and efficiency to biotechnical research by offering research agents which use 20 algorithms (internal and external) for intelligent searching of >24 databases (some proprietary, some public) • Offer valuable features daily including the “Daily Twist” to improve site “stickiness” • Maintain neutrality to increase comfort level of customers with research or data storage by not engaging in biotech research or gene patenting.

  12. The FactsCompetitors 5 categories of Competitors • Biggest users – enterprise-wide systems (Bayer) • Shrink-wrap bioinformatics (software targeted at departments and individuals (Informax, Oxford Molecular Group) • Data producers – wet lab experimenters that produced original data – highly valued proprietary offerings (Celera, Incyte) • Internal bioinformatics departments of large pharmaceutical companies • Internet-focused firms that targeted smaller firms and individuals (Doubletwist, eBioinformatics, LabOnWeb.com)

  13. The FactsAdvantages over Competitors Many competitors were silos housing 30 or more VPs and personnel Utilized relationships with a ex-colleague, now head of Sun Microsystems, to provide high-end processing power in exchange for positive publicity (3 new Sun supercomputers at Sun’s Beaverton, Oregon facility) Internal communication, buy-in, flexibility, energy

  14. The FactsEconomics / Revenues The bioinformatics market is seen as a pyramid with the top being the 2K pharmaceutical and biotech companies, and the bottom, the 200K individual life scientists that are potential users of Doubletwist The 200,000 life scientists at the bottom of the pyramid representi a market of 1.4B (based on 10K/commercial scientist and 1K/academic scientist. Fees include • Annual subscriptions (Users paying average of 10-30K annually) and • One time pay-per-use (10K for ten runs)

  15. Primary Stakeholders Company Officers: • John Couch, Chairman, CEO (MS Electrical Engineering, UC Berkeley) • Robert Williamson, COO (MBA Stanford) • Steven Sanders, VP Sales (BA Political Economics) • Colin Freund, VP Business Development (MBA Stanford) • Edward Kirulata, VP Engineering (EE, 15 years software design, systems architecture) • Sophie Vazdi, VP Marketing (PhD Medical Chemistry, University College, London) Employees Scientists People (benefit from scientific breakthroughs)

  16. GBF Analysis - Winner takes all? Really GIRF – but change strategies fast! Great jump, yes, did this!

  17. GBF Analysis $ involved in gene research and patenting feeds protectionism and individualism, which was a major obstacle for such a community-based enterprise.

  18. Success or Failure? • March 2001 DoubleTwist withdrew its initial public offering (six months after it had been filed). • January 2002 former COO Robert Williamson replaced Couch as CEO (Couch becoming chairman of the board) • April 2002 DailyTwist was shut down. "No one was surprised by this," Williamson told the San Francisco Chronicle, "but everyone was disappointed. We had a great product and a great team, we just didn't have the revenues." • DoubleTwist had raised a total of $76 million • 200 employees, had dwindled to 60 Source, Kevin Davies, East Day Business Times, March 11, 2002

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