1-1
internet
business models
text and cases
Doubletwist, Inc.
Chapter 5, Case 2
Steven Young COS498
© 2005 UMFK.
1-2
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.
© 2005 UMFK.
1-3
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
© 2005 UMFK.
1-4
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!
© 2005 UMFK.
1-5
Overview of Doubletwist, Inc.
History (continued)
John Couch
• Hewlett Packard
–
•
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
–
–
–
–
–
•
•
Involved in development of hand-held calculator marketing
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
© 2005 UMFK.
1-6
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.
© 2005 UMFK.
1-7
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.
© 2005 UMFK.
1-8
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
© 2005 UMFK.
1-9
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
© 2005 UMFK.
1-10
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 (Bronzelevel) to higher value paid service
(Silver-level)
© 2005 UMFK.
1-11
The Facts
Value 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.
© 2005 UMFK.
1-12
The Facts
Competitors
5 categories of Competitors
1. Biggest users – enterprise-wide systems (Bayer)
2. Shrink-wrap bioinformatics (software targeted at
departments and individuals (Informax, Oxford
Molecular Group)
3. Data producers – wet lab experimenters that produced
original data – highly valued proprietary offerings
(Celera, Incyte)
4. Internal bioinformatics departments of large
pharmaceutical companies
5. Internet-focused firms that targeted smaller firms and
individuals (Doubletwist, eBioinformatics,
LabOnWeb.com)
© 2005 UMFK.
1-13
The Facts
Advantages 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
© 2005 UMFK.
1-14
The Facts
Economics / 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)
© 2005 UMFK.
1-15
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)
© 2005 UMFK.
1-16
GBF Analysis - Winner takes all?
Really GIRF – but change strategies fast!
Great jump, yes, did this!
© 2005 UMFK.
1-17
GBF Analysis
$ involved in gene research and patenting
feeds protectionism and individualism,
which was a major obstacle for such a
community-based enterprise.
© 2005 UMFK.
1-18
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
© 2005 UMFK.