SV-11 Industry Partnershps Cascade Design

Industry PartnershipsCascade Designs Inc.

Day One Response, Inc.

Sustainable Vision Workshop3/22/2011

Agenda

Background: Cascade Designs Inc. (CDI)

Background: Day One Response

Case Study: SE200 Electrochlorinator

Partnering Strategies

Case Study: Day One Waterbag

Partner Selection Criteria and Pitfalls

Conclusions

Platypus Hydration SystemsDenali Snowshoes

MSR & SweetWaterPurifiers

Therm-A-Rest Sleep Pads

MSR Tents MSR Stoves

Under the brand names Mountain Safety Research (MSR), Platypus, and Therm-A-Rest

we are recognized as the technical and market leader in hydration systems, hand-held water

purifiers, lightweight camp stoves, cookware, sleep pads, and snowshoes.

Over 40 years of experience in developing innovative commercial and military products.

• Manufacturing expertise in a wide range of disciplines and

technologies – metal forming and fabrication, sewing, RF welding,

thermoforming, and final assembly. In-house microbiology lab.

• Cascade Designs has over 5,000 Outdoor retail accounts in the U.S.

and sales agents in over 40 countries around the world.

• Existing supplier of the Army and Marine Corps’ standard-issue sleep

pad, water purifier, camp stove, snowshoes, and dry bags.

Cascade Designs Inc. (CDI)Core Strengths

Background

• Cascade Designs’ core strength is bringing

innovative new technologies to market. [i.e. –

“Crossing the Valley of Death”].

• On the commercial side of our business,

market pressures require us to have something

new at the trade show every year.

• Government funded development efforts enable

us to “swing for the fences”, and partner with

universities and technology firms to research

cutting-edge technologies.

DoD Funding

$

Valley of Death

$

Product Revenue

“Providing clean drinking water is our #1 challenge in disaster zones.” -Steve Rieve, American Red Cross

Cal Poly State University & DayOne Response, Inc.

Day One ResponseBackground

All essential functions in one unit:

1. Easy Collection

Under difficult conditions

2. Transport

Backpack straps are comfortable

3. Treatment

Dirt, Cysts, viruses, bacteria removed

4. Storage and Dispensing

closure prevents re-contamination

The DayOne Waterbag™

Strategic Partnerships• Cal Poly State University R&D (2007-present)

• DayOne Response, Inc. founded April 2010 with guidance from Innovation Quest and NCIIA

• Partnership with Cascade Designs, Inc. and US Naval Facilities Engineering Command

• Working with P&G’s Children’s Safe Drinking Water program to expand the use of PUR in disasters and other development settings.

• Continued partnership with California Polytechnic University on R&D for current and future projects

Case Study: Electrochlorinators

Electro-

Chlorination

Halogenated

Resin

Solar

Radiation

Particle

Filtration

(Sieves)

Ceramic

Candle Filters

Hollow Fiber

Adsorption

Forward

Osmosis

Ion Exchange

Precipitant

Dosing

Oxidant

Dosing

Applied Energy Physical Separation Chemical Treatment

Apaclara

Capacitive

De-ionization

MIOX

MM Media

PATH

MSR

Halosource

TDA

Research

PATH

Access to cutting-edge technologies has given CDI the opportunity to evaluate the full spectrum of water purification technologies for use in the Base of the Pyramid markets.

Sweetwater

CDI Water Purification Technologies Map

Puralytics

Cal Poly

University

MIOX

MSR

Lemelson

Laird- Norton

Gates

Sefar

Light Year

Oasys

HTI

Resintech

Purolite

ORICA

Metal Ion

Treatment

Quartek

One Drop

Calgon

Biomin

Outdoor

• CDI has over a 35% share of the outdoor water purification

market.

Military

• CDI is the supplier of the Marine Corps’ standard-issue

Individual Water Purifier System.

• CDI has funded R&D efforts to develop next generation on-the-

move water purification systems for the Army, Marine Corps, and

Special Forces.

Developing World

• CDI is providing lab and technical support on PATH’s Safe

Water effort.

• Funded development projects include the SE200

Electrochlorinator (Africa) and Household Water Treatment

System (India).

BackgroundWater Purification Markets

BackgroundCDI History in Emerging Markets

2004 Tsunami: Lessons Learned

• Philanthropy wasn’t enough.

• Products need to be designed for the end

user.

• Logistics are critical.

• Decision to apply CDI’s resources

toward developing innovative technical

solutions to provide access to safe water.

BackgroundCDI Developing World Efforts

• Waterborne diseases are a major global

health problem.

• Seattle is a center for global health

initiatives (Gates Foundation, PATH,

World Vision, etc.).

• DoD-funded efforts have given CDI

access to cutting-edge water purification

technologies.

• CDI is trying to determine if we can

contribute in developing world markets.

[Can we leverage the strengths that made

us a leader in Outdoor and Military water

purification?].

Electrochlorinator uses electricity to convert salt into a powerful disinfectant.

• Early development work funded by DARPA.

• MSR MIOX Purifier launched to the outdoor market in November 2003.

Became the #1 selling Purifier in its first year on the market.

• Support from PATH and the Lemelson Foundation enabled CDI to adapt

the electrochlorinator technology for developing world applications.

Technology

• Supply chain, storage, and

transportation benefits.

• The capital and operating costs are

much lower than other small

community water purification

options.

• Disinfectant is created fresh for

each use. [No shelf life issues].

• “Smart circuit” technology

minimizes the potential for

operator error.

SE200 Electrochlorinator

SE200 Target Specifications

Treated Water Volume per run 200 liters (55gal)

Power Source External 12V Battery

Run Time 5-7 minutes

Voltage/Amperage 12V / 4.5A

Capacity (80 Amp hour Battery) 200 runs

Wholesale Cost Target $100

Approximate operational cost

per 1000 liters$0.13

Advantages

ConnectionsCal Poly Electrochlorinator Project

• The team at the Naval Facilities

Engineering Service Center (NFESC)

has helped CDI establish relationships

with a wide range of government and

industry partners.

• Bill Varnava, the project officer on

several of CDI’s military funded R&D

efforts, is a Cal Poly alumni, and

recommended that CDI consider

working with the University on a

Senior Project.

The Seawater Desalination Test Facility (SDTF) provides research, development, test and evaluation, and training support for water purification equipment.

Naval Base Ventura County (Port Hueneme, CA)

ProjectCal Poly Electrochlorinator

Students Colin Gibbs, John Wilson and

David Dyk

Advising

ProfessorLee McFarland

CDI Project

Manager Whitney Goodwin

Deliverable A unique design that functioned

within the target product

specifications was developed.

New ideas for dispensing and

measuring the disinfectant were

explored. Potential manufacturing

options were investigated.

Senior Design ProjectCal Poly Electrochlorinator

BenefitsStudents

• Gained experience in designing an innovative

water purification product.

Cal Poly

• Developed relationships with industry and

government contacts.

Cascade Designs

• Interaction with students forced the CDI

design team to reflect on the use modes and

design parameters.

• Students explored alternative design concepts

and technical approaches.

• Student team investigated innovative

manufacturing processes.

• Success on the Waterbag and

Electrochlorinator projects have enabled CDI

to expand our involvement with Universities.

Success FactorsCal Poly Electrochlorinator Project

• Project was relevant within Cascade

Designs. [Our design effort with PATH

was done concurrently].

• Strong project manager at Cascade

Designs. [Design lead worked with the

student team]. Willingness to invest time

and resources to support the student effort.

• Cal Poly students were smart and

motivated to succeed.

• Professor McFarland provided solid

coaching. [Emphasis on functionality and

manufacturability].

Seed MoneyLemelson SE200 Grant

• Adapt the MIOX electrochlorinator technology for

humanitarian and disaster relief applications.

• Study the requirements for rural small-community

water purification systems. Gather field data.

• Evaluate sustainability (micro-finance water kiosk

entrepreneur economic model).

• Leverage existing government funding. [Evaluate

new materials, power supply options, etc.].

• Position the CDI/PATH/Day One team to

participate in new humanitarian and disaster relief

efforts. [Operation Crimson Viper].

• Help CDI explore partnership opportunities with

Universities. [Cal Poly, UC Berkeley, UW, etc.]

What did the Lemelson Foundation grant enable the PATH/CDI team to accomplish?

Partnering

5% Technology - 95% All the other stuff

Business models

Cultural factors

User experience

Financing

Ease-of-use

Distribution

Supply chain

Maintenance

Cost

Idea Create Design

Concepts

Product

Specs

Explore Materials

& Technologies

Alpha

Prototype

Beta Prototype Design

Mods.

Finalize

Design

Product

Upgrades

Sales Input

Evaluate

Partnering Oppty.

Identify Standards

& Regulations

Evaluate Mkt.

Opportunity

Idea Product

Specs

Identify

User Needs

Demand

Curve

Market

Testing

Marketing

Strategy Packaging &

Instructions

Product

Launch

P.R. &

Promotions

Preview with

Key Buyers

Increase

Mkt. Share

Product

Launch

Scenario

Planning

Design

Reviews

File

Patents

Contract

Negotiations

Improve

Profitability

Develop I.P.P.

Strategy

Design

Reviews

Identify Potential

Suppliers

Sourcing &

Costing

Manufacturing

Strategy

Design

Tooling

Risk

Assessment

Quality

Strategy

Create

Inspection Plans

Design

Validation

First

Article

Continuous

Quality

Build

Tooling

Production Continuous

Quality

Product

Support Commercialization Concept Development

Engineering

Marketing

Sales

Admin.

Operations

Quality

Technology Transition

Technology Scale-UpCascade Designs Inc.

Phase Description Objective

Proof-of-Concept

Conduct design studies. Buildmock-ups and alpha prototypes. {1 off}

Ideate the most effective product concepts. Identify key performanceindicators.

Beta Prototype & Test

Build functional prototypes and conduct lab and field testing. {5-10}

Demonstrate that the concept has the potential to meet the target product requirements.

Low-Rate Product

Build product samples with “soft tooling” and real materials. {50-500}

Conduct a comprehensive field test to evaluate product performance and training requirements.

Market TestingConduct a market study with early adopters in key target markets. {1000 – 10,000}

Track performance closely. Verify the product meets the needs of the key usergroups. [Price, durability, etc.]

Product LaunchFull-scale production and market introduction. {Pipeline filled. Re-orders.}

Product meets or exceeds customer requirements and sales projections

Market Expansion

Secondary markets and spin-off or accessory products are considered. {TBD}

Leverage the product’s success to build market share and access new markets.

Case Study: DayOne Waterbag, Scaling and Partnerships

Concept

(2007)

Iterations

(2007-2010)

Product

(2011)

Phase Description Objective

Beta Prototype& Test

Build functional prototypes and conduct lab and field testing. {5-10}

Demonstrate that the concept has the potential to meet the target product requirements.

Waterbag 2007-2009

Nicaragua 2009

Phase Description Objective

Low-Rate Product

Build product samples with “soft tooling” and real materials. {50-500}

Conduct a comprehensive field test to evaluate product performance and training requirements.

Waterbag 2010-2011

Crimson Viper, Thailand, July 2010

Waterbag 2010-2011

Haiti, March 2011

Phase Description Objective

Low-Rate Product

Build product samples with “soft tooling” and real materials. {50-500}

Conduct a comprehensive field test to evaluate product performance and training requirements.

Waterbag Next Steps…Phase Description Objective

Market Testing Conduct a market study with early adopters in key target markets. {1000 – 10,000}

Track performance closely. Verify the product meets the needs of the key user groups. [Price, durability, etc.]

Product Launch Full-scale production and market introduction. {Pipeline filled. Re-orders.}

Product meets or exceeds customer requirements and sales projections.

Market Expansion Secondary markets and spin-off or accessory products are considered. {TBD}

Leverage the product’s success to build market share and access new markets.

What factors does Cascade Designs consider when evaluating potential industry or University partners?

PartneringSelection Criteria

Technical Advantage – Does the product concept have a

competitive advantage over the existing COTS products.

Passion – Does this team have the vision, talent and

commitment to get the job done?

Business Compatibility – Are the business interests

aligned?

Synergy – Does this opportunity fit in with other existing

development projects or strategic objectives?

Distribution Fit – Can we sell the products resulting from

this effort into one of our existing markets?

Manufacturing Fit – Can we produce the future products

with our existing manufacturing capabilities?

I.P. Protection – Is defensible I.P. protection available?

Risk – What are the potential risks vs. rewards?

Operation Crimson Viper Field Testing

What are some of the factors that often cause inventors and start-up companies to struggle?

PitfallsInventors & Start-ups

• Fail to partner with other organizations.

[Try to do it all themselves].

• Lack a clear understanding of the target

markets and competitive landscape.

• Unrealistic expectations regarding the

value of their idea. [Std. royalty Outdoor

market: 2-5% net profits].

• Unable to identify a “Champion” within

their key distribution channels. [Believe

that a better mousetrap just sells.].

• Funding. [Dilution of ownership, cash

flow].

Thanks

Next Steps

• Need to gain a better understanding of the

HADR user needs and product

requirements.

• Need to identify which DoD/government

agencies are relevant to our cause. [“Map

the foodchain”].

• Set up meetings with contacts in key

HADR agencies. Brief them on our active

and planned development projects.

[“Connect the dots”].

• Find the best ways to channel our strong

corporate and political support.

• Find new ways to get our “80% solution”

product concepts out in the field for market

testing.

• What all the Lemeslon Funding

allowed us to do

?Background

Economics of the SE200

• Resupply items: • 30 kg salt per 40,000 liters of water

($4)

• charge 12V car battery each 40,000

liters ($1.30 at a charging station1)

• Raw water

• Capital costs: • SE200 ($100 wholesale cost target)

• 12V 80 Amp-hour battery ($100)

• Total Capital Costs: $200

• Operational cost per 1000 liters:

$0.13

1 Electricity battery charging cost is based on charging station price. It would be less if the operator has

access to electricity and does not need to go to a charging station.

Development Business Model (Aquaya)

Ratio of consumable costs to sales 0.02

WATER SALES INCOME US$

Monthly sales from water at 4 Ksh/20L $ 139

Yearly Sales from water at 4Ksh/20L $ 1,669

5 Year Sales of water at 4Ksh/20L $ 8,343

OPERATIONAL COSTS US$

Amount spent on battery recharges over 5 years $ 130.36

Amount spent on salt over 5 years $ 31.30

Total consumable costs over 5 years $ 161.66

Comparison of oxidants (operational costs)

ProductAquatabs PUR Packets WaterGuard SE200

MedentechProctor and Gamble ($)

WaterGuard, Kenya ($)

Cascade Designs, Inc. ($)

Use modeTablets

Sachets of powder

Dilute liquidchlorine

Chlorine production

Cost per 1000 liters1.40 10.00 0.22 0.13

Shelf life5 years 3 years 6 months -1 year 5 years+

Special storage conditions

controlled temperature

controlled temperature

controlled temperature

no

Air transportable without permits

yes yes no no

Indication of safetyno no no Lights, auto-stop

Field Trials

•December, 2008: Kenya – Kenya, installation of a 20 L electrochlorinator.

– Collect initial operator/training feedback

•June, 2009:Kenya– Kenya, revisit 20L installation

– Hold focus groups on 200L alpha prototype

– Collect qualitative feedback

•Spring/Summer, 2010: Ghana, Kenya, Zimbabwe– Set up first SE200 water kiosks

– Carry out quantitative microbial studies in households

– Collect operator and customer feedback

– Develop preliminary financial model

•July, 2010: Disaster Response Exercise in Thailand– Simulated disaster scenario

– Train Thai Marines to operate the SE200

– Compare to 5 other disaster relief water technologies

• Strategic alliances are favored by DoD

R&D funding patrons (ONR, DARPA,

etc.). [CDI hunts most effectively in

packs].

• CDI and PARC have complimentary

core strengths.

• CDI’s in-house manufacturing

engineering, prototyping and LRIP

production capability can compliment

PARC technology transition efforts.

• CDI can serve as a Prime contractor

on collaborative development efforts

(SBIRs, etc.).

• CDI has the brand recognition,

marketing expertise, and distribution

network to bring PARC technologies to

the Outdoor and military markets.

Partnership Opportunities

Economics of the SE200

• Resupply items: • 30 kg salt per 40,000 liters of water

($4)

• charge 12V car battery each 40,000

liters ($1.30 at a charging station1)

• Raw water

• Capital costs: • SE200 ($100 wholesale cost target)

• 12V 80 Amp-hour battery ($100)

• Total Capital Costs: $200

• Operational cost per 1000 liters:

$0.13

1 Electricity battery charging cost is based on charging station price. It would be less if the operator has

access to electricity and does not need to go to a charging station.

Development Business Model (Aquaya)

Ratio of consumable costs to sales 0.02

WATER SALES INCOME US$

Monthly sales from water at 4 Ksh/20L $ 139

Yearly Sales from water at 4Ksh/20L $ 1,669

5 Year Sales of water at 4Ksh/20L $ 8,343

OPERATIONAL COSTS US$

Amount spent on battery recharges over 5 years $ 130.36

Amount spent on salt over 5 years $ 31.30

Total consumable costs over 5 years $ 161.66

Comparison of oxidants (operational costs)

ProductAquatabs PUR Packets WaterGuard SE200

MedentechProctor and Gamble ($)

WaterGuard, Kenya ($)

Cascade Designs, Inc. ($)

Use modeTablets

Sachets of powder

Dilute liquidchlorine

Chlorine production

Cost per 1000 liters1.40 10.00 0.22 0.13

Shelf life5 years 3 years 6 months -1 year 5 years+

Special storage conditions

controlled temperature

controlled temperature

controlled temperature

no

Air transportable without permits

yes yes no no

Indication of safetyno no no Lights, auto-stop

Field Trials

•December, 2008: Kenya – Kenya, installation of a 20 L electrochlorinator.

– Collect initial operator/training feedback

•June, 2009:Kenya– Kenya, revisit 20L installation

– Hold focus groups on 200L alpha prototype

– Collect qualitative feedback

•Spring/Summer, 2010: Ghana, Kenya, Zimbabwe– Set up first SE200 water kiosks

– Carry out quantitative microbial studies in households

– Collect operator and customer feedback

– Develop preliminary financial model

•July, 2010: Disaster Response Exercise in Thailand– Simulated disaster scenario

– Train Thai Marines to operate the SE200

– Compare to 5 other disaster relief water technologies