Today's roundtable overlapped with the Italy - Slovakia World Cup soccer game, which from what I can tell was quite exciting, albeit very disappointing for the reigning champions!
Michael Jastram started off by presenting ProR, an open-source platform to manage the RFQ process for automotive parts manufacturers and suppliers. Michael has an European Union grant for the next 18 months to build this platform, and intends to offer integration services and premium functionality on top of it to monetize it. His presentation was clear and concise, and he has good connections into the automotive industry, through which he expects to be able to scope out the functionality of the system relatively easily.
There are about 6 major manufacturers and 600 smaller parts manufacturers who feed into these companies. We discussed average deal sizes for the integration projects, which Michael estimates between €10,000-50,000. This would be a very reasonable way to monetize the platform and build a several million dollars a year business over the next three years. I found Michael's strategy robust and well thought through.
He used me as a sounding board to verify his assumptions. Michael came to the session with a good deal of homework done, which made it a smooth discussion with a very clear execution roadmap. I gave him several pointers to open source case studies, including SugarCRM, CollabNet, SpringSource, and DimDim, which, of course, is our host for the 1M/1M roundtables.
Then Bryan Webb pitched Norton Scientific, which is a protein aggregation monitoring system that helps with drug discovery. Bryan's target market is the 3,500 chemistry labs worldwide, adding up to a TAM of about $250 million. The product is 12 weeks from being ready, and will be sold through distributors at $8,000 per unit. Bryan seems to have identified a well-defined niche, and has designed a product that costs $1,000 to build. Distributors will be paying $6,000 per unit, making $5,000 profit per unit. There are some short-term cash flow issues with this business, but clearly, there is a business here that can get to break-even relatively quickly. With some seed capital, the business will scale just fine. I plan to invite Bryan to be featured on my Incubation Radar series, and introduce him to some angel investors.
Relationships Matter Now
Next, Denise Barreto started off by introducing Relationships Matter Now, a Web portal for wellness programs that want to offer relationship advice to employees of corporations. I'm afraid I did not find the value proposition convincing, and advised her to go talk to at least 50 corporate HR managers in charge of wellness programs to validate her idea before she quits her day job.
Up last was David Segura with Giant Media, discussing his viral video marketing company which did $90,000 last month in services revenue. David is exploring ways to manage his cash-flow challenges so that he can invest some money in building a widget or two that transforms Giant Media to more of a technology company, as opposed to a pure services company.
I tend to really like services businesses that achieve deep customer intimacy and build products based on that knowledge and experience. I am curious to see what kind of widgets David comes up with over the next few months, and again, as this business develops, we will feature the company in my Incubation Radar and expose it to seed investors.
While I am not sure about Denise's venture, the others three businesses - ProR, Norton Scientific, and Giant Media - I am reasonably sure have the potential to reach the $1 million mark with good execution and intelligent maneuvering.
I started doing my free Online Strategy Roundtables for entrepreneurs in the fall of 2008. These roundtables are the cornerstone programming of a global initiative that I have started called One Million by One Million (1M/1M). Its mission is to help a million entrepreneurs globally to reach $1 million in revenue and beyond, build $1 trillion in sustainable global GDP, and create 10 million jobs. In 1M/1M, I teach the EJ Methodology which is based on my Entrepreneur Journeys research, and emphasize bootstrapping, idea validation, and crisp positioning as some of the core principles of building strong fundamentals in early stage ventures. In addition, we are offering entrepreneurs access to investors and customers through our recently launched our 1M/1M Incubation Radar series. You can pitch to be featured on my blog following these instructions.
Sramana Mitra is a technology entrepreneur and strategy consultant in Silicon Valley. She has founded three companies, writes a business blog, Sramana Mitra on Strategy, and runs the 1M/1M initiative. She has a master's degree in electrical engineering and computer science from the Massachusetts Institute of Technology. Her Entrepreneur Journeys book series, Entrepreneur Journeys, Bootstrapping: Weapon Of Mass Reconstruction, Positioning: How To Test, Validate, and Bring Your Idea To Market and her latest volume Innovation: Need Of The Hour, as well as Vision India 2020, are all available from Amazon.
Photo by Svilen Milev