In a previous post I mentioned I was undertaking a market validation exercise based on a business idea of mine. The idea itself was born out of a problem I experienced during my time in the lab.
An online inventory management system for recording the location and details of biological samples in storage units (e.g. –80C freezers).
The pain that it addressed: There are currently inefficient methods of recording the location and details of valuable biological samples in storage units. Finding, identifying and sharing of these resources, especially over a longer period, becomes problematic leading to wasting of time and money.
Problems with current systems
- Illegible writing on samples or ‘location map’
- Limited information can be recorded
- Hard to sustain over long periods of time e.g. when group members leave
- Not durable i.e. always having to make a new map periodically if with pen and paper.
- Hard to modify when samples change location
- Hard to know what other people have for the purpose sharing of resources
- Difficult to search current library of MY samples
- Difficult to search current library of MY LAB GROUP’S sample
Business model? An online SaaS model with a freemium/ premium pricing strategy. Free for individual researchers. Costs incurred when wanting to amalgamate individual libraries/ databases together (price increases according to # of people in the lab/ sharing the database.
The consumer? Are biological based researchers (from grad students to professors) with biological sample storage freezers (typically large –80/-20C freezers or liquid nitrogen tanks. Every group should access to at least one of these units). I recognise there are two levels of consumers that exist important for buying decisions within the laboratory environment:
1: individual researchers including grad students who have significant influence over laboratory purchases.
2: the group leader/s who have sign off authority on laboratory spending.
Their spending habits:
Average annual lab budgets 250k to 500k for university and industry labs respectively.75% of labs mentioned that 25-75% of the budget is to pay staff.The dollars available for purchasing equipment, products, and services is over $100,000 for more than 43%.
- Increased digitisation of labs.
- Increased complexity of laboratories and science.
- New generation of researchers coming through which are a greater part of the online digital world. More tech savvy.
How big is the market? [ rough bits taken from the web]
2008 there were approx 100,000 biological scientists 100,000 medical scientists agricultural and food 30,0000. with a 30% increase over the next 10 years
US Market size NOW = 250,000 life science researchers in US
if average lab group size is 6 ( this is the documented average, however I am sceptical):
x $10/month (cost of our service) = $5 mill/ year
x $15/month (cost of our service) = $7.5mill/ year
if average lab group size 10
x $15/month (cost of our service) = $4.5 mill/ year
x $20/month (cost of our service) = $6mill/ year
Based on what I had flushed out I above I proceeded to do some market research to validate the hypothesised pain.
Online Web Survey – Using Google Docs and my global network of scientists through Facebook/ Linkedin to I undertook a web survey to as many people as I could. Check it out here if you want.
In person, phone or follow up conversations also took place with those from the survey that I wanted to discuss their answers with.
So far: 20% will no pay for the solution, 20% may purchase and 60% will purchase. (so a 60% x7.5mill/ year business???)
I also did some competitor analysis. It took some time but I found 2 main competitors. They were harder to find because their solution was part of a broader solution. They are also both recently launched products i.e. <6 months. I investigated there products further by downloading/ signing up to have a play. Turns out their products are very well designed and will solve the pain I have identified. I also could not see how I could design something better and neither could some of my survey respondents.
While there does look like a small market there which could be fine for a small scalable start-up the fact that these two good competitors exist is off putting. They have first move advantage into a ready market both with well designed products.
RESULT ? Idea Killed.
Graeme @ graemefielder.com