Validating idea #2

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.

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The idea?

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%.

Important trends:

  1. Increased digitisation of labs.
  2. Increased complexity of laboratories and science.
  3. 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.

Next please…….

Graeme @ graemefielder.com

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