For this class, each group had to create a business plan. Our group chose to analyse and refine on a recently developed start-up (UNItiques) that was developed by one of our group members.
The First Pitch: First Pitch.docx
Executive Summary: Executive Summary.jpg
Final Buisness Plan: Offical Buisness Plan .docx
PowerPoint Buisness Plan Presentation: POWERPOINT-UNI 1.pptx
Business Case Paper: Extend Fertility Analysis
By combining revolutionary science and quality medical services in one place, one can beat the biological clock and create a more comprehensive assurance for professional women who delay their pregnancies until mid to late 30s. By retrieving and freezing women’s eggs for future use, Extend Fertility believes that they can provide a service that has been missing from the current market. The company’s goals are to help encourage advanced public information and increased research in the area of fertility.
They want to build a trusted brand and deliver quality service through a specific infrastructure; creating strategic partnerships with industry leaders in all related fields does this. Her entrepreneurial spirit is obvious in the way the developed a strong social network, kept a rein of the suppliers, and was well aware of the technological and demand risk. However, she is geared towards the trustee since she is very much committed to the management structure. But, she has some promoter traits since she had great control of the recourses.
The structure of the company is set by both a scientific and technology advisory boards as well as by setting up a call center, training clinics, and finding a conveniently located facility to store the cryopreserved eggs – overall the structure was a collection of partnerships and centralization of resources. This was to ensure women would go to one place that would help them (in-house).
The cash-flow analysis of the company made in the business plan makes sure to include a comparison with competitor prices and makes sure to be inclusive of multiple types of ways that women can get children –including adaption. The start up itself was initially built on the dependency of $500,000 from family and friends; as well as a dependency on strategic partners to fund research and development. Overall, she projected she would break even with eight clients a month and would also provide a financing plan with capital one to make the expensive process more accessible to younger clients.
Dependency on strategic partnerships is not sustainable
Jones worked with a variety of individuals and extensively used her social/professional network to gain understanding of the opportunity gap, technology, and science behind her idea. She was able to target and acquire the appropriate resources that would make Extend Fertility possible.
It was a smart tactic for her to try to block the market from other people by taking the top valuable resource’s away from potential competitors. Howver there are some situations that would make these “strategic partnerships” not enough to guarantee the sustained and long-term success of Extend Fertility. There is always a chance that future competitors can find comparable external resources and become challenging competitors to Extend Fertility. Therefore, she would need to provide something valuable that only she and her company can provide and have exclusive rights over that was permanently guaranteed. Centralizing resources is not enough and is not something that someone can have permanent excusive rights over. Any of these resources could be bought over by other people with a similar cause or even go out of business. She needs to have something that could back her up when all else fails. Therefore, what she needs to do find and patent a specific product that could potentially be developed through her scientific and technology advisory board.
The business plan had stated that Extend Fertility was in late-stage negotiations to obtain exclusive U.S. rights to what is objectively the egg-freezing product and technique in the world, with expected FDA approval in April 2004. However to depend on this is too risky – but she would need something like this to maintain credibility of the company. Another issue with these external resources is that if she has ownership over all of them and her “brand” is attached with each of them, she becomes fully responsible for all their actions – every clinic, pharmaceutical company, and science research related to Extend Fertility. The company will be scapegoated for any failure. So, she has too many different resources under her belt that she must ensure their actions are good and that everything is running smoothly. Therefore, she needs to create a more limited but exclusive network that she could potentially take over. This way she is controlling everyone rather than all these companies and places controlling her and her company.
Overestimating the opportunity gap
The market for these types of “professional women” may not be as broad as she may have initially predicted. Although there is potential value because of good conditions, there was not statistical evidence that stated how broad this market is and proof that she would even be able to get eight clients per month. Even though she may see an “obsessive desire” for children that has supposedly translated into the multibillion-dollar markets for adoption and similar practices – this does not directly correlate with the guarantee of eight clients a month to make sure the company breaks even each month.
There is definitely a willingness to pay high for elective medical procedures, the market she is targeting is such a small niche of individuals that it may not prosper like intended. I would like to see how many respondents responded to her survey and garrentee the legitimacy of the way the survey was conducted in order to better understand the context of the in-house statistics that she provides below:
“Our pricing survey showed 60% of respondents were willing to spend $10k+ for egg freezing, with 21% willing to spend $15k+. Respondents earning more than $100k per year and/or in their late 30s were willing to spend even more.”
Challenging the path of traditional scientific progress is too risky
Christy Jones was trying to fast track the process by trying to fill the gap between modern speedy technological advancements and the slow progression of scientific research. She wanted to simultaneously do continuous scientific research and quickly fill the opportunity gap by creating Extend Fertility. This opportunity gap arose because of a shift in social values, technological changes, and consumer economic changes – since professional women have the technology available to them to potentially have more control over their fertility and are willing to pay grand amounts to do so.
There is a question that arises from this business case that makes us weigh the pros and cons of trying to wait to fully research and analyze all possibilities in relation to safety/statistics concerning egg fertilization v. taking a risk by rushing a product into the market as to encourage more future research. If the technology and scientific process does not work as expected, since she is moving so fast, she could be promising women something that she can not necessarily provide.
Although the business plan stated that through her research “she became convinced that the technology was viable but that the research would need to be brought to publication before she could get commercial acceptance”, she needs more viable statements to back her up. So, what she needs to do is increase credibility by pausing the flow of clients for another year in order to continue testing and making sure that Extend Fertility promises are true. This way she won’t get in trouble in the future.
2nd Business Paper
Due: November 10th
CustomMade: The Future of the Online Marketplace
CustomMade is a local Cambridge based start-up that arose on the radar in 2009 after two Boston University college students, Mike Salguero and Seth Rosen, decided to purchase the domain to a custom-made wares website. These novice entrepreneurs started the operations to their new start-up out of Salguero’s one bedroom apartment with no initial seed money. CustomMade is an online marketplace that connects customers with makers who want one-of-a-kind creations. Within the e-commerce industry, this local business has created a new type of online marketplace that not only delivers handmade/custom items but also offers meaningful relationships between tis customers and crafters. They believe in the concept that things mean more when they are created by the customer and therefore you bring your creations to life –and can get exactly what you want, the way you want it through this new website dynamic.
Moreover, CustomMade creates an online community not only between customers and makers, but also between makers to other makers. There are thousands of professional makers –small business owners, talented craftspeople, independent artisans—across the United States.[i] Yet, creating one centralized place to find these makers provides a stronger, more diverse, and safe network that can provide a viable alternative to traditional large retail and help small local businesses. Today, CustomMade is the “world’s first and largest online seller of custom products with over 12,000 custom makers registered”.[ii]
In a consumer world where customers buy items from big retailers, there is an increased detachment and sentimental value to what is bought. CustomMade decided to bridge the missing gap between art and commerce to develop a more personal way of shopping for its customers. The start-up believes that customers are always interested in the stories behind the items they are buying. However, if this is true, the founders asked themselves why someone would go to a big box furniture store or big jewelry retail rather than a local furniture store or an independent jeweler[iii].
They discovered that it is because there are frictions in the market that make “custom-made” feel inaccessible to the general population –which therefore creates an opportunity gap. So, their goal is to close this gap by facilitating the building of relationships between customers and the people who are actually making the things they are buying. They are also trying to use the opportunity by helping crafters across the country grow their businesses and compete against big retail through an online safe and secure market –which both founders are passionate about. On a grander scale, they want to manipulate the current social situation from one that is focused on mass production to a market that focuses on high quality, originality, and personalization[iv]. Although Etsy was a similar competitor, that also tries to close the gap between art and commerce, CustomMade goes the extra step. Their site is more reliable in that crafters are ensured better sales and customers can customize everything on offer – which caught the eyes of many influential investors.
Mike Salguero and his co-founder had first initiated the company with no seed money prepared. Therefore, in the time period of 60 days, they were able to put down a personal deposit, raised $15,000 from family, and the rest of the $400k to purchase the website was acquired from friends and outside investors[v]. The website had 350 crafters when the website was initially bought from the woodworker who had owned and run it since 1996. When the two novice entrepreneurs bought the website they decided to spend a year to design a more accessible website interface and create an adaptable business model. At first, they were founded on a subscription-based service, but changed in 2011 to a transactional marketplace model to facilitate transactions that aided in their financial growth [vi].
In the beginning stages, The Founder Collective gave $400,000 in seed money during the year of 2009. Then, in 2010 they secured angel round of funding for 1.15 million that was used to “expand consumer-based marketing, branch out to other custom verticals and hire more staff for website development and sales.”[vii] In 2011, they were able to catch the eye of important investors such as First Round Capital and Google Ventures to raise $2.1 million that helped expand staff and site features –with a larger goal of disrupting big box retail with customized items. They continued their increased funding by receiving $4 million in 2012 by Google Ventures and several other venture capitalists. However, they tripled this amount in 2013 with the help of returning investors from Google Ventures with an astounding $18,000. [viii]Within this period, they increased the number of crafters from the initial 350 makers to 12,000 makers on the site and raised an estimated total of $25 million from 11 investors.[ix] Moreover, “CustomMade says it has “doubled in size and revenues” in the past six months.”[x] CustomMade’s CEO Mike Salguero states that “2013 was a critical year of growth, refinement and, perhaps most importantly, deeper engagement with our Buyer and Maker community.”[xi]
The way that CustomMade creates money is by taking a 7% commission on all sales from the seller. In terms of cash flow, each month they receive $2 million in transactions. [xii] To continue to create accountability and credibility as a company, they have a money back guarantee for purchases up to $5,000. The employees moderate the disputes and some website features encourage the sellers to post regular updates, including photographs on the progress of the customized pieces –which increases artist accountability and buyer satisfaction. This helps keep the retention rate of customers that in return benefits the sellers.
CustomMade needs to continue to persuade people that getting something custom made is truly accessible and has overall better value than going to a big-box retailer. Moreover, it is important that the company resumes the momentum of helping their artists better price and promote their work. Beyond continuing these solid practices, the team must think about how they will resume to provide an intimate community with an ever-expanding network on the site. The two founders took a grand risk because although they both held MBAs, they have no solid technological skill sets and were therefore innately unqualified to create a consumer Internet business. They have been able to hire the right people and their timing was impeccable. However, now that they are rapidly expanding, I believe that Mike Salguero and Seth Rosen may now need to reevaluate their positions within the company. With expansion, they will need to know a lot of more intricate computer skills to continuously improve the site. Therefore, I believe the best steps is for Salguero to step down and take a different role rather than CEO of the company to allow the company to grow to new heights that he otherwise would not be capable of doing.
Moreover, within the new round of investors, they should utilize the money not on expanding, but rather on solidifying their brand awareness across the United States. They need to use strategic marketing in order to truly break through the traditional consumer methods of interacting with products. If their goal is to disrupt the traditional market and decrease the feeling of “inaccessibility”, they should shift their focus to a bigger cause than just the site itself.
Although seemingly contradictory, CustomMade could potentially partner with big box retailers and create custom versions of certain big retailer popular items. This can help the company to penetrate the market from within by utilizing these resources and huge customer network to convince the populations that custom-made is the more sustainable, greener, and better path. Why not have something exactly the way you like it? This can help add true value to homes that transcends an actual price tag. These items can be passed on for generations, with their sentimental value and the CustomMade name engrained in households across America.