Roundtable Recap: August 5 – Paying Customers =>Validation =>Valuation

This week’s roundtable had some very interesting businesses. Three out of the five that presented are going to be featured on the 1M/1M Incubation Radar shortly, and a fourth will be featured on Deal Radar. Here’s a brief recap, before we do the comprehensive profiles on them.

First up was Avinash Gavande for Hospitality Star, an eLearning SaaS vendor for the Hospitality industry. Avinash has several customers in the mid-market in India and South East Asia. They’re doing about $200k in revenue, and presented a plan to do a comprehensive SaaS solution for the Hospitality industry including ERP and Procurement. The company’s entire client-base, however, is in eLearning, an industry-pain that is recognized and acknowledged by customers. Most importantly, the revenues are coming entirely from that business. My read on this company is that they should stay focused on eLearning for Hospitality as a core focus, and skip ERP and Procurement for now. For small companies, focus is critical. No need to waste precious resources – engineering, marketing or sales – in building ERP and Procurement solutions at this stage.

Next Leonardo Marcovitz discussed his Rapid Tissue Processor, a laboratory equipment for Histology labs, of which there are about 5700 in his target market. At $60,000 per unit, the product is substantially cheaper than its various competitors. It is also faster, making tissue processing more efficient for labs that have significant volume, and can translate to a core business benefit. Leonardo has validated the premise with several labs and has built a prototype. He needs about 10-12 months to get through the regulatory process, and also funding to manufacture the product. Now funding for early stage biotech ventures has become very, very tight. I was talking to someone at San Jose State University’s biotech incubator last night, and he said they were having a really hard time. So, I suggested to Leonardo to explore possible service projects with Quest Diagnostics and Labcorp, two of the largest companies in his target market, and see if they can generate some revenue with which to fund the project. An alternative would be strategic investment from Quest or Labcorp.

Chris Salter then presented Music Wizard. The company has been around for a while, and sells various digital games and educational products around learning to play music. A $500 educational product is selling well for them right now, and they also have a variety of distribution deals and so forth. Music Wizard, however, has raised $10 million dollars, but the revenue levels have fluctuated. With a burn rate of about $80k a month, the company is just about close to break even, today. Chris is trying to raise money while protecting his current shareholders. My sense is, any investor coming into the deal today will severely dilute the older investors, and that may simply not be the best route forward. Recapitalization deals are very complicated and often end up ugly. Instead, Chris should try to bootstrap the company going forward, and build organically. There may be some small amounts of working capital financing that can be used, but otherwise, at this stage, the business needs to grow from internally generated cash.

Then Rani Wemel with LTT Global spoke about an authoring tool for eLearning that enables educators to deliver their educational content on mobile phones. Rani has a couple of pilot educational institution customers in Malaysia and Indonesia, and hopes to help them deliver their material to students in a scalable way. The institutes have committed to paying about 80 cents per student per month, and one of the pilots will be with 120 students. Not a bad start to be able to get customers to pay for such pilots, and if Rani can get another 20 such pilots going in the educational institutions, she will learn a lot about what is needed to really and truly bring this authoring tool to market. What functionality. What usage model. What kind of professional services. All these are open questions. But with a steady set of pilots in swing, Rani should be able to answer these questions.

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.

The recording of this roundtable can be found here. Recordings of previous roundtables are all available here. You can register for the next roundtable here.

This segment is a part in the series : Roundtable Recap
. March 25 – A Mixed Bag Of Advice . April 1 – Bootstrapping Tips . April 8 – A Focus On E-Commerce . April 15 – Small Is OK; The Goal Is Profitability . April 22 – The Original Runners . April 29 – Finding The Right Direction . May 6 – Defining Value Proposition . May 20 – Validation, Validation, Validation . May 27 – Is The Venture Worth Your Time? . June 3 – Defining Market Segments . June 10 – Efficient Targeting . June 17 – Online Education Startups . June 24 – Three Startups That Can Hit One Million Dollars . July 1 - Get Your Pricing Model Validated . July 8 - The EJ Methodology . July 15 - A Market Of Late Adopters . July 22 - Bootstrap Using Services . July 29 - Startups In Malaysia . August 5 - Paying Customers =>Validation =>Valuation . August 19 - Niche E-Commerce Is Great For Bootstrapping . August 26 - 85%-90% Of Search Traffic Comes From Organic Search . September 2 - Find High Velocity Channels . September 9 - Open Opportunities In Cloud Computing And Rural BPO . September 16 – 5 Cloud Computing Opportunities for Entrepreneurs . September 23 - Do Not Spray And Pray . September 30 - Investors Don't Fund Broad Ideas . October 7 - Try To Get At Least $2M Pre-Money In Seed Round Valuation . October 14 - Professional Investors Do Not Invest In $20 Million Markets . October 21 - Bootstrapping Comes In Many Flavors . October 28 – Convert Potential Competitors To Partners . November 4 - Premium Lounge Sneak Preview . November 11 - African Tech Entrepreneurs Emerging . November 18 - Not Coming To The Rescue Of Victory . December 2 - Niche Marketplace Businesses Can Be Interesting . December 9 - Where Should You Raise Money? . December 16 - Top 10 Tech Trends To Watch . January 6 - Top 10 Vertical and Social Web Trends For The Decade . January 13 - Top 10 Online Advertising Trends For The Decade . January 20 - Personalization Remains An Open Problem . January 27 - Non-Dilutive Financing Through Revenue Sharing . February 3 - Indian Entrepreneurs Are Maturing . February 10 - When Keywords Are Competitive . February 17 - Indian Company Plugs Gap In Google’s Enterprise Solution . February 24 - VCs, Angels, Incubators, Accelerators – What Are You Doing With Your Rejects? . March 3 - Spotlight On The Northwest . March 10 - Spotlight On India . March 17 - Spotlight On Latin And Central America . March 24 - 75th Session Spotlights The Midwest . March 31 - Microsoft’s $100,000 India Startup Challenge Grant . April 6 - 1M/1M Announces Important Partnership With MAD Incubator, Malaysia . April 9 - 1M/1M Announces Partnership With TiE Chennai . April 16 - 1M/1M Partners With Indian Angel Network Incubator . April 17 - High-Octane Energy In Pune . April 21- Incubators Are Reaching Out To 1M/1M . April 28 - Guerrilla P.R. & SEO Most Profitable Customer Acquisition Strategies . May 5 - Ownership Matters . May 12 - Two Really Cool Companies . May 19, Making Money From Blogs . May 26 - Twitter, LinkedIn - Why Not Affiliates? . June 2 - 1M/1M And Incubators - What We Have Learned . June 9 - Silicon Valley . June 16 - Exciting Companies Lined Up For Microsoft Startup Grant Finals . June 23 - New Assessment Tool For Entrepreneurs . June 30 - Continued International Participation . July 21 - Crowd Sourced Funding Exchanges - An Emerging Trend . July 28 - Investors And Incubators Need To Look At Pre-Incubation . August 4 - How Do You Bootstrap Freemium Ventures? . August 11 - Menlo Park And The Silicon Valley Renaissance . August 25 - How To Use Twitter For Lead Generation . September 1 - Fall Call To Action . September 8 - A View Into Israeli Start-ups . September 15 - Do Your Homework First . September 22 - How Do You Catalyze A Region’s Entrepreneurship? . September 29 - From Poland To Argentina . October 6 - Dedicated To Steve Jobs, Reinforcing Mission To Restructure Capitalism . October 13 - FREE Is Not A Business Model . October 20 - Non-profits And For-profits . October 27 - Check Out Stanzr . November 3 - VCs Are Not Always Right . November 17 - Business Schools And Early Stage Entrepreneurship . December 1 - 1M/1M Premium Company Freshdesk Wins Funding From Accel Partners . December 8 - Three Open Opportunities For 2012 . December 15 - Web 3.0 And Social Dancing; Romania Emerging . December 22 - Free Apps, Ad-Supported Business Models => Dangerous! . January 5 - ERP Galore . January 12-13 - Spotlight On IIT Kharagpur, India . January 19 - Are Media Sites Fundable? . January 26th - Spotlight On Jacksonville, Florida . February 2 - YCombinator vs. 1M/1M . February 9 - Are You Fundable? . February 16 - What’s Happening In Turkey? . February 23 - Microsoft Israel To Offer 1M/1M Scholarships . March 1 - Strategy Gaps Need To Be Plugged . March 12 - Winners Of Microsoft Israel Scholarships . March 15 - Spotlight On 3 Day Startup Tel-Aviv . April 3 - Rendezvous In Bangalore . April 12 - More From Indian Entrepreneurs . April 19 - Tyranny Of The TAM . April 26 - A Rare Women-Only Session . May 3 - Some Wonderful Opportunities With Corporate Partners . May 10 - BlueSnap-Elance Contest Applications Deadline This Weekend . May 22 - Winners Of TechHub-A&N Media Battle Of The Startups Contest In London Win 1M/1M Scholarships