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An idea to exploit my domain experience

Discussion in 'Ideas, Needs, Concept Feedback' started by BerlinerBaer, Sep 12, 2018.

  1. BerlinerBaer
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    BerlinerBaer Contributor Read Millionaire Fastlane FASTLANE INSIDER

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    I just finished the chapter in Unscripted, that talks about the advantages of domain experience. (btw, listening to this book while driving just gives you so many ideas, I'll probably do nothing else for a while whenever I drive).

    I started thinking about my domain experience and I had several business ideas. While driving around today I had a new one that sounds really good to me, so I'd like to discuss only that one for now.

    Broker for scientific services.

    Without going into too much detail, I've identified a service that a lot of scientists all over the world might find interesting. It's in a very specialized niche. The service would be essentially a website. The website has as its purpose to connect potential customers with companies that provide them with the products they need. Those products are not commodity items but will have to be made on a case-by-case evaluation by any company who offers those products. There's increasing competition from Asia in this business and prices are tanking while quality is rising. So while it's not a total commodity service, the service is in the process of becoming more commoditized and I'd like to help speed up that process.

    On my website, a prospect would include various information pertaining to their desired product, just enough for a company to be able to create a quote with lead time and price.

    The website then collects all the quotes and presents them to the prospect. The prospect decides to work with one of the companies. Upon completion of the project, they can leave a review of how things went. While the project is ongoing, the company can post updates that are saved in the customer's account. If someone is working with several companies, there will be an easy way to track all the different projects.

    The prospect will have to submit only one quote request, and in return gets a multitude of offers to compare. Smaller businesses will get an advantage because they may otherwise be overlooked. The only way to post a review is after actually finishing the transaction. That way, it should be pretty trustworthy.

    The best companies will have the best reviews, which makes the decision process easier for prospects. They can sort according to lead time, price and average review score.

    What I'm unclear about is: Where do I make the money?
    Do I charge companies a yearly fee for being on the platform? (This would keep out the crappy Asian companies and only give access to those that already have some money)
    Do I take a cut from any business they make? How do I track the transaction between buyer and seller to ensure that I get my fair share?
    How do I prevent people from circumventing my platform, after they've found a good offer in order to maybe gain some more savings since they can go directly to the company?

    What do you guys think about those two ideas? I think the second one is more difficult and has more potential to make real money. I just got the idea today while driving. All I'd need to do is:

    1. Build the site (will have to hire someone for that. Not sure how expensive it would end up being.)
    2. Get companies signed up (most likely, a lot of small companies will jump on board over against the bigger ones, but once there's momentum, everyone will want to be on there)
    3. Get the word out to people (Of course Google, but I can also reach out to people I know and spread the word that way).


    This is a model that's been done many times in all kinds of areas, especially insurance. It would be a little more complicated than insurance, but the basic principle stands.

    What are your thoughts on this? Any questions, concerns, ideas or warnings are greatly appreciated.
     
    Xeon likes this.
  2. LittleWolfie
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    LittleWolfie Bronze Contributor Read Millionaire Fastlane Speedway Pass

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    Sounds like a marketplace. As an example some of your competitors are paying 22k. Though if your willing to put the time in you could make a hacky version for a third of that.
     
  3. Andreas Thiel
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    Andreas Thiel Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER

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    My guts say that you would not provide much value with your "All I'd need to do" block, could not charge a lot and need to make scale work for you, as opposed to magnitude.
    Also, there is a part in "Zero To One" that talks about what kind of sales channel is appropriate for a given type of "purchase" ... and that "big ticket purchase" might not work on such a platform. Not sure.

    You have the domain knowledge, so probably you know what the value attributes of the market are and which ones you are planning to attack. My attempt to rephrase the idea: you want the basic concept to remain as it is - companies outsource research by paying for completed milestones (can I think about that like with contracts where money is paid after clinical trial phases?) and you pretty much only want to make the discovery process and the transaction process more convenient?

    I think if you do not provide a lot more value, for example with a vetting process that your customers pay for, you can not charge a lot of money.
    I would also look into how big the market is - how many companies currently actually outsource research.
     
  4. BerlinerBaer
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    BerlinerBaer Contributor Read Millionaire Fastlane FASTLANE INSIDER

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    I'm definitely thinking about scale here. I want to connect buyers with sellers nationally and internationally.


    I'll put that on my reading list. Haven't heard of it before.

    That's the basic idea, yes. The reason I got the idea is because where I'm currently working we started offering this service on the side. It's not promoted apart from when I or one of my colleagues brings it up when talking to a customer. We're able to offer really good prices because we source from India and just put our QC on it at the end. They do good work in those labs these days. What I found is that a lot of people are interested, but just never considered it. I believe the reason for why people never considered it:

    - They think it's too expensive.
    - They don't know who to trust.
    - They may not consider importing due to quality or bureaucracy concerns.

    The vetting process is highly important. I've given that some thought and here's what I've got so far:

    - The system should become self-vetting over time, i.e. companies are getting reviews from satisfied customers.

    - Initially I'll have to find companies that will want to work with me here. I'll have to convince them that it's worth signing up with my service with the expectation to get more orders. In order to verify whether they're the real deal or just a pretend-company in Asia I was considering to do two things:

    1. Charge an admission fee. Any company that won't pay to be listed, will probably not be able to afford it. The admission fee needs to be high enough to filter out obvious losers, but also low enough to sound reasonable for what they will gain. I may consider some sort of risk-reversal strategy like: "If you don't get any quote requests in your first year, you get your money back at the end of the year".

    2. I'm wondering if I could get them to send me references from former customers that they've worked with. I can then ask them to verify that they've done good work. That would increase my trust in the value of the company and at the same time give me another lead on the customer side. These references can be displayed as testimonials on my website for each of the companies that responds to buyer inquiries. Of course companies would only do that if they think the platform is highly beneficial for them. I think image is extremely important at that stage, so I should probably have a really serious website already up and running.

    3. I may look into partnering with QC companies. Any product purchased will have to be evaluated by the QC company first before final delivery. If QC fails, the seller won't see their money.

    4. As a last resort, I thought I could include an escrow service. Buyer sends me the money and I hold it for them until they get what they ordered. If the company doesn't deliver, they'll never see any money. I'm not familiar with all the legal framework needed for this. The more I think about it, the less I think this is a good idea. The need for an escrow service is already suspicious. I think I need to focus on risk-mitigation as well as reviews and testimonials for participating companies.


    Market size is pretty big in US and Canada alone, considering that I'd be essentially a one-man show. I mentioned earlier that the company I currently work for started (half-heartedly) offering these services and I by myself have found $35k worth of opportunities just by walking into a few places and casually mentioning it within 6 months). A colleague of mine has had even better results in a biotech hub. That's just two guys walking around and talking to customers. Considering that with a website I can reach the entire world, I think market size would be pretty great.

    The biggest value add I think is that people can easily identify affordable options. Many people that used to not consider this service will be able to give it a try.

    Another value add would be tracking progress within their account on the website. One thing I noticed getting difficult is keeping track of several projects and their progress. I would want the website to not just facilitate connecting buyers with sellers, but sellers would receive the PO's through my website and then log their progress periodically there. Buyers can have an easy overview of all the projects that are happening and inquiring quickly what the status is of everything. Much, much easier and better organized than people's e-mail inboxes.

    I think with that site I'd also have the option to expand into related markets to offer similar services and grow from there. There are lots of similar industries that would benefit from that. Sourcing is notoriously difficult and time intensive. This would give people a big boost in productivity in that they send out one quote to reach dozens of companies at once and they can keep track of all the projects in one place easily (good interface important).
     
  5. BerlinerBaer
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    BerlinerBaer Contributor Read Millionaire Fastlane FASTLANE INSIDER

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    I'm not sure what you mean by the 22k remark? Who's paying 22k for what?
     
  6. Rabby
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    Rabby Silver Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    Well I have brokered things so let me add two cents. There are usually two ways to get paid as a broker/agent, if you're really that and not a wholesaler, etc.

    1. You charge a fee to the client. This might be perfectly acceptable to them, because you know the manufacturers, and the manufacturers take you seriously (once you get started anyway). You also know what information is missing, and you can develop your own process for getting it all. For example, maybe you come up with a supplemental questionnaire for people who need custom spectroscopy equipment (or whatever), and it answers the questions you need to answer for a manufacturer.

    2. You take a commission from the manufacturer. First you enter into a contract with them (one or more of them). Then you get quotes and nail down specs, and when the product is sold they cut you 20%, 15%, 1.111% or whatever you agreed on in the contract.

    In either case, the "middle man" adds value by connecting, providing a communication channel, providing industry expertise, facilitating trust and completing the transaction, and acting as an agent for buyer or seller when they lack the time or expertise to act on their own behalf.

    This model works in manufacturing, finance, real estate, mercenary work, etc and has for centuries.
     
    SROWE85 and Roli like this.

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