Jim Poss Case Study

Jim Poss Case Study

1. Who is Jim Poss

1. Jim Poss demonstrates a strong passion for project even after so many people shot down the idea. His passion translates into determination to getting the idea out to potential customers/investors. Taking risks like going into solar power when the trend was heading toward wind and selling his product even though he didn’t have a finished product to sell. And he craves learning, working 3 jobs, double major and a minor plus an MBA before working his new venture gave him the knowledge and confidence to try for it.
2. When comparing myself to Jim Poss, it doesn’t even come close to similar. His amazingly driven and a very creative individual; I am nowhere near the same level as he is. With more practice and experience in the real world maybe I can gain the right knowledge to start a business but right now I wouldn’t dare.

1. What are the most Compelling features of the Big Belly venture?

1. Consider

1. Market: Solar Trash Compactor business
2. Customer Problem Solution: Created a solar powered public trash compactor which will would offer significant savings and cut down trash pick-ups and reduce fuel consumption significantly.
3. Competitive Landscape: The product is very unique compared to what is traditionally used like conventional dumpsters and compactors.  The product does not have any direct competitors but still has possible competition with existing compactors/dumpsters

1. Evaluate Target market selection: Businesses that are remote, have high trash volume, financially stable and an appreciation for the environmental cachet. So places like ski resorts, amusement parks, tourist sites possibly stadiums and campuses.
2. Barriers to Entry: Low competition but reason to believe there will be imitation after implementing the system. Threat of substitutes low to medium range; regular dumpsters and trash cans are prevalent everywhere and cheaper to have but aren’t as efficient. Startup costs are high for manufacturing the product, gathering the right employees and getting the IP secured.

1. Customer Value

1. How would you price BigBelly?                                                                                                       I would price it in a way that is cheap enough to be an attractive investment for the buyer but also give Seahorse enough profit to keep going. You need the profit to be enough to sustained growth and potential for expansion.
2. How would you use terms, programs to counter anticipated customer challenges to purchase? Tell the customers the benefits of having such a device including how it will cut down the amount of times the trash collector has to come to your business or how using this device will help reduce the amount of pollution emitted by said trucks potentially saving millions of gallons of gas each year. You can place the product anywhere you want and is easy to use.

1. Tech Development

1. Product and Financing are milestone based, why is that important?                                  It’s important to create milestones for the product because it gives the team unified objectives to work towards. It’s also important to combine it with financial milestones because say once you reach x amount you can start building the first prototype or you reach y amount and now you can start manufacturing 10 compactors. These milestones are objective points to work towards which gives the employee’s motivation and a clear goal to work towards.  Financers will typically give the company milestones to hit before they will fund them more so they know they are making progress toward reaching a point of paying the financers back.
2. IP is the largest single cost item, does that make sense?                                                           In a way yes. In order to protect his creation from being copied and to prevent newcomers from easily entering the same market, Jim Poss had to patent/protect every aspect of his creation. This process is very expensive but it helps Poss stay in a comfortable spot in the market when new products eventually start entering.

1. Analyze the proposed financial offering

1. What will investors receive in exchange for their $250K investment?                      Investors would own 10% of the company if they invested.
2. Defend or reject the $2.5M pre-money evaluation?                                                               I would reject this evaluation mainly due to the fact that the company had to sell many of their products for a loss in order to get the name out. Trying the dig themselves out by the time summer rolls around probably will not happen. Not to say that it will never happen, just in the time frame allotted it seems pretty high.
3. Is this an attractive Investment?                                                                     Overall, the company knows who they are, what their mission is and who they are selling to. They know what to do and how to do it, its just a matter of getting the funds to do it more efficiently. If I were an investor I would invest in this company because the need for more efficient trash receptacles can help drive down pick-up costa and the added benefit of less trash around. For real investors they might see more risk involved with such a new concept being adopted but the right investors will see how much of a game changer this product could be.                                                                                                   Who are the likely investors, why?                                                                                      Potential investors could be solar energy equipment suppliers who are looking to increase their solar cell sales with the product. Others could be independent angle investors who see the benefit of having such a product out in the streets or at remote locations.
4. Evaluate the exit strategy

1. How would you estimate the enterprise value? Based on the market penetration and how well the product has sold year after year would give a potential buyer confidence that the acquisition would work out in the end. I don’t know every single monetary fact about the company so I can’t give a real estimate but if I had to guess I would say around $25M to $35M for a buyout.
2. Can Jim afford that villa in Tahiti with his cut of the proceeds?                                     I’m sure he could.