Concept: Make and market red-tinted contact lenses for egg-laying chickens, altering their behavior so they will fight less, eat less, and produce more eggs -- increasing egg-ranch profitability
Projections: Eventual pretax net margins of 25%; 1989 sales of $329,000; 1992 sales of $24 million
Hurdles: Persuading historically conservative egg farmers, operating on thin margins, to risk money up front for an unproven product; sustaining the company in the face of slower-than-expected product acceptance; defending an easily copied product from competitors likely to enter after the market has been opened
Randy Wise's decision to sell contact lenses for chickens is not the result of a sudden impulse. He's been preparing for this since he was a teenager in California.
Back in the the early 1960s, his father, a chicken rancher, got involved with a similar venture. The idea then was to reduce the cannibalism of egg-laying chickens with a lens that distorted their vision. The business flopped, but the goal -- improving the economics of egg production -- is something Wise didn't stop thinking about.
At Harvard Business School during the early 1970s, he wrote a popular case study that evaluated his father's ill-fated experience and outlined the opportunity for a new company. It explored the economics of egg ranching and examined the options for marketing the new lenses. Even today, the case (which sells about 6,000 copies annually) is used in business schools all over the country to highlight pricing and marketing questions.
Wise hoped to launch the business right after business school, but he couldn't get the financing. "Investors had a hard time relating to egg production," he recalls. Fifteen years la...
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...ve done the same thing with chicken ranchers and convinced one or two of them to try the product. Their mistake was to think purely in economic terms. They said, "Here's an industry that needs our product because cost savings should automatically be embraced." They lost time.
In the best of times, egg production is a high-volume, low-margin business. As a group, farmers have been losing money over the past year. It's very difficult to take on new technology when you're squeezed. Farmers, for example, won't buy fertilizer when they're losing money, even though it's obvious that they should. But the industry should be recovering over the next 12 months. Animalens should be using this period to make sure the tests are done properly so that the credibility is there when the industry improves. If the tests confirm what they've been saying, I think they have a viable shot.
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