Rich Sheridan, CEO of Menlo Innovations and I examine Accuri Cytometers as a case study in innovating in a mature market. Menlo has played a critical role in developing Accuri's core product. Accuri must convince potential customers to adopt a new product in a space where research protocols assume use of an existing standard. Rich discusses this and other barriers to entry and how they might be overcome.
Like this? Let us know with a $5 donation, so we can do more
In this interview (Quicktime ipod compatible, 129MB; Google streaming flash video), Rich Sheridan, CEO of Menlo Innovations, and I (Bud Gibson) discuss Menlo's work with Accuri Cytometers as a case study about innovating in a mature market.
The CEO of Accuri Cytometers is Jennifer Baird. To date, the company has received $5 million in angel investment and $5 million in venture capital complemented by funding from Michigan's 21st Century Jobs Fund.
A cytometer counts cells and is used in medical research facilities. Accuri Cytometers aims to offer a 75% initial cost of savings against a typical market price for cytometers of $200k. Further, the Accuri cytometer is intended to lower the level of expertise required for operation. Both of these factors should put the cytometer within the reach of individual researchers, thereby increasing the number of potential purchasers in the overall market.
Menlo's role has been to develop the software interface for the cytometer that delivers on the proposed value proposition. Rich's word for the process Menlo uses is "high tech anthropology". Essentially, high tech anthropology is an iterative software development approach that involves: (1) creating user personas from interviews; (2) designing mock-ups based on the personas and testing them with the appropriate target users; (3) moving from there to functioning prototypes with more testing; and (4) finally shipping product. Menlo has been working with Accuri for two years, and they expect that initial product shipments will not occur for another 6 to 12 months.
During their iterations, Menlo discovered that cytometers play a central role in the labs where they are used and that errors in utilizing them come with a high cost, potentially delaying research projects for months. As a result, lab directors do not entrust running the cytometer to their assistants. However, managers also find the low-level technical work required to run the cytometer to be a distraction from their usual managerial duties. The opportunity for Accuri lies in getting potential buyers to trust their equipment enough to leave it in the hands of assistants. That way, the market broadens and alters in a way that traditional makers of this equipment are at a disadvantage.
In considering this process, Rich notes that the transition for lab managers cannot be too discontinuous. Otherwise, there will be resistance. Accuri is essentially trying to get the buyers of one product to make a switch to another. Additionally and somewhat specific to medical research, accepted protocols have been established around the use of current cytometer products, and these protocols must be respected.
Rich and I finish by discussing Menlo's relationship with Accuri. It is not purely fee for service. Rather, Menlo has foregone a portion of their fees for a revenue share each time Accuri makes a sales. Rich notes that investors and managers in particular like this model because they feel it better aligns Menlo's incentives with those of the company. We may have the opportunity to revisit this model in a later interview.
Additional links
- Menlo's software development approach falls under 'agile' methodologies as explained in this wikipedia article. Essentially these approaches are designed to limit the business risk inherent in software development.