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A low-tech idea in a high-tech world
Even great inventions can get sandbagged in the Silicon Valley
By Brian D. Rossman
My friend Bob has a problem. No, it isn't contagious. No, it will not require bankruptcy. No, he does not have to see a counselor. Bob has a terrific business idea--an idea that will save lives and make money at the same time. Yet, this business will likely never see the light of day. Why? Because my friend Bob has a low-tech idea in a high-tech world.
Bob is a 30-year-old MBA graduate from New York University, who worked at Lockheed Missiles and Space for five years during the early '90s. After returning to Silicon Valley with his financial degree, Bob spent the first year and a half day-trading. At the end of this period, Bob was contacted by a former co-worker at Lockheed who came up with a revolutionary idea to speed up the process for filling sandbags.
Looking at my bemused expression, Bob explained to me as he had done to others countless times before, that floods are the #1 cause of property damage in the U.S., with losses reaching over $22 billion in 1997. Nearly nine of every 10 presidential emergency declarations result from natural disasters where flooding was a major component. Sandbags are used to help erect barriers against floods. He had my attention.
Apparently, Bob's partner, an aerospace engineer, was watching CNN during a natural flood disaster when he realized that manually filling up sandbags in an emergency setting is a very labor-intensive and time-consuming activity. The engineer constructed a fully automated process that is portable, easy to use, and inexpensive to build and maintain. Then he contacted Bob to help with the administrative and financial aspects of the business. Bob, believing this venture could both make money and a difference, agreed to participate. After investing $50,000 of his own money to patent and design the prototype, the company received its first customer. The order, however, remains unfulfilled. To complete the production of the prototype, Bob's company is in need of $100,000.
In the Silicon Valley, venture capital of the world, this amount is mere chicken (dot-com?) feed. According to some, it was not uncommon to spend that amount on a Y2K disaster party. Yet, raising $100,000 to help disaster relief efforts is a different invitation altogether. Bob stated that his efforts at fundraising have been disappointing at best. Bob explained that no angel, or venture capitalist will look at them because they are not a "sexy dot-com company."
With all of the investment money chasing "too few deals," as the common industry saying goes, it's hard to fathom that there's no money for any good idea. According to the most recent Money Tree survey, compiled by PriceWaterhouseCoopers and the Mercury News, $13.4 billion of venture capital (over 40 percent of all venture capital invested in the country) was infused into Bay Area companies last year. Internet investments rose tenfold from $102 million in 1998 to $1.2 billion in 1999.
Based on these statistics, you would think there would be room for an innovative company that is willing to get its hands dirty so others don't have to. As Bob pointed out, however, venture capital investment is flowing in record numbers to the technology sector--and leaving the rest of industry behind.
According to the 1998 Money Tree survey, the Internet accounted for 44 percent of the investment; telecommunications was next at 23 percent, followed by software at 10 percent, biotech sciences at 10 percent, semiconductors at 5 percent, computer/peripherals 3 percent, and miscellaneous (for all other ideas including industrial) 5 percent.
So what's the next step for Bob? He says neither he nor his partner have any more money to put into the company. He is considering using cash advances from a credit card or asking friends and family to invest. Like a true entrepreneur, Bob's spirit remains unshaken in this river of rejection: "We are determined and motivated to bring a good idea to market. We intend to make a difference!"
Contact Brian Rossman at bdrlaw@bigfoot.com.
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Sunnyvale, California Since 1994
