There are reasons markets are under served

Things I knew before I started, but ignored: There is usually a reason that markets are under served.

Here is some background before I get to the real story.

I am somewhat involved in boy scouts, my son is a Webelo II and I volunteer for that I can. Last summer I volunteered to coordinate summer camp. This boils down to collecting forms, having parents fill them out, copying the info to different forms, handing forms in to the main office, hoping and praying that they don’t lose track of it,
keeping copies and then transcribing yet more data. All of this is done via paper and pen. I have never spilled so much ink in my life. Keeping track of so much paper and who has done what was a nightmare of epic proportions for someone like me. Other people’s money was involved in a mixture of checks and cash all with different amounts
due and constantly changing based on a mind boggling laundry list of variables. If ever there was a process ripe for automation, this was it.

I thought I found an itch I wanted to scratch.

The ephemeral goal was to provide a basecamp on steroids for scouts to organize themselves. I wanted something less complicated than BigTent, but a bit more custom tailored to scouting than a generic group org system would be.

I am quite satisfied at my current job. I wanted to solve a problem, not alter my life. I quickly realized that I needed to do two things; find a designer/usability guru and figure out if this was going to be a viable project. In other words, will this eventually pay for itself?

I got my friend Brenton Klik to sign on and together we did some research. I try to use conservative numbers, but when they become too bleak I shift to conventional wisdom as found in Hacker News. This is what we found:

There are about 20,000 cub scout packs and troops in the US and that number is shrinking. Right at the beginning there is a limited customer base. If we assume a maximum 10% market penetration over the course of a few years we end up with 2,000 customers.

I didn’t really want to do this myself so I wanted to hire someone, this means a decent developer and tech support person. With a part time support position and full time developer the initial yearly cost would be $80k. I

In order to eventually enter the black within a few years, I would have to charge $10/mo per pack, not per user. I didn’t really see the model working on a per user basis. Nor did I want the uncertainty of ad revenue. Basecamp charges $25/mo for the minimal package, so $10/mo seemed reasonable.

Brenton and I met with a representative from the scouts to figure out whether this was a viable idea. You can read his post for details on that experience.

In my opinion the biggest hurdle is that the scouts is a volunteer run and volunteer funded organization. I wasn’t out to make a living on this project, but I certainly didn’t want to lose any money either. There were significantly cheaper solutions out there. None of them do much of anything particularly well, but they do it cheap enough and
tolerably well enough. Which is what matters.

As Brenton said, for the price of a coffee we found out that the project wasn’t worth it. There are reasons why blue oceans are blue.

Comment (1)

  1. Elijah Miller wrote::

    You might enjoy the latest article from my friend David Christiansen describing his work on TroopTrack.com. These articles are eerily similar, right down to the comparison against the cost of Coffee!

    http://www.techdarkside.com/coffee_startup

    Wednesday, December 9, 2009 at 6:46 pm #