Next, they considered whether there was an established competitor in the market. They analyzed the ideas to see if they involved something of critical value to a customer. They evaluated potential costs. Finally, they addressed how easy it would be to identify and reach the right decision-makers. They were down to five types of businesses that could use Odin’s technology. Three months of research narrowed the field to three.
The first consisted of Defense Department and law enforcement agencies that keep track of weapons. The second was what is known as the cabinetry market in hospitals — cabinets installed and used by medical suppliers to store devices. Third, they considered companies that might use the tags to connect customers to social-media sites. Customers visiting a car dealership, for example, could swipe a tag at a kiosk, updating their whereabouts on their Facebook pages and also survey friends about, say, a car’s color. As a result, the car — and the dealer — could be exposed to hundreds of the customers’ friends. The technology could also be connected to the dealer’s customer database, pulling up records and making the checkout process easier and faster.
In mid-2009, Odin started approaching government agencies. Most of the resulting contracts have been “six-figure deals,” said Mr. Sweeney, who expects it to take two years for the company to attract larger commitments. Six months later, Odin entered the cabinetry market, which proved more lucrative. In fact, when it became clear that the area had potential, he doubled the company’s research and development budget to enable more sophisticated tweaking of the technology. And his social-media efforts have been so successful that he recently created a new company, dwinQ, to sell those products.
Last year, Mr. Sweeney said, revenue for the 40-employee company was up about 30 percent — with about half of all revenue coming from the new markets.
Focus on Profits
In 2008, Adrian Nazari watched as the market for his three-year-old business, Financial Crossing, fell apart. Based in Palo Alto, Calif., the company sold a technology that financial services firms used to help customers manage their debt. But as the market fell and fortunes declined, many clients pulled the plug on their contracts. Financial Crossing’s revenue fell 60 percent from 2008 to 2009.
At first, Mr. Nazari decided to wait it out. But by mid-2009, he realized he had to change his strategy. He and his management team studied existing market research and conducted a survey of about 1,000 consumers. They found that respondents were considerably more concerned about their debt levels than they had been before the downturn. That lent credence to an idea Mr. Nazari had had to build on the company’s existing technology to focus on consumers, rather than banks, and provide an online service to help them manage their financial obligations. It would be free to consumers; banks would pay for each transaction that resulted.
Crucial to the decision was determining how long it would take to turn a profit. Costs, Mr. Nazari knew, would be substantial. It would take approximately $3 million, he figured, to retool the company’s technology. And the expenses for marketing, rebranding and public relations, as well as overhauling the sales system, could be another $6 million. But the potential market was much larger as well. “We were now looking at over 100 million U.S. consumers who potentially could use our products,” he said. He figured it would take two to three years to break even.
Mr. Nazari, who changed the name of the company to Credit Sesame and based it in Sunnyvale, Calif., proceeded to develop the new technology and find money to finance the new enterprise. He raised about $1.2 million in venture capital in late 2010 (a year later, he would gather another $6.1 million), and by January 2011 he was ready to introduce the service.
Now, he says, “We have hundreds of thousands of consumers using our product.” Credit Sesame did not start taking in revenue until the middle of 2011, but he expects the company, which has 24 employees, to approach $10 million this year. He anticipates breaking even by the first quarter of 2013.