Seeing Red

Instead of abandoning the idea, Wise kept it in the back of his mind for almost 15 years. During that period, he held a series of high-paying consulting jobs, specializing in marine transportation. In 1981 he founded a graphics software company in Boston. All the while, Wise did his best to keep informed about the chicken business. He read Egg Industry magazine and other poultry trade journals. And he commissioned research into a new lens design -- one that relied on color instead of distortion. "Hardly a week went by when I wasn't thinking about contact lenses for chickens," he says.

Each year thousands of business-school students were exposed to the idea through the case study. Wise says it wouldn't have surprised him if someone had beat him to the punch. It was a concept waiting to be executed. But to his relief, nobody ever touched it.

Between 1979 and 1984, when Wise incorporated Animalens, he invested nearly $15,000 of his own money. In 1985 and 1986, when he sold his graphics software company to Lotus Development Corp. for a reported $12 million to $15 million (he owned about 20%), he put up another $100,000 to pay for prototypes and new molds. For the design work, he retained a well-known professor from Virginia Polytechnic Institute named A. T. Leighton Jr. The challenge, says Leighton, was to get the right depth and thickness of lens. The lens had to stay in the bird's eye for life. In January 1988 Wise felt they had a product that overcame the design flaws of the earlier lens -- and one that fell within the cost parameters he had targeted. The patent application was in the mail. Wise was ready. Now, all he had to do was sell it to the chicken farmers of America.

Consider how the typical egg producer makes money: he buys a 17-week-old pullet for $3.25. Then, over the course of the next year (the normal productive life of the bird), he spends some $9.40 maintaining it -- $7.60 on feed and another $1.80 or so for housing, lighting, and labor. His cost per bird: around $12.65. The average egg layer produces 21 dozen eggs in its year of work, which, at 60¢ a dozen to the farmer, generates $12.60 a year. If the farmer is lucky, he'll net another 25¢ by selling the chicken once its production falls off. In this example, the gross margin is a scant 1.6%.

Like many businesses, the commercial egg trade has undergone tremendous changes over the past two decades. What used to be a good-sized chicken ranch -- say, 100,000 birds -- hardly counts by today's standards. Given cost pressures, the most competitive producers have sought economies of scale -- big farms can, for example, mix their own feed. Currently there are about 50 egg farms in the United States with more than a million chickens; among them they manage nearly 55% of the country's almost 250 million layers.

Even the big guys have been hurt by recent trends. Americans have been eating a lot fewer eggs; since 1960 per capita consumption has plummeted from 335 to 235 per year. And despite the efforts of operators to hold the line, the costs of feed, labor, and overhead have been climbing. All this would be fine if egg farmers could keep on raising prices. But the price of a dozen eggs is continuously squeezed by oversupply. So every year farmers are driven out of business.

From the point of view of the individual egg rancher, there are very few opportunities for cost savings. Over the past decade, the farmer has brought on all kinds of automated equipment to minimize his labor needs. The modern-day chicken house is filled with Rube Goldberg-like contraptions: cage systems, feeding and watering systems, egg-packing systems. Eggs are shipped to market without being touched by human hands. So what else can farmers do? They can fiddle around with feed additives and look for genetic improvements. Smart operators are already doing these things.

But nobody -- nobody -- is using contact lenses.

Randy Wise figures he has three key selling points on which he can build his case. The first one -- that the lenses reduce cannibalism -- is something he's known since the 1960s. The calming effect of the color red has been corroborated again and again over the past several years by research on light and color at agricultural universities. The other two benefits -- that lenses reduce feed consumption and that they increase egg production -- have been noticed only more recently. Supported by fewer tests, they're more controversial. "Basically," Wise says, "we try to figure out what the rancher is most concerned about. But we like to talk about all three.''

Dealing with the effects of pecking, he notes, has been a chronic problem for egg farmers. All chickens normally establish a social hierarchy, or pecking order, though some breeds are more aggressive than others. When one bird bleeds, the other birds peck at it. Ranchers can lose up to a quarter of their flock to such cannibalism. They mitigate the results of this behavior by beak trimming. The procedure, better known as debeaking, uses a hot knife to cut off the tip of the beak. Debeaking, which costs from 3¢ to 5¢ per bird, doesn't solve the problem. Chickens still peck, Wise says, but less harmfully. The procedure reduces the 25% mortality rate, but it can still run as high as 12% to 15%.

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