What He Tells People Who Ask About His Accent: "I'm from the South."
On Financial Projections: "It's a lot healthier to look for customers' reactions and for the number of customers than to focus on things like revenues. Those will be there if people love your product.
HOW SOLOPOINT PROPOSES TO PROFIT BY KEEPING SOHOS CONNECTED
As calls arrive the PCM sorts and directs them: faxes go to a fax machine and voice calls to voice mail or wherever the SOHO worker happens to be -- at the desk, in the kitchen, on the road, with a client, or at the beach. The PCM also permits SOHO workers to monitor incoming calls undetected from any location.
SoloPoint hopes to establish a revenue flow with help from distribution partners, including Baby Bells and cellular providers. As production costs decline and gross margins widen, sales will shift toward more expensive, higher-volume channels, including catalogs, direct marketing, and retail stores.
The Financials
($ millions) 1996 1998 2000
Revenues $4.0 $27.0 $75.0
Step one: sales by Baby Bells, cellular providers 2.865 15.0 31.0
Step two: sales from catalogs, direct marketing, retail 1.135 12.0 44.0
Gross profits 1.9 15.0 45.0
Expenses
Marketing/sales 2.7 6.4 15.0
R&D 1.6 3.4 9.0
G&A 1.1 2.2 6.0
Profit (loss) (3.5) 3.0 15.0
The SOHO Market
Includes small offices (10 people or fewer) and income-producing home offices. "You only have to be conscious to realize that something big is going on in this market," says SoloPoint chairman Charlie Bass.
WHAT THE EXPERTS SAY
Industry Expert
Harry Newton
Editor-in-chief, Computer Telephony Magazine, in New York City
With 75% of business calls reaching voice mail, today's phone is not only stupid but a gigantic time waster. The paradigm of tomorrow's "intelligent phone" is still evolving, but any product that lets customers contact SOHO workers faster, more easily, and more reliably will do well. I don't believe the $400 threshold. Heck, people are paying $2,500 for PCs, and they spend more time on the phone. As for Ameritech's involvement, I'm skeptical. The phone companies have not been successful at complex-product marketing.
Potential Customer
Helen Friel
Real estate agent, DeWolfe New England, in Arlington, Mass.
The concept of being able to connect the home phone with the cellular phone is terrific. I also love the fact that you can program it to accept calls only from those you want to talk to. In my business I get people who are calling me about any little thing, and they can sometimes abuse the cell number. But when I'm waiting for that very important phone call, this device would be great. I want people to find me. If they don't find me, they'll find somebody else. In my business what you're selling is service and information. If you're going to give premier service, you have to make yourself available. I think the price is fine. I wouldn't even question it. One sale is more than enough to pay for it.
Observer
Geoff Moore
Founder of the Chasm Group, marketing consultants, in Palo Alto, Calif.
In their very early marketing stages, some products require a Field of Dreams approach, which is implicitly criticized here. Valley start-ups often produce a technology in search of a market, but that's how it is with paradigm shifts. Nobody asked for the World Wide Web or the Macintosh .
By contrast, if the new product fits easily into an existing paradigm, as the PCM seems to, then the kind of Procter & Gamble thinking described here is the winning strategy. The risk of rejection is much lower, but the chance of winning a major market all to yourself is lower, too. The reason that introducing a paradigm-shifting product is worth the risk is that if the market adopts it, the company that dominates the market -- Netscape, for instance, in Internet access software -- gains astronomical valuation.
SoloPoint is an interesting compromise. PCMs do not seem likely to shift any paradigms, so the company has given away the super-upside potential. But PCMs could generate better returns than the average new product, and thus the product warrants the level of risk taken by SoloPoint's investors.
The company's start-up model does not invalidate the traditional Silicon Valley play, but it introduces an interesting variation. While SoloPoint does not appear to be a suitable investment for the classic venture fund, it seems to warrant the managed-private-investment approach Charlie Bass is championing. If it works, that approach could find a place on the start-up-funding spectrum.
Competitor
Nick d'Arbellof
Director of marketing at Wildfire, a maker of voice-activated electronic assistants in Lexington, Mass.
An easy-to-integrate, easy-to-use device that forwards calls and helps manage the flow of daily communications could be a big hit in the SOHO market. However, that is a tall order.
Increasingly, consumers want their technology to be "hassle-free." That's why more and more people are opting for a $6-to-$8-a-month voice-mail box from the phone company over an $89 digital answering machine from Circuit City. If the SoloPoint device is truly plug and play, that's a huge plus.
Likewise with ease of use. If the device is simple, highly intuitive, and requires very little programming, then people will use it and make it a part of their routine. If not, they won't. Period.
The bottom line is that early adopters and gadget freaks will snap it up, but achieving market acceptance within the broader SOHO market will be tough. As with many consumer products, it's all about word of mouth: if no one's using it, no one will recommend it; if lots of people are using it heavily, they'll tell everyone they know, and it will spread like . . . well, Wildfire.
