Steve Meginniss Helped Reinvent the Toothbrush. Can He Do the Same Thing for Wheels?
The Pitch: "Wheelchair users often get arm pain from pushing their chairs around all day. Our wheels turn wheelchairs into two-gear chairs, which helps reduce that pain. Outfitting a chair with our wheels costs about $5,000, because we have to customize them depending on the type of chair being used. Insurers typically cover about 80 percent of the cost. Magic Wheels needs $1 million to advertise more and to send more representatives to trade shows. We also need development money to add more wheel sizes and to find ways of cutting manufacturing costs."
Company: Magic Wheels
Founder: Steve Meginniss, co-inventor of the Sonicare toothbrush
Year Founded: 1996
Clients: Wheelchair users2007 revenue: $124,000
2008 projected revenue: $456,000
Investment Needed: $1 million for operations, marketing, and nationwide sales
Recent Buzz: Received BusinessWeek's IDEA award in July 2007
The Investors React
I like this product. If you're on a one-gear bike and you can't make it up the hill, you get off and walk. But someone in a wheelchair doesn't have that option. And Meginniss helped invent the Sonicare toothbrush, which means he has been successful bringing a new product to market. But he needs to cut the price, and I don't think he needs more money to do that. Maybe he can outsource manufacturing to Mexico or China. And I wonder if he really needs to customize the product as much as he thinks he does. How many options do you need, besides having a few different sizes?
Allen Anes, M.D.
Vegas Valley Angels
This is a wonderful product, but it's a difficult business. The price seems high, and the fact that Magic Wheels can't mass-produce the wheels is a negative. Revenue figures so far prove the difficulty of penetrating the market at such a high price. I'm not sure Magic Wheels can succeed as a standalone company. It might be better off getting sold to Stryker (NYSE:SYK) or another larger player in the assisting-devices business. Meginniss would have to give up some margins and take a commission instead. But that route to building sales is cheaper, quicker, and more predictable in the end.
Managing general partner
Focus the sales effort
It's a clever idea, and it fits into the trend of consumer-driven health care. Consumers are increasingly willing to spend more out of pocket to get what they want. And an aging population will drive market growth. To ramp up sales, Meginniss should focus on marketing to therapists and hospitals, where most wheelchair users get their product recommendations. I think advertising is of limited value. He might also want to focus his sales effort on some key geographic regions and concentrate on building relationships with large volume dealers in those areas.
Menlo Park, California