PRODUCT CONNECTION

            The Saga of FizzBin Tech
                                              
                                             Part 4


FizzBin Tech (www.fizzbintech.com) now had three strikes against it.  The
Hindenburg had failed because the target specifications didn’t meet the customers’
needs.  The FUBaR addressed a market that was too small to be viable.  And the
SunBin cost too much to manufacture.  There seemed only two chances for FBT to
make it: slim and none.

Last Chance
Once again nearly out of cash, FBT had no choice but to go back to the existing
investors for more money to pay for a cost-reduction effort.  A series of bridge
loans (with onerous liquidation preferences attached) bought the company another
life.  And one more Herculean effort by the engineering team brought the cost of
the SunBin down to $2.50 with a clear path to reducing that figure below a dollar
once the product got into high volume production.  It looked like FBT might finally
be looking at making some serious money.

Then disaster struck from an unexpected quarter.  A previously unknown oil field
equal in size to 25% of the world’s known reserves was discovered under Beverley
Hills by a wildcatter named Jed Clampett.   Naturally, oil prices plummeted.

Even at these lower prices, the SunBin was still a viable product if it could be sold
for $2 instead of the planned $5.  And had FBT gotten the product into production
a year earlier by designing it to be lower cost in the first place, it would already be
driving down the cost curve at higher volumes and would still have been able to
make a profit at the lower price.  But that was not the case.

Time is always the enemy of a start-up and FBT had used up its allotment.  The
longer it takes to get a successful product developed, to market and turning a
profit, the more chance there is that something is going to change externally to
invalidate the assumptions under which the project was begun.  When that
happens, the plan needs to be adjusted to accommodate for the new conditions.  
And if there is not enough time to react, the company may well not survive.  Thus it
was with FizzBin Technologies.

Four Strikes and You’re Out
Having failed to successfully launch the Hindenburg, the FUBaR, the SunBin or its
lower-cost redesigned version, FBT had run out of chances.  The investors were
disillusioned by FBT making one misstep after another in their product
development efforts.  So they decided to pull the plug.

The IP was sold to HAL Corp.  The VCs got back a small fraction of their original
investment; the employees got nothing (remember those liquidation preferences).  
All of the past CEOs went on to run other (mostly equally unsuccessful) start-ups.  
And Dr. Corey went back to Wossamotta U where he began work in the new field of
Selenium Xenon Yttrium (SeXeY) material and dreamed of once again starting a
company of his own.

With so much promise at the beginning, where did FizzBin Tech go wrong and,
more importantly, what could they have done to avoid their mistakes?  We will
explore these questions in the final installment of “The Saga of FizzBin Tech.”