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In the Pipeline – Company & Product
In late 1996, Maarten Byl, Nick Raschella and Nicholas Love were introduced to John McMahon, an electrician and inventor. One of John’s many ideas was for a novel poly vinyl chloride (PVC) pipe repair system. He was resolute in his conviction that all enormous market existed for a product, which would make broken PVC pipe a snap to fix. John dreamed of further developing this vision and one day providing the market with his revolutionary concept. For six years, this vision consisted of little more than diagrams, as John was unable to overcome the numerous obstacles, which an inventor faces when he assumes the role of entrepreneur.
In the Pipeline (ITP) has been formed to take advantage of this divergence between the inventor’s dreams and market realities. In the Pipeline will guide new products from conception of the idea to commercialization. To help convey this motion, the name In The Pipeline was chosen.
Since ITP’s formation in November 1996, John’s concept has undergone a rapid evolution. A prototype of a split conduit repair solution was manufactured and test marketed in Australia in early 1997. Responses from this showed a substantial demand for a product that could do more than repair straight PVC pipe. The market demanded a simple and cost effective total repair, redesign and installation system, utilizing identical joining technology. To address the need for a total system, ITP developed Snapfix.
ITP has arranged for the production of Snapfix by Marley Plastics for supply to Australia’s two telecommunications companies and Ideal Electrical. Ideal Electrical is Australia’s largest independent electrical wholesaler and will be marketing Snapfix in their upcoming June catalog.
We now seek to secure a joint venture manufacturer and venture capital funding to launch the product in the U.S. The successful launch of John’s invention will ensure that the company’s objectives of identifying, developing and commercializing innovative products are realized.
Snapfix is the first total repair, redesign and installation system for PVC pipe. Snapfix solves the problems inherent in the existing piecemeal approaches; specifically the costly and time consuming process of relaying large sections of pipe, the severing, removal and re-threading of encased electrical and telecommunications cables, and the use of toxic resins.
Snapfix is an integrated system comprising Straight, T-shaped, Y-shaped and Bend sections; it uses joining technology consisting of interlocking compression joints on opposing sides of a split conduit. A damaged PVC pipe can be repaired in seconds by snapping the required length of Snapfix over the break, thereby sealing and reinforcing the pipe. (See Appendix A for product diagrams). In comparison to alternative repair methods, Snapfix saves time and money. The product line will be produced in a range of sizes to fit most commonly used pipe in the telecommunications and electrical industries.
John’s company, Zardoz Pty Ltd, assigned the intellectual property rights for Snapfix, which include a Patent Pending and a Trademark application, to ITP. This assignment is effective for five years from May 1997, with an option to renew for a further five years. Zardoz Pty Ltd will receive a royalty of 1% of Snapfix’s gross sales and 25% equity in ITP.
A survey of selected firms in the telecommunications and electrical industries revealed a large unanswered demand for a repair, redesign and installation system such as Snapfix. This demand has been long standing, as evidenced by the 40 patented pipe repair, redesign and installation systems dating back to 1975. None of these systems have been able to adequately fill this need. The demand for a total system such as Snapfix is driven by the:
- Cost of current repair, redesign and installation approaches
- Time that other approaches take to apply in the field
- Aging nature of the existing electrical cable networks
- Telecommunications industry demand for fiber optic cable encased in PVC pipe.
Snapfix’s most substantial benefit is the cost savings that it delivers. Table 1 summarizes the major benefits of Snapfix.
Table 1 – Product Benefits
|Product Benefit||Advantages to Users|
|1. Total system||
|2. Product cost savings||
|3. Labor cost savings||
|6. Environmentally friendly||
|7. Health & safety||
|8. Ease of installation||
|10. Lifetime warranty||
As Snapfix faces few direct competitors, the pricing structure is of reduced importance. The
pricing strategy for Snapfix is to emphasize the total cost of repair, redesign and installation solution, rather than the specific product cost. In broader terms, the PVC pipe industry is one which is characterized by decreasing pricing scales, based on customer buying power.
Snapfix’s closest competitors and its substitutes are analyzed below in Table 2. This table compares the costs of each repair solution for a standard twelve-inch long break in a two-inch diameter PVC pipe, encasing standard electrical cables, located three feet under-round. The analysis excludes common excavation time.
Table 2 – Competitor Analysis
|Repair Solution||Repair Method||Material Cost||Labor Cost@$40/hr||Total Cost|
|New PVC Pipe||Remove cables, fit new pipes & re-thread cables||$1.00||$120.00||$121.00|
|3M Resin Kits||Repair cables, fit clear box, mix and pour resin, and allow time to cure||$35.00||$60.00||$95.00|
|Fel-Pro Fixmaster Kit||Fill crack with epoxy, wrap urethane impregnated fiberglass tape around pipe & allow time to cure||$30.00||$40.00||$70.00|
|Mayer Kreig Lock Duct||Clamp split conduit together (difficult), apply sealant along joint, and allow to dry.||$45.00||$20.00||$65.00|
|Carlon Split Conduit||Fit split conduit together, apply joint sealing tape around both sections, tie with plastic strap||$16.00||$10.50||$26.50|
|Snapfix||Hand snap together around break without disturbing cables||$8.00||$3.50||$11.50|
Repairing with Snapfix can provide a huge cost savings of up to 90% over alternative repair methods. This feature will aid market penetration at corporate and small business levels. Furthermore, the convenience and lower tooling costs will make Snapfix the preferred solution to repair existing installed pipe. A similar ease of use and time saving features also characterize the redesign and installation applications of Snapfix.
|In the Pipeline|
|Table of Contents||Appendices|
|1. Executive Summary
2. Company & Product
4. Operational Plan
5. Financial Plan
6. Offer to Investors
|The information and ideas herein are the confidential,
proprietary, sole, and exclusive property of the company’s founders.