This post has been pre-approved by Mods, is on-topic and any reference to other companies is merely for comparative purposes to BGMT.
Five critical enablers for growth:
BGMT needs five critical steps to drive growth, some well understood and others less obvious. The first is to pick the right market, ideally a “limitless” market with millions of end points (that is, users or devices). Google’s addressable market, for example, is every Internet user on the planet—some 2.4 billion people—and the approximately $500 billion (and growing) worldwide spending on advertising. “There are two parallel paths BG is following to reach its 2015 milestone. The first path is consists of development for three identified product channels: patients, professionals, and physicians. The second path, BG refers to as the “Natural Medicine Trifecta.”
LinkedIn addresses a market that includes any professional and anyone looking to hire a professional, for another point of reference BGMT expands on their two parallel paths.
Path 1: Patients, professionals, and physicians are the three primary revenue channels available in medical cannabis. BG’s product development path addresses each of these channels, by building upon data collected from the BudGenius research laboratory. Additionally, BG is assembling a media channel (“BGTV”) to drive product awareness and education. The content network includes “edutainment” styled video content for display on PC, mobile, and tablet devices. BGTV will spotlight new cannabis research for patients, and will inform professionals about B2C and B2B tools available to enhance their business operations.
Path 2: BG refers to this path as the “Natural Medicine Trifecta”; the three essential knowledge points necessary to chart efficacy of any natural herb, such as cannabis. This is summarized as ‘know the ailment, know the medicine, know the effect.’ To know the ailments being treated, BG must first engage the patient. BG works directly with patients through the BudGenius.com portal to help patients find the most applicable medicine for their ailments. BG must also know the medicine, which includes testing for safe consumption, the chemical composition of each plant, and the dosage being consumed. There are very few safety controls in cannabis distribution today. BudGenius is of the few laboratories to perform a safety analysis on all plant samples received. Knowing chemical composition is important because of the complexity of the cannabis plant. Some studies show over 100 different compounds, many of which may be medically beneficial. Also, due to varied quality controls from independent farmers, each harvest often produces a unique plant with a distinct ratio of compounds. Each sample received by the BudGenius laboratory is uniquely tagged and recorded to catalog the harvest. Lastly, BG must collect physiological data from the patient to determine whether the chosen medicine is effectively treating the ailment. Without these three knowledge points in place, medical cannabis treatment will not be as targeted and efficient as it could potentially become. BG has charted a path to introduce products and services to collect the necessary data and fully complete this trifecta. In its final stage, this will occur as a result of several cloud-based Internet products working in tandem to collect data, data mine results, and calculate a collective analysis.
Next is to define a monetization model that enables the company to capture demand without stifling it and thus to scale up successfully. The MJ industry is in its infancy. Getting it right the first time is critical for BGMT. Mind you, BG has had 2 years to lay the rubber to the road and capture the value created by a company’s offering, this stage is critical since it essentially defines a company’s business model and is difficult to change later. For example, one popular software company tied monetization of its act-one product to a physical construct, processors. The company later tried to introduce a different pricing model that was more directly tied to the usage of the product. Even though the model change benefited a large majority of customers, the customers who it didn’t benefit were so vocal that the company had to revert to the original model.
Back in 2012, BGMT introduced Vision 2015, where “envisioning a world where being healthy doesn’t mean spending your salary towards insurance and health clinics. We’re surrounded by portable computing devices with the power to measure, monitor, and communicate. These same tools can become cost effective devices to monitor subtle changes in your body’s chemistry. While we may not reach the goal of your tablet computer becoming your personal on-call physician by 2015, by linking technologies that are currently available today we will come very close to this vision. Three years from now you’ll be able to utilize the same device that you send email and Twitter messages on to monitor how well the natural medicine you took this morning is bringing your body back to a healthy alignment. If that sounds surprising, remember that all your body is to any diagnostic device is a series of electrical impulses. These impulses are then calculated in a small computer and then given to a physician to interpret. This data doesn’t need to be isolated in several small devices and then placed on a paper chart. Instead, imagine if the electrical imprint of your body was available as an anonymous flow of energy in the Internet cloud. Your body could then be compared to billions of other bodies experiencing similar symptoms. This could then be compared and contrasted with thousands of treatment options and correlated with an infinite number of environmental factors to determine the best natural medicine for you.
What computers do better than any human is to calculate patterns. With this type of analysis, new suggestions can be offered to trained providers of natural medicine that you speak to using the same tablet PC that’s monitoring your health — all within the privacy of your own home, your lunch break, or in the evening before going to bed.”
The third step for BGMT is the focus on rapid adoption. This approach protects a company from becoming caught up in the demands of serving an isolated customer set. Many startups companies become lost in the pursuit of the “lighthouse” customer. These companies make major concessions across product and pricing to win over a large account. BGMT can not afford to get it wrong. Though in some instances this may result in a major referenced customer, it could hinder the development of future products designed for mass use, or of a streamlined operational capability.
The magic of BG’s journey is that most of Vision 2015’s technology is already available today. Unfortunately, few people have had the chance to experience it. BG Medical is linking these systems together and will place them at your fingertips. Together we will push the world forward into an amazing reality where true health care meets prevention, not costly surgeries, and surely not toxic medications. We’re proud to begin our journey with the amazing medical qualities of cannabis and the groundswell support across the world from people like you. In 2012, you’ll see us make great leaps in our research and Internet technology. By 2013, we’ll be working with special diagnostic tools in our labs to monitor and administer new types of treatments. Next, new herbs will added to our systems. Finally, in mid 2015 you’ll see the many of technologies shown here in full operation.”
There has been quite the chatter surrounding BGMT’s secret lab, for good reason…
The fourth growth factor is stealth. Andrew Grove, former CEO of Intel, famously spoke of paranoia as a virtue. Given the pace at which the barriers to entry are falling in this industry, maintaining a low profile while alpha and beta products are developed is vital. I believe we can all relate BGMT’s off the wall stealthiness. However, in this ‘budding industry,’ intellectual-property protection provided by patents (and non-patents) as a prime example of low barriers. The fifth and final enabling action is to create proper incentives for the leadership team to remain committed to the company, through act one and beyond. Both in their culture and in their incentive structure (for example, change of control agreements, like what we have recently seen take place with Mr. Salvatore R. Tuzzolino as the majority shareholder), many start-ups give little thought to life beyond the IPO. Instead, companies and their executives should be focused on building $1 billion companies—with respect to revenue and not market capitalization.
“In past years, BGMT’s executive staff has introduced technologies to the world that forever changed the way you communicate and interact. We’re proud to be on the forefront of innovation again, this time by advancing natural medicine and the human condition. We’re glad you’ve joined us in this journey, and we’re glad you see the benefit of natural medicines like we do.”
The drivers of growth for act two are different Finding venture capital for BGMT, act two presents new challenges for the company. Having achieved a foothold (or more) in the marketplace, what next? How can Angel keep his software or online-services company growing? How can he replicate the lab and distribute the footprint to other parts of the country? When can he fully tap into the truly budding California marijuana industry that is not yet fully legal, despite being the first-legalized MMJ state?
It is said that, in the span between $100 million and $1 billion in annual revenues, many companies will run up against either natural market-size or market-share limits to their core product or service. Those companies able to grow successfully to $1 billion and beyond used at least one of three viable growth strategies to get past these boundaries.
First, a fortunate few built robust enough act-one business models that they could simply expand for their second act. These companies opened new geographies (as Facebook did, focusing on Anglophone markets), new outlets (as Google did with Gmail), or new categories (as Amazon did in expanding its e-commerce engine to new retail categories). This approach is only viable for those companies whose act one addresses a target market that is so sizable and fast growing it can support multiple phases of growth. I believe we can easily see the MJ target opportunity for BG Medical Technologies, Inc. What Leafly has become to Colorado, there is simply no reason why BGMT can’t establish a similar footprint, taking it to the next level but on a much, much larger scale market (1,100 dispensaries in LA, per se).
Second, some companies extend their proven business model into adjacent markets. For example, Microsoft replicated its success in desktop operating systems when it moved into server operating systems and eventually enterprise applications (such as Dynamics and SharePoint). Many companies using this strategy made sizable acquisitions a key component of their growth story, buying footholds in adjacent markets and overcoming the difficulties of integration. iEquities stake in SKT* and AEG* are good case in points. Oracle built out its portfolio of enterprise applications primarily via large acquisitions (for example, BEA Systems, PeopleSoft, Siebel, and Taleo). Adobe, SAP, and Symantec also used M&A in this way, acquiring large segments in adjacent markets and excelling in postmerger integration.
BGMT’s business ventures with cancer hardware (software) devices, and e-commerce engines define portfolio proliferation…
Third, some companies successfully grow when they transform their core product into a platform, around which an “ecosystem” of complementary products and services can arise. Let’s take budgenius.com for instance. Wrapping one’s mind around the concept of Budgenius morphing into a greater platform technology can best be defined through other tech industry experts, such as Microsoft. MS successfully used this strategy when it parlayed its leadership in PC operating systems to commensurate success in PC productivity software (that is, Microsoft Office, built on top of Microsoft Windows). Salesforce.com followed a similar playbook with its Force.com platform, which encourages developers to create new tools using its application programming interfaces and provides Salesforce.com with valuable insight into future product areas.
No one is comparing Budgenius to Microsoft or Salesforce at this stage, but it’s clear in this snippet from financialbuzz dot com that BG Medical Technologies is on the up and up:
“BG MEDICAL TECHNOLOGIES
Although a stable presence in the marijuana research field, BG is a great investment more for its marketing and networking. They own and operate BudGenius.com, which serves as a bustling news outlet for new developments in medical marijuana and also combines customer reviews. This may not seem like a novel concept let alone a profitable one, but BudGenius is a self-learning program that calculates a particular strain’s possible side-effects and what its best treatment use is. The site updates itself literally every ten seconds and calculates its advice both with scientific findings and user comments. Their foray into the research part of the industry is still getting off the ground (mainly in the technology branch), but BG acts as a sort of news ticker for dispensaries. The fruits of their research will pay off when they hit the market, but dispensaries look to them first for new developments, strains and customer tastes. This kind of industry trust can translate to huge stock payoffs down the line.”
