By: wgm2001 ISO
While perusing the CC, note the importance Thode placed on having new suppliers and their ability to ramp up product very quickly. You do this because you expect to sell a lot of product, but you also do it ahead of time, like Thode did, so you can meet the new demands and keep the customer happy by being able to deliver product in quantity and on time.
People sometimes forget how important creating the infrastructure is to successfully growing a company. I see Thode building infrastructure to support the expansion to a $200 million dollar plus company.
I think he talked about a $200 million company in the past CC because he thought it was readily achievable in 2-3 years. What he isn't talking about from my perspective is his real goal, building a $billion plus company. Hints about there being a larger market than expected for some of their newer technology point beyond $200 million since their current plan builds out to that figure. Surprises, like he hinted at, point to the next goal, the next level of a company.
There are two major transitions in growth for a company like ISCO. To reach $200 million they will become a different company with all of the infrastructure in place that small companies do not need. That is incrementally being set in place now. However to go from $200 to a $billion, they will need another major and somewhat difficult restructuring. While we are all happy they appear to be growing toward their stated goal, I hope that when they succeed they don't succeed too quickly and overstress the developing infrastructure.
We have $9 million this year. $20-$50 million next year would be nice and even doable, and then somewhere in the $50-125 range in 2007 would be real nice but it would strain them significantly, as long as they remain only a manufacturer.
The hint at putting filtering in the handset would likely be a licensing deal where ISCO did not manufacture the chips only own the rights to the licensed technology. That type of growth as well as the hinted software possibilities is easier to manage and I believe Thode wants to grow that side of the business. It is easier to scale intellectual capital than physical production and supply chains up above $100 million with our level of product. That is just too many physical filters moving around with all the desing/build/inventory problems involved, even with his outsourcing model and multiple suppliers.
Somewhere along this growth curve we will begin to see a new ISCO that markets intellectual capital along with its physical products. That is the only way I see them growing much beyond $100 million and meeting Thode's stated goal and it will be absolutely necessary for him to meet what I believe is his unstated goal.
Just a few thoughts from the rim as I digest the information from the last few weeks.
