Finding Funding, for the right product you can get the money
By Don Debelak
This article originally appeared in Entrepreneur in the early 2000s.
How is the inventor doing today
Note: This product has been a run-away success and almost every airline carries it. Wikipedia has an excellent update on all that is happening with this inventor and it is a really great story.
The “digEplayer” is a product line of “digEcor.” digEplayers are self-contained, portable audio video on demand (AVOD) hard-disk based digital entertainment devices. Similar in size to a portable DVD player, digEplayers are pre-programmed with movies, television shows, cartoons, videos and music, as well as airport maps, destination information, promotions and advertising.
The Entrepreneurs: William J. Boyers Jr., 39-year-old founder of APS in Tacoma, Washington and partner and co-founder Ray Henson, 39, who helped Boyer with the technical aspects of the invention
The Product: The digEplayer is a portable battery-operated in-flight entertainment system that passengers place on their tray tables. The 3-pound system, which holds 64 full-length movies and hours of digital music, cartoons and TV sitcoms, is a less expensive alternative to the traditional onboard in-flight systems that cost as much as $1 million per plane to install. A licensing arrangement with Twentieth Century Fox allows APS to reprogram the units every 60 days with new movies right before they go to video.
Startup: $250,000, which paid for making a rough design of the unit
Sales: $1 million-plus in the first quarter of 2004
The Challenge: negotiating the expensive product development and marketing costs required to introduce a high-tech product to a market with well-funded competitors
William J. Boyer Jr.’s high-tech business idea could certainly be described as ambitious: He set out to persuade airlines to ditch their traditional onboard entertainment systems for his innovative alternative. Although in the early days he lacked the requisite capital and technical expertise to get the business off the ground, before long, his venture was soaring past the million-dollar sales mark. Here’s a closer look at how he launched his big idea from conception to reality.
Finding Funding – Steps to Success
- Sell customers on your product’s benefits. Big customers are almost always skeptical of new vendors with smaller businesses. But they will listen if your product strikes them as unique and important. As Boyer explains, his product met that criteria: “I knew my product had two big benefits. Current in-flight entertainment systems weigh in excess of 1,500 pounds [due to wiring, screens and other components], a weight that requires about $100,000 of fuel per year. The digEplayer only weighs 3 pounds per system. The second benefit is that [if my] product fails, only one unit fails. When current systems go out, no one can watch a show. [With digEplayer], airlines can avoid unhappy customers on a long flight when a system goes down.”
- Don’t be afraid to bring in a partner. Technical expertise is expensive-especially with high-tech products, where you might need a minimum of 10 redesigns before you get a product that meets your needs. If you can’t afford to spend that kind of money, another option is to give up a part of the business to a partner with technical expertise. In Boyer’s case, he found Henson, his technical expert, in the coffee shop Boyer owned. “I originally got my idea in 2000, and I knew one of my customers had worked at Intel and knew about electronics,” says Boyer, who launched the business in 2002. “I kept asking him questions until, finally, Ray insisted I tell him what I was working on. Ray liked the idea, and he agreed to work on the project for a share of the business.”
- Find champions in the market. It doesn’t matter what your product is-you’ll have a tough time meeting the right people and breaking into the market if you lack an inside connection pushing for you. So do research to find people looking for a solution like yours. Boyer’s champion was Dave Palmer, Alaska Airlines’ managing director of marketing.
Boyer, who loves being around planes, was also working as a baggage-handler at the time, so he knew of Palmer. Boyer got the initial meeting because he had heard the managing director of marketing was struggling with the $1 million cost of adding an embedded entertainment system to each plane. So Boyer sent him a letter with a money-saving solution that caught Palmer’s eye: Instead of spending $1 million per plane, Palmer could buy 40 digEplayer units for each plane (at a tenth of the cost of the embedded system). The airline could then charge air travelers $10 each to use a unit in flight. “I’ve probably talked to Dave Palmer 75 to 80 times,” says Boyer, who is now courting other airlines as well. “He made time for me every time I wanted to see him.”
Thanks to that commitment from Alaska Airlines, Boyer was able to secure a licensing deal with a division of Twentieth Century Fox called Fox in Flight. It helped, too, that the studio needed what he offered-content sales outside of theaters. “I sent a letter to Twentieth Century Fox asking if I could get an appointment for content procurement,” he says. One thing led to another, and soon Boyer was on a plane to Los Angeles, where, he says, “[the studio] went out of [its] way to get me the licenses for the content. And they set up the license so I can get movies about a month before they are generally available on video.”
- Take small steps. You can try to limit your expenses for developing a high-tech product, but they can still add up. To keep costs down, be careful and move slowly to ensure you’re spending money on a product that will sell. “On my first call to Dave Palmer, I started out with just a picture,” says Boyer. “Then, when Dave liked what he saw, I kept moving forward with better models and prototypes. I had two mock-ups, a working model in a briefcase, and two prototypes before we finalized our product. Plus, I contacted Twentieth Century Fox after Alaska Airlines insisted I have content, so my last prototype included movie programming from Twentieth Century Fox and music programming [from] DMX Music.”