Michael A. Tibbetts MBAX 6100 Entrepreneurship and Small Business Management Frank Moyes, Leeds School of Business June

1. Software Bisque Business Model Assessment Michael A. Tibbetts MBAX 6100 Entrepreneurship and Small Business Management Frank Moyes, Leeds School of Business June 18, 2003

2. Opportunity & Need • Compelling need – • Since the stone age, man has been looking up to the skies in wonder. Brilliant astronomers such as Copernicus, Galileo, and their peers contributed vast amounts to our knowledge of the stars. Today it is not only professional astronomers in large observatories, but also amateur astronomers in their back yards whose contributions and discoveries are expanding our knowledge of the skies. In certain areas such as meteor counting, comet and supernova discovery the accomplishments of amateurs meet and at times exceed those of professional astronomers. The use of the term amateur is an arbitrary distinction, given the sophisticated technical resources leveraged by these astronomers. These resources include telescopes, robotic mounts, cameras, and software controls to enable the amateur astronomer to view the night skies with amazing precision. It is this need for advanced software and hardware capabilities that Software Bisque addresses. • Other needs - • Intellectual; astronomy is predominately an intellectual pursuit of knowledge • Emotional; as a whole amateur astronomers have a passionate love for the sky • Social; enhanced status and pride of ownership • Problem Solving – • Over the course of the 20th century, technological innovations have strongly shaped the size and composition of the amateur astronomer population. Software Bisque provides software and hardware solutions that solve many of the fundamental resource needs of their customers. • Market Structure – • Software Bisque’s market is well segmented, with clear niches for specific software applications. There are no competitors like Software Bisque that cover the entire range in their product offerings. There are strong competitors in specific niches, but none which provides competitive offerings across the entire range of applications. These niches include: • Planetarium programs for the identification of known objects in the sky • Telescope control software • CCD camera control software

3. Target Market • Target Consumer Market - • Composition • The target market consists of thirty or forty thousand hardcore sky gazers and another couple hundred thousand more casual types. The Astronomical League is the largest amateur group in the United States with 240 member societies. Sky & Telescope magazine, the subscription of choice for the amateur astronomer, has a subscriber base of 250,000 world wide. • Demographics: • Predominatelywhite males between the age of thirty and sixty five, with perhaps fifteen percent of the group consisting of women • Roughly 20% of the population from outside the United States • Social: • Well educated • Typically with backgrounds and employment in engineering or the sciences • High proportion from rural or suburban backgrounds • Above average income • Psychographics: • Careful, with a high concern for integrity, accuracy, and perfection • Critical thinkers • Environmentally-friendly • Decision-making process - • Thorough analysis of all product features and capabilities • Careful consideration given to the opinions of other amateur astronomers • Decisions are primarily based on performance not price

4. Product/Service • Value Proposition - • Software Bisque is an astronomy hardware and software company. Through its range of high quality products it provides pride of ownership, status, and the ability to achieve significant accomplishments to amateur astronomers. • Products offered - • Software Bisque provides a software suite that covers the range of required applications for amateur astronomy including planetarium programs, telescope control, and CCD camera control. Each of the software applications (TheSky, CCDSoft, TPoint) is priced in the $100 - $200 range. • Along with its software suite, the company manufactures the “Rolls Royce” of robotic telescope mounts, the Paramount ME. This is the most precise, feature rich robotic telescope mount at the $10,000 price point. Each Paramount ME is machined and hand assembled in Golden Colorado with an expected waiting period of one year for delivery. • With a system consisting of these products an amateur astronomer has the ability to do fully automated pointing and tracking of the sky with amazing precision. What this means is the astronomer can point a telescope and camera towards a portion of the sky, go to bed, and wake up in the morning to see the highest quality results of a full night’s worth of tracking. Historically to realize these results, the amateur astronomer was required to stay awake all night, manually adjusting the equipment without achieving the same high quality results. • Key product attributes - • Performance; precision, accuracy, reliability, feature set • Cost; highest quality, most feature rich software and hardware mount in the respective price ranges • Social; style, pride of ownership, status • Service; full software support, employee capabilities, product range.

5. Unique Benefits • Achievement • One of the greatest rewards for amateur astronomers is the recognition and prizes that come with a new discovery. These discoveries are typically in the areas of meteors, comets, and supernovas. The community even uses the term Ace for an individual who has discovered five or more new comets. The high quality, precision instruments and software provided by Software Bisque acts as an assistant for these Aces of the night sky. • Pride of ownership • With regards to the Paramount ME, this device is truly the Rolls Royce of robotic telescope mounts. Along with the tremendous capability this puts into the hands of the amateur astronomer also comes the satisfaction of owning one of the finest pieces of machinery every assembled. • Status • Ownership has its benefits, but so does the right to brag and show off. Owning a Paramount ME is a symbol of status amongst those in the amateur astronomer community. People don’t wait a year to own a Hyundai, and if they do own one, they don’t show it off to their friends. Astronomers who own a Paramount ME like to let others know what they are using and why. • Choice/Range of Products • Software Bisque is the only company providing a full suite of software applications across the range of product niches. • Market Understanding • If you are looking for a robotic telescope mount and ask around you will be quickly pointed to the Paramount ME. Similarly, the feature rich nature and stability of the TheSky, CCDSoft, and TPoint also make them highly recommended items amongst amateur astronomers. The members of the amateur astronomy community are extremely technology savvy and have the ability to distinguish truly exceptional products from the norm. Software Bisque puts a tremendous amount of effort into delivering the best software and hardware solutions and are realizing the benefits of a target audience that can appreciate and distinguish the differences between their offerings and those of the competition.

6. Competitive Advantage • Opportunity Driven Market - • While barriers to entry for this market are low, success requires sophisticated hardware and software development capabilities, substantial amateur astronomy experience, and the ability to effectively deliver, support, and sell complex technology. This is definitely an opportunity driven market for the right company with the right capabilities, resources, and products. • Competitors - • Hobbyists • Like the founders of Software Bisque, many amateur astronomers also dabble in software development. Many of these hobbyists have developed planetarium programs and are delivering them as freeware or shareware on the internet. There are several dozen competitors in this class. • Small Individual Entrepreneurs • Over time some of the individuals developing their own software accumulate a large enough user base to sustain a viable, albeit small company. There are approximately 6 to 12 competitors in this class. • Corporate • Hardware (robotic mounts): Astro-Physics, Losmandy, Mountain Instruments, Meade Instruments; these are large multi-million dollar companies with substantial resources. • Software: Few companies have reached the upper tier of success in this market. The biggest competitor for Software Bisque on this scale is Space Holdings, manufacturer of Starry Night. This company is the antithesis of Software Bisque. Space Holdings is a company with formal investor backing as opposed to a bootstrapped operation, with the likes of Neil Armstrong and Neil Dobbs (CNN) on its board of directors. The two companies are also very different from the product side. Space Holdings is in essence a media company with experience in multimedia software development but limited experience in the amateur astronomy market. As a result the two companies products, Starry Night and TheSky come at the market from very different positions. Starry Night is glitzy with movies and an educational bent, while TheSky is all about performance and the features an amateur astronomer desires. Starry Night is sold via retail channels, while TheSky is sold online, through magazine advertising, and word of mouth.

7. Competitive Advantage (cont.) • Resources - • Financial: Family run bootstrap operation • Physical: Fully equipped machine shop with CNC machines and automated lathes, along with a comparable software development environment • Human Resources: World’s best machinist and mechanical engineer of robotic telescope mounts; world class software developers with a sophisticated knowledge of amateur astronomy • Intangible: In the 15+ years of the company’s existence it has been able to maintain a competitive advantage in the market. While any individual product feature can be copied, it is the ability to execute and deliver a product consisting of the full feature set that has proven difficult for the competition to imitate. This family run business of four brothers from the School of Mines who are passionately competitive and sophisticated in their skills and knowledge have thus far proven too much for the competition to overcome. • Capabilities - • Product: The design features and benefits of Software Bisque’s products clearly meet the needs of the market and provide the firm a strong competitive position. • Marketing: Software Bisque has a strongly differentiated set of hardware and software products with features that clearly set them apart from the offerings of other players in the market. • Sales: Steve Bisque the founder of Software Bisque has a sophisticated set of sales skills for his products. His detailed knowledge of market needs, competitor’s offerings, and the advantages of Software Bisque’s products enables him to close virtually any deal once he has the opportunity to speak with the customer.

8. Conclusion/Recommendations • Observations of the market and customers via trade magazine reviews, customer testimonials, and direct internet communications (message boards, user groups, etc.) reveal that the perspectives of Steve, Tom, Matt, and Dan Bisque are well aligned with the realities of this market and their business. • Software Bisque is a successful company in a tough competitive and operational position. This is a privately held company with somewhere between $2.5 and $5 million dollars in annual revenue, and seven employees. There are larger, better funded competitors in both the hardware and software markets. • Three things have made this company successful: • Experience, and knowledge of amateur astronomy. As amateur astronomers themselves, the founders of this company know what they want in a product, can evaluate the shortcomings of competitor's product offerings, and implement features and enhancements targeted at these vulnerabilities. • Fierce competitors. The four brothers who own and run this company take this endeavor seriously and personally. If a competitor comes out with a new feature or is said to be better than Software Bisque, these guys take it personally and work on their product with a passion to win. • Family run, hard work. 16 hour days are the norm at Software Bisque. Because these guys are doing it on their dime as a bootstrap operation and not on the dime of a professional investor they are willing to do whatever it takes to win and produce the best products in their market. It is hard to believe that their peers at other firms working for multi-million companies have the same passion, work ethic, attitude, or approach. • This company is operated on the blood, sweat and tears of the 7 passionate employees, with a heavy burden falling on the four Bisque brothers. Are they successful based on a traditional MBA analysis and review? The answer here is mixed. Software and hardware skills are expensive, but this company needs to grow so the direct effort of the founders is not solely responsible for the success of the firm. At some point the founders need additional staff to train and delegate, so they can work fewer hours and give this company life beyond their direct efforts and time. Are they successful in other ways? Based on their product and demand, the answer is a definitive yes. Customers are waiting a year for a Paramount ME and Software Bisque has only ever had one customer cancel an order in that time! Users do not hesitate to leap to the defense of the company’s products in user group and message board dialogues. With a successful suite of products, loyal customers, sophisticated resources and capabilities, this is a truly successful firm of the classic entrepreneurial mold.

9. Appendices