Final Notice, page 12
Ganesh asked, “Patsy, how big is our beta test group?”
“We’re planning 100 in the first wave and then after 2 weeks, another 100 per week until we get to 500. If all is going well, we’ll then add a final 500.”
“Wade, presumably you’ve been involved with this and can cover these volumes?”
“Oh yeah. The production set up has gone very smoothly. We even got a nice grant from the Indian government, who are trying to energize their manufacturing for export capability. Those volumes are nothing. We’re just chomping at the bit, waiting for the bell so we can show off our stuff,” he said with a big smile. “And speaking of grants and Indian manufacturing ... Liz, Ganesh, what’s the potential for a big surprise from this administration of slapping a big import tax on us?”
“Ganesh and I have been talking with our outside counsel and as we never manufactured in the USA, and aren’t shipping jobs abroad, they don’t see an immediate concern, but then again … ”
“Thanks. Looking at it another way, I’m almost positive that nobody with similar products makes their stuff in the USA, so we’d all be in the same boat.”
Then Vijay asked the big question: “I’d like to hear from each of you ... your view on the Final Notice. Keep it or not? Or something in between. Patsy, since you’ve been privy to this before today, what’s your view?”
“I look at it from a doctor’s point of view and the benefits of the VT2 are indisputable. As a doctor, I have also witnessed the suffering, both emotional and financial, of … I can’t think of a better way of saying it, a messy end to one’s life. Life insurance benefits not discussed and often lost to the beneficiaries. Wills not complete or updated, leading to all sorts of problems. I accept that the Notice may give some users a feeling that they can do what they want with impunity, but that’s someone’s unique moral code and we can’t be responsible for that. If we did, cars wouldn’t be able to break the speed limit. I say it stays. For the full post-beta test rollout, perhaps with an option and some encouragement to register it with their doctor. I also suggest that we activate the Notice period to include the options of 10, 20 and 30 days. This will give us a more realistic picture for the final rollout.”
“Interesting idea. Thanks. Drew?”
“I admit that the killings really shocked me and shook some of my confidence, but then I thought back to the Focus Groups. The stories we heard from them about how they wished their mother or father had known about their death so that they would have also known. No one wants to believe a loved one is going to die. But the Notice wakes them up to reality so they can say their goodbyes and ensure there are none of those missed opportunities that eat away at the survivors forever. I also agree with Patsy on the Notice options.”
“Thanks. Liz?”
“Keep it in. It’s legal and it appears to be valuable.”
“Succinct and to the point. What a surprise.” Smiles all round. “Maria, you were also involved earlier. Your thoughts?”
“I have to admit to a personal bias. My mom died suddenly, and I didn’t get a chance to say goodbye. And as Drew said, we all heard similar stories with our Focus Groups. So, I see the value of the Notice. Obviously, I wish there were no collateral issues associated with our product, but since my function is charged with managing the public’s perception of the VT2, that is my concern. What happens if the killings become a story before the IPO? Could that adversely affect the launch and future of VitalTech? That’s my question and it should be everyone else’s, too. And I’m OK with the expanded Notice options.”
“Thanks, Maria. You raise an excellent point. Don, I think we know your view on the Notice, but what about Maria’s concern?”
“We all agree that the VT2 is light years ahead of the competition. But how long will that last? One year, two? I can almost guarantee that it won’t be three until someone else develops a Notice-type alert. And when they do, we would have to unwrap ours – which we’d had all along – but in a competitive, reactionary environment, dramatically reducing our current sales projections. Also, if we launch without it, we may not be seen as such a major step up, and people won’t swap their Fitbits, Garmins and whatever else they are using, especially at a premium price. And I’m 100% behind the expanded Notice periods.
“One more point,” Don continued. “If you go back to what Patsy said earlier, gun sales are going up - by over 10% a year, in fact. The NRA is even offering discounts to senior citizens and they’re approaching a million more sales. My point is this. Nobody cares about the danger of guns and gun deaths. Gun sales don’t drop after mass killings, and the outrage is very short lived. I’d almost wager a bet that if a big story broke, it would help us.”
Vijay replied with a concerned look. “Not a comforting thought, but hard to argue with. But that reminds me. When we finish the beta test discussion, Maria will present a process that she has developed, with input from Liz, to make sure that inquiries from the public, distributors, legal and law enforcement are handled efficiently and effectively. Users might be immune to gun death stories, but investors aren’t immune to shoddy management.
“Who’s next ... Wade? You’ve been pretty quiet. Want to – sorry – wade into the discussion about the notice?” Make- believe groans rose from the group at Vijay’s poor pun and the mood lightened a bit.
“I say let’s do it. And I agree with Don, that the activation of the Notice with a doctor’s registration, adds a degree of complexity, and I’m shooting for 7 sigma defect levels.”
“I thought 6 sigma was the highest,” asked Vijay, half seriously.
“So far. But you should know that the tiffin carriers in India do better than 6 sigma.”
“Whoa,” Maria blurted out. “6, 7 sigma and tiffins. I thought I was doing pretty well with all the manufacturing jargon you throw around, Wade. Supply chains, productivity levels, just- in-time and even the alphabet soups like OEE, WIP, TQM, but what is sigma and tiffins?”
Wade, who loved talking about manufacturing, replied with the enthusiasm of a kid with his favorite toy, “6 sigma means that you consistently manufacture your products with no more than 3.4 defective ones out of a million; in other words, 99.999999% of all attempts are perfect. 7 sigma would eliminate the 3 defective ones. That’s our target.”
“And tiffins?”
“Ahh. Vijay or Ganesh could probably explain it better, but since you ask, all across India, millions of workers leave home for work, bright and early, to cover the distances that many have to go. As they are leaving, their wives or in some cases, mothers, begin to make up their lunch, and by our standards, these lunches are complex: Rice and two or even three dishes, plus their chapatis or other bread. They pack them into stacking tin containers, called tiffins, kinda like those camping kits you see. Then, the tiffin carriers come round the houses, collect the tiffins, and deliver them to the right people, almost all the time. If you’ve ever seen the chaos of Mumbai, that level of performance is amazing. Not sure how many meals are delivered but in Mumbai, I read it was over 200,000 per day. FedEx and Harvard Business School have studied them.”
“Why don’t they eat at restaurants near where they work?”
“Don’t know. Vijay, Ganesh?”
Ganesh answered, “Eating meals out would be too expensive for most and sandwiches haven’t taken over yet. Plus, food is very important, and everyone prefers to eat home cooking, with exactly the right spice combinations. Thinking about it is making me hungry. Let’s move on!”
“OK, Ganesh, what do you think about the Notice?” Vijay asked.
“Keep it.”
“Are you just saying that because you’re hungry?”
“Yes.”
They all laughed, and Vijay said, “OK. I’ve had my doubts, but it’s agreed to keep it in. Drew, please take us through the beta test details.”
Drew explained the test participant configuration, age groups and other details. As discussed earlier, younger groups would be added and each group would have a 50/50 gun/no gun composition. They would keep the same requirements regarding no clinical depression and no imminently fatal illnesses; and Patsy and her team would draft instructions to the referring doctors to watch for signs of depression and anger. The automatic notification to doctors, of a patient’s Final Notice that was trialed during the alpha test would be kept, but the 911 notifications would remain suppressed.
The meeting was adjourned, and while there was general agreement and enthusiasm, it was obvious that the murders weighed on the group.
Vijay felt comfortable with how the meeting had gone. His colleagues were upbeat and optimistic, and despite the heaviness of the shootings, he was confident. One ingredient in his feel-good frame of mind was this afternoon’s scheduled meeting with KKL, giving him a chance to see Jennifer again. And, she was staying overnight. They had both been so busy, it had been two weeks since they’d been together. He had an hour and a half before the meeting, so he changed into his running gear and hit the pavement.
***
Vijay was back and showered and at his desk at 1:45 PM, in time to gulp down the blueberry, protein supplement, smoothie that Maureen had waiting for him. Thank God for smoothies and supplements, he thought, as he devoured both the smoothie and a full email inbox. At exactly 2:00 PM, Maureen announced his visitors, J. Edward Konig and Jennifer Andrews.
Vijay was ambivalent about J. Edward. He guessed him to be in his mid- fifties, but he was off by about 10 years, due to J. Edward’s physical condition, or rather lack thereof. He wasn’t a tall man and he was carrying 20-30 extra pounds. But despite his lethargy, J. Edward was enthusiastic in his backing of VitalTech and Vijay appreciated that. He also seemed confident and Vijay had to hope that this confidence was based on reality, because the financial world was all new to Vijay. KKL was successful, so Vijay assumed he knew what he was talking about.
Jennifer was often the bridge between Vijay and J. Edward. She could sense when Vijay was nervous about something, possibly an aggressive move suggested by J. Edward, and she would intervene and broker a compromise. She was very level-headed and very smart.
As he greeted them, he was struck, once again, by her beauty and hoped that the meeting and the rest of the day would quickly melt away so they could be together in a much different way than the client relationship charade they were about to begin.
“J. Edward, Jennifer, thank you for making the trip up. It’s good to see you both again. You remember Don, Liz, Maria and Ganesh? I’ve asked them to join us.”
After the hellos, hand-shakes, and settling in, Maureen took requests for coffee and tea. Bottles of water and juices were on a sideboard. There were no soft drinks, thanks to Vijay’s dual role of doctor and health enthusiast.
Almost immediately, J. Edward asked about the Final Notice option. “As you can all imagine, I was horrified to hear about the murders of innocent people by the test participants after receiving their Final Notices. Our country and guns have a long, strong and complicated relationship, and I was relieved when Vijay told me that the FBI felt there was no basis that would implicate VitalTech with the murders. And that being the case, I hope that you all are standing strong in your conviction about the benefits of the Notice feature.”
Vijay was concerned that J. Edward was going to continue with his sales pitch, so he broke in. “You’ll be pleased to hear that our Team unanimously agreed to continue with the Notice, with three small additions. To better understand the role of guns, we’ll set up the test group on a 50/50 basis, guns and no guns. We’ll also prepare a detailed briefing sheet for the conferring doctors, advising them to particularly watch for signs of depression and anger when the Final Notice is received. And for the post-beta test roll out, we’ll strongly encourage registration of the user’s doctor, so that they can become more active in the relationship. Finally, we’ll be allowing users to set the Notice period to 10, 20 or 30 days.
We’ve also set up a detailed public relations flow process so that we handle calls from the public, clinicians, law enforcement, distributors, etc., efficiently and consistently. What we don’t want is a screw-up that leads to a story breaking about the murders.”
“That’s great Vijay,” J. Edward replied, and then, looking at Don. “How’s your marketing guru feel about that? Everyone’s counting on you to sell a million of these things … in the first month!”
There were chuckles from all and Don replied, “Keeping it in is the right move. The Focus Groups said as much, despite the grim reality.”
J. Edward smiled and said, “Hmm, that might be a better name for it than Final Notice: ‘The Grim Reality.’ ” Following appreciative laughter amongst the group, J. Edward continued, “Hell, when Richard Branson was starting up Virgin Airlines, he wanted to call First Class and Economy, Upper Class and Lower Class.” More laughter. “He got his way with Upper Class. Planning in advance for handling inquiries is a good idea but what are your contingencies for public relations issues? What if a story does break? We have some good connections with the media and if we know quickly enough, we may be able to quash it.”
Before Maria could respond, Don jumped in and repeated his comment from the morning session. “Sorry to barge in, but going back to your comment about our relationship with guns, I said this morning that if word got out about a watch that’s causing people to kill others, I believe it would help, rather than hurt us.”
“Why do you think that?” J Edward asked.
“First of all, everyone has pondered the question, ‘If you knew, for sure, that you only had X days to live, what would you do?’ Second, we’re talking about people with guns, and they are different than people without guns, and not just because they have a gun. They have a gun because they know that there is a chance they may have to shoot someone. They may hope it never happens, but it could, and they have accepted that they can do it. Most of them have never shot at anyone, but I know that everyone has at least someone that they might like to take out, if they could do so with impunity. A politician, boss, bully, etc. I couldn’t afford the ammunition to take care of all the politicians I’d like to send to their graves before I climb into mine. Smiles, chuckles and acknowledgement filled the room.
“And the final reason is that it would be a huge, unique and compelling story that would feed those fantasies. It would go viral and everyone in the world would hear about it within a week.”
Vijay was concerned. “So, what you are also saying is that, by feeding their fantasies, there may be an even better chance that people with guns will act in this way when they get their Notice.”
Two people in the room heard the apprehension and warning in Vijay’s comment and one of them, Don, replied, “No, I don’t think it would change the odds.”
The other person, J. Edward, shifted the conversation, “How many are you planning in the first beta test group, Vijay?”
“100 for the first wave, followed two weeks later by another 100 per week until we get to 500. We’ll then add a final 500 to finish out the tests.”
“And production?”
“That’s looking good. We’re even getting a grant from the Indian government.”
“Yes, so I’ve heard. That’s good news. Ganesh, how are the units pricing out?”
“Almost too good to be true. Better than planned. I was talking with your analysts the other day and even if we hit some serious snags, it might dent our margin forecast, but profits would still be way above normal expectations. We’ve discussed a $199 basic model price. At a volume of 500,000 in year one, our lowest, worst case, forecasted gross income would be 100 million, and obviously double that if we hit your million-unit, notional target. Our estimated gross margin for the low-end volume range is in the 65 -68 percent range.”
“Notional? I’m betting the bank on it. We’ll be talking with René at Credit Suisse in the next day or so to get an update on the current IPO climate and preliminary forecasts. Hopefully you’ll be able to nail down final costs so we can start to compress the forecast range.
“Let me ask a question. What if this thing really did take off, even faster than any of us thought? We’re the only game in town at the moment, but if we stumble with fulfillment, we create openings and opportunities for others. It may sound crazy, but what if my ‘notion’ way underestimates demand? What if it’s 1.5 million? Two million? Three? Or even five?”
J. Edward was an optimist but not a stupid one, so when he came up with something like this, it wasn’t just complete nonsense, and it gave everyone pause for thought.
Don, who was probably the biggest optimist in the room, said, “Wade seemed pretty confident in his production capability today.”
But Vijay put it into perspective, “Yes, but we weren’t talking about numbers like these. Let me talk with Wade and ask him what it would take – time and money – to reach those levels. It’s a good idea to think about those possibilities so we can react more quickly. I’ll get back to you with our thoughts.”
