Brian Willard, who lives in Denver, just read a lengthy article about Redbeacon, the subject of Case 13.1. He’s thinking about launching a Web-based service similar to Redbeacon’s. Brian just inherited a substantial sum of money and is willing to put it into the business. One thing that Brian plans to do is roll out his business on a nationwide basis, rather than on a region-to-region basis like Redbeacon is doing. Brian feels that by doing this, he’ll be able to leapfrog Redbeacon and become the preferred provider for people using the Internet to find local service providers. Comment on the wisdom of Brian’s strategy.

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YOU BE THE VC 13.1 Company: Driptech Web: www.driptech.com Twitter: Driptech Facebook: Driptech Business Idea: Manufacture and sell affordable, water efficient irrigation systems for small-plot farmers in developing nations. Pitch: In many developing countries, farmers have no means to grow crops during periods of low rainfall or drought. Often, a farmer gets a crop during a season of good rainfall, but that season may be followed by several seasons of low rainfall or drought. The drip-irrigation systems that are sold locally are typically too expensive for subsistence farmers to buy. As a result, when rains come sporadically, food irrigation is often used, which is an inefficient way to irrigate crops and wastes water. Driptech, which is a for-profit social venture, was founded to address this global problem. Its founder, Peter Frykman, developed Driptech's core solution as part of a graduate class at Stanford University-Entrepreneurial Design for Extreme Affordability. Following a trip to Ethiopia, Frykman realized small farms need cheap, low- maintenance, drip irrigation systems to reduce effort and to conserve water. To achieve this goal, Frykman and his team developed a drip irrigation system that consists of low-cost laser-punched plastic tubes linked to a water tank. Gravity drives water through the tubing and to the plants' roots from the holes. Simple tap valves control the flow of water. The entire system can be installed and maintained by an individual farmer. The Driptech system is about one-fourth the cost of a traditional drip irrigation system, which Driptech hopes will spur widespread adoption. The secret sauce that allows Driptech to provide such a low price-point is in the innovative way the system is designed and manu- factured. Its proprietary technology uses the same machines that make plastic carry bags to punch precision holes in plastic tubing (which is the heart of Driptech's system). There are thousands of these machines across the world. This allows Driptech's systems to be manufac- tured near the point of sale, rather than from a central location, which economizes on labor and transportation costs. Traditional drip-irrigation systems are made in specialized factories and need skilled technicians. In addition, the Driptech system is made from fewer parts than traditional drip-irrigation systems and takes less effort to install. There are vast worldwide markets for the Driptech system, which is most appropriate for small farms. In India alone, 86 percent of farmers farm less than two hectares (1 hectare is about 2.5 acres). The relationship between farmers and the size of their farms is similar in China. Driptech asserts that by investing $20 in its drip- irrigation system, a farmer could recover five times that much in increased crop production in a single year. Driptech's systems will be sold by the company and through NGOs working to improve agricultural practices in developing countries. Q&A: Based on the material covered in this chapter, what questions would you ask the firm's founders before making your funding decision? What answers would satisfy you? Decision: If you had to make your decision on just the information provided in the pitch and on the company's Web site, would you fund this company? Why or why not?