Entrepreneurial Small Business 4th Edition by Jerome Katz ,Richard Green

Exercise 18

Focus on Small Business: Mindnautilus
Nick Tostenrude was attending the University of Portland when he met Dennis Moulton in 1999. The two got to talking, and it turned out both wanted to get into business for themselves. Dennis offered an idea from his father-PC- and Internet-based programs to help the cognitive functioning of people recovering from traumatic brain injury. While Dennis's father had developed the software on the Apple II years before, its functionality was limited by the less capable hardware and software of that early computer. Dennis and Nick thought they would try again, with state-of-the-art technology. They incorporated in March 2000.
The fundamental idea made sense. Doing an industry analysis, they discovered some interesting opportunities. Most of the substitutes for their proposed product involved the person going to a hospital, rehabilitation center, or health professional's office for therapy. The alternative was working at home, but books were hard to use, and videotapes offered limited interaction. Research also showed a market of 54 million people with disabilities in the United States.
There were also some threats in the market. Numerous small mom-and-pop companies offered one or two products, but none had taken the market by storm, due largely to poor marketing, mostly confined to one locality. Another major market hurdle was that many people with traumatic brain injury did not have personal computers equipped with special features like keypads, pointing devices, and screen enlargers. Without this equipment, even the best cognition software would be unusable. By far the biggest threat was technological. While Dennis's father had developed the software years earlier, creating software that met the demands of a market increasingly sophisticated about therapies and personal computer software was turning out to be a real challenge.
Mindnautilus looked like a promising idea, but one that would require three or four years of expensive research, development, programming, and debugging before any sales could be made. Neither Nick nor Dennis had the deep pockets it would take to fund the research and development effort. The problem was to find a strategy that would leverage what they could do now and use it to build toward their dream.
They knew there was a large market of potential consumers. They also knew there was a pool of firms making assistive devices and software for the market, but for the most part these firms had weak marketing and hence weak sales. Nick and Dennis realized that the Internet was the perfect way to sell these products to a market of families with one or more members with disabilities. Fortunately, the software for creating online stores was easy to master and inexpensive. So they started Enablemart.com , an online store specializing in selling assistive devices and software for people with disabilities. Sales of the EnableMart store would provide cash flow to support development of the program, Mindnautilus.

The business grew to customers in all 50 states and in over 20 foreign countries. The firm's expertise was great enough that it did contract work for Microsoft and Goodwill Industries. The firm gave 10 percent of its pretax profits to charitable causes nominated by its customers. All these together led the firm to its receipt of a 2002 Global Collegiate Entrepreneur Award for the Pacific Northwest region. It also happened that Nick graduated from the University of Portland in 2002 with his bachelor's degree in electrical engineering. How did Nick describe the secret to his success A superior strategist to the end, he said, "Find a niche." With this track record of success, Nick and Dennis sold EnableMart in 2012 to School Health Corporation. Today Nick is a senior manager at Amazon, and Dennis is the cofounder of Boundless Assistive Technology, another start-up selling products that help people with disabilities.
Do you think Dennis and Nick could have predicted they would start EnableMart when they started Mindnautilus Why or why not