Cranking up the engine

In recent weeks I've been thinking about how to approach this Scripps Institute opportunity. To recap, $570 million has been committed by state & local government to build a Scripps Institute in Palm Beach County inspired by its historical location in La Jolla, CA and its reputation as the leading research institution in America. That and all its spinoffs means that something like $6 billion (my estimate) is going to get spent on real estate investment within 100 miles of there over the next 10 or 20 years.

We have the best real estate investment software engine there is (though it is far from being a product). Excel is our competition. Every real estate developer already has a way to "do the numbers". So, the current market for the product we've been envisioning is for

• somebody new to real estate investment,
• somebody whose Excel spreadsheet has become musclebound.
• somebody who has lost the employee who built the musclebound Excel spreadsheet.
• somebody who wants to do new kinds of projects that he has not done before

We'd like to charge $5k or $10k for getting involved with somebody and frequently make $20k or $50k with an engagement.

There is no immediate money in the picture sketched above. Furthermore, there is no overwhelming product advantage over Excel in the long term without signifigant marketing muscle. So, I've been thinking about how to improve this situation. Here's what I've got.

I've done a few hundred case studies on all kinds of real estate development. From them we'll distill a very high level of prototypes. People have tried to do this nationally, but that's hampered by vastly different densities, costs, & products nationally. But within 100 miles of www.ScrippsEast.com - (I own that domain) it will be easy to create useful prototypes. So somebody who owns land can sit down at our software and say,

1. I'm looking at 100 acres of land.
2. I want to build townhouses and allowable density is 8/acre.
3. 30% of my land is lost to environmental restrictions.
4. Let's employ Carl's standards for a middle income townhouse development.
5. Wow, Carl says if all goes right I'll make $11 milliion.

Then if he wants to do more detailed planning he can proliferate my standards and prototypes into detailed assumptions and refine them all he/she wants with the help of engineers, market experts, architects, etc.

I think that is a business we could make a lot of money at. And, by the time we've handled ScrippsEast well, we'll have a product that has a distinctive advantage over all competition to market worldwide. That could be worth $50 million to us. Of course, there are lots of challenges to meet if that is to be achieved, but it is better to work on $50 million opportunities than on $100,000 opportunities if all else is equal.

But we need a $50k or $100k to get that started. That's why I'm working on the CDBG project, to get that ball rolling. Venture capital is dumb. It is a way to waste time on hypothetical business plans and get people bothering you that you don't want bothering you. So, we gotta fund it or find a very friendly source. Oracle funded itself mostly from clients, and I think that's the way lots of APL got funded (GE). I'd like to do it that way.