Flashback to July 2006 – Lumenera Corporation
Just four years ago, Lumenera was founded with no VC investment. It has since grown to about 65 people, and continues to be self-financed.
What are the keys to finding a market and product idea that can perform like that? How do you get market traction quickly?
Lumenera finds gaps and builds to fill them
To get some insights, I talked with Greg Bell, VP of business development, and Claudia Dunphy, marketing & communications manager. From the beginning, the Lumenera founders sought a way to enter a new market with no outside investment. Along with Bell, founders included Kevin Mayer CTO, Huw Leahy, president, Andrew Nelson, hardware design, and Simon Tardif, senior software engineer.
Market opportunity identification – Opportunities can be found at the intersection of new trends, in this case both market needs and technology were changing fast. Coming from their backgrounds in the imaging industry, the founders started with the broad “imaging” category, and did primary market research to identify unaddressed markets. They looked at what larger players were doing and found some gaps (customers unserved by the larger players). Then they did a lot of persistent outbound sales initiatives to find lead customers and refine the product definition. Knowing who the main competitors would be for the new “industrial digital” application category, they found a path that would serve as a defensible market entry. They established a position that Lumenera would design and manufacture digital cameras for industrial, scientific, and security applications.
Channel-driven whole product – “We jumped into digital cameras four years ago,” Bell says, “when industrial applications were still using analog cameras. We helped migrate them to digital.” The initial strategy was to sell to OEM customers that have domain expertise and presence in various complex niche markets. For example a company that makes factory automation equipment, such as a “pick and place” machine for assembly operations, can use Lumenera cameras to achieve faster assembly speeds, with better quality, at a lower overall cost for the end customer. For the OEM, the system installation is simplified, and the costs are lower.
Market-driven responsiveness – Lumenera also has technology partners to meet certain client needs. For the security market they established a deal with ObjectVideo of Reston, Virginia, to include embedded video analytics, thus creating an intelligent security camera, able to identify movement of people or objects, and generate an alarm. As Dunphy comments, “We are also working with Texas Instruments to develop our next generation DSP products, as well as National Instruments creating software drivers to facilitate integration with their LabView software, which is a popular product in the industrial market.”
About “Marketing” – Lumenera was a pioneer in the industrial digital camera market, but really excelled at getting to OEM buyers early, establishing leadership as a company with a strong value proposition. Also, as Bell comments, “We are strong believers in marketing pull, rather than cold-calling. We’ve always spent more dollars with on-line marketing than traditional media communications and events. Our goal is to make sure all vision-related product designers in our target segments will find Lumenera when they look for cameras. And then, by working with an OEM partner, we leverage their domain expertise in various sectors.” The unique factor is that these customers have complex applications, and off the shelf standard cameras (e.g. consumer cameras from Sony or JVC) do not do the job. Hence the Lumenera marketing message always includes an offer to customize.
Lead Customers – When asked about how they got the first OEM deal, Bell says “Many new companies miss the chance to sit in front of a prospect and fully understand their needs. We did it, and found several untapped new markets.” Based on these initial prospect discussions, they went into customization from the beginning, meeting the “whole product” needs of these customers. The secret here is to find a product definition that is below the volume threshold of interest to big players (such as Sony and JVC), with a market still large enough to be exploited profitably by Lumenera. By working through the needs of their OEM partners, Lumenera has found, and begun to exploit, several such markets. And now, with a solid reputation and a diversity of base products available, the company is adding global distributors to its channel strategy. The goal is to have local sales representatives, speaking the local language, and exhibiting at local trade shows globally.
Results – The company is growing rapidly and financing its own growth. In April, it won the OCRI award for Technology Company of the Year.
This article by Peter Fillmore, was originally published in SCAN – MARKETECH in July 2006.