BlueSEQ revisited

On the first day of the Copenhagenomics 2011 conference, I took notes on a presentation made by Peter Jabbour of BlueSEQ in which I interlaced some comments of my own. I was particularly disappointed in the presentation, which completely failed, in my opinion, to demonstrate the value of the company.  This prompted BlueSEQ marketer Shawn Baker to post a reply that addresses some of my points, but failed to get to the heart of the matter.  However, I had the opportunity to speak to BlueSEQ CEO Michael Heltzen on Friday morning, setting me straight on several facts.  Given what I’d learned, I thought it was important to take the time to revisit what I had said about BlueSEQ.

I understand some people thought my criticism of BlueSEQ was targeted.  Let me set the record straight: Of all of the companies that presented or attended at Copenhagenomics 2011, the only one I have any relationship at all with is CLC bio, and that is – to this point – entirely informal.  Any criticisms I have made about BlueSEQ, or any other any company, are simply my own opinion based on the information presented – and for the record, I do have a little experience with business models.

In this case, the presentation lead me to believe there were a lot of holes in the BlueSEQ business model.  Fortunately, CEO Michael Heltzen was kind enough to patiently answer my questions and explain the business model to me, which has prompted me to change my opinion.

In case you haven’t heard of BlueSEQ, they’re an organization that serves to match users that have unmet sequencing needs (“users”) with groups that have surplus sequencing capacity (“providers”). This is a simplified version of what they do, at least – and was the focus of their presentation at Copenhagenomics 2011.

Initially, BlueSEQ set themselves up during the presentation as a young company that just “went live” recently.  While there’s nothing wrong with that, I have spent time as an entrepreneur and am aware that young companies have a tendency to be a little overly optimistic about their markets and potential for finding customers.  Although BlueSEQ did boast of about a hundred users signing up for their services, I listened carefully but didn’t hear anything about providers having signed up as well.  That set off flags for me.  BlueSEQ CEO Michael Heltzen patiently explained to me that they do, in fact, have 25 providers already signed up – a very impressive number for just over a month of operations.

Having paying clients, or providers in this case, is 90% of the battle for any match-making company and knowing that there are groups paying for BlueSEQ’s services should be music to the ears of any potential investors.  That, on it’s own, provided some significant validation of the company’s business model for me.  Obviously, if people are currently paying for it, then clearly there is value.

And speaking of paying, the presentation did not explain what it was that providers were paying for.  A 10% service fee – charged to providers – was mentioned during the presentation, which seems a little high for nothing more than a service linking buyers with sellers.  I heard the same comment from other people who saw the presentation and voiced their concern (albeit more quietly than I did) that it was a bit disproportional.  However, again, BlueSEQ’s Michael Heltzen provided the explanation:  BlueSEQ doesn’t just match sequencing providers with users –  they provide a complete front-office service, not only promoting the sequencing centre’s business by matching them with the users, but also by handling the initial steps of any inquiries and working with the user to sort out the wet and dry lab requirements of any potential sequencing project.  Suddenly, I think the value of BlueSEQ’s services should be apparent.

Many groups with excess sequencing capacity may find themselves in a position where they have the ability to provide sequencing services, but not the facilities to handle customer requests or promote themselves to find the users who could take advantage of the sequencing services.  Enter BlueSEQ.

This explanation, diametrically opposite to the “web portal” model described during the business presentation, suddenly shows where the potential for an entrepreneurial group can build a concrete business.   The analogy used during the BlueSeq presentation of a web portal where people can buy airline tickets by comparing prices on-line was a poor choice, completely diminishing the value that BlueSEQ provides by interpreting, analyzing and, in-part, educating the sequencing users.  What a service that could be!

With good experimental design being one of the most difficult parts of science, BlueSEQ is in fact sitting in the wonderful position of being the early entry into a completely new business model.  They are able to transform the disjointed requests of novice users into complete experimental plans and then match those experiments with labs that have experience and capacity for performing those experiments well.  The user gains by getting competitive quotes and help in setting up the product they want, while the the provider gains by being able to focus on the service they provide without the complexities of dealing with customers that may not know what they want or need.

Pure genius.

Of course, there are still pitfalls ahead with this type of business model.  There really is no bar to entry for other competitors, other than the experience of the current group. (I’m sure it’s extensive, but there are others out there who could do the same.)  There is also no real guarantee that what they are doing will be cost effective in the long run.  As sequencing becomes cheaper and cheaper, it might actually come to a point where it will be more cost efficient to turn to a professional sequencing company like Complete Genomics that does provide a full service than to a portal and matchmaking service like BlueSEQ.  Of course, those are concerns that I’m sure BlueSEQ has put more thought into than I have – and will be up to them to solve.

As I said last time, and I meant it quite sincerely: Good luck to the business.  I’ll be looking forward to hearing their presentations in the future – and I hope they have only good things to report.

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  1. Pingback: BlueSeq Knowledgebase | Fejes.ca

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