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Tuesday, November 18, 2008

Bioinformatics Companies

I was working on my poster this afternoon, when I got an email asking me to provide my opinions on certain bioinformatics areas I've blogged on before, in return for an Apple iPod Touch in a survey that would take about half an hour to complete. Considering that ratio of value to time (roughly 44x what I get paid as a graduate student), I took the time to take the survey.

Unfortunately, at the very end of the survey, it told me I wasn't eligible to recieve the iPod. Go figure. Had they told me that first, I probably would have (wisely) spent that half hour on my poster or studying. (Then they told me they'd ship it in 4-6 weeks.... ok, then.)

In any case, the survey asked very targeted questions with multiple choice answers which really didn't encompas the real/full answers to the questions, and questions which were so leading that there really was no way to give the complete answer. (I like boxes to give my opinions... which kind of describes my blog, I suppose - A box into which I write my opinion. Anyhow...) In some ways, I have to wonder if the people who wrote the survey were trying to sell their product, or get feedback on it. Still, it led me to think about bioinformatics applications companies. (Don't worry, this will make sense in the end.)

The first thing you have to notice as a bioinformatics software company is that you have a small audience. A VERY small audience. If microsoft could only sell it's OS to a couple hundred or a thousand labs, how much would it have had to charge to make several billion dollars? (Answer: too much.)

And that's the key issue - bioinformatics applications don't come cheap. To make a profit on a bioinformtics application, you can only do one of four things:
  1. Sell at a high volume
  2. Sell at a high price
  3. Find a way to tie it to something high price, like a custom machine.
  4. Sell a service using the application.
The first is hard to do - there aren't enough bioinformatics labs for that. The second is common, but really alienates the audience. (Too many bioinformaticians believe that a grad student can just build their own tools from scratch cheaper than buying a pre-made and expensive tool, but that's another rant for another day. I'll just say I'm glad it's not a problem in my lab!) The third is good, but buying a custom machine has hidden support costs and in a world where applications get faster all the time, runs the risk of the device becoming obsolete all too fast. The last one is somewhat of a non-starter. Who wants to send their results to a third party for processing? Data ownership issues aside, if the bandwidth isn't expensive enough, the network transfer time usually negates the advantages of doing that.

So that leaves anyone who wants to make a profit in bioinformatics in a tight spot - and I haven't even mentioned the worst part of it yet:

If you are writing proprietary bioinformatics software, odds are, someone's writing a free version of it out there somewhere too. How do you compete against free software, which is often riding on the cutting edge? Software patents are also going to be hard to enforce in the post-bilski legal world, and even if a company managed to sue a piece of software out of existence (e.g. injunctions), someone else will just come along and write their own version. After all, bioinformaticians are generally able to program their own tools, if they need to.

Anyhow, all this was sparked by the survey today, making me want to give the authors of the survey some feedback.
  1. Your audience knows things - give them boxes to fill in to give their opinions. (Even if they don't know things, I'm sure it's entertaining.)
  2. Don't try to lead the respondents to the answers you want - let them give you their opinions. (That can also be paraphrased as "less promotional material, and more opinion asking." Isn't that the point of asking their opinions in the first place?
  3. Make sure your survey works! (The one I did today asked a few questions to test if I was paying attention to what I was reading, and then told me I got the answers wrong, despite confirming that the answer I checked was correct. Oops.)
So how does all of that tie together?

If you ask questions with the only possible answers being the ones you've provided, you're going to convince yourself that the audience and pricing for your product are something that it may not be. Bioinformatics software is a hard field to be successful in - and asking the wrong questions will only make it harder to understand the pitfalls ahead. With pressure on both the business side and the software side, this is not a field in which you can afford to ask the wrong questions.



Blogger BadboyZ said...

This is a very entertaining piece.
I have some experience in this area and having worked for two such companies it's so true how they seem to try and fish out information that they , as the experts, should already know.
There are a few success stories in corporate bioinformatics and these are people who have a solid understanding of what good software should be doing.
Companies try to fill the holes in support, bugs and other inconsistencies that exist in open source initiatives.
A Bioinformatics company may also be more successful in a developing country because they have the unique expertise to impress the local market/investors and stay in business.
In areas like North America/Europe it does appear to be more tough going. Good companies should always remember that they're selling software to some of the most intelligent people on the planet.

November 19, 2008 6:17:00 AM PST  
Blogger WOody said...

Why dont you thank reversely?
Just sell packages that already well-developed and then make them into a pipeline such as "pipeline pilot"?

December 2, 2008 11:09:00 PM PST  
Blogger Anthony said...

Hi Woody,

Because if a company does that, they're not a bioinformatics company - they're a marketing company.

December 3, 2008 9:53:00 AM PST  

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