Interactive Strategizing

Step 1: some background information

You are an investor with a broad portfolio in technology products. Christian Houle – a retired CFL (Canadian Football League) player and entrepreneur – has approached you recently and has asked you for an investment. He has offered you 10 percent of his company, PHAZON, for $500,000. Houle is developing earbuds (Figure 1) that, he believes, will revolutionize the truly wireless (TW) market.

Figure 1. The PHAZON Truly Wireless Earbuds

The main selling features (un-replicable features, according to Houle) of the PHAZON earbuds are the following.

  • The PHAZON earbuds are the world’s first one-size-fits-all wireless earbuds – guaranteed not to fall off. Wireless earbuds have been around recently. However, they offer poor comfort and stability. While producers claim that inserts (plastic or foam) can fix these problems, everyone who has tried earbuds with inserts knows that they do fall off. The PHAZON earbuds are the first that fit perfectly and do not fall off – with a simple twist motion, the fit is so solid that you can literally dive into the water and the earbuds will stay in place. Among other things, the PHAZON earbuds are just half the size of all other earbuds. While other earbuds fit correctly 50-70% of people, the PHAZON earbuds fit correctly over 95% of people. With PHAZON, any sports from casual jogging to skydiving will let you listen to music flawlessly. In the wireless earbud industry, it is critical to have that great snug fit since there are no wires to prevent true wireless from falling out – after all, no one wants to lose their earbuds while playing sports.
  • The PHAZON earbuds are the first waterproof earbuds. With PHAZON, you can listen to music flawlessly while swimming.

Before approaching you for investment, Chris Houle has launched a crowdfunding campaign on a Canadian crowdfunding platform – in its 60 day duration he raised over 2.2 Million dollars. Around 11 000 crowdfunding supporters have pre-ordered the PHAZON earbuds for a price of $199 a pair. Competitive (and similarly crowdfunded) wireless earbuds, like BRAGI, are pricier ($299 a pair) and offer poorer fit and comfort. They do offer other features, though, that the PHAZON prototype still does not have – like volume adjuster buttons and fitness tacking (based on biosensors and internal memory). Big players like BOSE are offering wireless earbuds with superb sound quality, but they still have one wire, so they are not truly wireless. Apple has launched pretty-looking truly wireless earbuds, which are notoriously uncomfortable to wear. The PHAZON earbuds do seem to have potential, with their unique design. What Chris Houle has shown you is a prototype of the product, though. The fully-fledged earbuds are not yet ready to go to market. The video below will tell you more.

Step 2: based on this background information, please answer the following questions. There are no right or wrong answers, it is all about your opinions (which will be kept confidential). Please take your time and don’t rush. Thank you. START