all three issues if we could build a machine that could accurately evaluate old phones, erase the memory, and pay consumers on the spot.
We spent the next several months investigating visual recognition technology, phone erase software, and kiosk business models. We talked with anyone familiar with the kiosk or used phone business who would give us their time. We leaned on our attorney, Jeff Thacker at DLA Piper, to investigate environmental and pawn-shop laws. We also asked DLA to help write our patent filings along the way. We were confident our idea would work, but we needed to build one and test it before we could validate it in the market. We also wanted to affirm that the capital markets would even fund a deal that was as far off the beaten path as this idea.
So, we pooled our resources, and with the help of a local engineering firm called DynaPac, we cobbled together the first prototype machine last summer. We started looking for retailers willing to give it a try. We also ran the pitch past a dozen or so Silicon Valley VCs to do a laugh test. They didn’t laugh, and in fact seemed open to the concept as long as we could get some strong market validation. Retailer response was also positive, but the first one to say “roll it in and give it a try” was the Nebraska Furniture Mart in Omaha. A few weeks into the trial a perpetual line had begun to form and folks were waiting up to 45 minutes to get their turn at the machine—ecoATM was a hit.
Since then we have performed more pilots and are launching 10 more machines immediately. We have customer contracts in hand and more pending with some of the largest U.S. electronics retailers. Some are planning full-scale national roll-outs for this year. We were also able to attract Tom Tullie to take over as CEO. Tom has run several public companies including Applied Micro Circuits Corp. (NASDAQ: [[ticker:AMCC]]), where he was president and COO.
EcoATM is not disclosing financial details about our current round of external funding, but we are announcing that Molbak, who took Coinstar public, also has joined our board of directors. The list of investors interested in our next financing is extensive and we are building out the team and the technology as quickly as we can. The adrenaline rush is back!
Now the challenges we face are about executing this vision in full scale. The casualties in the kiosk space are generally failures of execution. It’s no trivial task to build a network of kiosks robust enough to withstand the demands of the public and the retailers who host them. Part of that challenge stems from the capital requirements, but it’s also about avoiding big mistakes. With retailers demanding large scale roll-outs, we will need to learn how to run fast without tripping—and it seems like we just learned how to walk.
