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Hydrofoils for Motorboats
TCA Project Part B
Matt Baryluk, Zane Dennler, and Ben Leonardi
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Hydrofoils for Motorboats
Origins
The concept behind motorboat hydrofoils is well-proven, having first been put into
practice over 100 years ago. Hydrofoils utilize the simply physics principle of lift to
increase the speed and efficiency of water travel. Realizing that this principle could be
applied to boats in the same way that it was to aeroplanes, Enrico Forlanini built the first
efficient manned hydrofoil craft in Italy around 1900. Despite a proven concept,
hydrofoils would not see widespread use until the 1950s, when they were adapted for
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for military and commercial use. By the 1970s hydrofoil craft saw widespread adoption,
with certain boats achieving speeds of 80 miles per hour.
This image demonstrates how the interaction of water flow with the foil creates lift.
These developments, however, applied only to fixed, open water craft, such as
patrol boats, racing boats, and catamarans. In March of 2018, Jacob Woeste conceived
of a modular hydrofoil attachment for aluminum fishing boats, one which could confer
the same benefits of speed and stability while allowing for flexibility and applicability to
the niche of recreational and competitive fishing and boating. Aluminum motor boat
owners receive multiple benefits. The first, which caters primarily to competitive boaters
and fishers, is the additional speed that is gained as the hull is lifted from the water and
drag is greatly reduced. The second, more tailored to recreational boaters, is the
increased comfort of a lifted hull, which will no longer buck and skip upon contact with
waves. While the product has been developed through work on an Engineering Senior
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Design Project, it has been evolving for five months and presents a high propensity for
commercialization.
Industry Dynamics
As this attachable recreational hydrofoil would be the first of its kind to market,
there is currently no industry surrounding attachable hydrofoils. It follows that the
industry dynamics which concern us are aluminum fishing boats, whose owners are
likely to purchase the hydrofoils in order to improve the performance of their craft. Within
the $30 billion overall boating industry, roughly $1.5 billion is comprised by aluminum
fishing boats. The quantity sold in 2016, roughly 60,000, has grown consistently
year-over-year since 2013. Sales grew 6.4% in 2014, another 4.0% in 2015, and a
further 6.1% in 2016. What’s more, 84% of industry experts forecast that sales will
increase again in 2018, and 42% believe this growth will top 10%.
The above numbers merely concern new boat sales. Another lucrative market
exists in currently owned boats, whose numbers are estimated at 600,000 units.
Founding and Implementation of Technology Strategy
There are multiple variables influencing the approach to implementation. The
intent is to target the purchasers and owners of aluminum fishing boats, the largest
demographic whose boats are compatible with our product. The rationale is provide an
upgrade to performance at a cheaper price than other upgrades or a new boat. Buyers
will be persuaded to purchase the hydrofoils rather than opting for a more expensive
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model with the same performance. Owners will recognize hydrofoils as a performance
upgrade with a far cheaper price point than an entirely new boat or engine. A challenge
still exists in providing the product at a price point that will render it competitive with
other performance upgrades while providing a profit. Market research is being carried
out in the form of interviews in order to understand where this point of equilibrium lies.
The current projected price point is $3,000. This would enable a predicted 20% profit
margin. The extent of market penetration determines total profit, but at 4% of new boat
sales and 2% of current owners profit would equate to roughly $10 million.
As far as intellectual property is concerned, a patent is being pursued in order to
prolong the available time for development and increase market share. As it stands, the
patent environment for hydrofoils is finicky. A number of hydrofoil-related patents have
already been filed and expired, leaving many aspects of the concept in public domain.
There are, however, a number of features of our product that render it unique, due to the
fact that the concept must be worked to make it removable from boats. In addition, for
safety reasons, the hydrofoils must be designed to break away safely in the case of an
underwater collision so that passengers are not injured by sudden stopping. The intent
is to pursue the patent on the grounds of these innovations.
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Establishing an Objective
Pertinent Stakeholders
Below are listed a number of various stakeholders with differing degrees of actual
stake in either the actual company or the market environment in which the firm is
competing.
Consumers
While the adage that ‘customer is king’ might not always be a truism, there is
absolutely a reason that that is the first group listed under stakeholders. A market is
needed for a firm to exist, and the firm needs to make sure that they are supplying to a
market hungry for the product. Thankfully, hunger seems abundantly apparent. From the
over $3.6 billion in recreational boats sold annually (2016), to the massive market for
add-ons to those boats (including faster motors, depth detectors, etc…), this is a market
full of opportunity.
The firm is, however, focusing on the slightly more specialized sector of not only
the recreational boat market, but the fishing boat. Specifically, the $1.5 billion aluminum
fishing boat market and the $0.4 billion fiberglass fishing boat market, as the product is
primarily aimed at those who fish for leisure. In addition to currently being a market
drowning in opportunity, the market has also seen a growth of around 5 to 6 percent
every single year since 2013.
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Employees/Advisers
Currently, the firm consists of three individuals: Jacob Woeste, the CEO and
co-founder, Derek Schulte, the CTO and other co-founder, and Chris Moell, who is
technical support. All three of these individuals have exceptionally strong technical
backgrounds, with combined experiences encompassing published research papers,
patent drawings, CAD designing and 3D modelling, as well as professional experiences
in manufacturing engineering. What should be apparent is that a problem for the team is
not their technical knowhow, but their business acumen.
When looking forward to actual product offering, these individuals will need
strong knowhow in supply chain management, as well as probably some sort of
financial expert. However, a common theme exists that makes these individuals all have
legitimate stake in their business, and will probably impact the hiring process. All of
them simply enjoy fishing for leisure, relate to some of the problems faced by fishermen,
and wish to improve the lives of those who share their passion.
However, while not officially members of the team, there are a number of
consultants and advisers who have been instrumental along the way. From engineering
professors, to department heads, to individuals actually members of the market in which
they would like to involve themselves, their help cannot be underestimated.
Competitors
Competition, as far as attachable boat hydrofoils are concerned, is essentially
nonexistent. There are a few firms that have patents on hydrofoils that attach to
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surfboards and other personal , non-motorized boating equipment, but none designed
specifically for fishing boats. This leaves the firm with a large market and an as of yet
unsolved problem: fishermen’s desire to get to destinations faster and with less
discomfort along the way.
Currently, most products on the market focus on only one side of this problem
and do so in a manner that is not cost-effective for consumers. New, external motors
that boost speed by a number of factors can actually complicate and make the comfort
problem substantially worse. There are very few products that have the ostensible
purpose of smoothing a ride: it is something boaters just assume will not change.
Boat Salesmen
Lastly, the individuals by whom this product is intended to be sold will be
wholesale boat distributors (e.g., Bass Pro Shops, Cabela’s, etc…) as well as
convenience stores and retail giants Amazon and Walmart. The firm intends to have an
incentive structure such as to motivate individual employees of these distributors and
retail stores to sell and grant a kickback to those who sell particularly well.
Interest Evaluation and Stakeholder Position
The deep dive analysis of the firm will be performed from a sales representative
in the boating and outdoors market, like one of the individuals we talked to for advice:
Mark Blackfield. Mark has been a sales representative in the sports boating and
assorted accoutrements industry for twenty years. One of the main concerns given by
all, but specifically those looking to market their products is the propensity of these
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external devices to withstand significant damage. While this is ostensibly a technical
problem, the solution of it will be instrumental in marketing these products as not only
fast, fuel-efficient, and comfortable, but also and necessarily safe.
BHAG for the Organization
The final design for the prototype has a safe mechanism for breaking away from
boats so that the product can be marketed as fast, fuel-efficient, comfortable, and safe.
Tentative Sequence of Actions
Action Sequence
1. Continue meeting with technical and business advisers
2. Conduct market research via interviews
a. Focus on relationship between speed tradeoffs, optimum balance of
speed, fuel efficiency, comfort
3. Manufacture first prototype for senior project
4. Explore intellectual property claims
a. Most patents to hydrofoils have expired, leaving public domain
5. Speak to patent lawyer in fall ‘18
Assumptions
● Boats’ longevity will not be harmed by the addition of external stressors
● Boaters are most concerned with the speed of their boats
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○ Competitive fishermen are more concerned with speed
○ Recreational fishermen are more concerned with comfort
● Aluminum boats have a cost-effective method of installing hydrofoils
Risks
There are a myriad of risks that could upset the firm’s trajectory, both
endogenous and exogenous. The status of the product as a compliment good to a
luxury one marks it as particularly more vulnerable to any broader economic slowdowns
than consumer staple, or even normal, goods.
Internal
Any concern over the members of the team should be assuaged by the fact that
many have already given countless hours to this project, so qualms directed to the
sticktoitiveness of members of the team or even the advisers are misguided at this
point. However, the actual physical products machining and the entirety of the supply
chain is a question that remains, as of yet, unanswered. From installation on boats, to
sourcing of materials, to dealings with variations in boat structures: some of these
problems can cause genuine concern. However, they are not questions with which the
team is unfamiliar and a good deal of thought has gone into clever solutions to these.
External
A change in consumer preferences (or simply a change in the population to
whom this product appeals) could throw a wrench in this market - though given that how
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such a demand shock would happen is a mystery, the importance of proactively dealing
with such a problem is dwarfed by others, such as problems complicating the firm’s
exploitation of intellectual property schemes. From the expiration of many related
hydrofoil patents to the general nature of such technology and the relatively basic
application of the technology in an unbeforeseen way, this may present some problems.
However, the exploration of the ability to patent the method of joining the foil to the boat
is definitely occurring.
Recommendations
Objective Summary
The 3 year goal of our company is to sell the attachable hydrofoil to 5% of the
used boat market in the Ohio Valley region. Kentucky, Ohio, West Virginia, and
Tennessee are included in the Ohio River Valley. We would also like to sell the
attachable hydrofoil to 1% of the used boat market in the United States within the first 3
years. After the Ohio River Valley, we will be targeting the Great Lakes Region. There
are 12.5 million registered recreational boats in the United States. Since the largest
portion of these boats are aluminum fishing boats, we estimate that there around 3.5-4
million aluminum fishing boats in the United States.
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Recommended Actions and Justifications
The first thing that we will do to launch our company would be to get patents on
different aspects of our product. The attaching mechanism, support to the haul, and the
ability to move the propellor lower as the boat rises could all be patented.
We will target the used boat market to sell the hydrofoil. To maximize sales, we
will begin displaying the new item at boat shows in the region. At the different boat
shows, we would create different relationships with boat dealerships to put the product
in their stores. In addition, we would like to create an agreement with them to have them
be able to install our product for customers.
We will also work to get our product on Overton’s. Overton’s is a website that
boat owners can buy parts and accessories for their boats. The website is extremely
popular, and the ability to be on that website would be crucial.
Last, we will make appearances at local fishing tournaments. The appearances
will get us in front of potential clients, and it will help us gain recognition. If we are seen
by more people, then we would have a higher likelihood of someone buying our product.
Assume the Role of a Competitors
Strong and Likely Competitor
A strong or likely competitor would be one of the many companies that exist in
the industry currently. Both companies that manufacture boats and companies that
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create boat parts/accessories would be able to compete in this space. The patent for
hydrofoils is not valid anymore, so it would be easy for a competitor to enter the space.
Competition’s Mitigation Recommendations
The competition would be able to mitigate our product by using their financial
resources and established network. Their financial prowess would allow the competition
to do more research, which would allow them to create their own ways to install the
hydrofoil. Creating a hydrofoil is not the difficult part of the equation, but attaching the
hydrofoil to the boat adds many different risks. The competition would need to engineer
a way to attach the hydrofoil to the boat, add support to the hull of the boat, and account
for the height of the propellor as the boat rises and lowers in the water. These could all
be accomplished if patents did not exist to protect our company.
The competition would also be able to utilize its network to mitigate the risk to
their business that our company poses. Since they are already established in the
industry, getting the product into dealerships and in front of customers would be much
easier for them. Also, if an individual boat manufacturer added this as an option to a
new boat, then it would be in the spotlight even faster.
Recommendation Adjustments
To mitigate the risk, we would suggest that our company gets patents for the
areas that are patentable as soon as possible. There is no way to patent the hydrofoils
on the boat because it has been done already. The patent, however, is not valid
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anymore. The ability for the hydrofoils to attach to the boat, the strengthening of the
boat hull, and the propellor height being able to adjust as the boat rises out of the water
are all things that are important to design and could be patented. The patents create the
added safety and time that our company needs to get started in the boating industry.
The patents would protect our competitive advantage, and the patents would allow us to
recoup the money that we put into our research and design preparation.
Sources
http://web.mit.edu/2.972/www/reports/hydrofoil/hydrofoil.html
https://books.google.com/books?id=8NsDAAAAMBAJ&pg=PA70&dq=1954+Popular+M
echanics+January&hl=en&sa=X&ei=S8Q4T9XAH8aygwe0k-nnBQ&ved=0CD8Q6AEwB
DgK#v=onepage&q&f=true
http://www.foils.org/
https://books.google.com/books?id=u-EDAAAAMBAJ&pg=PA136&dq=&hl=en&sa=X&ei
=uoxET6-bFcPVgQf2s_i2BA&ved=0CEcQ6AEwBjgK#v=onepage&q&f=true
https://www.growboating.org/toolkit/facts-and-figures.aspx
http://www.oceanofnews.com/wings-water-history-hydrofoils-boats/
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