Entrepreneurs/Forbes
Outstanding In His Field
Devon Pendleton 06.18.07
Forbes
Eliav Tahar has invented a novel way to maintain a healthy herd. Will anyone buy it?
Eight years ago the only animals Eliav Tahar consorted with were fellow marketing sharks on Madison Avenue. These days he hangs with a herd of Holstein dairy cows in the muddy pastures of Galilee in Israel. His company, Veterix of Or Aqiva, has created the world's first wireless diagnostic system for cattle.
Tahar, 36, has exploited the unpredictable twists of his life. Born and raised in Tel Aviv, he studied economics and filmmaking at Tel Aviv University, then became an ad executive with BBDO, campaign manager for the deputy mayor of Acre and a marketing consultant in Manhattan for an Israeli textile company. Lured by the high-tech boom, Tahar returned to Israel in 1999, enrolled in night classes and found work as a hardware engineer for what is now Israel Aerospace Industries.
The idea for Veterix came to him by chance in 2003 when his dog, Bono, was hit by a car. During the pup's lengthy recuperation, Tahar was afraid to leave the dog alone. "I thought there should be a relatively cheap diagnostic tool for monitoring animals," he recalls. First thought: an electronic pet collar. But meetings with veterinarians and scientists convinced him to focus instead on livestock. In December 2003 Tahar quit his job to found Veterix.
He spent the next few months touring dairy farms in the Galilee region--and realized that a delicate collar for a bulky bovine neck would never work. Cows did, however, have an anatomical advantage in the form of powerful four-chambered stomachs. Tahar was particularly impressed with a magnet farmers fed cows to collect stray bits of metal the animal picked up during grazing, preventing infections known as "hardware disease." Inspired, Tahar designed a 3.5-inch electronic capsule--its off-the-shelf parts include a microprocessor, memory and radio chips--inserted with a rod through the esophagus into the cow's reticulum, the second of its four stomachs. At a few grams apiece, the e-capsules settle to the bottom of the stomach, where they can last five years or more, too large and too heavy to move.
The capsule's sensors pick up vibrations, temperature and pressure changes within the reticulum and store them in a microchip, which then processes the data using formulas devised by Tahar and a fellow engineer. The data is then transmitted via a wireless signal to a farmer's PC, where Veterix software analyzes the information. Any major deviations prompt an alert signal, with specific recommendations for the farmer on how to respond. A high temperature reading coupled with high heart and respiratory rates, for example, cause a flashing banner to pop up on the screen, with an advisory to isolate cow number 34 for early fever symptoms; an elevated heart rate and temperature in an otherwise normal beast might alert the farmer that Bessie, number 22, is in heat.
Tahar believes such careful scrutiny will allow for early detection of diseases, more judicious use of antibiotics and a happier quadruped. "An unstressed cow is always going to make for a better product," he says. Convincing others--that was another matter.
Gathering up seed money was the least of it. In November 2004 Veterix secured $525,000 from Capital Point, a venture firm that trades on the Tel Aviv Stock Exchange, in return for a 41% share. Tahar used the money, in part, to refine the system's calculations to account for hundreds of different symptoms of cow distress--like rumen acidosis, mastitis, ketosis and hoof-and-mouth disease. Another $1 million arrived last December from the Israel-U.S. Binational Industrial Research & Development Foundation, a group that promotes technology in both countries. Private investors have kicked in $150,000. Tahar has held on to 33% of the equity, Veterix cofounder Michael Nathanson 16%; other employees split 7%.
But how to win over farmers? Tahar knew he needed corporate backing, and the obvious choice was Sweden's DeLaval, the world's biggest manufacturer of dairy equipment (2006 sales: $1 billion). "At the time we had no system," says Tahar. "Just an idea, a PowerPoint presentation and some slides." DeLaval liked the technology, he recalls. But it finally signed on in October 2005 when Veterix gained further government support, which implied a vote of confidence. In total, DeLaval says it will kick in $1.3 million in research funding in exchange for exclusive distribution rights for the capsule when it comes to market, which Tahar predicts won't happen until the end of 2009.
Or perhaps even later. Veterix is still swatting at bugs in the algorithms. It must also get approval from regulatory agencies: the Standards Institution of Israel; the European Committee for Electrotechnical Standardization; and both the Federal Communications Commission and the Food & Drug Administration in the U.S. These markets are critical, since nearly half the world's milk production comes from North America and western Europe.
Then there's the question of whether dairy farmers, a thrifty bunch, will bite. The capsules will probably retail at $70 to $80 apiece, on top of the $3,000-to-$6,000 price tag for the software, depending on the size of the herd. The average dairy cow, says Thomas Overton, a dairy science professor at Cornell University, racks up an annual $150 in vet expenses. Veterix, he thinks, can best succeed if it proves reliable at detecting serious diseases; the average cost to replace a cow is $1,800 to $2,000.
Veterix may have to refine its marketing pitch. Two of its stronger selling points--that the capsules will minimize antibiotic use and prevent outbreaks such as mad cow disease--play more to consumer fears than to agricultural realities. Mad cow is a minimal threat in the U.S. thanks to stricter FDA regulations on feed; and it's illegal in both the U.S. and the EU for any dairy products with even trace amounts of antibiotics to go to market.
None of these challenges is insurmountable, says Tahar. He still has roughly $2 million in cash on hand--enough, he believes, to carry him through a couple of unprofitable years, followed by break-even results on $5 million or so in sales by 2012. At least he's in the land of miracles. |
