T Nation

Biotest's Business Model

I am attending Columbia’s MBA and Real estate program so I am very interested in business, models, bios of CEOs etc…

I have to say that in comparison to some of the great companies Biotest has put together a tremendous business model that I think is a perfect blend of old school business principles blended with new school technology and marketing…

Biotest has created T-Nation which is probably the most diehard consumer base I have seen in a long time… I have to imagine that although total customers is not that astounding, sales per customer per year must be staggering, as well as a tremendous customer retention rate…Biotest has a staff that writes articles and answers questions at NO fee to the consumer…Biotest sells direct to the consumer which allows it to provide all of the services it does for free and without huge arkup to its products.

A lot of businesses could learn a lot from Biotest… I have witnessed its progression since 1999 when it operated more like a magazine to now where it is an interactive melting pot of ideas and thoughts. It has changed with the times, and for the better…

Kudos on a wonderful, and I hope profitable business, that serves as a great example for other aspiring entrepreneurs around the T-Nation.

Am I alone here, or do other people admire Biotest as an innovative company… also what do you guys think its strengths and weaknesses are?

usdsig:

Agree…

Especially in two areas:

  1. Small Buisness Internet Commerce.

  2. Profitablity on the Internet.

If I’m not mistaken, “Biotest” is in a small niche of total buisness commerce…and I would imagine that they would not have been around long if their “buisness” was run like the “Amazons” of the world.

I like “Amazon.com”…I don’t think that I’ve brought a book from a free-standing store in years! But from what I undertand, they have survived more on hype and inflated stock price than on profitability.

I think that the “Biotest” buisness model would be a good read…

Mufasa

Maybe TC will add a few words, even if they are mainly a comparison to MM2K and the more traditional BB business approach. If nothing else, T-Nation and Biotest are not trying to be everything to everyone. They know what their target audience considers valuable, and they provide lots of it.

Plus the writing’s great. That’s essential.

I would say T-Nation’s annual sales are anywhere from 2.0 to 2.5 million. Not a bad start at all since 1999.

OD

What I think is most interesting is how the online forum contributes to developing a customer base… People come here for information (i have to admit i get addicted to it sometimes)… and in doing so develop a loyalty to Biotest… Also, because of the multitude of topics covered, T-Nation comes up in a lot of search engine queries bringing more people to the site…

I wonder if the executives consciously realized how powerful an online forum would be as a sales vehicle. I also wonder if they realized that providing professional guidance for free would be this powerful… I suspect that they did, because they invested a lot into it in both technical and intellectual capital…

I am curious as to how big a company Biotest is- employees, market cap, etc…

TC, TP, etc, want to comment on this?

[quote]Original_Demon wrote:
I would say T-Nation’s annual sales are anywhere from 2.0 to 2.5 million. Not a bad start at all since 1999.

OD[/quote]

I would venture to guess that they are closer to 70- 120 million per year. You don’t do the R & D that they do and support a web site like this on much less. Just my 2 cents.

[quote]Original_Demon wrote:
I would say T-Nation’s annual sales are anywhere from 2.0 to 2.5 million. Not a bad start at all since 1999.

OD[/quote]

T-nation’s sales are way over 2.5 million a year. I think it was TC who said it costs 1 million/year just to run this website. I can’t imagine a company spending 50% of their gross earnings on a website like this one. I’m willing to bet they’re over $20 mil/year

[quote]sully’s wrote:
Original_Demon wrote:
I would say T-Nation’s annual sales are anywhere from 2.0 to 2.5 million. Not a bad start at all since 1999.

OD

I would venture to guess that they are closer to 70- 120 million per year. You don’t do the R & D that they do and support a web site like this on much less. Just my 2 cents.
[/quote]

70-120 million?

dude, that is a SHITLOAD of Grow!

Just for ha-ha’s lets say that Biotest makes average net profit of $30 for every “unit” sold, I mean, roll all the supps into on big pile and call that the average…

That’s over 2 million units sold every year to get to 70 million dollars.

No way are they moving that much product, and they aren’t net’ing 30 bucks off each unit sold either, probaly more like $12-15, meaning 4 million units sold.

How much did Philips sell EAS for? 10 million, 50 million?

EAS had National level brand recognition, even house frows new the brand, and it had a best selling book pushing its supplements.

Biotest, sadly, does not have 1/10th the recognition or circulation.

I hope they get there though!

My wild guess is, Biotest is a $10-20 million year gross income concern at the moment.

[quote]Jason05 wrote:
Original_Demon wrote:
I would say T-Nation’s annual sales are anywhere from 2.0 to 2.5 million. Not a bad start at all since 1999.

OD

T-Nation’s sales are way over 2.5 million a year. I think it was TC who said it costs 1 million/year just to run this website. I can’t imagine a company spending 50% of their gross earnings on a website like this one. I’m willing to bet they’re over $20 mil/year[/quote]

Why not, this website is the engine that puts Biotest in the publics conscience.

I agree though, 2 million is to low.

edit, two, too, to…

I would imagine that the guys are pretty amused at the numbers being thrown around! (Tim and TC, rolling their eyes, and saying “I WISH!!!”)

Seriously…this whole Bodybuilding/Fitness/Strength Training/ area seems to have “niches” where everyone can have a “piece of the pie…”…as long as they can fill a particular “niche” which I think the guys have done well.

But I would BET that they would tell you that you can’t slack off ONE IOTA or you die. In other words, it’s probably a DAILY struggle to fill this “niche” market and maintain profitablity.

By the way, I mentioned this on another thread…it doesn’t cease to amaze me how Bill Phillips captured such a lucrative market…young women and “Soccor Moms” with his “Body-for-Life”…then “Muscle Media” seemed to piss it all away by trying to “morph” into something somewhere between “Flex” and “Men’s Health”, only to eventually fold.

(Oh well…Billy Boy had made his millions!)

I would LOVE to hear TC’s thoughts on THAT fiasco!

Anyway…I admire what they’ve done here…

Mufasa

Some of the posters are talking about two different things, net profit vs. gross income… I would not even guesstimate the margin on products Biotest makes, but gross income could at least be disussed…

Hell, I spend $150 a month on Grow!, Surge, and the “supplement of the week”…

For simplicity purposes, and myself as an example, we will call it $2,000 per year.

Let’s say that there are 1,000 loyals… That is only $2,000,000… Let’s say there are another $1,500,000 in “non diehard customer sales per year”… That is only $3,500,000… We have seen Biotest branch out to Costco, GNC, etc…

I guesstimate they are a $10-$15M per year company…

I have heard that Biotest is going more mass market and putting its supplements in places like Target, anyone else heard this?

So guys, when can I buy some shares of Biotest stock?

I want to be in on the IPO :slight_smile:

[quote]D-Rock112 wrote:
I have heard that Biotest is going more mass market and putting its supplements in places like Target, anyone else heard this?[/quote]

I saw HOT-ROX at the local CVS pharmacy months ago, but no other products at any place other than “boutique” supplememt places.

The 2.0 - 2.5 million mark was after overhead.

However, I just want a damn T-Nation Shaker!!!

OD

The greatest strengths I can spot are the hallmark of any good business. Straight answers, no circumlocution, and a good product that does what they say it will do, plus a customer support system that has never been done before. The threads are like a self propagating system. People learn from Pros, experience, then help others. It’s beautifull.There is a bunch of other stuff that makes them successfull too, but those are the big ones that even I can spot.
I sit in awe of it.

[quote]usdsig wrote:
Some of the posters are talking about two different things, net profit vs. gross income… I would not even guesstimate the margin on products Biotest makes, but gross income could at least be disussed…

Hell, I spend $150 a month on Grow!, Surge, and the “supplement of the week”…

For simplicity purposes, and myself as an example, we will call it $2,000 per year.

Let’s say that there are 1,000 loyals… That is only $2,000,000… Let’s say there are another $1,500,000 in “non diehard customer sales per year”… That is only $3,500,000… We have seen Biotest branch out to Costco, GNC, etc…

I guesstimate they are a $10-$15M per year company…

[/quote]

I’m betting the customer base is much larger than that.

t-nation.com is in the top 50,000 or so websites worldwide, which is really incredibly good considering how many millions of unique websites there are, being in the top 10% of all websites in terms of traffic.

Oh yea, and as far as brand recognition and loyalty go, at the little place that I got my supps at, they couldn’t keep it on the shelves.
The lady said that the Biotest stuff just flies out the door.

Biotest is the best thing on the planet. If it wasn’t we wouldn’t be sharing this string. T-Nation totally rocks as a website. You can learn how to best use their products, how to control your diet (thanks, Dr. B and Lonnie), how to get some of the best workouts on the planet (CW, CT, EC, team Staley and the rest of the crew), how various fitness products work (hasn’t been that long since T-Jack) and this is beside the point they sell sell the best products on the market today. Their research and testing is some of the finest on the market and its useful (remember HMB, that was a waste?). I live on HOT-ROX, Carbolin 19, Methoxy-7 and the rest of their catalog.Long live Biotest!