Acme Medical Materials
Acme Medical Materials (AMM) is the exclusive licensee of a process for getting active chlorine molecules to “stick” to fabric after it is washed. The idea is that the fabric surface itself becomes antibacterial for some period of time after washing. When converted to hospital gowns, medical scrubs and drapes, it kills a wide range of bacteria, viruses and spores. Fabric with this chemical affixed (think of it being printed on) can be “recharged” with more chlorine simply by washing. Acme also has a limited license for a brand name from a well-known global CPG manufacturer. We did not invest.
- Assessment:We have learned not to trust licensing arrangements like these; where big companies are given to wildly swinging strategic leaps. If either of these licensors decided to end their deal with Acme, perhaps after seeing them succeed, Acme would be unable to stop them. For example, Acme could build a big hospital business, only to have one of the large uniform service providers simply go direct to the licensor and push Acme aside with better terms and a much larger product line. We have seen this happen before and while “unlicensing” doesn’t always occur, having no control over your own technology or brand name makes for a difficult investment thesis.
- Outcome: Too soon to tell, but this may be a place where our strategic principles – and common sense – prevented us from making a great investment. The company is off to a terrific start.
- Learning:It would be great to be wrong here, as it would rebuild our confidence in big companies as “good citizens.” We will see.