Case Study: LightStream Technologies

The Company

Some U.S. companies add exporting as a business strategy after they have been successful domestically. Others, such as Virginia-based LightStream Technologies, which manufactures devices using ultraviolet (UV) light to purify water; build their businesses and products around exporting.

When Vice Chairman Josh Lanier and his cofounders started LightStream in 1998, they knew that water purification was a $6 billion business, largely dominated by the production and sale of chlorine. But dependence on chlorine is changing, Lanier insists, because of health and environmental problems associated with excessive chlorine use and security concerns about transporting the chemical.

Although other UV light disinfection systems exist, LightStream’s product is different from conventional systems. It uses pulsed UV light, which disinfects by means of short bursts of UV light that are of much stronger intensity.

People operating hand operated water pump

Disease-free drinking water is a luxury in much of the developing world.
LightStream of Reston, Virginia, makes technology that purifies water using ultraviolet light.

The Challenge

Lanier and his colleagues needed a fast, reliable, cost-effective way of finding distributors in key markets. They assumed their technology would be in demand, especially in developing countries, where pollution management is a primary need.

“Water is a necessity of life,” notes Lanier. “There are markets around the world that meet our criteria: one, an immediate need, and two, the ability to buy.” But how does a startup find buyers without experiencing undue financial risk?

Lanier had a fortuitous background— experience in government relations. “Water is policy and politics,” he observes, “and in working with governments and business associations in Washington, D.C., I had honed good instincts for finessing sales once I got in the door.” But getting in the door was a challenge for the fledgling business.

The Solution

It remained a challenge until Lanier met Sandra Collazo, a U.S. Commercial Service trade specialist at the Northern Virginia Export Assistance Center. Collazo, whose specialties include environmental equipment, told Lanier about a Commercial Service trade mission to India. Numerous trade missions are organized each year, some of which are specific to a country, region, or industry. Participants pay their own travel expenses, plus a fee that covers finding interested, qualified buyers.

Navigating the shoals of India’s environmental sector can be tricky. Many firms are eager to partner with U.S. companies, but finding the right one is crucial. Some appear established but are financially shaky. Others present long lists of contacts but lack the network to distribute products. Choosing the right partner can take months.

This is where Collazo and her Commercial Service colleagues in India came in. As Lanier traveled to New Delhi, Mumbai, and Chennai with the trade mission, he met with representatives of companies that Commercial Service officers had prescreened to fit LightStream’s needs. The schedule was hectic but worthwhile. Dozens of companies were interested in becoming LightStream Authorized Solution Providers. “We were able to survey and better understand the Indian market by participating in the trade mission,” says Lanier. “What would have easily taken a month on our own was accomplished in days through the Commercial Service.”

With help from the Commercial Service, Lanier whittled the list of candidates down to Subhash Projects and Marketing Ltd., a leading Indian engineering and construction firm. LightStream formed a strategic alliance with Subhash, and both companies expect sales of $15 million in India over the next five years. The agreement calls for technology transfer and joint marketing throughout India. “Subhash is a good group,” says Lanier. “They’re solid, they have growth potential, and they are publicly traded.”

Lanier accelerated his overseas business development and took advantage of more Commercial Service products. Under the Gold Key program, U.S. businesspeople travel on their own to a market and meet potential buyers selected by Commercial Service officers. Lanier calculates that he has participated in dozens of Gold Keys around the world. Recently, he took a Gold Key trip to Europe. A cheap dollar makes LightStream’s products a relative bargain in Europe right now. The Gold Key visit to Ireland concluded with a distribution agreement for the United Kingdom and South Africa, generating sales of $4.2 million, with subsequent purchases of 40 systems worth even more.

Lanier’s next project is to conduct 30 Gold Keys in 30 countries. The Commercial Service will find suitable partners in each country; in turn, those companies will be asked to go to a special Web site where they can view information about LightStream. The prospective partners will then complete a questionnaire that Lanier has honed to eliminate all but the most qualified candidates. Then, Lanier will fly to meet the prospects with the help of Commercial Service officers in the market. “For a very reasonable cost, I can use this virtual Gold Key to facilitate sales to multiple markets simultaneously, knowing I have an experienced team on my side if I run into difficulties,” says Lanier.

Lessons Learned

For Lanier, creating LightStream and going global are “the biggest and boldest things of all I’ve ever done.” He’s learned several valuable lessons:

  • Move the company’s products as close to the customer as possible. Getting close to the customer means forging alliances in as many markets as possible. U.S. government programs can help your company form partnerships.
  • Strive for a high-quality product. LightStream is in the process of acquiring a Six Sigma, which equates to 3.2 defects for each million opportunities for defects. Setting a standard for high quality helps a company gain and hold a valuable niche in the marketplace.
  • Remember the importance of personal relationships. Lanier says, “Through the process of building our worldwide distribution network prior to product release, we were able to learn a great deal that has helped us restructure our organization’s plans for regional operation.”

Action

These ideas can help you find the right partner, agent, or distributor:

  • Use the U.S. Commercial Service. Consider traveling on a trade mission, or try the Gold Key program.
  • Join business organizations. Business organizations can help you understand government regulations, promote your industry, and keep up with the latest technical information. To find the best organization for you, consult the U.S. Chamber of Commerce at www.uschamber.com.
  • Conduct market research. The Commercial Service’s Country Commercial Guides, found at www.export.gov/mrktresearch, are excellent preliminary resources.