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There's a new industry being born, one with high margins, developing technologies, growing, and seemingly insatiable, worldwide demand, negligible foreign competition, little price resistance, and estimated annual revenues in the $3 billion range. When I read about it recently, I felt I should write about the opportunity beckoning sharp entrepreneurs.
But the more I read and the more I spoke with industry participants, the more ambivalent I became. This industry is the business of helping create babies by assisting couples and individuals with fertility and related problems, applying any of a number of techniques ranging from fertility drugs to adoption to implantation of donor eggs in a surrogate carrier.
Debora Spar, a professor at Harvard Business School, clearly outlines the dimensions of this emerging industry in her book, The Baby Business: How Money, Science, & Politics Drive the Commerce of Conception (see BusinessWeek.com, 2/27/06, "And Baby Makes…a Market").
DIFFICULT ISSUES. Spar tells of customers prepared to spend up to $100,000 in assorted fees to create a child, and an industry populated by intriguing entrepreneurs, with seemingly huge opportunities for many more.
To gauge these opportunities, I decided to speak with a few business owners who have experience in the baby-creation arena. If you think your business faces difficult quandaries, consider those of Ruth Tavor, who launched New York Lifespring five years ago, after she gave birth, at age 47, to her second child.
Hers was no ordinary pregnancy. Because she encountered difficulties becoming pregnant, she wanted eggs for implantation into her womb, and she wanted them from a young Jewish donor. It turned out such eggs are in short supply, so Tavor decided to place ads in Israeli newspapers seeking donors. "I got a tremendous response," she says, and so she not only gave birth to a baby but to a business as well.
SOUL SEARCHING. Tavor's Lifespring is focused on obtaining eggs from Israeli women for implantation on behalf of clients seeking a Jewish donor. Sometimes the eggs are implanted in mothers unable to produce their own eggs, and sometimes in surrogate mothers. Sounds straightforward enough, but as Tavor says, "There is a technical part to this business and there is an emotional part." It's the emotional part that causes the problems.
First, there are the emotions of the donors. "I ask them, 'What if the child is curious later on and wants to meet you?'" Most of the time the women say no, which is the answer she wants to hear. "If they say yes, I'm worried."
Once a woman decides to donate eggs—for a fee of $8,000 as compensation for the discomfort and inconvenience—Tavor must be there every step of the way to hold her hand. "Sometimes they don't tell even tell their mothers they're doing it. I'm the only one they can talk with."
HIGHEST BIDDER. Then there are the emotions of the would-be parents. Even though Tavor has a steady stream of Israeli women donating eggs, there are still usually more prospective parents than eggs available. Tavor compiles an eight-page dossier on each egg donor, with photos and medical and biographical information to present to parents. But how should she hand these out? "Let's say I have 10 couples" in search of donor eggs. "How do I choose who will get to see which donor first?"
In New York Lifespring's early days, one couple offered more money than her standard fee in order to be guaranteed eggs from a particular woman the couple had picked out from the dossiers. Tavor accepted the additional money, passing it on to the donor.
But she felt terrible afterwards, as if she had polluted the process, and decided to impose a hard and fast set of rules whereby she sends information describing five current donors to all her prospective parents simultaneously. Whoever calls her first requesting eggs of one or the other gains access to that donor's eggs. "I don't want to play God," she says. She now rejects the periodic offers from prospective parents of additional payments for preferential treatment.
LAWYER'S TOUCH. Given the weighty nature of her daily struggles, Tavor is at a loss for how to expand her business. Right now, her only assistance in operating the company comes from her husband, who's a Web designer and handles the technology and marketing components of the business, including keyword selection to keep the company ranking high in search engines. But she despairs of bringing aboard a colleague to do what she does: "I don't know how much their heart will be in it."
Melissa Brisman, a New Jersey lawyer specializing in reproductive issues, became involved in this new industry much like Tavor, via a personal experience. Because she couldn't carry a child, she used a "gestational carrier,"—that is, a woman who was implanted with Brisman's eggs and her husband's sperm. Ten years ago, Brisman decided to apply her legal skills to help other women traverse the complex legal and regulatory issues that come up in such cases.
Today, Brisman has a staff of 11 paralegals and administrative assistants to help her work with would-be parents, of whom 15% are from outside the U.S. (largely because third-party fertilization is illegal in much of Europe). Like Tavor, she finds the emotional issues most challenging.
HAND HOLDING. "Patience is a hard thing to counsel someone who has been waiting 10 years," she says. Once prospective parents pursue a course involving surrogates and donated eggs, "A lot of things can go wrong." Yet there's enough success to make the process viable. "Surprisingly enough, 80% of our clients take home a baby."
The first-hand experience Tavor and Brisman bring to their businesses is what sold Jaime Needel, a 29-year-old Hoboken, N.J., marketing executive, on engaging both after cancer treatments left her infertile. Tavor, she says, treats her "like a daughter." And Brisman "holds your hand all the way through" to the expected birth, which for Needel's surrogate should be sometime early next year.
Is this really a viable industry for would-be entrepreneurs, in the nature of such emerging industries as alternative energy or nanotechnology? I'm really not sure. I must say I've never seen a business with more ethical, emotional, regulatory, and legal challenges than this. Yet it is a business in which demand is nearly certain to grow. And as technology becomes more sophisticated, it will create opportunities that aren't necessarily fully apparent at this point.
TOUGH QUESTIONS. A critical success factor for business owners appears to be personal experience, to have gone through some aspect of the unconventional baby-creation process. This enhances the credibility and trust that customers crave. Of course, this requirement also acts as a limitation.
Opportunities taken for granted in other industries, such as franchising and economies of scale, definitely aren't easily applicable here. Suffice it to say, you had better be prepared to confront the largest issues of your life, and life in general, in this emerging industry.
Gumpert is author of Burn Your Business Plan! What Investors Really Want from Entrepreneurs and How to Really Start Your Own Business. His Web site is www.davidgumpert.com.
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