Government rules can be a costly pain point for companies, particularly in heavily regulated industries like healthcare and financial services. But they can be a real boon for entrepreneurs. The first step of the moneymaker-to-moonshot business model is solving a problem for larger businesses—and new regulations fall squarely into that category.

In 2013, then-President Obama signed the Drug Quality and Security Act (DQSA) into law. The legislation required pharmaceutical companies to provide the means to “track and trace” most prescription medications from every source of ingredients to the patient—right down to the bottle. At the time, few companies were equipped to handle this level of detail along the supply chain. Many, in fact, still relied heavily on paper-based documentation and processes.

But Evren Ozkaya—the latest entrepreneur featured in our video series— knew exactly how to do it. Just prior to the arrival of DQSA, he spearheaded a track-and-trace program for pharmaceutical giant Sandoz. So in 2014, Evren took the law into his own hands, so to speak, and launched Supply Chain Wizard, a consulting firm focused on helping companies comply with the new regulations. Consulting is one of those great “on-ramps” for entrepreneurs. As a consultant, you can start small—even as a sole proprietor—and market yourself as an expert in a domain that is in high demand. Evren had deep experience in supply chain management, having received his Ph.D. in the field from Georgia Tech before taking a position in McKinsey’s supply chain management practice.

Navigating Next Steps

One great thing about consulting is that it opens doors across a broad swath of companies—even entire industries. And every successful consulting engagement—in which you prove your value to clients with a positive return on investment (ROI)—raises your profile and increases demand for your service. That’s how Evren spent the next five years building Supply Chain Wizard into a $6 million moneymaker with 51 employees and offices around the world, appearing on the Inc. 5000 list of America’s fastest-growing companies two years in a row.

But there was a hitch. The legislation that drove the majority of the company’s revenues had a deadline of 2023, and by 2019, most pharmaceutical companies were well on their way to meeting it. That year, Evren joined the Birthing of Giants Fellowship Week at MIT with a nagging question on his mind: What was the company’s next step?

While he didn’t have a complete answer to that question, he did have an inkling of what it would look like. During Supply Chain Wizard’s phenomenal growth, the company invested in software to make its processes more efficient and replicable. One solution focused on strategic planning. Another was a portal to onboard a company’s suppliers into its new tracking system by the hundreds. The company got so good at building software that clients would often ask them to create tailored solutions, and by 2019, software sales accounted for 20% of revenue.

But Supply Chain Wizard’s investment in software development was scattershot. Some products were useful only during consulting engagements. Others were one-offs for specific clients with little universal appeal. If the company could produce a digital solution that appealed to a broad market, it could scale quickly and easily to meet demand using a software-as-a-service (SaaS) model. (SaaS refers to applications that any number of users, from any number of different clients, can use either through a web browser or mobile app.) Because SaaS applications live in the cloud, serving a million users doesn’t cost a lot more than serving a thousand. It’s essentially economies of scale on steroids, and it can push profit margins through the roof.

“There’s limited time, limited capacity, limited budget, limited people—how can you maximize your value with these limitations? That’s where the initial thinking about how we could scale the software faster became a topic.”

When I met Evren that week at MIT, he knew the future of his company was in software, but wasn’t sure which solution to invest in.

“The fellowship program gave me an opportunity to think through all the different aspects of the business and consider their potential,” Evren told me recently. “There’s limited time, limited capacity, limited budget, limited people—how can you maximize your value with these limitations? That’s where the initial thinking about how we could scale the software faster became a topic.”

Using the Launch Pad

The answer came soon enough: One client had asked for a “digital factory” solution that automated certain manufacturing processes to improve visibility and performance with speed and cost-effectiveness by employing technology such as artificial intelligence (AI), machine learning (ML), and Internet of Things (IoT). Digital factory solutions could appeal to a vast total available market (TAM) far beyond the pharmaceutical industry. At the same time, the deep relationships and trust Supply Chain Wizard built among pharmas gave it the launch pad it needed to edge aside giant, well-funded competitors like IBM, Siemens and Cisco.

Supply Chain Wizard was able to begin this transition without sacrificing a big chunk of equity to venture capitalists. When the company did seek outside investment, its valuation was that of a tech company, not a consulting firm. Here’s what that means: the company’s valuation was a multiple of revenue, not profit, so was vastly higher than it would have been even a few years earlier. What’s more, a high valuation means that investors must accept a smaller percentage of equity, keeping the control of the company firmly in Evren’s hands.

In other words, Evren followed the moneymaker-to-moonshot path to success. He built a money-making company that could fund investments in technology solutions out of operating income. That technology addressed problems that bigger companies needed to solve. He then transitioned that technology into a standalone, highly scalable product which transformed his company into a moonshot with a huge valuation to match.

Mike drop. Game over. Except that Evren is not the kind of guy to rest on his laurels, or even define success exclusively through financial gain. To him, the real value comes from making a positive impact—ensuring that prescription medications are safe and that life-saving drugs can reach a wider population at lower cost.

What about you? Do you have an expertise that you can market as a consultant? Could you uncover unmet needs from your client base that you can meet with technology? Do you have a moonshot in you?

To see more of Evren’s story, click here to sign up for How I Did It, a free monthly series featuring fast-growth entrepreneurs and looking at how they built highly profitable businesses.