Seven Marine

The benefits of off-the-shelf product development are evident:

• You're leveraging components and parts that have already undergone extensive R&D, often costing companies hundreds of millions of dollars.

• You pay only for what you use.

• Reliability is typically higher.

• Parts are readily available.

However, there are some drawbacks to off-the-shelf product development:

• You must adapt your product to fit existing components and parts.

• You are vulnerable to price fluctuations in the components and parts market.

• Sometimes suppliers may cease providing parts, as we've seen with cases like Wescam discontinuing supply to Bayraktar TB2 camera systems

I could delve into how Volvo Penta acquired Seven Marine and eventually shut it down, but that's a tale of business development for another time. The key takeaway from this case study is that if you lack substantial funds and experience, utilizing off-the-shelf parts is a wise strategy. As you begin to generate revenue, you can gradually invest in research and development to create in-house components and parts. This approach has been successfully employed by industry titans like Elon Musk, who initially sourced Tesla Roadster chassis from Lotus, and Christian von Koenigsegg, who once used Ford engines but now manufactures their own. Even Apple began with Intel CPUs before developing their proprietary CPUs. The lesson is clear: if you're short on funds and experience, off-the-shelf development is the path to follow.

Seven Marine LLC was a renowned company known for manufacturing high-performance outboard engines, primarily designed for Center Console boats. These outboard engines were meticulously crafted to deliver robust and dependable propulsion for large and high-speed boats. They found their application in notable brands like Midnight Express, HCB, Tiara, and Freeman.

In a pivotal moment at the 2011 Miami Boat Show, Seven Marine introduced a 557-horsepower outboard engine, while just a few meters away, competitors such as Mercury, Yamaha, and Suzuki were showcasing their outboard engines with power ratings of 300 and 350 horsepower. It was nothing short of impressive to witness what Seven Marine had achieved in comparison.

Founded in 2010 by Rick Davis and David Foulkes, Seven Marine aimed to create potent outboard engines for high-performance boats. However, the market was dominated by industry giants like Suzuki, Yamaha, and Mercury. The question loomed: How could a small Wisconsin-based company compete against these industry leaders?

For Seven Marine LLC, the answer was clear—they couldn't compete in the 300-400 horsepower outboard market, already dominated by the major players. Instead, they embarked on a journey to develop the most powerful outboard engines.

One of their key strategies was to employ "off-the-shelf development." In this approach, components and equipment are sourced from various suppliers, assembled, encased, and branded as the company's product. We'll delve deeper into this concept in a future blog post or case study. For now, let's focus on how Seven Marine revolutionized the outboard boat engine industry by creating the most powerful outboard engine using off-the-shelf parts.

To illustrate this, consider the 2011 Cadillac CTS-V, equipped with a 6.2-liter supercharged V8 engine producing 556 horsepower. At that time, the base price for the entire car was $60,000. The connection to Seven Marine outboards? They shared the same engine. Seven Marine approached General Motors (GM) to acquire this engine for use in their outboards.

However, merely having the engine wasn't sufficient. They also needed a transmission. Just as cars rely on transmissions to transfer power to the wheels, boats require gearboxes to transfer power to the propeller. Seven Marine sourced the ZF63IV transmission for approximately $4,000.

All these components and parts were meticulously assembled at Seven Marine HQ. The only element created by Seven Marine was the striking outer shell— Its beautiful

Seven Marine sold outboards for $70,000, offering 527 horsepower, and over $100,000 for the 627 horsepower model. Now, let's compare the cost of off-the-shelf development to full-scale development: the supercharged 6.2-liter V8 engine cost $22,000, the transmission was $4,000, and additional expenses for wiring, electronics, Selva parts, and labor amounted to another $20,000, totaling $46,000 for an average outboard.

If you were to Google "how much it costs manufacturers to develop an engine," you would discover figures in the billion-dollar range. Mercury Marine, for instance, invested over $2 billion in their development program since 2009, including $10 million to make their engines slightly quieter.

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