Captivate Networks: how Four Critical Decisions Shaped One Firm’s Path to Growth Anthony Liisi
1996 – First idea of Captivate What if you put flat-screen displays inside elevators so people had something to watch while waiting to read their destination? 2011 – Network of 10,000 office elevator displays across North America Seen by 4 million smart, busy, upscale professionals on the move and struggling “to do it all”.
Critical Decision 1 Are We a Technology Company or a Media Company? Licensing the technology to an elevator company? Who is the audience? • A company must also focus on how its technology creates value for the end user • To assemble sufficient data to persuade building owners to install flat-panel displays in their elevators and advertisers to pay to run ads on the displays.
Critical Decision 2 Should We Hire Nielsen Media or Do Our Market Research? No one a had ever placed flat-panel displays in elevators before, so how effective the advertising would be? Nielsen wanted $200,000. Credibility Vs Cost. • Preliminary research by Captivate: average income of $100,000, Professional & Managerial hard to reach through traditional media. • To be armed with verified, unbiased data to support his business concept.
Critical Decision 3 Should We Take Otis’s Offer? To partner with the largest elevator company? Market share? Is 25% enough? Who are the customers? • To be an exclusive provider of flat-screen displays. • Not allowed to install its systems in any other elevators. • All of the market share • As media company, building owners and advertisers were primary customers. “ Here we were. We had no revenue, very little funding, a cool technology, and an idea. And here’sthe largest elevator company in the world that wants to partner with us, and we said “No”. ”
Critical Decision 4 Should We Give the Building Owners a Cut of the Profits? To provide building owners a service? • Development of its business model, and how much its revenue it should share with its partners. • To feel like they were a participant in its business rather than just bystanders.
Present-Day Growth Path Tragic events of September 11, 2011. • More and more popular • Demand is increasing • To pass safety information in times of emergency • Purchased by Gannett in 2004
Question 2 • Why do you think that Captivate has been able to sustain its growth? What, if anything, will eventually slow the growth of the company?
Question 2 • No competitors • Audience: on-the-goal professionals • 3.7 million people • Division of Gannett • 10 000 elevator displays • 1000 office buildings • 39 million ads • What will come next?
Question 3 • Of the day-to-day challenges of managing growth discussed in the chapter, which of the challenges do you think were the most difficult for Captivate to deal with during the firm’s early years?
Question 3 • Cash Flow Management • Nielsen Media research • Very little funding, no revenue • Cut of the profits to building owners • Price Stability – no competitors to fight with • Quality Control • Capital Constraints
Question 4 • Why do you think Gannett purchased Captivate?
Question 4 • Gannett: US newspaper company • Newspapers + Internet • How to advertise more • Logical solution
Question 1 + Application Question 1 • Which of the four decisions discussed in the case do you think was the most difficult? What would have happened to Captivate if it had made the opposite decision in this circumstances? • How do you think Captivate would have evolved if DiFranza and his team had seen the company as a technological company rather than a media company?
Which of the four decisions discussed in the was the most critical? Critical Question 1: Are We a Technology Company or a Media Company? • 2)No need to hire Nielsen Media • 3)Would had taken Otis’s Offer or offered licensing the technology • 4)No profits to the building owners
How would Captivate have evolved if Difranza had seen the company as a technology company rather than a media company? Microsoft (technology company) Captivate (if technology company) • Focus on developing new technology (new software every year or 2 years) • Licensing to computer maker companies • To look for new support to develop the technology (from computer to smartphone) • HD & 3D flat-panel displays • To look for other places where people are “captivates” i.e waiting room, airport… • Not as big as today and would not had being purchased by Gannett
Application Question 2 • Think of your professional life as a student or as an employee, if you currently have a job. List four major decisions that you made that have put you on the track that you’re currently on. Reflecting back, would you change any of the decisions that you made? If so, why?
Liisi’s questions • Where to go to study – Tartu or Tallinn? • What to study – economics vs mathematics? • Start working while still studying? • Go to abroad? Where?
Anthony’s Should I change field of study? To stay in science or to go in business? To stay in my hometown or to leave for the capital city? To pursue a double degrees or to have more work experiences? To stay in France after my French university reject my application for 2nd year of Master degree or to go study in Taiwan to have a Master degree? • High school diploma specialized in sciences • Family owns a grocery-chain • Hometown: To take care of the family as the eldest but no Chinese class and limited awareness of globalization • Capital city: To live alone, To adapt to a new environment • Double degrees: Rooms are limited, To be abroad at little cost, To make an international network • France: To work only in France, Bad economical environment (unemployment rate high, growth rate null) • Taiwan: To keep enlarging my international network, improving my Chinese, To build up time