Big Red Car here. Hey, it’s raining in the ATX and I don’t like that. It’s a bit cold in addition. The Boss had a day of power washing laid on but it looks a bit spotty. I like The Boss to get his power washing on — it makes the simpleton so damn happy. [Haha, watch it Big Red Car.]
So The Boss has always been a huge fan of the transformation of old economy companies to new economy companies. A great way to create value by essentially jerking the old economy company into the real, current world.
You will remember that we talked about this some time ago here. The Old Economy to New Economy Transformation Series
Great theory but can you cite any real examples?
In discussing this case study, we cannot violate the confidentiality of the coaching confessional, Old Sport, so we shall be speaking a bit obtusely but you will able to get the lesson and message. And, yes, it’s a true story but the names have been changed to protect the confidentiality.
An experienced entrepreneur — serial entrepreneur — was operating a couple of websites. One was making a damn good bit of profit, the other was just inching up the curve. The guy was salty, seasoned and experienced. Was living the good life — La Vida Loco indeed. [You have to love the energy of Ricky Martin, no? Raw energy. Enjoy. STFU, Big Red Car, what do you know about Ricky Freakin’ Martin? Haha.]
A deal fell into his lap. An old economy publishing company was divesting itself of a publication which had a website and the website was complementary to one of the entrepreneur’s current offerings. Not quite overlapping but pretty damn close.
To say that the entrepreneur stole this website would be the understatement of the year. He bought it for nothing because the seller could not mentally divorce the website from the failing publication’s hard copy publishing business.
The publisher — big company, not too agile or fleet footed — had an old economy frame of reference and the entrepreneur had a new economy frame of reference.
The entrepreneur bought a website with almost 15 years of brand equity, an established base of viewers and 15 years of content — both from the magazine but also the website. The nature of the business was such that it was content that had an endless shelf life. The content also included a library of pictures — used in the articles — which was spectacular.
Again, he stole the website from a pricing perspective already but the brand equity, the readership, the content and the pics — can you smell the gravy, Grasshopper?
The deal had a few bugs on it from a traditional “reps and warranties” perspective but The Boss quickly understood the huge magnitude of the opportunity and counseled the entrepreneur to pull the trigger and worry about the details thereafter. The deal was that damn good.
The entrepreneur pulled the trigger and bought the website. He got everything that he bargained for plus some.
Squaring up the edges
The entrepreneur already had a staff which included software engineers, developers and marketing folks so his modifications to the website design were marginal expenses. He made those changes without breaking a sweat.
Then the entrepreneur and The Boss engaged in a dialogue exploring all the other opportunities that could be capitalized upon given the brand equity, the viewership and the industry.
The entrepreneur concluded that the magazine had failed by traditional old economy publishing standards but the website had never really been managed as a new economy undertaking. Remember, he was already in this business.
Drawing the new economy in
The entrepreneur saw and capitalized upon the following opportunities:
1. He freshened up the design of the website — which was pretty damn good to start with.
2. He dramatically improved the communication strategy by employing a couple of bloggers to write periodically about the industry and site — engaged with the community.
3. He began to immediately think about the viewers not as a faceless mass but as a related community with a common interest. They were a community with multiple needs — unfulfilled needs — within the same industry not just potential customers. He was going to identify and fulfill those other common community needs.
4. He developed eCommerce and publishing strategies which were within the known needs of this burgeoning economy. These opportunities are huge.
The reputation management of the eCommerce selections was a vital element in the embrace of eCommerce. The website’s expert status made its imprimatur a very valuable consideration for potential eCommerce strategic partners.
5. He developed an email based communication strategy which drew the community to the site with engaging and timely information.
6. He came full circle and is contemplating a periodic coffee table publication — not the old monthly publication — which will attract meaningful advertising revenue with an “exclusivity” strategy.
He funded all these modifications with his own funds. His execution was at a Tiffany’s level of design quality — a very important point, dear reader. He did not do this with a chainsaw, he did it like Tiffany’s.
As part of this strategy, the entrepreneur broadened the footprint of the website by employing social media. Facebook, Pinterest, Instagram, Twitter — the presence on each of these sites is superb and also at a Tiffany’s level of quality but at a depth — remember he had 15 years of content to deploy as he saw fit — that suggested the enterprise was well established.
If you went to any of those sites, you would be drawn back to the website and you would think you were roaming the jewelry cases at Tiffany’s.
The opportunity to create value by transforming old economy enterprises to new economy enterprises is out there and worthy of your attention. Own a car dealership? Transform it. Jerk it into the new economy.
The transformation is not difficult but you have to be able to see the opportunity. You have to access the requisite skills. This entrepreneur was already in the game with his other successful websites. He did not require much convincing. He understood the opportunity instantly.
This entrepreneur is a “no drama” well experienced Founder, CEO and manager. He is not a young whiz kid — he’s a salty, experienced, successful entrepreneur and business man who understands how to build a company to support a product.
This enterprise has now transformed the entrepreneur’s opportunity from that of a guy with a damn good website or two to a platform for other similar websites and old economy to new economy transformations. He may not quite see that right now but that’s what has happened. His transformation is a process that can be replicated should another such opportunity present itself.
So, Old Sport, there you have it. Ponder and think how you might do the same thing. To my friend, the entrepreneur, The Boss says: “Keep crushing it. You deserve every bit of your success. Show those kids how a seasoned entrepreneur catches the brass ring one more time. Well played.”