Management lessons from CEOs who defied the dot-bomb - PROFIT Magazine
September 02, 2003
The next time you face trouble, remember these firms that outmaneuvered the dot-bomb
By Peter Carter
.....Take Kamloops, B.C.-based MediaWave Communications Corp. (Ranked No. 6 on PROFIT Magazine's Hot 50 List in 2003). It set out to be an online retailer, morphed into a website builder, then successfully transformed back into an online retailer - but with new stripes - achieving two-year revenue growth of 1,646% in the process.
MediaWave president and CEO Grant Robertson, 31, a former accountant, was working as an investment-newsletter writer when he started the company in 1999. The original plan was to carve out a niche as an online retailer of specialty wilderness gear. Think Mountain Equipment Co-op (MEC), Coast Mountain Sports or even Canadian Tire, but with hard-to-find merchandise. The problem? MEC, with its strong brand and market presence, was already online. Even though Robertson knew going nose-to-nose with MEC would be expensive, he was sure it was feasible.
In early 2000, hoping to cash in on Internet enthusiasm, Robertson and his partners went looking for investors. After a series of false starts and exaggerated financial promises that never materialized, Robertson - who had spent the previous few years as a professional market watcher - read the lack of interest as a bad omen.
"The opportunity for alternative financing would have been simple only months earlier," he says. "I realized that we'd placed all our eggs in one basket and that investor enthusiasm for Internet-related businesses was going south. We had to adapt or die."
Recognizing that he and his staff had Web expertise in spades, Robertson decided that it would be easy to shift the focus from creating an online retail empire to supplying the support to help existing companies grow online. "The sideline idea was attractive," says Robertson. "We had the people in place to realize a high margin on little investment, and we knew if we didn't do something right away we'd have to close down." He also knew that by aiming his resources in a new direction he'd have to put his online store on the back burner, but it was better than going out of business.
"I figured with the support work we could keep the doors open while developing the business," he says. "It would delay the development of our overall business model, but it would at least ensure that we could get there in the end."
The shift worked. In the summer of 2000, MediaWave nabbed a contract with Teck Cominco to create a website to help the Canadian mining giant sell used mining equipment to customers around the globe. That contract was a big deal for MediaWave, contributing the bulk of its second-year revenue. "Even more important," says Robertson, "being connected with such a large company gave us the credibility we needed to leverage other clients."
Among those new clients was UniEx, a Kamloops-based manufacturer of furnace humidifiers. At first, MediaWave helped UniEx develop an e-commerce site. Then, when UniEx's owner decided to move to Peru, he offered to sell his company to Robertson. MediaWave swung a deal for shares and cash, and in April 2001, Robertson's company was finally an online retailer. Granted, humidifiers aren't nearly as sexy as wilderness gear, but the acquisition brought $150,000 directly to MediaWave's top line and put the company in growth mode. In 2002, the UniEx division generated more than $700,000 for the company (total revenue came in at $1.2 million). It also turned the firm into a serious exporter. In 2000, it generated a mere 5% of its revenue abroad. By the end of 2002, that number had jumped to 87%. So what's next for a company that has been three different creatures in three short years? "Diversification," says Robertson. "We've managed to evolve into what we set out to be in the first place, but we have to keep moving with the market." .....