It's been busy here at HQ, so I'm sorry for the lack of action on this blog. Fortunately though, there seems to be very little real news in our space right now, so I haven't missed much. Wait... That's not a good thing at all. Maybe this whole economic crisis I keep hearing about on the news has some legs to it?
Regardless, there are two things I thought I'd briefly comment on. First, by popular request, is my take on the implosion of Reactrix.
RIP Reactrix
Ah Reactrix, we hardly knew ye. News of the implosion of the firm started a few weeks ago when Adrian over at DailyDOOH mentioned that "the first, pretty large in this instance, US based Digital Signage vendor has bitten the dust" and there was a great deal of speculation about who it could be. Many top names were thrown around (thankfully WireSpring dodged the bullet there :), and eventually the "winner" of the guessing game was Reactrix... At which point everybody guessing in the comments let out a collective "what? I thought you said they were pretty large??"
While Reactrix did burn through an awful lot of cash ($85M), they hardly had a big footprint, and they had practically no brand presence, at least if you ask me. Their technology was very cool and made for a terrific demo, but at the end of the day content production costs were ridiculous and most of the 120+ installations had full-time staffers present, making ongoing operations extremely expensive. (For those of you who haven't seen these systems before, they're large projected images on floors that users can interact with by walking on them and making body gestures).
The tech might be worth something to somebody, somewhere, but since Reactrix started up many more gestural technologies have become available, so it's going to be hard finding a competitive advantage there. Small company (footprint- and impact-wise). Big company (spending-wise). Apparently a very small company (revenue-wise). That's a tough combination to live through in any economic climate, let alone this one.
On the Petters Group
The other item I've been getting a lot of email inquiries about is this deal/mess/whatever with the Petters Group, notable in this industry only because they own a big chunk of BroadSign (full disclosure: BroadSign is a direct competitor of WireSpring, and Dave Haynes is my arch-nemesis in the blogging world -- and since he has a moustache, I think it's obvious which one of us is the evil one). In any event, the founder of Petters Group, Tom Petters, has been accused of running a $3 billion fraud scheme via their venture capital arm. He's has been arrested and will be showing up soon at a federal court near you.
Petters's venture capital fund was a significant source of funding to BroadSign at some point in time. Since all assets of Petters Group have been frozen, I suspect, but cannot confirm, that any funds that weren't already disbursed to any client companies including BroadSign have been cut off. And that's... it.
I seriously doubt that anybody at BroadSign had any knowledge of, or involvement in, the alleged fraud. I don't know anything about BroadSign's financial situation (and I don't want to speculate). And while I wouldn't recommend you go and use their software (you did read the above disclaimer, right?), it has nothing to do with the current Petters situation.
One final note: I do think that some degree of failure and consolidation is inevitable. It has nothing to do with the current financial climate (though that will no doubt accelerate things), but rather is a simple function of our market's size and the number of players in it. However, I certainly understand that these failures and closures mean that value is being destroyed and jobs are being lost. That's no fun in any economy, but it'll probably feel a lot worse for those people whose money or jobs were lost in this one.
Regardless, there are two things I thought I'd briefly comment on. First, by popular request, is my take on the implosion of Reactrix.
RIP Reactrix
Ah Reactrix, we hardly knew ye. News of the implosion of the firm started a few weeks ago when Adrian over at DailyDOOH mentioned that "the first, pretty large in this instance, US based Digital Signage vendor has bitten the dust" and there was a great deal of speculation about who it could be. Many top names were thrown around (thankfully WireSpring dodged the bullet there :), and eventually the "winner" of the guessing game was Reactrix... At which point everybody guessing in the comments let out a collective "what? I thought you said they were pretty large??"
While Reactrix did burn through an awful lot of cash ($85M), they hardly had a big footprint, and they had practically no brand presence, at least if you ask me. Their technology was very cool and made for a terrific demo, but at the end of the day content production costs were ridiculous and most of the 120+ installations had full-time staffers present, making ongoing operations extremely expensive. (For those of you who haven't seen these systems before, they're large projected images on floors that users can interact with by walking on them and making body gestures).
The tech might be worth something to somebody, somewhere, but since Reactrix started up many more gestural technologies have become available, so it's going to be hard finding a competitive advantage there. Small company (footprint- and impact-wise). Big company (spending-wise). Apparently a very small company (revenue-wise). That's a tough combination to live through in any economic climate, let alone this one.
On the Petters Group
The other item I've been getting a lot of email inquiries about is this deal/mess/whatever with the Petters Group, notable in this industry only because they own a big chunk of BroadSign (full disclosure: BroadSign is a direct competitor of WireSpring, and Dave Haynes is my arch-nemesis in the blogging world -- and since he has a moustache, I think it's obvious which one of us is the evil one). In any event, the founder of Petters Group, Tom Petters, has been accused of running a $3 billion fraud scheme via their venture capital arm. He's has been arrested and will be showing up soon at a federal court near you.
Petters's venture capital fund was a significant source of funding to BroadSign at some point in time. Since all assets of Petters Group have been frozen, I suspect, but cannot confirm, that any funds that weren't already disbursed to any client companies including BroadSign have been cut off. And that's... it.
I seriously doubt that anybody at BroadSign had any knowledge of, or involvement in, the alleged fraud. I don't know anything about BroadSign's financial situation (and I don't want to speculate). And while I wouldn't recommend you go and use their software (you did read the above disclaimer, right?), it has nothing to do with the current Petters situation.
One final note: I do think that some degree of failure and consolidation is inevitable. It has nothing to do with the current financial climate (though that will no doubt accelerate things), but rather is a simple function of our market's size and the number of players in it. However, I certainly understand that these failures and closures mean that value is being destroyed and jobs are being lost. That's no fun in any economy, but it'll probably feel a lot worse for those people whose money or jobs were lost in this one.
Subscribe to this blog
Follow Bill Gerba on Twitter
5 comments:
If I knew how to type out an arch enemy/villain-like laugh, I would ... something like "mwoohahaha..."
But it just looks weird.
Thanks for your take on things ... some of the rumor-driven stuff floating around out there is way over the top
And yes, failure and consolidation is inevitable, but that was the case well before the market went haywire ... 300-plus software offers (and STILL more coming in) is nutty
I don't know about anyone else, but I could hear Dave in my head making the laugh...
ditto. thanks for your thoughts. I think the last month has made everyone a little stir-crazy and so we tend to let our minds wander at the possibilities. (I'll admit I called Dave in the midst of all of it...)
Dave: I believe the preferred spelling is "mwahahahaha". I agree, yours looks silly.
Also, please grow out your moustache by DSE so that it's long enough to twirl. Bring a cape and tophat. I'll supply the train, tracks, rope, and damsel.
Justin: I agree. I limit my CNBC watching to an hour a day, and right now I think even that is too much :)
I just came across, belatedly, your write-up on the failure of Reactrix. I worked with the company for a number of years. You have two glaring, almost preposterous inaccuracies in your analysis: content production costs were not expensive: $5,000 to $10,000 per spot, which is very cheap compared to a high-quality :30 TV ad spot, especially considering the undisputedly far higher recall and engagement performance of Reactrix compared to TV or video content (per Arbitron research). Also, the company never had a full-time employee assigned to each of its 150+ displays around the country. Rather, it had a field service team with no more than six technicians supporting all the displays in the network. Reactirx died an unnecessary death as the result of profligate spending, poor execution (floor displays were too small, too dirty due to choice of material and not bright enough), an inept and bloated management team, corporate arrogance and an amazingly negligent and gullible board of investors who sycophantically roasted marshmallows and made s'mores side-by-side with company management while gathered 'round the bonfire of their invested cash.
you are right on--but you forgot about the big problem and it was Mike Ribero the CEO of Reactrix. He had no vision, no leadership and loved to spend the VC cash on himself. Four Seasons stays, first-class plane flights, expensive meals...
The Reactrix board of directors were bamboozled by Mike Ribero.
Post a Comment