Denver Startup Offers Outsourced Services To Create Vendor Margins
February 25, 2014 by Dave Haynes
I’ve loosely known Matt Krebs for a few months now, and he’s kept me informed here and there as he spooled up his start-up Creating Margin, an interesting little take on providing support services in the digital signage eco-system.
The Denver company is there primarily to take on things like the scoping, set-up and ongoing management tasks of digital signage networks, generally on behalf of vendors who don’t want to take on headcount themselves to get that work done. These small to mid-sized companies want the revenue, but not the overhead. So they’d pay the outsourced company X, and charge the end-user Y, and get their margin from the difference.
The notion here is that when a software vendor, integrator, deployment firm or whoever gets asked by a client if they can take on the ongoing upkeep of a network – like scheduling and distribution – they can say yes, and then turn around and get it done by Creating Margin.
I don’t know if this is entirely unique, but it’s not a model I know. So I asked Krebs to fill me in a bit more, by Q & A.
Q – So give me the 75-floor elevator pitch on Creating Margin?
Krebs: First off Dave thanks for an opportunity to speak with you. We really enjoy the content on 16:9 and think your honest commentary there, and advisory work at Preset Group, helps lend credibility to this industry. All good stuff, so thank you.
Creating Margin is a services-focused organization specializing in software configuration, creative design, content creation, project management, and digital signage advisory services. We have the advantage of using an agile business model and building unique teams for each project based on the requirements of our customers. Not maintaining an organization of employees allows us to offer services at lower costs because we don’t have to pay for brick and mortar offices, a bunch of equipment, or employee benefits. Our contractor team actually appreciates the freedom this allows them, and my ability to assemble a unique team for each project creates a competitive network that keeps everyone performing at a high level. I really think this is the future of “Gen Y” organizations because it’s truly performance based management.
Q – How did you idea develop and when did you hang out the shingle?
The idea for Creating Margin was formed while I was still at Four Winds Interactive. After returning to Denver from a year in Britain, I was speaking with people both inside and outside of FWi about the industry. I’ve always had an interest in understanding the big picture, so it was just a matter of time before I started my own company to fill some gap. From early conversations, it was clear that a services-focused organization that used contract (I prefer “project based” or “agile”) labor could really compliment the businesses of many software providers, their resellers and end users.
With a background in application development in the Four Winds product suite as well as partner development and training, I recognized that Four Winds’ powerful CMS actually creates an opportunity for specialized service providers; very few FWi customers understand how to use all of the capabilities of Content Manager. In most cases, investing in technical skillsets wouldn’t make financial sense. This realization was enough for me to take the leap and get started.
As it typically goes with a startup venture, the clients I expected to have didn’t work out, but we’ve been blessed to find opportunities in a variety of other places.
Q – What’s the marketplace void you’re filling?
We’ve all heard about that old theory of specialization/comparative advantage, but many companies need help in figuring out what they’re good at and what they don’t have enough time, money or talent to be good at. At Creating Margin we’re thankful that we don’t have to tell people what they should contract out. Customers inevitably provide that feedback, and either those customers seek us out directly or companies come to us to provide on-demand services for their end users.
Q – Why wouldn’t companies just have these resources internally?
Some companies can give this a try, and some may succeed for a time, but the reality is that often software companies have enough on their plate already. Over months and years, companies express what their priorities are whether they intend to or not, and lower priority departments see higher turnover, lower morale, and poor performance. This is where Creating Margin can say “just send us a portion of what you’re getting paid for, and we’ll provide top notch services when you need them.” Additionally, you think about certain proprietary tools or processes which require months of training to groom a capable team member, and the choice to outsource to a company that is already expert at those functions becomes an easy financial decision.
Q – What’s the breadth of services, and what don’t you do?
We don’t have our own software, we don’t have our own hardware. Through our contractor team, we can provide any service that you might require for your digital signage network whether that be the pre-installation advisory services, the up-front installation services, the ongoing content refresh services, or training and support for new team members or new application development.
Q – Do you also function as a reseller?
We’re exploring these opportunities, but in a way, speaking with software or hardware vendors serves my interest as a life-long learner. I think that the ideal advisory organization is one that knows the industry on a technical and personal (perhaps even “personnel”) level, and insofar as I can touch every product out there, my curiosity isn’t going anywhere! In the long term, I expect Creating Margin can make more money by providing top notch services than by pushing another product to market.
Q – How will you wall off different clients and their customers, so there’s no chance of material for retailer A appearing on screens for retailer B?
I realize you’re probably speaking at a technical level, so while cloud based solutions and managed services are an area that we’d like to serve, most of our customers are hosting their own content. It seems unlikely that we would lose track of content and have it be part of the deliverable for a different project.
This question could also be asked in regards to proprietary secrets. In this case, besides non-disclosure agreements, this problem is largely solved by the unique teams that we’ll assemble for each customer. While I do envision Creating Margin consolidating our teams over time, working with contractor teams will always result in a unique face for each project which has the advantage of silo-ing any proprietary information.
Q – What’s been the marketplace reaction to date?
I mentioned that our customers haven’t been who we expected, but the business is nevertheless building. Most of the people I talk to can easily see the value proposition, whether that be in providing local “boots on the ground” for their implementation, the advanced content creation and software configuration that they can’t find anywhere else, or an unbiased perspective for how their solution should look or function. As we continue to scale, in the next year or so we’ll probably be looking for an office space with a few hoteling desks and meeting rooms so that our teams have a place to gather and host customers.