ISE 2017: STRATACACHE CEO Riegel Forecasting $1B Annual Sales By End Of 2018
February 9, 2017 by Dave Haynes
Chris Riegel, CEO of STRATACACHE and aspiring conquerer of all before him, is at ISE this week and did a sit-down talk Wednesday at the Digital Signage Summit put on by the German firm invidis.
Riegel and I have been trying, and failing, at syncing up a time to talk and do a podcast, so this presented an opportunity to hear his take on what’s happened in the wake of acquiring Scala and, more recently, Real Digital Media.
He told interviewer Florian Rotberg of invidis that with the most recent acquisition the headcount at STRATACACHE is just under 400 people globally. “We’ve grown into what I would call a pre-eminent retail digital execution company, so we service large retail, large QSR, large gaming, large banking environments. Anywhere where you’re trying to put a digital experience in retail to influence customers decision. We’ve grown that practice through both organic growth, as well as acquisitions coming from PRN, to really focus on that retail sector. Ultimately, from a brand perspective, brands spend just over a trillion dollars a year globally, trying to influence the consumer, be it media, be it advertising, be it other things.”
The company is doing about 75% US and the rest Europe and elsewhere, with Scala via its reseller network creating a much broader global footprint.
Riegel said the PRN and later the Scala buys (the latter was not a full buy but more of a majority takeover) made sense to him.
“I think that if you look at PRN, if you look at Scala as assets, both were tremendous companies, and in both cases had fallen under management that didn’t know what to do with them, did not have a vision for the future,” Riegel said. “So when we come in, we look at finding good asset, being able to turn, with PRN we’ve increased sales at PRN 400% since the acquisition. The PRN acquisition was capital positive for weeks, and it didn’t take a lot of things to solve it. Technicolor, the parent company, didn’t want to be in that business anymore.”
“On the Scala environment, Scala had had some challenges with the board, investors level, where there was just not decisive leadership, not a direction, not a desire, to really fight it out. In our acquisitions, seeing what that asset was, we looked at ourselves as very valuable investors, in going in and being able to buy companies that are great assets, great businesses, that just needed focus, just needed attention in their markets.”
Riegel said the multiple CMS situation he’s bought his way into is workable. “Today we have three flagship products. We have our ActiVia product, we have the Scala product, I think you look at STRATACACHE in the future as being a house of multiple brands. Not unlike Toyota, or others where you might have a Lexus brand, a Toyota brand, a Scion brand, you can have a solution provider, a solution platform that has multiple different value propositions, and multiple features with it.”
“I think there are pieces from the different cores,” he aded, “that are applicable in the STRATACACHE environment with our ActiVia platform, very Linux-centric, or Scala which is Windows-centric. So we are able to populate some of our DNA into that environment. I think you will see more of a cross-pollination, but each of the products that we own have capabilities that are feature sets, there are unique points for any markets that may continue to apply.”
He said STRATACACHE and Scala are the prime brands and, unless I missed it, did not reference Real Digital Media. “Within the US and North American markets, we’ll continue to practice with STRATACACHE and Scala. Outside of the US, it’s principally Scala from an execution perspective. But we’re building in all of the managed services.”
“I think in this industry, too many people in this industry look at the technology markets, that’s really services business, the technology is the razor that sells the blades on the services side, so we at STRATACACHE have operations systems for customers, we are managing those networks, corroborating those networks, doing all of the heavy lifting in the background. Customer on the brand side doesn’t want to buy a piece of technology and have to run it themselves, they don’t have that capability. So the real strength behind the business is being able to build those operational services, and keep growing those globally.”
Rotberg asked him about whether the turnkey services angle leaves room for companies like systems integrators. “There’s certainly enough air for system integrators. The market is under assault from two areas. You have on one side, Adobe and Google coming from the software only side. On the other side we have the Koreans, LG and Samsung, that are trying to take all value out of the market by compressing software and hardware into a single device. You have to drive down that services model in our business to be able to survive and be able to compete in that environment.”
Riegel said the company as a whole did just over $500 million in sales in 2016, and expects to be at a billion by 2018, and said that will happen because of the size of enterprise deals that are out there now.
“Five years ago, you would see a big project that was a $10 million project Two years ago, that was a $200 million project. I’m now seeing $750 million and billion dollar projects on retail brand activation.”
“You’re seeing,” he explained, “very very large environments, where you have the top 20, top 50 brands on a global basis that are saying – the brands are understanding that mobile and social are not necessarily as effective as they might have thought. Social, especially, is being seen in many of the markets in the US that the agencies were gaming the customers, taking advantage of those customers. Digital retail is very pure, very simple, from the standpoint that the client can go see that activated in the Walmart, in the Tesco, where you see the impact that it has and you can track that on an immediate sales basis. … What did the sign do this day? What was the impact? So the transparency of that digital execution in that retail market is much better for that customer, and much more effective.”
“We work in some of the largest retail markets in the world, including Walmart. I know the transactional data going though that network. I get the question from a customer, “Well, does digital really work?”
“Well, I have Walmart and McDonalds, two customers, each with over 100,000 devices. I know exactly what the numbers are in terms of the digital having impact. Yes, it has an impact, two very large brands don’t spend that kind of money to do the activations that are necessary in those scales without having absolute proof in showing that it does work.”
Riegel had an interesting take on high-profile flagship stores, and the negative impacts whiz-bang technology like real-time analytics can have for retail.
“I think that analytics is highly important, but we in the industry have a fault of overselling it. We’re going to a retailer and saying, ‘I want to target based on gender at this city buying pattern.’ You’re dealing with a retailer that has a problem where the floors aren’t clean, the shelves aren’t stocked. We tend to go too far too fast. For that retailer, analytics will be a discussion about what insights it can provide and then how to move that footprint in terms of incremental. Retailers don’t typically make huge bold moves.”
Talking about landmark installations: “We have a practice within our digital team that we call ‘The Store of the Now.’ New York is great, but there’s one New York. London is great, but there’s one London. You win or lose retail battles in the US in Topeka, in Amarillo, in the inner parts of the country that don’t have the great New York experiences that are supported by a population of 20 million people in the metro area.”
“The challenge is that retailers will see that flagship as the solution, when in fact it’s a tar pit, it’s a trap, where they feel like they need this great experience they saw in New York, but that doesn’t scale across the 3,000, the 4,000, 10,000 store networks. It’s really about having to execute incremental gains of that mass fleet. The scaled-down digital experiences that will still have impact, that will still move the needle. But then achieving a goal for that customer, for that retailer, influencing their customers.”
Smart, smart guy. And he’s not done with acquisition.
I love reading stuff that makes sense. I’m so tired of all of that technology fluff from over the last five years.