Internet Securities Case
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Internet Securities Case Company Background Founded in 1994, service launched in June 1995 Provides hard-to-find financial, business and political information from emerging markets to business professionals Company Background Subscription based $250/Month/User Web delivered Snapshot 1998 650 Institutional customers 25 emerging market countries China, Russia, India, Argentina, many more.. 90% retention rate 175 employees 18 offices around the globe Industry Background Late 1990s – Market for business information undergoing significant and rapid change Internet as catalyst Dominant players Emerging players Reuters, Dow-Jones, D&B Specialized terminals $1,000/user/month 3,000 online financial information companies in US alone Why the change Barrier to entry: Technical – Proprietary networks employed by dominant players no longer necessary Growing Niche Competition for generic business and financial info very fierce Emerging markets represented a growing opportunity Initially too small for dominant players to deal with Many technical barriers Creating the Business Concept Providing hard-to-find financial, business and political information from emerging markets to business professionals in developed markets as well as emerging markets Creating the Business Concept Developing the technical infrastructure Bootstrapped Technical challenges in emerging market locations Backward integration in Poland Creating the Business Concept Contracting with providers and developing content Complex contracts Changing market Cost model: Paid providers 15% of subscription revenues attributable to the source Accounting for this Selling the service to customers Customers in developed and emerging nations $250/Country/User One year contracts, paid up front Building the Organization Initial organization small and simple Early efforts at organization: 1. Financial controls Budgeting 2. Most basic form of control IT Systems Growing complexity Maintaining control and quality in increasingly autonomous offices Sales Dealing with business and organizational complexity 20 (2/96) – 30 (6/96) – 120 (9/96) – 175 (6/98) Building the Organization Creating a formal organization Initially along functional lines Later along geographic lines Template for organizations within each country Current Issues Growing Competition Established players Other upstarts Incremental Model Product “lines” Advantages Disadvantages Constraints People, not capital Questions to Ponder May see some of these on the exam 1. What competitive threats do you see in the future and how can ISI mitigate these? 2. What organizational challenges does the firm face in 1998? 3. What advice would you give the founders as they attempt to build their business?
