Smart Business Magazine, Mar 2013

March 2013 Smart Business Indianapolis 15 I see a lot of companies and we were the same way doing a lot of things that were outside of the core he says If you think in concentric circles once youve identified the core we were two three and four jumps out in terms of concentric circles What ends up happening is it creates a culture where youre not winning youre not in the leadership position and you start to potentially lose some credibility with your retail partners because youre not coming to the table as the true leader In Coinstars two core businesses the company was the clear leader and Davis saw great opportunities if the company could leverage that take advantage and grow that circle The first thing we needed to do was gain alignment around the fact that we thought there was decades of growth in this automated retail space Davis says We did a lot of analysis and saw that there were all these macro trends around consumers not having time available Time starved consumers are comfortable with technology and they love to control their own destiny Coinstar also found that its retail partners could greatly benefit as well We concluded that this was a great space for us to be in and there was a lot of growth potential Davis says We thought of the category as the intersection between brick and mortar and e commerce Grow and innovate To build on the opportunity in that space Davis and his team started their new strategy by focusing on Redbox because it was a business with immense opportunity Coinstar had a joint venture with McDonalds on the Redbox business so its first step was to buy out the rest of the company We doubled down on Redbox Davis says At the same time we said Weve got to shift the focus of the company from all the growth through acquisition and instead focus more on organic growth Coinstar started a new ventures team and put leadership in place to start vetting ideas The company got ideas from venture capital firms private equity firms idea contests whiteboard contests and an inventors network We started getting ideas from all sorts of different pockets and corners of the country he says Once we saw ideas and thought this had some real potential this team that we put in place started vetting them Today Coinstar has eight new ventures on top of both its coin counting and Redbox businesses Six are organic and two are strategic investments We looked around as we focused on this automated retail space and there really werent a lot of people doing things in there that would be companies we would acquire so we needed to create the category on our own and weve had quite a bit of success at doing that Davis says The seeds are at various stages some are in their infancy with just a few kiosks and others we have multiples of hundreds The company follows a very similar launching process for each of its new businesses We go out and vet it and we look at the size of the category and see if we think that theres ways or an opportunity for a new solution thats more convenient and leverages what we know he says Then we go out and hire someone with deep domain expertise and give them a bucket of money that we tightly control and we put a clock on them to go out and prove the concept The new ventures start with one kiosk and are compared to Redbox and Coinstar in their infancy before being allowed to grow As they clear the hurdles they get permission and more money to go from three kiosks to 30 30 to 300 and 300 to 3000 Davis says The process Coinstar has made so successful is a result of having an innovative culture that breeds creativity You have to be pretty disciplined about creating a culture of innovation Davis says We really encourage people to try stuff The way we have managed innovation internally is we think really big We start small and once we land on an idea we scale quickly But if you fail you fail cheaply Thats what we have tried to do over and over again Under Davis leadership Coinstar has grown tremendously The company has more than 42000 Redbox kiosks and 20000 Coinstar kiosks Redbox recently celebrated its 10 year anniversary Our market share now is 10 points over the next closest competitor in the physical space Davis says That business at the end of 2007 was about a 500 million business and we are projected to be over 2 billion for 2012 The companys success in its two main businesses and its new ventures stems from maintaining an innovative hardworking environment Theres a certain paranoia we have inside the company and a need to constantly innovate and stay focused to deliver Davis says Thats the mindset that weve adopted across the company How to reach Coinstar Inc 425 943 8000 or www coinstar com Paul Davis left CEO of Coinstar Inc and Bob Mudge right president of Verizon Consumer and Mass Business Markets