Here’s a business sure to have its ups and downs: The Elevator Channel, an advertising, news, and entertainment programming network running only on video screens it places in elevator cabs.
The Elevator Channel is the fourth start-up for chief executive officer and founder C. Rudy Alexander, who now lives in the Charlotte area full time.
“I’ve been in technology for 20 years and build companies around the world, in Europe, Asia, and North America,” Alexander tells Local Tech Wire. “But I’ve kept a home at Lake Norman and always intended to come back here and build a business.”
Alexander says conversation with his neighbor and co-founder, Dr. Thomas Wilson, a physician, led to The Elevator Channel. “We sat around coming up with ideas over a couple of bottles of wine,” he adds.
After “doing a bunch of due diligence on the industry,” Alexander and Wilson created the company, funding it themselves with help from friends and family. They have put in $3.2 million since launching The Elevator Channel in 2001.
The company seeks an additional $3 million from investors to complete installations under current contracts and chase new business in new markets.
The young company already has 24 employees in a large, 8,000 square-foot office in the Design Center of the Carolinas. Alexander says the company will exercise an option to increase that to 11,000 square feet March 1.
In 2003, The Elevator Channel did its first installations. It installed flat video screens and speakers in multiple buildings in 2003 and has contracts with Bank of America, Cousins Properties and CB Richard Ellis in Charlotte. Those companies have 4,385 buildings under management with 40,000 elevator cabs.
The Elevator Channel currently has screens in elevators in seven Charlotte buildings. The company made $133,000 in net revenue last year and projects profitability by the third quarter this year on revenue of $4.4 million. Current advertisers include local restaurants, the Girl Scouts, service and temporary agencies and a spa.
While the company is only operating in the Charlotte area presently, it plans expansions to the Atlanta and Dallas markets by the end of the year.
“The revenue scales up to $45 million a year when you add Atlanta and Dallas, which are much bigger markets,” says Alexander. Those markets also generally command higher ad rates than Charlotte. “We’ll be able to get a premium rate in Atlanta and Dallas as opposed to Charlotte,” he says.
The company charges 7 cents an impression in Charlotte. The flat video screens that carry advertising and news are targeted directly to buildings’ tenants and visitors. The screens include a camera that counts the actual number of viewers for each message. “That information is time and date stamped and relayed to our system each night,” Alexander says. “We bill on actual viewers.”
The patented system for giving advertisers the exact number of people who view the screens is one thing that differentiates The Elevator Channel from its sole competitor, the Captivate Network of Westford, MA.
Captivate’s current product does not show video and uses a somewhat different business model. It charges building companies $8,000 to install its devices in elevators and $100 monthly fees. The building management companies then receive the ad revenue. Captivate has installed more than 4,200 flat screens in 400 U.S. and Canadian buildings.
“We wanted to be a media and advertising company, not just a technology company,” Alexander says. He compares The Elevator Channel to local radio stations. “We pay for installation and pay a rental fee for the space, then get the advertising revenue.”
Alexander says the cost of installing The Elevator Channel’s flat screens has dropped 62 percent since the company’s inception because the cost of the components has fallen. The devices were intentionally made easy to install and remove for updates, Alexander says.
Pundits are sure to pounce on advertising invading once private spaces such as elevators, restrooms and taxicabs. But Alexander says surveys conducted by both the building management companies and The Elevator Channel show 97 percent approval ratings.
“We’ve had a few complaints about specific ads,” says Alexander, “but we get feedback from the building managers that people are beginning to rely on them for information and entertainment throughout the day.” The screens have a “CNN look,” he says, and carry reports specific to buildings and the region, from weather reports and news bulletins to building fire drill information.
The company also provides 30 percent of its space to free advertising for a woman’s healthcare and the Community School of the Arts for children, Alexander says. “It’s part of the vision I had from day one. It’s the right thing to do. And I don’t think you could do business in Charlotte without community involvement.”
Alexander says he expects the company will “generate a lot of exit strategies. It throws off a lot of cash and the margins are good.” He says whether it’s a merger, acquisition, initial public offering of stock, they expect it may happen as soon as 2006.
Charlotte companies wanted
The N.C. Council for Entrepreneurial Development has extended its deadline for companies to present at its Venture 2004 conference to Feb. 5 and seeks more Charlotte companies.
The Venture 2004 selection committee seeks high-growth companies from an array of industries and stages to present to hundreds of venture capitalists who attend the conference.
So far, End II End Communications is the only Charlotte firm slated to present. The conference is held April 27-28 at the University of North Carolina at Chapel Hill’s Friday Center.
Argus Search moves
Argus Search has relocated within Charlotte to newly-refurbished offices in the historic Tompkins Toolworx Building in SouthEnd.
It joins Your General Counsel, Imprimis and the Business Innovation and Growth Council in a “corporate dorm” arrangement, which allows each firm to share infrastructure costs while maintaining individual offices.
Argus is a pioneer in outsourced recruitment services, as well as a provider of traditional recruiting services. The company has a combined 32 years of recruitment expertise in financial services, information technology, logistics, supply chain, human resources, sales and professional services.
The Elevator Channel: www.elevatorchannel.com
Venture 2004: www.cednc.org/venture
Argus Search: www.argussearch.com