Mediapike - A Corporate Analysis
By: Patrick Flaherty
Mediapike David Cohen and Evan Gellar were tired of VHS tapes and, in general, were sick of not getting the media that they wanted when they wanted it. This was enough frustration for a brilliant
Mediapike David Cohen and Evan Gellar were tired of VHS tapes and, in general, were sick of not getting the media that they wanted when they wanted it. This was enough frustration for a brilliant idea, an idea that turned into Mediapike. Mediapike was a participatory network of digital media-on-demand systems for broadband consumers. After a successful technical trial at Brown and no more private investors, it was time for David and Evan to decide how to make the business a commercial success and raise $6 million. Assuming that they were going to proceed with Mediapike for the time being, they would need to not only raise money, but to spread their name, hire employees, and purchase all of the equipment. One way to spread their name would be to get universities to try it out, preferably smaller universities both to make the marketing easier and because they are likely more willing to give it a try. Mediapike has the potential to help university technology departments, which in turn could attract more students and raise its credentials. Since David and Evan are ivy-league, young, male students, and the marketing/business world requires diverse knowledge and backgrounds, the two entrepreneurs should look towards finding older, non-ivy league, and experienced employees. This helps to appeal to not only investors but to the universities themselves. The main focus for David and Evan is the money situation. It was predicted that each undergraduate is worth $60 per year, and that forty universities were going to be interested in the services. Another source of great revenue was also predicted to come from online promotions and inter-university advertising. With all of these high hopes for the success of Mediapike, the root of the problem was that the revenue was just not going to come soon enough. They would be over $8 million in debt before making a profit halfway through the third year. What did the venture capitalists think of Mediapike? Well, it was estimated that college students were online for 15-40 hours per week and that they were the biggest age group of online spenders. The internet, in general, was still a huge hit and, as technology would continue to grow, it would continue to be a hit among college students. Were these statistics and the company’s money-making potential convincing enough for the investors? Not quite. Concerns were focused around the great responsibility placed on the universities themselves to handle the services. Were they capable? Another issue was that college students are, really, so young and unpredictable. Were they reliable? A final concern was whether or not the technical trial at Brown was a universal sample. Would it work on other campuses? Many investors, without a doubt, set out to talk to technology advisors and deans at several universities to find out firsthand what their takes are on Mediapike. While the idea for Mediapike is a good one, as most innovative ideas are, it is unfortunately unrealistic to raise the money needed. The start-up costs and predicted debt are just too much to sustain. I would suggest possibly selling the idea to a larger corporation. It is also possible for David and Evan to still be involved in the service even if they don’t possess complete control. Unfortunately, the transition from idea to functional business is rarely as successful as young entrepreneurs would hope. Patrick Flaherty
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