After two and a half years of development and a total investment of about $2 million, advertising start-up Big Moving Pictures was just about ready to start signing customers and generating revenue.
Then, in September of 2008, financial disaster struck Wall Street. It was right before the big unveiling of the company's product. BMP's potential customers--large consumer advertisers--lost their budgets. The best contacts at customer companies got laid off. The start-up found itself in a business wasteland. It was ready to go. But its pipeline to revenue had dried up.
It was a disaster for the company, but CEO David Knight (disclosure: a friend) didn't think it meant he had to fold up shop. To his mind, and those of his financial backers, the idea was sound; it's just that the timing had gone bad. Knight found his business in a unique situation that let him execute an unusual business maneuver: he put the company into hibernation.
Knight cut expenses to near-zero, convinced his creditors to cut the company a lot of slack, and stopped angling for new business. It was all to put the firm essentially into deep freeze while he waited for the economy to recover enough to be able to support his business.
BMP's business is placing ultra-large high-resolution video displays at airshows and similar events, and using those displays to show live footage from cameras mounted in and on the vehicles performing at the show (the ability to get permission to mount HD cameras on military aircraft is one of the company's competitive advantages). Wrapped around that unique video are interviews, pre-recorded features, and advertising, the source of BMP's revenues.
Before putting Big Moving Pictures on ice, Knight says he looked at the usual accepted alternatives, including raising money to bridge the recession. He said that would have been both difficult, dilutive to the employee shareholders, and pointless, since there was really nothing of additional value the company could accomplish without customers. He also looked at changing the business model radically into one that didn't rely on advertisers, but did not come up with a concept that made sense (although he is working on some ancillary video productions using his well-placed cameras).
How to put a business into suspended animation When companies start putting money back into advertising experiments, Knight is convinced, his business will again become viable. But as BMP was still pre-revenue before the market crash, he found himself able to simply turn off the lights without actually killing the possibility of turning them back on.
Here's how he did it. … Read more