Big Companies Changing Everyday Life: Netflix

As part of our blog series, we will occasionally spotlight an exciting, fast-growing, or game-changing company. These businesses are working to disrupt their industries—in the best way possible.

 

If you’ve ever streamed a movie or television show online, you likely did it through Netflix. Headquartered in Los Gatos, California, this company was founded in 1997. Netflix offers a subscription-based streaming service, offering consumers a large library of films and television shows. Though Netflix has been around for over twenty years, its current form is relatively new.

Netflix began as a DVD subscription service. The idea was to bring the flexibility of a video rental store to the convenience of home; users would request films, which were then mailed to their homes. This rental by mail model was popular among American households, but Netflix truly changed the home entertainment world when it began to provide streaming services. In 2007, the company expanded its business with the introduction of streaming media, though it continued its DBD and Blu-ray rental service. The first of its kind, this streaming service became extremely popular; by January of 2006, Netflix operated in over 190 countries. The service is available worldwide except in Mainland China, Syria, North Korea, and Crimea.

Netflix continued to expand as a media company by entering the content-production industry. In 2012, the company debuted its first original series. Since then, it has continued to expand the production of both film and television series. Netflix released an estimated 126 original series or films in 2016—more than any other network or cable channel. In 2018, the company received more Emmy Award nominations than any other network, including HBO.

As of April 2018, Netflix had 125 million total subscribers worldwide. Around 57 million of those subscribers live in the United States, meaning around 20% of all Americans have a subscription. The company continues to break ground in the home entertainment and production industries, and we’re looking forward to see what they do next.

 

What’s Different About Today’s Biggest Companies

Today’s biggest companies aren’t the same as they were a generation ago, nor with a few exceptions were those companies the same as the biggest companies from a generation before that. And this is a sign of a healthy, dynamic economy. Fortunes are made by finding and creating the next big thing, not by entrenching in existing industries until their decaying utility makes the entire system collapse and reset. Nevertheless, it’s worth looking at the current-day behavior, effects, and larger consequences of today’s biggest companies.

A Conversation Starter

We recently heard an online interview with PJ O’ Rourke, economic and political writer, who was talking about the new, digital economy when he said:

“You think back 20-30 years ago and you think of the top ten companies and you knew them. You knew what they did; they made stuff. They provided services, and you used that stuff. They made Chevrolets. They made electricity. They made toothpaste. Now, you look at the top corporations and they make what?…Money. Money and trouble as far as I’m concerned.”

 

Marketing Today’s Big Companies

We’re not sure how much we agree with this view. As was also mentioned in the interview as part of the larger panel discussion: With Amazon, people like being able to buy things online and have them show up at their door step. It may be a different kind of service, but the digital economy delivers, in large part, digital services that make things easier, if the tech itself is complicated to understand.

On the other hand, it’s not entirely satisfying to say that appropriating and then monetizing the world’s social networks is just a different version of making toothpaste. So maybe here’s a better way to put it: We’re not sure how much we disagree with O’ Rourke’s larger point, either. And with this dueling perspective in mind, we wanted to take a deeper dive into how today’s big companies are marketing themselves.

 

Loyalty Marketing and Customer Success

If, like us, you keep tabs on trends in the marketing industry, you know that many of the buzzword practices currently include loyalty marketing and customer success. You have experts in the industry blogging about how companies need to understand the difference between customer support vs. customer success—with the obvious implication that many businesses need to put more emphasis on the latter. You have big-time digital marketing publications with articles discussing “how businesses can use AI tools to improve customer engagement. You have major marketing agencies, like rDialogue, out there talking about how loyalty marketing is “the root of their company.”

In turn, we wonder if, and how much, this new emphasis on businesses making a deeper connection with their customers is a reaction to the perception that the only thing “today’s biggest companies do is make money and trouble.” Loyalty marketing and customer success are more important than ever because being associated with a positive customer experience is necessary to reassure the customer that the company is offering any “real value” at all.

 

A New Generation of Socially-Conscious Monopolies?

What are the stakes if the new digital economy continues to churn out winner-take-all companies based on their unquestioned loyalty to their customers. Where does this path eventually lead us? Are we to believe that a new generation of socially-conscious monopolies is going to deliver an economic utopia? With the interconnectedness of customer networks and a business culture in which customer success is so deeply ingrained, will customers continue to have leverage if their success depends on a single company and for which they have no other reasonable choices? Or will the old rules of monopolies apply and loyalty marketing is just a Trojan Horse for price-gouging down the road? We noticed that Amazon Prime membership has gotten more expensive yet again, while you need to use more of their ever-expanding roster of benefits to make the higher membership fee worth the cost. Likewise, we’re skeptical that Facebook’s investment in network security and self-monitoring infrastructure (the one that took a big bite out of future profit projections and thus the company’s market value) was out of any obligation to their customer. Rather, it was to guard against governmental action that would change how the company was regulated, a potentially bigger threat to its bottom-line.

 

Big Companies Changing Everyday Life: Amazon

As part of our blog series, we will occasionally spotlight an exciting, fast-growing, or game-changing company. These businesses are working to disrupt their industries—in the best way possible.

If you’ve purchased something online in the past week, there’s a big chance it came from Amazon. This company now represents nearly half of all U.S. e-commerce sales, and more than 75% of U.S. online consumers shop on Amazon. The company was founded by Jeff Bezos in 1994, but it originally operated as an online bookstore. The website later diversified to sell video downloads and streaming, MP3 downloads and streaming, audiobook downloads, software, video games, and electronics. In its current iteration, customers can purchase and sell nearly everything and anything on Amazon—and its changing the way Americans shop.

Amazon did not expect to make a profit for four to five years after its rebranding in 2000. They experienced slow growth, causing stockholders to complain that the company was not reaching profitability fast enough. However, when the dot-com bubble burst, Amazon survived. The company eventually turns its first profit in the fourth quarter of 2001: $5 million on more than $1 billion. In 2011, Amazon had 30,000 full-time employees in the United States. By the end of 2016, it had 180,000 employees in the country.

In 2015, Amazon surpassed Walmart as the most valuable retailed in the United States by market capitalization, and it is the fourth most valuable public company in the world. It is the largest Internet company by revenue and the second largest employer in the United States. Amazon currently has thirteen subsidiaries, including Audible.com, Whole Foods Market, Goodreads, and Junglee.

So, why have we listed Amazon as an Upcoming Company? Because its innovations continue to change American life. Through services like AmazonFresh, customers can have groceries delivered to their doorstep. Through Amazon Video, customers can watch and stream thousands of movies and television shows. Users can utilize Amazon Drive, the company’s cloud storage application, or read any book on their e-Reader, the Kindle. This company developed Amazon Alexa, a game-changing virtual assistant and a step forward in smart home technology. Amazon continues to innovate, and we can’t wait to see their next service, product, or invention.

 

 

A Succinct Guide to Building Relationships with Big Brands

In a previous post, we discussed tips for working with big clients in B2B contracts. However, we need to cover the ways in which smaller companies should enter into these relationships and negotiations. Corporate companies and smaller, start-up-type businesses handle negotiations differently, so you should do your best to prepare for intense, ongoing talks. Here’s our advice for entering these relationships.

 

  • Develop personal relationships. Understand the role and function of the people you meet during negotiations and try to build personal relationships. This will allow you to cater your pitch to their individual interests, highlighting one of the key reasons why working with a smaller company has advantages.

 

  • Be clear and forthright. Focus your pitch on where you can make the most impact for the larger company. Utilize quantitative data to quickly and succinctly tell them that utilizing your services will save X money, X amount of time, or generate X measurable PR benefits. Speak their language and use empathy to make a big impression.

 

  • Value your work. You may be tempted to cut your price in order to snag a big client. In reality, these large clients are the businesses who can and should be paying more; they have the resources, and they’re going to take up a lot of your time. Don’t low-ball price negotiations.

 

  • Understand how your size works in your favor. Don’t change who you are or how your company operates to cozy up to a large client. In most cases, large companies are pursuing you because of the way small businesses operate. Delivering the goods on time and sticking to a budget are essential but remember to incorporate the personal touch you’re known for. Don’t posture your company to seem larger than it really is.

 

  • Find an excellent lawyer. Odds are that you don’t have experience in negotiating commercial contracts. Prevent yourself from getting pushed into a corner by hiring a good lawyer. This resource will tell you what’s normal, if you’re getting a good deal, and how to stick up for yourself when negotiations get tough.

 

Working with Big Companies: Essential B2B Tips

Working with large business-to-business clients is a demanding process and making the transition to serving large accounts can be difficult. However, businesses of every shape and size are beginning to work together—whether it’s to improve market reach or PR relations. Access to lending and a global talent market mean that your business may land a contract with a big company. If this happens to you, here’s what you need to know.

Big B2B will change your business. A bigger client means a bigger budget. The extra revenue may help to fund resources you need to go after other businesses (both large and small), so think of large B2B contracts as investments in the future of your company. Additionally, larger companies will often have people in place to make your job simpler. Prominent clients can dramatically raise your profile and working with well-known businesses can boost staff morale and aid in employee fulfillment. A big B2B contract will allow you to “plug in” to larger networks.

 

Your small size is an advantage. Though your company will benefit from big B2B relationships, the larger company will also benefit. They’ll get faster responses, fewer bureaucratic hurdles, and personal relationships to make the process more enjoyable. Additionally, your team will likely be able to provide the outside perspective creative services many big companies seek.

 

Understand the risks. Working with large clients is both fulfilling and challenging. When taking on a massive client, it is essential to recognize how the contract can negatively impact your business. See below for our complete list of risks.

 

  • If you lose a major client, it will take a long time to replace the revenue source. Additionally, losing big clients will often happen without warning, leaving you and your team scrambling to make up the cash. Be sure to maintain additional clients to safeguard against disaster.

 

  • They will be demanding, and large clients will generally have several checks on process and approval requirements. They’re going to use up a lot of your time. To reiterate: do your best to maintain additional clients for the duration of the contract.

 

  • Price negotiation may be out of the question. To that end, becoming reliant on a big client will leave you without bargaining power when renegotiating fees and retainer arrangements.

 

  • They can cost you money. You will likely need to hire additional staff and subcontractors. Additionally, meeting the expectations of a large, demanding client will increase workplace pressure levels.

 

While entering a contract with a large-scale company will, in most cases, dramatically change your business for the better, it is essential to consider every side and outcome of the relationship.

Verizon Communications

Market Cap: $200.9 Billion

Industry: Telecommunications services

Founded: 2000

Chief Executive Officer: Lowell McAdam

Employees: 155,400

Sales: $127.99 billion

Headquartered: New York, NY

 

Summary: Verizon Communications is a popular and well-known holding company which engages in the provision of broadband and communication services. The company provides wireless and wireline services. The wireless portion provides wireless communications services and products on both a post- and prepaid basis. This is provided to consumer, business, and government customers. Conversely, the wireless segment offers broadband video and data, corporate networking solutions, data and cloud services, security and managed network services, and both local and long-distance voice services.

 

Why you should care: Verizon currently ranks as the 18th largest country in the world. It is number seven in profit and thirty-one in market value. These numbers are incredible impressive for a company less than twenty years old. Verizon Communications is also leading the charge toward 5G communication services, which they plan to roll out in late 2018. With a safe dividend and a stable emphasis on technology, Verizon is an excellent buy for investors seeking long-term gains.

ExxonMobil

 

Market Cap: $344.1 Billion

Industry: Oil and Gas Operations

Founded: 1859

Chief Executive Officer: Darren Woods

Employees: 71.,200

Sales: $230.06 Billion

Headquarters: Irving, Texas

 

Summary: Exxon Mobil engages in and facilitates the exploration, development, and distribution of oil, gas, and petroleum products, operating through upstream, downstream, and chemical channels. Their upstream segment produces crude oil and natural gas, whereas their downstream segment manufacturers and trades petroleum products. The chemical segment offers and distributes petrochemicals. Founded by John D. Rockefeller in 1882, ExxonMobile is one of the most successful oil development and distribution companies of all time. The company is currently the thirteenth-largest in the world, number ten in sales, number sixteen in profit, and number ten in market value.

 

Why you should care: According to Bloomberg, an emerging shale oil producer is beginning to court ExxonMobil to invest in Algerian shale reserves. The producer, headed by a man named Ould Kaddour, encouraged companies to “come explore” while at the World Gas Conference in Washington. ExxonMobil’s participation in this venture could lead to massive changes in the shale oil market, as Algeria is a relatively “untapped” country. To that end, a federal judge in California recently dismissed a climate change lawsuit brought by San Francisco and Oakland against ExxonMobil. The company continues to drill worldwide and is understood to be one of the biggest contributors to global climate change.

 

JPMorgan Chase & Co.

Market Cap: $387.7 Billion

Industry: Banking

Founded: 1968

Chief Executive Officer: Jamie Dimon

Employees: 252,539

Sales: $118.18 Billion

Headquarters: New York, NY

 

Summary: JPMorgan Chase & Co. is a well-known financial holding company. It provides financial and investment banking services to people worldwide, offering a range of investment banking products in all major capital markets. JPMorgan Chase & Co. Advises on corporate strategy and structure, works on capital-raising in equity and debt markets, assesses sophistical risk management, partakes in market-making in cash securities and derivative instrument, and provides prime brokerage and research. The company operates through consumer and community banking, corporate and investment banking, commercial banking, and asset management. They are perhaps best-known for their mortgage banking, which includes mortgage origination and servicing activities and portfolios for residential mortgages and home equity loans.

 

Why you should care: JPMorgan Chase & Co. ranks as the third-largest company in the world. They are currently number ten in profit and number eight in assets. Consumers should care about this company because their activities in the early 2000s facilitated the 2008 financial crash. Then, in February of 2012, US Attorney General Eric Holder announced the National Mortgage Settlement, which fined JPMorgan Chase (and four other megabanks) a total of $25 billion. Allegedly, JPMorgan met part of its settlement burden by forgiving loans it no longer owned.

 

McKesson Corporation

Market Cap: $30.5 Billion

Industry: Pharmaceuticals

Founded: 1833

Chief Executive Officer: John H. Hammergren

Employees: 68,000

Sales: $196.5 Billion

Headquarters: San Francisco, California

 

Summary: McKesson Corporation is an American pharmaceutical distribution company. They provide health information technology, medical supplies, and care management tools. The corporation operates through McKesson Distribution Solutions and McKesson Technology Solutions segments. The distribution branch provides ethical and proprietary drugs, medical-surgical supplies and equipment, and health/beauty care products throughout North America. They also provide pharmaceutical solutions for biotech and pharmaceutical manufactures. The Technology Solutions segment provides software, automation, business services, and consulting to hospitals, physician offices, and imaging centers.

 

Why you should care: Despite being a relatively small company, McKesson ranks #10 in global sales and #5 in American sales. McKesson stock was recently (February 2018) declared the best stock to beat healthcare headwinds. The company’s size, dominating control, and ability to be a low-cost producer in a slim-margin industry allow it to endure hardships faced by other healthcare companies. McKesson Corporation is California’s second-richest company with nearly $200 billion in annual revenues.

Apple

Market Cap: $752 Billion
Industry: Computer Hardware
Founded: 1976
Chief Executive Officer: Tim Cook
Employees: 116,000
Sales: $217.48 Billion
Headquarters: Cupertino, California

 

Summary: Apple designs, manufactures, and markets mobile communication, media devices, personal computers, and portable digital music players. They help employees to work more productively and simply, aiding in creative problem solving, communication, and collaboration. Apple is the ninth largest company in the world and ranks seventh in global sales. It holds the number one spot in market value.

 

Why should you care: Apple is one of the most renowned technology innovators in the world, pioneering devices such as the laptop and the smartphone. Though it has yet to jump into the world of intelligent personal assistants (aside from the iPhone’s “Siri”), the company is doing extensive research on artificial intelligence. The next several years will see massive changes to the world of technology, and we foresee Apple at the vanguard.