Netgraphe, Inc. (WWW)
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Inc. - dominant in Quebec in the employment, dating service, automotive services and
looking to replicate their business model with other websites
In February 2003, Bruno Leclaire was appointed President and Chief Executive Officer of Netgraphe inc., one of Quebecs and Canadas leading provider of e-commerce services, online information, communication, and IT consulting services, with its CANOE network and related Web sites Webfin.com, Jobboom.com, MatchContact.com, Autonet.com, as well as its subsidiary firm Progisia Informatique.
Bruno Leclaire is a graduate of the Université de Sherbrooke with a B.Sc. in Computer Science. In 1988, he joined the IT consulting firm SHL Systemhouse Inc. at the entering level of Computer Programmer. Within a few years, Bruno Leclaire was promoted to the position of Director of Systems Integration (the second leading officer in the Montreal branch), a position he held from 1994 till his departure in 1995. Mr. Leclaire then founded the IT consulting firm NeoSim with his associates. In 1996, he contributed to the creation of the new business venture Recru-Direct, which would become Jobboom a few years later. Netgraphe acquired NeoSim in December 1999, at which time Jobboom was founded. In the year 2000, Bruno Leclaire acted as Vice-President and General Manager of the unit Jobboom.com, overseeing the development of the Web site as well as managing the Sales and Marketing department.
Mr. Leclaire was appointed President of Jobboom in February 2001. Under his strong leadership and remarkable creativity, the company embarked on a new era of extraordinary growth, both in terms of its sales revenues and the ever-expanding sophistication of its services. Between February 2001 and February 2003, Jobbooms sales revenues tripled. While in 2000 its profitability was at the break-even level, Jobbooms profit margin rose to 40% in the first quarter of 2003.
In February 2003, Bruno Leclaire
took over the leadership of Netgraphe.
CEOCFOinterviews: Mr. Leclaire, please tell us how long youve been at Netgraphe and give us a little background on the company?
Mr. Leclaire: I have been here for about four months and what we are aiming to do is continuing to develop new streams of revenue. A week after I was appointed, we started the STAR ACADEMY project, which was a big television and web success in Quebec. With that project, we sold content packages on the web. The people went to our site, and could buy a fan club type package. They saw some exclusive videos at the website for free, but had to pay to access other videos, the forums and the chats with the stars from the show. The business model for that project included also advertising revenue. We are trying to replicate that success with other television shows and we are trying to find exclusive content that we can sell on the web. Our strategy is to ultimately have sites that are partly free, sponsored by the advertising, and partly paying.
CEOCFOinterviews: Is the STAR ACADEMY strategy something that is new to the market or is that something that people are doing and you are replicating?
Mr. Leclaire: The
STAR ACADEMY format is fairly new in North America. At the end of the show, people can
vote to save someone from elimination. I believe it was a first to offer a paying vote on
the web. The voting and the concept of accessing forms etc., for a charge, is new.
Mr. Leclaire: Our technology is very interactive. We know quickly when people dont like what we do: they send us emails. We can gauge easily how things are going. When STAR ACADEMY started, we received tons of emails saying that it was inconceivable to sell content, and why do we have to pay to vote and stuff like that. We had to be proactive and explain our position, which was that the technology is expensive and we have to pay for it. Further, there is no reason why a vote on the web should be free whereas it costs one dollar through the phone, which uses a technology that is a lot less expensive. As trailblazers, you sometimes have to make choices that people initially dont like. After a while it is accepted and we start from there. We also offer paying votes for another television show, a reality show and they pay one dollar. There is a lot of interaction and we try to make the best of it.
CEOCFOinterviews: Do you see a trend in the industry for paid content?
Mr. Leclaire: Definitely! Definitely! I think there will always be free content but that the advertising will change a little. We have seen companies that were not going to survive without advertising. We have to share the available advertising dollars with all the media. On the web, it is easy to create inventory to sell advertising; there is a limit however to what can be sold. To survive we must find other ways to add revenue. I think that advertising will be 50% of our revenue and the other 50% will come from selling content. We will not achieve this balance in one month, but over a couple of years, Im sure our business model will change and adapt.
CEOCFOinterviews: What other ideas do you have going forward, and how do you plan to continue to work on the ideas you have already?
Mr. Leclaire: We are looking at the assets that we have. For example, at Netgraphe we have Jobboom, which is a very profitable site and we dominate the Quebec market for employment; it is a site where you can post jobs. Our model works pretty well in Quebec but we are not present in the rest of Canada, so one of my priorities is to attack the rest of Canada with that product. The same thing with ReseauContact, in English it is MatchContact, it is like a dating site, and we dominate the market for that in Quebec as well. We are looking for a strategy to expand the rest of Canada in this area too. There is no reason why this system wont perform as well in the rest of Canada as it does in Quebec. Our Autonet site, which is specialized for automobiles, is relatively strong in English Canada, but it is not really present in Quebec, so we want to expand that in Quebec.
CEOCFOinterviews: Other than the language, is there anything else you need to do to expand into English Canada?
Mr. Leclaire: It is more than translating; there are cultural issues that need to be addressed. To have the same success in English Canada as we do in French Canada, we need to adapt our products to the different culture, the different expectatons and needs as well as to a more competitive environment."
CEOCFOinterviews: What is the competition like and where do you stand in the market place?
Mr. Leclaire: In the Quebec market place we are second behind MicroSoft Corporation (MSFT). But you must understand that with MicroSoft, if you type in a wrong command, you will end up in the MicroSoft search engine. I think MicroSoft will probably stay #1 because of that. They also have updates through windows which make it almost impossible to get ahead of them. In English Canada, we are ranked sixth and there is an opportunity to move up. But we also have competition from the American sites, which less the case in French Canada. Our strategy is to build partnerships with other groups to get exclusive content.
CEOCFOinterviews: How do you get advertisers?
Mr. Leclaire: What we see changing are the simple banners. We are trying to find new ways to advertise. Key words in search engines are beginning to pay off in revenue. It is very targeted and more expensive, which means more revenue for us. The key is to multiply the revenues by finding new ways to advertise.
CEOCFOinterviews: What is the financial condition of the company?
Mr. Leclaire: We expect to deliver a net profit by the end of the year, which is an amazing improvement over the losses in the tens of millions of the past few years. In the first quarter of 2003, we did $44,000.00 dollars operating profit. Our net loss was around $100,000.00. We are getting close to break-even.
CEOCFOinterviews: Can you give us a breakdown?
Mr. Leclaire: Netgraphes revenues are roughly split in three equal thirds between advertising and general content site revenues, specialized site subscription revenues and IT consulting revenues.
CEOCFOinterviews: Will you tell us about the consulting part of the business?
Mr. Leclaire: We have approximately seventy consultants whose services are sold to large technology and financial services companies, such as Standard Life. These are technology people that are either working on specific contracts or as part of global project which we manage for the client.
CEOCFOinterviews: Why are people coming to you for that, and what sets your people and your service apart from the others?
Mr. Leclaire: It is our expertise and our track record, and our adaptability due to our smaller size. We have various experts in different areas.
CEOCFOinterviews: Is the trend toward outsourcing and technology as strong in Quebec as it is in the United States?
Mr. Leclaire: Yes,
it is strong, and we want to get involved in the outsourcing market. The firm now is too
small to do big outsourcing contracts, but we can do small contracts. We have many things
Mr. Leclaire: What potential investors should know about Netgraphe is that we keep developing new types of revenues. I think we can replicate the Star Academy model for our other sites. This will increase our profitability significantly. We are dominant in Quebec in the employment, dating service, automotive services. We are looking at real estate as well and there are several other opportunities for expansion. Our main business sectors are very profitable and with the coming on-stream of new revenue sources, we should soon be profitable in the area of content as well.
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