By its own admission 5-year-old Zip.ca, Canada’s largest online DVD rental service, has some work to do. And it starts with grabbing consumer mindshare. Unlike its counterpart in the U.S., Netflix, Zip.ca (owned by Momentous.ca) remains relatively unknown, which is something the company is striving to change, says Curt Millar, chief financial and operations officer. He points to customer growth of 15% over the last six months as evidence.
And should digital distribution become a mainstream reality, Millar says Zip is ready to go and has had the infrastructure in place since the company’s inception. But if you’re an investor looking to get in on the ground floor with what is potentially the Canadian equivalent of the American phenomenon, you’ll have to wait; Millar says the company has no plans to go public in the near- to short-term because an economy of scale has yet to be reached. Zip has 60 employees and operates four distribution centres across the country. Millar, 38, has been with Zip since 2004 and has also had stints at Deloitte and Corporate Renaissance Group. We asked him six questions (and a little about vampires).
What is the greatest challenge currently facing Zip.ca and what are you doing about it?
Creating awareness of this service and our product offering in the marketplace. We’re still relatively new in Canada and the ability to reach out to every Canadian household and make them aware that changing the way they’re used to renting DVDs is even available, is our biggest challenge given the size of our company and the size of the Canadian market.
We’ve really focused on hiring and training people that are focused on customer service. And we’ve pushed that throughout the organization and it’s become a mantra for us. With that, what we’ve been able to get is word of mouth referrals — probably the most important part of our business — which is probably where half of our new customers come from. The other thing we’re doing is partnering with companies that are household names in Canada so we get that instant recognition and trust factor [such as Best Buy/Futureshop, Telus, Dell and Rogers; Zip.ca powers Rogers Video Direct and Canadian Business Online is owned by Rogers Communications Inc.].
Who else — person or company — do you feel is doing innovative work and in what way?
The company I find very innovative and I like what they’re doing and is also a lot of fun is Burton Snowboards. Traditionally, they were a snowboard manufacturer and saw the sport growing and really went after the market and grew it from pure snowboards out to all the accessories that go around the sport. And now that they’ve dominated that, they’ve continued to be innovative even as they’ve become a big company. They’ve also realized that it’s time for them to branch out and now they’ve gotten into sports that are complementary from a knowledge base [such as surfing].
How would you describe your leadership approach/style?
In one word, adaptive. I’m a firm believer that you need to find what works for your team and then go with that. And not everyone is the same so what’s going to inspire, lead, empower and motivate one person is not going to work for another. And you can be completely self-focused and say everyone’s got to adapt to me because I’m leading the charge, but I don’t believe that that’s the best way to spend everyone’s time and energy.
In an age where digital content distribution is growing, and where Netflix has achieved huge success, most recently with its Microsoft Xbox 360 partnership, how critical is it to Zip that you move into the same business in Canada?
It is critical in the long term. The growth around digital distribution will come. The question that no one has the answer to is when. When I joined the company four and half years ago I kind of thought, “This is going to happen any day now,” and here we are four and a half years later and it really hasn’t advanced all that much.
We’ve built out an infrastructure from day one that allows us to easily incorporate electronic delivery. We actually did some work with it last year by offering a test to our customer base (NHL games) and everything worked great. But our model is really offering tier one content around digital media for movies and … we couldn’t get that content so we got what we could. At this point the content is not quite ready to go fully down that path. …[Licensing issues in Canada are] still a big part of it but even if you look at the U.S. model the content that Netflix is offering is still not tier one, first-release movies. And part of that is the model of the video industry and how it’s evolved over its lifetime with different windows for different environments. And that’s a big, lucrative model to change and [the studios] need to make sure that they do it in such a way that preserves their investments. … We are constantly in discussion with different people to get [that content].
Given that public economic bailouts to private companies are a reality in many Western countries, is it fair for governments to also limit the compensation of executives at those companies?
I think it is. I think if your company is saying that you need to be supported by your government, which means by your taxpayers, then there has to be some strings attached to it. And if you believe in your company and in your future and that you’re going to be able to get right back on that growth path and that this will allow you to get there, then you should be willing to live within those parameters and get on board and get the job done.
You’re a fan of vampire movies and have had yourself photographed beside a life-sized cutout of Sarah Michelle Gellar from Buffy the Vampire Slayer. Does the recent vampire flick Twilight hold a candle to Buffy?
Twilight is a very good movie and Buffy the Vampire is a very good series because it lasted for quite a while and brought vampires back into the mix, if you will. Twilight is a fantastic movie based on the books — and I haven’t read the books, but my daughter has and really enjoys them — and I think one of the companies behind Twilight is a Canadian company, which is nice to see. But my heart is still with Buffy, although my wife has forced me to take down the picture that was in my office.