More than five years ago, Doug Fieldhouse took over a struggling provider of prepaid long-distance telephone service and discovered that the company was sitting on a killer app: a unique way to identify and virtually eliminate fraud in "card not present" transactions over the phone and the Internet. Vesta Corp. is now a leading provider of stored-value sales, service, and infrastructure in the United States.
President and CEO, Vesta Corp.
FROM DOUG'S ORIGINAL ENTRY:
Tell us what you do (or what your team or organization does) and the specific challenge you faced.
When Doug was appointed president and CEO of Carrier Services in May 1997, his given task was to shut the company down. It was under-performing in selling prepaid long distance under its own brand, 1-800-PREPAID. It was a highly commodified market plagued with low margins and high risk to the vendors. Doug convinced the Board to give him 90 days to first assess the company for hidden value, and he quickly found that it had a gem—Carrier had developed a unique approach to improving virtual commerce. At the core of its process was its ability to identify and virtually eliminate fraud in card-not-present transactions, such as over the phone or via the Internet, while radically improving customer relations. It was buried, almost an afterthought, lost in the failure of the company. But Doug saw the enormous potential of the combination of bulletproof fraud prevention and multiple payment channel options for customers—particularly as virtual commerce became more widespread—and staked the company on it. Unless Doug found an immediate way to translate this expertise to the market, though, Carrier Services was dead.
What was your moment of truth?
Doug recognized that large telecommunications companies were struggling to manage their prepaid long distance (and, increasingly, wireless) accounts. High acquisition costs, skyrocketing churn and—above all—the threat of fraud were alienating customers and eroding their margins, making it a losing marketplace, despite its huge potential for growth.
But Doug didn't just see an opportunity in solving prepaid telecommunications.
He realized that it was a short leap from replenishing and managing accounts based on minutes to those based on money.
Doug saw the power of using a common device—such as a wireless phone—to the success of mobile commerce in the U.S.
At that time, the idea of "stored value" accounts focused on plastic cards—following in the proven model of the credit card. But Doug realized that credit cards represented the old economy.
Doug saw the coming evolution to more fast, on-the-go, micro-transactions—such as for coffee, or parking meters, or toll bridges—that required instant, convenient access to a protected account.
And that's where he saw Carrier fitting in. As the one-stop "fueling station" for stored value accounts, particularly those accessed through a mobile phone.
What were the results?
Today, Carrier Services is known as Vesta Corp, and it is the number one provider of stored-value sales, service, and infrastructure in the U.S. The company is now profitable, employs more than 350 people, and commands more than 50% market share.
Vesta works with virtually all of the top telecom carriers to initiate, recharge and manage their thousands of prepaid long distance and wireless accounts.
Vesta is also working with other companies to tap into the teen market—hooked on their mobile phones & lacking traditional payment methods—to make e-commerce a reality in the U.S.
What's your parting tip?
Sow the seeds of success in failure.