Posted January 4, 2013 / As seen in the Pittsburgh Business Times, Malia Spencer, Reporter
Brunner Launching Spinoff Based On BHiveLab Experiment
Pittsburgh – January 4, 2013 – Brunner Inc., Pittsburgh’s second-largest advertising agency, is spinning out a two-year-long experiment into its own company.
The new company, BHiveLab, will focus on work in the mobile and digital space, developing its own digital platforms and incubating other startups in the sales and marketing space.
Scheduled to launch Jan. 3, it initially will be housed in the Brunner offices downtown with 15 full-time staff members, said Rick Gardinier, chief digital officer at Brunner and head of BHiveLab.
The new team’s leadership is from Brunner’s interactive and digital team, and BHive, along with its parent company, are hiring at all levels, Gardinier said.
In the beginning, Gardinier, who has been with the agency for 13 years and has a background in computer science, said he will split his time between Brunner and BHiveLab.
“Part of this is to break out of that work-for-hire paradigm and find other ways to create value for businesses and revenue for us,” Gardinier said. “The other aspect is retention. We have a lot of tech talent, but the Pittsburgh startup community is vibrant, and there are a lot of options for people. If you are in to the cutting-edge technology, we want to provide a place like that for our folks.”
BHiveLab started within the agency as an experimental lab two years ago that provided a way for staff to stay on top of the rapidly changing communications technology before Brunner’s clients asked for them.
Since the experiment began, the agency has invested about $500,000 in the lab through in-kind prototyping work and helping Brunner clients explore emerging technology.
“We found we were getting traction, and clients wanted to do projects with us,” Gardinier said, but the lab wasn’t set up quite right to follow through. By spinning it out into a for-profit entity, that problem is solved.
In fact, the new company is launching with significant revenue, in the high six figures to low seven figures, Gardinier said, declining to give an exact amount. He said the company could generate more than $1 million in revenue in its first year.
The first project to launch with the new company is a platform that Gardinier describes as Spotify (an online company that offers streaming music to members) for recipes. The product would be pushed to consumers, with a white-label version for food marketers.
Another product avenue the company is exploring is developing an easy-to-use platform called Objectify that would allow brand managers or consumers to take advantage of the growing number of products we own that are equipped with sensors and other technology.
For example, Gardinier said, “If you have a wine cellar and you want an easy app to tag all the wine with a bar code or RFID tag to connect those bottles, this platform would allow you to enable that.”
In terms of the incubation element of the new venture, Gardinier said he sees a place for BHiveLab to fit into the growing Pittsburgh startup community by focusing on marketing and communication technology development. “It’s a vibrant startup community (and) seems like in the next few years it will evolve,” he said. “We want to be part of the momentum and want to play a leadership role in that community as well.”
In exchange for an equity stake, BHiveLab expects to offer startup companies its technical and creative, marketing or executive expertise in addition to space. Gardinier said the company is looking to test the incubator model this year with two or three startups. At some point, the model could evolve to include capital investment.
With a nod toward incubating startups, BHiveLab joins the growing number of groups and companies in town that are working to help nurture entrepreneurs and their ideas. In 2013, The Hustle Den, an incubator run by the nonprofit Thrill Mill, is opening in East Liberty. There’s also Innovation Works’ AlphaLab on the South Side, Carnegie Mellon University’s Project Olympus and a number of co-working spaces aimed at startups such as The Beauty Shoppe and StartUptown.
For Michael Brunner, CEO of Brunner, spinning out BHiveLab was the natural next step in the experiment. The agency has about 200 people, he said, and it couldn’t be as agile or nimble as needed. Additionally, with people doing double duty at the lab and in the agency, the lab projects didn’t receive the focus necessary since client work was always more important.
“You can’t do something halfway,” he said of the need to spinout, but noted there will be interdependence between the two entities.
To view the article on the Pittsburgh Business Times website, visit http://www.bizjournals.com/pittsburgh/print-edition/2013/01/04/brunner-launching-spinoff.html?page=all.
Brunner (www.brunnerworks.com) is a $220 million independent advertising agency with more than 200 employees in offices in Pittsburgh and Atlanta. The agency provides a broad range of services, including brand strategy, research and planning, advertising, digital, public relations, direct and social media, as well as high-volume, quick turnaround print, digital and video production services through B*WORKS. Additionally, Brunner operates BHiveLab (www.bhivelab.com), a fully functioning innovation lab dedicated to finding creative ways to use technology and emerging media to engage the on-the-go consumer. The agency’s three units serve a wide variety of leading consumer and business-to-business brands, such as Bob Evans, the Cub Cadet brand of outdoor power equipment, CONSOL Energy, Eaton Vehicle Group, multiple GlaxoSmithKline brands, GNC, Heinz, Huffy, Philips Healthcare, PPG Industries and YellaWood pressure treated lumber.