Getting the Band back Together

The office is on Emery Street, which sounds almost quaint. Mostly only the old-timers remember it. This is where it all began. The dream, and, in the end, the nightmare. This is the birthplace of iXL, once the darling of the NASDAQ and one of the bellwethers of the so-called New Economy back – it seems like a million years ago now, doesn't it? – in 1999.

The Company That Overlooked Atlanta

In those heady days when Atlantans thought of the internet and dotcoms, they thought of iXL. They connected it the way they connect soft drinks and Coca-Cola. For hundreds of thousands of people it was hard not to. Every day as the city came to work and went home it passed under the watchful gaze of the huge iXL logo on the side of the headquarter building looming over the downtown connector.

Looking back now, iXL’s fortunes came and went almost as fast as commuters. But it's a new day. A sunny, unseasonably warm morning in May on Emery Street, in the 4th floor offices of the new incarnation of an old dream: Creative Digital Group (CDG).

It was giddy in those days on the inside.

Especially if you had a lot of stock

And sold before the fall.

Lessons Learned

"She fought for the right to love... In a city of violence and terror," reads the headline on the poster, above a buxom woman wearing a nightie and holding a gun. In the background two women are clawing at each other.

Maybe the poster is symbolic of something different now. Like trying to start a business from scratch in a slow economy. But there are more concrete things to talk about this morning.

Livingston and Brown show the reporter into an edit suite. The suite is arrayed with monitors and control boards and the architecture of high tech which, to the untutored eye, says little more than it's high tech. Livingston recognizes his audience. "It's digital, and it's beta cam based," he says, then pauses. "Put it another way, we can't compete in a world where we are dragging old equipment around."

It's a lesson Livingston learned the hard way.

When venture capitalists quit pouring money into internet start-up companies and the world of dotcoms began imploding, they dragged iXL into the black hole of vanishing fortunes. The stock that had peaked at $56 a share plunged to 53 cents by the time the company announced that it intended to merge with New York based Scient Corp. The number of employees at iXL, once as high as 3,000, was down to 1,000.

Livingston, who had gotten his start in the video business in television, then as Senior Vice President of Production for Brockway Direct Response advertising agency in New York, was one of the victims. He was laid off by iXL in late 2000. "Sometimes I feel like Joseph from the Bible being sold into slavery," he says, smiling.

As tribulations often do, getting laid off turned out to be a blessing. With a Macintosh computer, Livingston set up shop in his Acworth living room, operating as Creative Convergence. He kept clients, such as Chic-Fil-A and BellSouth that he had handled at iXL. And he realized how much the world had changed.

"I could do things on my computer in my living room that enabled me to compete with entire companies at a certain level of quality," he says. "It's like the old wedding photographer joke. The guy says, 'I can do that on my home video camera.’ Well, he can, but he can't."

"But, still, it hit home with me sitting in my living room, how democratized the video business is becoming. And it told me that we have to find a way to take this commodity service and connect all the aspects of it in a way that you cannot get anywhere else."

Another thing Livingston learned in the hard curve of iXL's rise and fall: "The internet was all about 1,000 solutions in search of a problem. Everybody was rushing to exploit the technology. But that's upside down. Our approach has to be to take a client's problem and solve it with the technology that fits."

Hit The Ground Running

At another end of the company’s 8,000 square foot space – windows overlooking the dizzying traffic of I-75 – Graphic Artist Forrest Brown is putting finishing touches on a project for BellSouth, an animated character advertising BellSouth’s high speed, DSL service.

The character, a creature with a head shaped like a computer screen and named "DS Al," spins and cavorts and dashes around in a :30 silent spot projected on the Jumbotron screen at Turner Field.

It took three weeks for Brown to complete the spot using computerized graphics that generate bones which make the Al move with human-like fluidity. In an adjacent suite, Editor David Sims is inserting commercials into tapes that play movies on Delta airline flights. Hundreds of dubs of the tapes are distributed to Delta's fleet around the world.

In yet another suite, sports videos are being compiled for interactive kiosks in the University of North Carolina's sports museum. An editor meticulously matches the action to a vast audio library of grunts and groans and ball-catching and body-smacking sounds.

Two floors down, in the office space occupied by the company that used to be iXL, but is now Scient Corp., CDG operates a sound and video studio where today they will tape a segment for Chic-Fil-A. They will take that shot and digitally insert the background of a convention.

Back on the fourth floor, Livingston and Brown show off the room they are most proud of: the company's video library. Row upon row of beta tapes line moveable shelves. The tapes contain 15 years worth of footage going back to the days before the company became iXL, and went public, and they were instead two companies – Creative Video and Floyd Design – that worked together.

"I don't know how many shots are in here, but it's at least a million," says Livingston, gazing at the rack of videos in neat rows of black plastic boxes. "I do know they're all indexed, so we can call them up instantly."

Because of the library, CDG can compile a 30 minute video in two or three days without having to go into the field. Although it won't be freshly shot, it will be freshly created on an impossible deadline. And the company is constantly adding to its video library. "We've got a crew leaving tomorrow to go to Pebble Beach to produce a video," says Livingston. "That's a tough detail."

Getting The Band Back Together

Three days later, on a Saturday morning better suited to golf, Barry Sikes sat down with a reporter and recalled what brought him back to a business that he walked away from so well heeled he spent 6 months on a 55 power boat with his wife, cruising the Caribbean and the East Coast.

He is a youthful and trim 49, tanned and relaxed, wearing shorts and sneakers. He is just back from another two weeks of sailing and fishing and playing golf in the Caribbean. One of the co-founders of iXL – with Bert Ellis – Sikes had returned to the role of Chief Operating Officer before he left iXL in February 2001, thinking he had departed on his own terms.

"I always wanted to have the financial option by the time I was age 50 to quit if I wanted to quit," he says. So he got there a little early. And now in life the toughest challenge he'd face would be trying to read a 7-foot, side-hill putt. That wasn't as tough as he thought. In six months, he had whittled his handicap to five, shooting par often enough to expect it. Another thing came with having honed his game: He was bored out of his skull.

And he came to the realization which, to an outsider, seemed like a no-brainer. When he was at the helm of iXL in the rip-roaring days, jetting around the country and the world to oversee 22 offices, he worked 7-day, 90-hour weeks. "I came to recognize," he says, "that I like to work." In fact, he LIVED to work. Another realization. “But that won't happen again," he says. "I've got my life in balance."

After Sikes left iXL, and moved back to his home town of Wilmington, NC, he watched iXL wane until the company merged with and disappeared into Scient Corp. last November. He stayed in touch with company executives with whom he remained on good terms.

"I told them if they ever considered getting out of the video business, to give me a call." The call came around the first of the year. Sikes immediately called his old partners – Jim Rocco, Steve Floyd, Richard Nailling – and asked them a simple question: "Do you want to get the band back together?" He laughs at the memory. "Of course they did." All they had to do was come up with the dough to buy the video operations of Scient.

"Fortunately, they were all in a position to do that," says Sikes. Other partners came on board. Livingston and Brown and David Kam, all of whom had worked at iXL or Creative Video.

Defying Trends and Expectations

While some may view starting a business in an economy that's iffy at best, as a risk, Sikes says Atlanta is a phenomenal city in the way it has defied national economic trends. The city has been in a 40 year boom.

"It's a big market, but it's a Southern town so it feels like a small market," he says. "People in Atlanta are what they appear to be." And, all over the city are little undiscovered, or little-known companies headquartered here who need video services. "Have you ever heard of Rock-Tenn?" he says. "It's a paper company. Last year it did $1.5 billion in business."

He and his partners have no desire to take the company public as they did iXL. "There will be no outside pressure, no having to answer to a bunch of different masters," he says, and you can see memories flash through his eyes. "And our owners and managers have realistic expectations."

Creative Digital Group, then, is almost the exact opposite of a dotcom hot rod. "But that doesn't mean this isn't a competitive environment," says Sikes. "We've got kids here that we just hired that are incredible. I joke with one of them that he'll have my job in 5 years. I'm not kidding."

Sikes says he'd be happy to generate "five to ten million in business a year, with a 15 to 25 percent profit." That's compared to the $100+ revenues iXL generated quarterly when it was riding high. So what is this new world order all about? Sikes agreed to a Q&A.

Getting Real

What lessons did you learn from iXL, intellectually, spiritually, and about building a business?

There is no doubt I learned a great deal from the experience. We started with 60 people in a single office and built it to 22 locations with over 3,000 staff members and hundreds of millions in revenues. That's not done without a lot of lessons learned to keep you humble. Intellectually, it was great. The process of building a rapidly growing company and going public was very exciting. Spiritually it was challenging because I felt the weight of the responsibility that goes along with that position and when the market headed south there were a lot of tough calls to be made. One business lesson I knew well before iXL was no business exists without a market need. The silver bullet for any company is a lack of demand for its service or product.

How dramatically has the video business changed since you first got into it?

The biggest change in the production/post production business is in the equipment area. The move to full digital capabilities, non-linear editing, desktop publishing and lower equipment cost has allowed for almost everyone to produce, shoot and edit video. The other area of change is the convergence of video with interactive media – DVD, CD-ROM, multimedia applications, web. You really need to have the creative and technical skills to operate in all these areas. We rarely do a project that doesn't combine one or all of these expertise. That said, it still requires very talented creative and technical people that know how to provide great service at a cost effective price. This is especially true in a down economy.

How does Atlanta, and even the region, match up against New York and Los Angeles as far as opportunities go in video production and post production?

There are a lot of great production and post production companies in Atlanta as there obviously are in big media markets like New York and LA. If Atlanta has advantages over New York and LA, it's the great corporate and commercial market we enjoy here. LA has more motion picture and entertainment related clientele. New York does a lot of business with the broadcasting industry. But Atlanta is still a city of great companies. Each market caters to its client base.

How would you characterize the way your new business feels compared to how iXL felt in its heyday?

We were very fortunate to have attracted a great group of very talented people to Creative Video and Floyd Design. We had an almost magical environment where we were all of like mind and I'm getting those feelings again. We did great work, very often cutting edge in terms of creativity and the use of technology. We worked hard and had a great time in the process. We created client loyalty because we delivered on time and on budget. IXL was also known as a place you could walk into and feel the energy and buzz. As iXL grew it was of course more difficult to maintain that level. I think we are already on our way to recapturing that same spirit from the early days of Creative Video and iXL.

If you again get the urge to build your business out into the world of dotcom consulting, will you lie down until the feeling passes, or do something as crazy as to try it again?

Considering there is almost no market for dotcom consulting the answer is no. Would I be bold enough to look at opportunities in emerging markets in the future? Yes, in a heart beat.

IXL boomed because it tied into a technology and an industry that had never existed before and for a while was a mind-boggling gold rush. Can you imagine another of those things in your lifetime, a technology-driven industry that doesn't exist now, but, in ten years, is making millionaires out of people?

We're still only beginning to realize the power behind the web and digitized information. This stuff is still in its infancy. So, yes, there is opportunity to greatly expand and create broad opportunity and wealth. If there is a next time like the dotcom era, people will be more rational and act more in accordance with the kind of business fundamentals that I've always adhered to. I'm not positive it will happen again in my lifetime, but if history repeats itself the next gold rush will happen again.

How do you maintain the sanity of staying small without getting frustrated about not being big?

Easy. I just remember what it was like to be big. Kidding aside, every day I come to Creative Digital Group I'm able to work with every staff member and every client. I know the status of every project. I can touch, feel and smell everything. I have a new saying: Big is good, small is better.

In iXL's days, one of your hardest jobs was turning down business. You called it a "high class" problem. What's your "high class" problem at Creative Digital Group?

There is a ton of talented people in the marketplace that I've had the great pleasure of working with and would like to be a part of the new company. My "high class" problem is to get all of them back under one roof.

How much of the future of Creative Digital Group will be tied to the development of proprietary products such as DAVID (Digital Audio Video Internet Device)?

DAVID is an employee training tool that successfully merges all of our digital service and technology. Many people talk about convergence. We actually do it. DAVID was developed by Luke Livingston to solve a client's problem. There was nothing else in the market that could accomplish that task. We will continue to develop other products or services based on that criteria.

What's the thrill of starting over?

For me, it's the excitement of building something. I've realized over time I love the process. I also like creating an environment that fosters creativity and rewards people based upon results. When you can do it with great partners like I have – Luke Livingston, Mary Brown, Jim Rocco, Steve Floyd, Richard Nailling, David Kam – then it's even better. Having many of the same staff members that we had in the Creative Video, Floyd Design and iXL days is icing on the cake.