Wednesday, October 26, 2011

Is Litebox the Proverbial Unicorn?; IBJ and Advance Indiana Research Company While Rest of Media Publishes Hype Without Question

I was all excited about the 1100 new jobs coming to my Pike Township courtesy of "Litebox."  Then I read Corey Schouten of the Indianapolis Business Journal's report on the company and its founder.  I also read Gary Welsh of Advance Indiana's take on the company's big announcement today.

Let's look at a portion of the Schouten IBJ article first:
A West Hollywood man with a short entrepreneurial resume came to Indiana with a big idea to build hundreds of trucks outfitted with giant video screens.

The product is unproven, and so is Bob Yanagihara, the ambitious 50-year-old who dreamed it up.

But Yanagihara said the key word when he met with state and city economic development officials: jobs.

He's scheduled to stand alongside Indiana Gov. Mitch Daniels and Indianapolis Mayor Greg Ballard Wednesday afternoon to announce his plans to build a $21 million manufacturing plant on the northwest side and create more than 1,000 jobs.

Yanagihara said that his previous business experience includes selling medical devices and floor tile.  His company, Litebox Inc., stands to collect training grants and property-tax abatement worth a total of $11 million if it creates the promised jobs, local economic development officials said. The deal doesn't pose much risk to local governments since the company won't receive tax breaks or grants unless it lives up to its promises.
Yanagihara also said he has lined up more than $200 million from private investors to fund the start-up, but he declined to name any of them.

Yanagihara told IBJ his company expects to create 1,200 to 1,400 jobs locally, paying salaries between $30,000 and $150,000.

He said the new factory near 86th Street and Georgetown Road would churn out eight mobile entertainment trucks per month, with 300 people working on them at a time in three shifts. More than 300 additional employees would work at a "media production office" at 146 E. Washington St., a building Yanagihara said he plans to renovate. Litebox has not yet hired a contractor to build its factory, Todd said. It plans to own, not lease, the space.

The company has not yet built any of the mobile entertainment semitrailers, which will feature 47-foot-tall, high-definition screens. The finished products would sell for about $3 million apiece and feature Panasonic LED screens and Bose sound equipment. Programming would be beamed to the devices by satellite.
To see the rest of the article, click here.

After reading in more detail about what this project will entail, basically a huge $3 million television screens loaded on semitrailer for outdoor video presentations, one has to wonder whether the demand actually would be there.  Advance Indiana wonders too:
The Indianapolis Star and all of the local TV stations ran with headline stories of the big economic development announcement today promising to bring more than 1,000 jobs to Indianapolis. "We're bringing back the drive-in movie theater, but it's going to be a digital version, and on wheels," Bob Yanagihara, founder of Litebox, Inc. told the Star. Develop Indy's CEO, Scott Miller, described it as "one of the biggest jobs announcements for the city in recent years. Gov. Mitch Daniels and Mayor Greg Ballard are scheduled to make a formal announcement in a couple of hours, along with Yanagihira. I tried in vein to find out information about this company online and came up short. The company's website has nothing more than a short video clip of the product concept and the contact information for Yanagihara. [The link to the company's website brought up an error message when I posted this story saying the bandwidth limit had been exceeded. Not real encouraging for a supposed tech-savvy company.] As the Star describes this new, untested product:
Yanagihara's unusual product calls for a towering video screen mounted on the back of a semitrailer truck. The truck can show up at any site on short notice and play first-run movies, live-streamed concerts and sports.
What's the market for this product? I can't imagine that there are enough buyers today to justify opening up a manufacturing facility to build a product that costs $3 million a piece in the worst economic times since the Great Depression....
Who says there's a demand for this product all over the world? Never forget the old saying that if it sounds too good to be true, it probably is. Now, check out what Yanagihara's past business experience consists of according to Schouten:

Yanagihara said his prior business experience includes selling medical devices and floor tile. (He owns a tile shop called Creative Environments in Los Angeles). His most recent entrepreneurial effort was a website called that is no longer online. (He said his team is revamping the site's design for a relaunch).
To see the rest of the Advance Indiana article, click here.

Thank you Corey Schouten of IBJ and Gary Welsh of Advance Indiana for not simply taking things at face value and actually doing some investigation.   I am not sure why state and city officials went so ga-ga over such a questionable proposal from an inexperienced businessman with a dubious product idea.   I hope the fact an election is 13 days away did not factor into the announcement.


Downtown Indy said...

IndyStar goes so far as to state

"The company makes high-definition video screens measuring 20 feet by 33 feet housed inside truck trailers for providing media at events."

The reality is the first unit has yet to be built. More sloppy journalism from The Star.

Gary R. Welsh said...

I honestly question whether this wasn't a set up just to show how easy it is to pull one over on the economic development guys in this state. WTHR's Bob Segall already discredited the Indiana Economic Development Corporation's phony job creation claims. He found countless number of announced projects where nothing was ever done following the announcements to actually create the jobs that were promised.

Downtown Indy said...

The CEO's history is a black hole from 1987 when he left UCSD until 2001. Where was he for all those years?

Nicolas Martin said...

Demand? The politicians can fund artificial demand if the need arises.