Pacific Cares: Seizing a Market Opportunity

By Bethany Coates, R. Ellis
2007 | Case No. E237
Ryan Snow and his business partner, Peter Pearson, faced challenges related to hyper-growth and maintaining customer satisfaction with regard to building Pacific Cares, a telephone technical support outsourcing company for laboratory and testing equipment. The two executives purchased the company in early 2003. Peter became CEO and Snow took on the role of President and Chairman. After running the company successfully for over two years, they continued to be optimistic about Pacific Cares’ growth trajectory. Since they took over, the organization had grown from 30 to 250 employees and revenue had doubled annually during the same time period. While confident of Pacific Cares’ prospects, Peter and Ryan also pushed on the question of how much growth the company could productively absorb without sacrificing both quality and customer satisfaction. In their last meeting, the Board requested that the executives develop a 2-year outlook for the business based upon Ryan and Peter’s assessment of how fast the company should accelerate. The Directors were primarily focused on whether to continue with the current “steady” growth, which was still considerable, but in line with the historic ramp, or to invest in a more “robust” strategy. The two executives wanted to build a large business as fast as possible and own the market before their competitors did. However, they were also sensitive to the impact on margins and the operational challenges of a stepped up expansion. Snow noted: On the one hand, Peter and I agree with the Hippocratic Oath of ‘First - do no harm.’ We have an asset we really don’t want to blow up. Customers and employees are depending on us. On the other, we see enormous potential in the market that is ours for the taking – unless someone else gets there first. If we accept the risks of robust growth, we could create a huge amount of value in just a few years for our employees, our investors and ourselves. A few other issues also factored into their decision. Their Board members had different perspectives on how much growth the company should target. Furthermore, since Ryan and Peter each had 100 percent of their net worth tied up into the business, bigger professional bets also carried significant personal risk.
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