[Case by case #9] From resilience to renewed growth: how Paris ZigZag reinvented itself after COVID

Since 2013, Paris Zigzag has been a lifestyle media outlet that digs outs, shares and introduces readers to hidden addresses, new trends and the best (alternative) outings in Paris. When the health crisis of 2020 hit, the sudden drop in its activities forced it to adapt its business model in order to survive... with success!

Elie Salameh, Associate Professor at EDHEC and Director of the Department of Accounting, Control and Law, is the co-author of a recent case study (1) published in The CASE Journal. In this interview, he details the resilience strategies implemented by Paris Zigzag to stay afloat during this unprecedented period and the lessons that can be generalised for all SMEs. He also presents the educational value of this case.

Why did you choose to have your students study the Paris ZigZag company? What lessons do you want them to learn from this case?

The Paris ZigZag case seems ideal to me because it is versatile: it stimulates critical thinking and decision-making and encourages creativity in the face of complex and real situations. Inspired by the experience of an entrepreneur and former EDHEC graduate (2), it focuses on the impact of crisis management measures on financial results. This example serves to emphasise the importance of several things: medium-term strategic reflection, the search for appropriate financing, and the promotion of organisational resilience.

This case also makes it possible to address a variety of audiences, including MBA/Master's students as well as undergraduates, and can be used in strategy, finance or entrepreneurship courses.

Through this case, the students explore how a start-up has managed to be agile, adapt to the unexpected and get through a difficult period such as the pandemic. Based on data collected from the company's founder and CEO, they evaluate the crisis management actions implemented by the company's management and their impact on the financial results. Following this analysis, I ask them to propose a medium-term strategic plan, exploring different financing options. I also expect them to make recommendations to adapt the company's business model to future challenges.

The pandemic brought Paris Zigzag's activity to a screeching halt. How has the company adapted its business model?

Like for millions of companies, the COVID crisis has indeed represented an enormous challenge for Paris Zigzag. In 2020, its economic model was mainly based on income generated from in situ events, such as guided tours and cultural experiences. The successive lockdowns brought these activities to a standstill. Vincent Dupuis, founder and CEO (2), immediately realised that Paris Zigzag would have to reinvent the way it worked in order to survive the crisis.

Its first actions were to rationalise costs, switch to remote working and explore new sources of income. The idea of virtual tours began to be explored, and the publication of a new book on the hidden secrets of Paris was brought forward. These decisions were crucial to maintaining activity and securing a minimum of cash flow during this difficult period.

You emphasise the importance of diversifying revenue streams. How has Paris ZigZag continued to generate money and maintain audience engagement during the pandemic?

The resilience and speed with which Vincent Dupuis and his team reacted were essential. It is important that students understand these concepts in depth. I therefore wanted them to take on the role of Vincent Dupuis to evaluate the decisions he made in times of crisis, and to make them think about what could have been done differently.

One of the most innovative initiatives was to develop virtual guided tours with artificial intelligence specialists. Of course, it's not comparable to a physical visit, but this immersive experience allowed customers to continue discovering Paris from home. It even attracted a new audience that couldn't travel.

In addition, the team came up with the idea of launching a cultural board game based on their knowledge of Paris. Although this project has had to be postponed until 2021, it is an important part of the strategy developed by Paris ZigZag to diversify its activities.

How have the upheavals linked to the COVID crisis changed the longer-term growth strategy of Paris ZigZag?

This forced interruption demonstrated the company's ability to adapt and find creative solutions. However, Vincent Dupuis realised that his company needed to be better prepared for the unexpected. He realised that diversifying his sources of income earlier would undoubtedly have enabled him to better absorb the shock of the pandemic. Developing different crisis scenarios could also have enabled him to better anticipate difficulties.

More generally, the challenges overcome in 2020 showed him the absolute necessity of devising a plan for long-term growth in order to guarantee the future success of Paris Zigzag. This is what the students explored, drawing up a strategic plan over three years. This work leads them to focus on the competition, the precise expectations of consumers, defining key stages for the future and detailing the funding avenues to be explored in order to realise this plan.

Strengthening its presence in Paris while developing in other major French and European cities has thus become a priority for the company. At the same time, Paris Zigzag wants to continue innovating online, improving its virtual tours and creating other cultural products such as games and mobile applications. There are also plans to strengthen the team to support this growth and to invest in technological tools to personalise its offers even more for each user.

More specifically, what new avenues of activity could Paris ZigZag explore as part of proactive strategic planning?

In addition to the measures already taken, the students identified several concrete avenues to enable this company to diversify its income, adapt to the new market dynamics and consolidate its position as a major player in Parisian cultural experiences.

By taking advantage of AI data and algorithms, the company could analyse the preferences and behaviour of its customers to offer virtual tours personalised to the specific interests of each individual. This would improve the user experience, encourage customer loyalty and give Paris ZigZag a competitive advantage over other market players.

At the same time, a monthly or annual subscription system would offer users regular access to guided tours. This would generate a predictable and stable source of income, while encouraging repeat visits.

To complement the virtual tour experience and add a source of income, Paris ZigZag could also develop and sell merchandise, such as branded souvenirs or cultural objects.

Through affiliate marketing, it would even be possible to establish partnerships with local businesses, such as restaurants or hotels. The start-up could recommend these establishments to tour participants and receive commission on successful recommendations.

Finally, by seeking sponsors for its cultural events and tours, Paris ZigZag could obtain additional financial support, while offering greater visibility to partner brands.

Paris ZigZag estimates that it needs a substantial sum of money to finance its growth plan. Given the size of the company and its medium- to long-term objectives, what would be the best options for raising this sum of money?

Financing is often a challenge for growing start-ups. Several criteria must be taken into account in order to choose the most appropriate option: acceptable degree of capital dilution, need for strategic support, speed of access to the necessary funds, flexibility in the management of the company.

In the case of Paris ZigZag, the venture capital option seems to be the most appropriate for its needs. It would provide it with the capital necessary to accelerate its growth while benefiting from the strategic expertise and network of investors. On the other hand, venture capital investors take significant stakes, which can involve a significant dilution of the company's ownership.

To avoid this, the use of crowdfunding can be an interesting alternative. Crowdfunding allows you to raise funds from a wide audience. However, the success of fundraising depends heavily on the company's ability to mobilise a large and active community. A well-orchestrated campaign is imperative to limit this uncertainty and raise the necessary funds!

Another option for Paris ZigZag is to call on business angels. These individual investors generally provide less capital, but their equity investment is often subject to more flexible conditions than those of venture capital funds. The company would retain greater management autonomy, while benefiting from strategic support, expertise and advice from its investors. This is invaluable for a growing company like Paris ZigZag!

References

(1) Salameh, E. and Haddad, C. (2024), "Adaptation and growth: a start-up’s resilience in the face of crisis and preparation for the future", , Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/TCJ-11-2023-0234

(2) Vincent Dupuis, diplômé 2008, CEO Paris ZigZag depuis 2013 - https://www.linkedin.com/in/vincent-dupuis-43836843/