How did the company get started?

• Author: Heffes, Ellen M.
• Position: THE OFFICE - Di Valerio speaks about Coinstar Inc. - Interview

How did the company get started?

Jens Molbak thought of the idea of Coinstar while he was a Stanford University graduate student. He thought about the jar of coins sitting on top of his dresser in his dorm room and realized there wasn't a good way to put those coins to use.

In 1989, he interviewed supermarket shoppers as part of a school project and confirmed his notion: People have a lot of change and don't care to go through the trouble of sorting, wrapping and rolling coins to take them to the bank.

Two years later, with his Stanford degree, Molbak founded Coinstar. He and two classmates created a machine that could quickly count change while filtering out the nuts, bolts, paper clips and other "dirt" that is often found in piggy banks and coin jars.

Today nearly 19,000 big green coin-counting kiosks can be found in grocery stores, drugstores and other high-traffic locations across the United States and abroad.

The coin-counting kiosk has evolved and now offers consumers an easy way to convert their change into cash for a nominal fee or into a gift card for no fee.

The core strengths that made Coinstar a household name have led the company to pursue other automated retail solutions. In 2005, it invested in Redbox, a self-service DVD rental concept that was developed in 2002 by McDonald's Corp. Bright red DVD rental kiosks began popping up in 2004 in McDonald's restaurants.

Then, in 2009, Coinstar acquired Red-box Automated Retail LLC; by the end of that year, there were more than 19,000 Redbox locations in supermarkets, drug and convenience stores and other retail locations. In 2010, Redbox surpassed 1 billion rentals and ended the year with more than 26,000 U.S. locations.

What events are significant in its evolution?

Started with its first installation of one product: self-service coin counting. By 2004, the company expanded to offer other front-of-store products and services. Among those are gift cards, amusement vending and money transfer.

In early 2009, the management team began to focus the company's resources in the area of automated retail, given its core competencies and the growth in self-service. Consequently, the company divested of its businesses that did not fall into this area.

What about competitors?

Banks, supermarkets and other retailers that purchase and operate coin-counting equipment from suppliers such as ScanCoin, Cummins-Allison.

For Redbox DVD rental: brick-and-mortar and kiosk solutions, as well as mail...