This week's episode of Automation Unplugged features our host Ron Callis interviewing Ryan Davis. Recorded live on Wednesday, May 24th, 2023, at 12:30 pm EST.

About Ryan Davis

In 2002, Ryan founded Ratio Inc while studying at the University of Utah, where he earned his Bachelor's degree in Mechanical Engineering in 2005.

Since then, the Ratio team has grown to a dozen people and countless great customers and vendors. Ratio Inc caters to luxury clientele in Utah's mountain communities and the Wasatch Front and specializes in low voltage systems, including Audio/Video, Lighting Controls, Motorized Shading, and Security Products.

When Ryan isn't messing with AV systems (at work or for fun), he might be found crew-chiefing for his off-road race team, fantasizing about snowcats, or playing bad covers in his power duo "Real Topeka".

Interview Recap

• The importance of coworkers sharing the company's culture and putting the right people in the right positions.
• Differentiating your company through branding and imagery
• The outlook for the smart technology industry in the current economic climate.

SEE ALSO: Home Automation Podcast Episode #243 An Industry Q&A with Cameron Howitt

Transcript

Ron: Welcome to the automation unplugged podcast. The podcast for technology professionals featuring leading industry personalities. I'm your host, Ron Callis. Today's show features returning guest, Ryan Davis, president of Ratio Inc. in 2002, Ryan founded Ratio while studying at the University of Utah. Where he earned his bachelor's degree in mechanical engineering in 2005. Since then, the ratio team has grown to a dozen people and countless great customer and vendor relationships. Ratio Inc caters to luxury clientele in the Utah mountain communities and the Wasatch front. And specializes in low-voltage systems, including audio video, lighting controls, motorized shading, and security. Be sure to check out Ryan's first appearance on automation unplugged. Back on show one 62. Originally recorded on March 24th, 2021. We live stream today's interview on social media on Wednesday, May 24th, 2023, at 12:30 p.m. Eastern Time. During our time together, we discussed company culture and the importance of putting the right people in the right positions within your company. The role of branding and marketing is to differentiate your business. And the outlook for the smart technology industry in the current economic climate. I really enjoyed this conversation and I hope you do as well. Let's tune in to this interview with Ryan Davis. Ryan, how are you, sir?

Ryan: Awesome. Awesome, awesome.

Ron: Awesome, man. How do you like this new fancy software we're using here?

Ryan: It's pretty fancy. Your intro had me a little bit worried though. I thought that maybe this was going to be kind of like a Jerry Springer situation like, let's bring her out now, Ryan's ex-girlfriend.

Ron: That's an interesting all-right team. Take notes here. That's an interesting show idea. Let's give it a whirl. Well, for those that don't know you, Ryan, let's see the high-level intro. Where are you guys located? What type of stuff does ratio do?

Ryan: We are in Farmington, Utah. That's where headquarters is, and the type of stuff we do. I mean, we cater to high-end residential clients for the most part. We do some commercial work mainly boardrooms and conference rooms and that kind of stuff. But I would say the majority of our work is in lighting control, shading systems, AV systems, and security. So that's those are the four buckets that we put our put our rainwater into.

Ron: And I know that anyone out there can go back and listen to show #162. We'll drop a link in fact here in the comments on all the social platforms. We are streaming live at the moment on YouTube, LinkedIn, and Facebook. So if you guys want a quick reference there. But for those that aren't familiar, Ryan, if you could maybe give the abbreviated version of kind of your backstory, where'd you come from that led to you being in this place running this business today?

Ryan: I like to joke that I was just like born with the AV gene like I was bitten by an AV spider and I just couldn't ever get out of it. I don't know. I legitimately think that I was like predestined to be an AV guy. I think from the time I was probably 11 or 12 years old, that's all I could think about was audio. So, and I guess back in those days, it was all, you know, car audio and 12 Volt stuff.

Ryan: You know, and that's probably just because in those days, the only people that we knew were kids that were kind of our age and they only had cars. So that's probably the only stuff we messed around with that much.

Ron: Did you compete? Did you like making the loud cars that go boom and compete?

Ryan: I guess there weren't really competitions way back then. I mean, there might have been, but it was before the SPL drags and stuff like that. But so no, not really. It wasn't that wasn't really it was more just like I would just screw around with anything I could get my hands on, but I would definitely, you know, I think there was like car audio review and that kind of stuff. And just anything that I could screw around with, even if somebody gave me a pair of 6-and-a-half-inch door speakers, they'd taken out of their out of their car, I would just obsess about it. I would build speaker boxes at shoe boxes if I could just to do it, you know?

Ron: That's funny. I got my first car when I was 16. I bought a Dodge Daytona turbo, a 1984 Dodge Daytona turbo, I bought it for $600 with the money I had made cutting grass. And those who tuned in, probably heard a version of this story, but I later sold the car three years later for $600. Like the best car investment of all time. But I remember making you just said 6 by 9 speakers. I remember my 6 by 9 speakers. I want to say I bought it. I'm from Virginia. So I bought it at circuit city. That was the big electronics store at the time. And I remember at an MDF board or DMF board, whatever it's called, make in my little trapezoidal speaker box, and I wrapped it, and I put glue on it, and I wrapped it in carpet, and it was, it was, I think, worth more than my car.

Ryan: Yeah.

Ron: But it sounded great.

Ryan: Common. Yeah, I would say common. Yep. So anyway, things evolved and, you know, I would just, I got more and more interested, started building my own speakers, started just doing really obsessing more and more about it. I started building home speakers and I eventually pursued a degree in electrical engineering thinking that would help me build the most epic home speakers, you know, ever created. I started doing that and built some pretty great home speakers. And I don't know. I mean, that whole world is very subjective. So after feeling like I had at least accomplished my goal to some extent and never selling speakers at all, it just, I got kind of bored with that. And I finished my degree in mechanical engineering, but while I was finishing my degree, I just had ramped up the AV business. I was still doing 12 Volt car installs for dealerships and stuff like that just to kind of keep things going during school. But then as soon as I finished school, I was like, it's time to kind of do this seriously. So I went straight into entrepreneurship, like graduated school, and boom, you had already stood up in AV business and you were in the business? Yeah, but I mean, really before that, because ratio existed before I had finished school. So ratio was the name of the business before I started doing exclusively home audio. So I was doing kind of some of both, but mostly car audio, but then once I graduated from college, I just was like, you know what? I don't know. It seemed to me like the writing was kind of on the wall for 12 Volt installs, like the systems were becoming more and more integrated to the cars and with can bus systems and stuff like that. It just didn't seem like what I wanted to hitch my car too. So I just decided that homes, homes were what I wanted to focus on. And so from that point on, that's what I focused on. So from then on, that's what I've been doing.

Ron: Ryan, we have someone tuned in here who just dropped a comment and so I got to give him some air time and that's the one and only Paul Starkey. He says, thanks, Ryan, for sharing. And Paul is infamous for many reasons. But one is because he was actually automation unplugged first guests. He was back in April of 2017. He was guest number one. So good to see you, Paul. Thanks for tuning in.

Ryan: Well, if I can, if I can just digress for one second, so Paul and his partner, Steve first, were the originators of vital management who were consultants of mine starting in 2018, I guess, and those guys actually gave me a lot of confidence and really have helped me a lot with business growth and somebody called me just yesterday and said, hey, tell me how you grew your business and how you knew what moves to make and all of those things. And I said, honestly, Paul and Steve were probably the biggest success in my recipe for that because. Once I knew, once I knew how the numbers reflected my next move, it gave me a lot more confidence. So anyway, a big thanks to Paul and Steve for helping guide me along the way. So thanks for joining in. Paul and thanks for thanks for the guidance of you and Steve.

Ron: Out of curiosity, what would you say one or two nuggets of wisdom or advice did they give you that you feel really was profound or helped you see your business differently?

Ryan: There were two things. One of them was I was going to hire a guy and I was stressing about it. And I'm like, can I afford to hire this guy? And this was Steve that said this. And he said, well, let's look at your pipeline, Ryan, and he said, you've got X amount of work in your pipeline. And you've got this many people to do that much work if you don't hire that guy. There's no way that you can do that much work. And I'm just a dumb AV guy that doesn't think about stuff like that, but him boiling it down to those terms made me think, oh, all right, well, not only can I afford somebody, you know, another technician, I have to do this. So it took the decision, made the decision very easy for me. The other nugget that was, that was easy for me. I was struggling with an employee that maybe just wasn't a very good culture fit and also was, I don't know, kind of bringing things down a little bit and it was just kind of a struggle. And I had made a decision to part ways with them. And I had kind of flip-flopped on my decision, and I had emailed Steve. This was Steve again. I emailed Steve and said, Steve, I'm kind of regretting my decision. I think that you know, this guy might not be, there might not be as many problems here as I think. And he emailed me back with a very Curt response of something to the effect of, hey, this dude is a problem because you've said he's a problem and everybody else knows he's a problem and you need to stick to your guns because you've made this decision once already, and you don't need to make it again. And it gave me the confidence to go through with the decision. And it was a good decision. And that person wasn't a bad person or anything like that. It was just like not the right fit for our company, but it was a good move for me. But it was a good push and a good nudge in the right direction. So those were two good moments for me with those guys.

Ron: When you think about parting ways with that person, how long did it take for you to feel you know the weight lifted and for you to feel that, in fact, that was a good decision?

Ryan: It didn't take long. I know that. I mean, it didn't take long, but I mean, there's inevitably, you know, it takes a while to untangle the rope you know. I mean, because there's inevitable, you know, especially this was kind of a slow process to kind of unwind things a little bit, but after we'd had the difficult conversations, which, you know, they're just kind of tough no matter how much you both agree on parting of ways and everything. It's hard to breach those topics. But, you know, once we had had those conversations, then I would say, within days, it really started to feel pretty good. So yeah.

Ron: That's been my experience is we, as leaders, have people on our team, and if we have the right people, even if we don't have the right people, but they often, those people can have a lot of responsibility and just think about how hard it would be, well, who's going to do that work, or how long will it take me to find someone to that's capable of doing that? But what we learn is when we have poison on our team or toxicity or just a miss, they can be wonderful people, but just to mix a mismatch in culture, or values, and if they don't value the same thing that you and your team do, that can be poisonous and ultimately you can slowly, you can make the decision to slowly let them go. And almost in every case, I've found when they're gone, you go, oh my goodness, why didn't I do that quicker?

Ryan: Yeah.

Ron: I mean, a 100%. I can't think of one case in my business. I've been an entrepreneur now for 16 years. I can't think of one case where I let someone go for those sorts of reasons. And I didn't go, man, shucks. I should have done that much sooner. Shame on me. I'll be better next time.

Ryan: Yeah, yep. Yep. I agree with you. I agree with you.

Ron: All right, Paul just jumped in here and he says, Ryan is modest. He's been a rockstar client, and he's followed the recipe to a T and his results prove it.

Ryan: Oh, thanks. That means a lot to me. Thank you.

Ron: That's high praise from Paul Starkey. What is the I'm curious? What approximate year did you bring in those guys? I didn't know Paul was going to join us, but let's talk about Paul and Steve and kind of that concept of bringing in outside experts. What was the year that that happened?

Ryan: So that was 2018. I believe, so that was around 2018. I think when I started with vital.

Ron: So 19, 20, 21, 22, 23. So we're 5 years later. Yep. Is your business. Twice the size? Same size? A little bit more than twice. So I think that we were like 1.2 or 1.3 and we're about four now. Oh my goodness, that's 1.2 to four. That's like about a three, 3.5 X. That's a 350% growth. And are you do you feel comfortable? You don't have to give exact numbers, but are you more profitable today than you were 5 years ago?

Ryan: Yeah. And I think probably the biggest thing is that back then, I mean, we just didn't know all that information. I mean, our books, we thought we were bookkeeping, but we just didn't know all of the answers, but once we got all of our, all of our chart of accounts and everything into kind of their method, you know, then things were more clear and easier to see. But yeah, it's absolutely more profitable. A 100%.

Ron: I'm going to go into the numbers concept and this is pretty fresh. I'll call it raw for me. Yesterday or in the past couple of days, today's Wednesday. So Monday and Tuesday, I had calls. There's an individual I won't name that is going to be due to financial stresses in their business. They're going to be ultimately they're going to be acquired. I'll just leave it at that. But when it comes down to it, it was due to some of the challenges that what's happened over the last 24 to 36 months. There's been supply chain shortages. So what have you and your peers done around the country is you've gone to your clients and in some cases collected large deposits for projects. And if that money so I'm talking about financial responsibility here, that money when you collect that money is not your money. It's a liability. It sits on your balance sheet. That's a customer deposit. But this is a tale as old as time. That if you don't earmark that as a customer deposit and you start to use that to pay your bills, and if supply chain continues to cost stress and thus you can't do that job, you can reach a point of no return.

Ryan: Yeah.

Ron: And I'm hearing versions of this story around the country literally right now. And I talked to somebody this week. I talked to somebody two weeks ago. I'm hearing versions of this story. I don't know if it's, you know, those people are finding me and I'm having those conversations, or if there's more of an issue out there. So I'll keep it simple, but for you, how do you think about customer deposits? And did you, you know, maybe not now, or maybe still now, were you collecting larger deposits for projects? And how do you, is there any maybe wisdom Paul and Steve were able to share with you that helped you think about the management of funds, and client funds differently in terms of how you operate your business here in 2023?

Ryan: Oh, it's still guitar on. So just, I mean, just so that I am totally transparent, so vital is now Matt Bernath and Matt, I've got to put in a plugin for Matt Matt does a great job and I still use vital and Steve and Paul are doing other things now, but those guys are totally started me off on the right foot. And Matt and I still are Matt and I still meet every month, but it's something that Steve harped on me forever on and even during the transition period between Steve and Matt, like Steve was doing backend stuff for Matt and Steve Woodson notes to Matt saying, this can't be right. Ryan's got to a $2 million pipeline on $150,000 worth of deposits like Ryan's a moron. Why is he doing this?

Ron: Everyone listening is nodding their head. Oh my God, he's talking about me.

Ryan: Yeah, I've been traditionally very bad at taking customer deposits, but we've gotten better at it. And we still are taking large deposits or trying to take large deposits for our customers. But we usually give them the option. I mean, we usually say, you don't have to give us a large deposit, but I mean, inevitably, we're ordering everything that can possibly be ordered at the time that they give us the deposit. So we're trying to safeguard that as much as possible. We're not just sitting on the cash. And, you know, hopefully, you know, not waiting for a rainy day so that we can spend their money. We're actually putting it to use. And then just warehousing their stuff so that we don't get in a situation where we're spending their money. But we are, I mean, if people ever push back on that, we just say, hey, look, you can wait as long as you want to give us the deposit. But the problem is that it's going to determine how soon your project gets trimmed out. And if you want to roll the dice, then you're rolling the dice, right? So, people are usually just fine with it. So.

Ron: Got it. I want to bring you to a topic. We discussed it two years ago. And two years ago, you were just joining HTSA.

Ryan: Yep.

Ron: And you're now two years in. And so maybe share with the folks listening if they don't know what HTSA is, what is it? Why did you join and how are things going?

Ryan: Okay. Yeah, HGSA is home technology specialists of America. It's a buying group. And I looked at a few buying groups. I mean, there's the pro source and there's some others. As he owned, and I'm sure that you probably know a lot of the lot of the names. And they all catered a little bit different things. But I ended up joining HTSA, and there's only about a hundred integrators in HTSA, but it's been awesome for me. It's just been absolutely awesome. So John Robbins is the dude who kind of, I guess, is kind of the main dude in HTSA and you know we have conferences twice a year, but you know my favorite thing about CDA every year has always been kind of rubbing shoulders with other dealers and picking up insights and seeing what other people do. And there's always like the pretension is usually dropped because they're not dealers that are working in your area and it just seems like people are usually pretty chill about sharing their even their safely guarded secrets you know. But the thing that I've liked probably the most about HTSA is that they seem to be I mean, I feel like these guys are a cut above, you know, I mean, these are like really, really sharp, really intelligent guys. They've been, you know, dealers for a long time. They're really good with integration and like high-end jobs, which is what I strive to be. But it's sort of like that networking and that openness that I would get from conversations at stadia, but it's taking the advice from people who I trust at a higher level and people who are already doing jobs at a level that I already, you know, that I can already appreciate. So I've loved it. And then there's also, you know, a financial benefit to it too, where, you know, we're getting, you know, it may be a little bit better percentage on certain brands and stuff just because we're kind of pooling our resources on buying power and that kind of thing. But I would say for me, the biggest resource has been the knowledge and the group understanding and that kind of thing. So I can't say enough good about it. It's been incredible for me.

Ron: Any particular nuggets of wisdom that you feel you picked up in those meetings or interactions with HTSA members over the last two years? Anything stick out to you? Top of mind?

Ryan: I mean, I feel like I come away recharged about some product or something after every conference. And unfortunately, I had to miss the one that was just about a month or two ago.

Ron: I missed you there. I was wondering where you were. I was there. I was like, come on. Where's Ryan at?

Ryan: I know, I know. I'm sorry. You know, Ron, I'm kind of drawing a blank on that one.

Ron: But I don't want to put you under the gun. I always try to find, as you know, because you listen to the show, I always try to uncover those nuggets wherever they might lie. I'm noticing there on your shirt. Your logo and that logo is new-ish . And one firefly might have helped you out with that logo. Why don't you talk about the idea that you wanted to feel a certain way about your logo and you felt it needed to be updated? Maybe talk us through that.

Ryan: Yeah. So I actually, what were we looking at? We were looking at redoing some.

Ron: Literature or signage or something.

Ryan: We were looking at redoing the website, I think, weren't we?

Ron: Well, we did the website. But was that what caused the curiosity around the logo to?

Ryan: What it was? It was that because you said, I mean, there was just one specific example of a landing page and you had me go to three different websites. And one of them, I'll just never forget it. And I don't know if they listen to your podcast or not, but one of them was the gray tech website in Canada.

Ron: Sure. At a BC. British Columbia.

Ryan: And shout out to those guys. But they had, I just was enamored with their logo and the colors on their logo. And I was like, man, I just like got to have I just, I don't know, I guess imitation is the lottery. Right? So, you know, I mean, I've always had, I mean, this isn't far from what my logos always been. So it's not like I have landed on the gray tech logo or anything like that. But I really loved the colors and stuff that they used. And these are, these are not their colors by any stretch, but there's really inspired me that I really liked like what they had done and how to.

Ron: Share it on the screen actually. I just pulled it up. So this is their website.

Ryan: And I liked how retro there were. And you know, I mean, I absolutely love their colors. I love retro stuff. And their colors are kind of retro and I'm totally into it. But long story short, I just was like, you know what? I would love to just do a little facelift on my logo. And it's not a far cry from where my logo was. But it just softened it up a little bit. I didn't want it to be so in your face and it had really sharp corners and really bold print and so me and Katie and Miguel went through and just did two or three revisions and looked at a few different options. And really, I mean, Miguel, I think Miguel worked up three different comps, and then we got on a call for about 20 minutes and Miguel made some real-time changes and we were like, bam, that's awesome. And Miguel is a freaking stud, man. I can't say enough about that guy. He is just awesome.

Ron: We feel the same fact, Miguel just got promoted. He did. He's now going to be leading a team. He's going to be taking on additional responsibilities and have people under him that he's guiding and showing, you know, how to practice client care and art and design in the way that he's delivered that for you. So that's very cool.

Ryan: But I love the logo and then I don't know if I don't know if I hadn't sent you the pictures of the way that the vans turned out, but he did a van design that we settled on. And the vans actually looked really good now too. So I'm loving how it's coming together.

Ron: I would like, you know what, we'll do. My team's listening. So I'll take, if you get me that artwork or a picture, I'll drop it into the comments on social media. And we'll also feature it on the landing page of the podcast. So here's, for those that are watching, I'm actually on the One Firefly site. And here you can see Ryan's last show, #162. And we always feature the video embed and the transcript. And any notes or details. So if you get me that vehicle wrap, I'll drop that onto the page. One thing I did want to just point out before we moved on, and this, you, again, you took, I love working with you, Ryan because you'll say, what could or should I be doing to grow my business? And you'll evaluate it, and you'll say no to some things, and you'll say yes to some things if they make sense, but it makes sense to you and your team. One of those things was I said, Ryan, it'd be a really good idea. If we could get your people wearing your company brand, shirts, sweatshirts, hats, you name it. Onto your website. Ideally either in your projects or in your office, but just personalizing the website, right? Marketings about differentiation. Well, this job is only your job, right? So it's not going to be on anyone else's websites. Your brand on your clothing on your team is only going to be on your website. So if they're comparing you to someone else, it's a great way to stand out. You decided to do that and can you just maybe talk about your frame of mind? And I say that because so many listening will nod their head and go, yeah, I could do that. And they'll acknowledge it's a good idea. But yet they still won't act. They won't do it. What went through your head that led you to decide to do it?

Ryan: This is the video pioneer that you're speaking about.

Ron: In the video, I mean, that's a brand name from One Firefly's video pioneer, but the idea, the bigger picture is imagery and video of your people and your projects.

Ryan: Well, I mean, I still use a bit of stock art from whoever you guys use. I mean, you guys, in newsletters or whatever. And you know truthfully, it always bugs me a little bit just because I don't like it when I send out a picture of a house that's not one of our houses you know. People will ask me sometimes like, oh, that was a beautiful house. And I'm like, well, unfortunately, that one wasn't even ours you know. But so my effort, I want more and more of what is sent out or whatever is on our site to be ours. And I would say almost everything on the website at this point is ours, but there are probably still a few things that aren't, but you know Ron has a service video pioneer, which basically gives me some photo shoots while some live video shoots that give me these motion shots on a few different sites. In a year, and I mean, as you can see, it's, I mean, it's just a lot better looking than a static shot, but also what I love about it is that these are actual jobs that we've done, and they're my actual technicians. So I like that when people look on my website and say, man, that looks cool. And then when my technicians show up or my project manager shows up, it's the same people. It's cool. I love that part of it. And the other thing is that despite my best intentions, I mean, I have a hard time just getting everything done all the time. And Ron's service is really enabled me to be able to just like be a little bit more hands-off and like I'm sure that Ron would attest to the fact that sometimes they have to just beat the crap out of me for the information that they need because even though I've turned that over to them, they still need like Ryan, I need you to answer 5 questions, and I'm like, yeah, yeah, yeah yeah, I'll get you those 5 questions. Ryan, all I need is 5 questions, but anyway, regardless of how simple it can be, sometimes we just it just there's just so much going on. So anyway, I never give a lot of marketing a lot of thought, but Ron's made it easy for me. And I am glad that I did the video pioneer stuff. And I think that it looks awesome on the website. And there's some things that I look at sometimes where I'm like, Ron, is it really going to make a difference? Do you think anybody really cares if they see a video on my website? And this is just a dumb AV guy again, you know? And Ron's like, how could you not see this man? Of course, it's going to make a difference. And so those are the things that Ron's probably saying, sometimes Ryan will ask if there's anything that he's missing or should do or should change and you know he's up for a recommendation or sometimes he is not. But sometimes I just don't understand the difference, but you know obviously it looks good.

Ron: No, I appreciate all those kind words. And I appreciate again, you're talking about the fact that you've engaged Paul and Steve and you engage Matt with vital and you engage with us. And I'm sure there are other advisers and consultants and folks you work within your life. There's a principle, I've got books over here to my left. I might even be able to grab it you know. We'll see if it's if it's top of the stack. But there's a book called who not how. And the idea that the general principle is you can not be an expert in something and you can take the time and energy to go become the expert. And if you're passionate about the subject, that can be a good idea. Alternatively, you can go out into the world and find people that are the experts, bring them into your life, and now their expertise, plus your expertise, one plus one equals three. And that's a way to generally get to the goal a little bit faster. Maybe a lot faster. And so just as if I was going to, you know, put a home in your market and wanted to put all the fun and technology, I'm going to call an integrator. I'm going to call you, Ryan. I'm going to say, I want a home theater. I don't know how to do it. How do we go through that process? And what should I think about? And you're going to advise me and you're going to say, Ron, well, how are you going to use the space? How many people are going to be in the space? How often will you use this? What type of content are you going to watch? You're going to ask me a litany of questions. That's going to lead you to an understanding of an approach. And that's the same thing we do in marketing. So I think folks should check out your website. Again, we'll drop a link to that. It's ratioav.com. I think it is beautiful. I did want to show you something. This is not a surprise because I did surprise you actually a month or two with this, but I'm going to show I'm going to talk about it on the website here. So everyone can see. So we, when One Firefly launched our new website, a month or two ago, and if you go to our website, which is onefirefly.com, and actually go under about to the one firefly approach section, which is what I'm sharing on screen share here for those that are tuned in. And if you scroll to the bottom of the page, by the way, you're going to see a bunch of faces of members of our team. And at the bottom of the page, you're actually going to see Boom! There's mister Ryan Davis.

Ryan: Yeah.

Ron: So that is, this was a fun photo of Ryan and I, we always whenever we go to an industry event, find time to connect. And someone caught a picture of us connecting, and there it is. It's on the website because business is people doing business with people. And so, you know, we wanted to show that content off. So appreciate you, Ryan, and what you're building over there, and proud of you, for sure. You and your team. Thanks, man. Big picture. We're in this economy that's, you know, we've got this debt ceiling thing going on. I don't watch I pride myself on generally not watching the news anymore. So I've been able to stay away from most of the drama. But there's no doubt that that's just one of many factors causing uncertainty and just the strange economy we're in. You know, are we in a recession or not? I don't know. I think we probably are a lot of times you don't even know it until you've come out of it. And then they look back at the data. But I think that you know the stock market is weird. You know, risk-on assets are weird. Interest rates are high. Inflation is high. There's all sorts of stuff going on out there. So what are you seeing? What are you seeing in your market? And then I want to go a little bit further because you have a unique thing happening in your market, which is you have people from California, leaving California and entering your market. So I'm going to call that part two of the question. Part one is just like, what are you seeing in terms of you look forward and look at the economy or the economic outlook for as it relates to your business?

Ryan: I would say on part one, I mean, things are still good for us. We're still writing good business and doing good jobs and all that. I like to think that we're less affected by a recession just because of the type of clients that we work with typically more affluent customers. And I think that's been true for the most part. I think that we've been doing, I think, that we've been staying steady. I know that there are other types of integrators who work on more like tracked housing and more entry-level type of installs that have been hurt a little bit more through this so far. And we haven't, but I think at some point, something like a recession catches up with everybody to some extent like. I don't think there's any way for it not to, but you know I guess my hope is that even if we've got to start taking some whistles and bells out of jobs that we keep things moving along, even if we have to drop things down a little bit. So hard to be a predictor of the future. And I'm hardly an economist. And I think that I probably got you beat on watching the news because I hardly know what's going on at all. But I do know that there's high inflation. And I do know that there's a lot going on with, I mean, I think that they're saying that 75% of the commercial real estate debt is going to be refinanced in the next 18 months and stuff like that. I mean, there's going to be a lot of some chaos over the next 12 to 24 months in a few areas. But hopefully, we keep things moving along. But in regards to the influx from California, I think that last year, 13% of the people that moved to Utah were from California.

Ron: Wow.

Ryan: And that doesn't sound like a huge number, but that's like an abnormally high number, you know? So normally that would be like 3% or something like that. So. I don't know. I mean, I love California. My wife is from California, I think that if California wasn't such a poorly managed place, I would love to live in California you know. But I guess it's hard to speak about Californians per se. I mean, they've come here and spent some good money with me, so I'm not really complaining about that. So I don't really know.

Ron: Are they moving there? Is it a primary residence or is it a second home or what's the trend you're seeing right now?

Ryan: A little bit of both, but I would say, oh, well, most of the people that we work with these are second homes for people. So I would say most of these are second homes, but we do have, I would say, probably 25% of these would be primary residences where people are just bugging out and saying, I can't deal with it anymore. So which I understand, I mean, there's some chaos there, you know?

Ron: Are you seeing a change in pattern for what I'll call steady state, which would be anything before maybe 2023? Are you seeing a change in pattern in the types of projects or the size of projects? Are they getting bigger? Are they getting smaller? Is any sort of trend observable to you?

Ryan: Before 2023.

Ron: Or so as of now, comparing it to 2022 and before, is there anything that's happening right now in terms of the types of clients or projects that you're signing in 2023? Are they getting or is that luxury job and more abundance, but maybe less of the medium or smaller jobs? Or is it the same?

Ryan: I think it's I think they're more of the same, but people are starting to cut back on some of the luxuries you know. It seemed like in the middle of 21, when lumber was going through the roof, for example, people were still saying, you know, the market was still going crazy. And so I mean, people were still just like, hey, you know what? I don't care if I mean, they cared, but they were still willing to push through a $300,000 increase in lumber just to get their house framed. You know, like, ugh, that sucks. But we're still doing it, you know? But I think now they're a little bit more guarded. I know one customer who they had had their house quoted. And they said, Dad, that's more than what we want to spend. They deleted a floor with just had two bedrooms on it. And over the course of 6 months, they had deleted a floor and the cost had still gone up by like $200,000.

Ron: Wow.

Ryan: And so now they're just like, you know, we'll just buy a townhome for the time being, and we'll just get it figured out whenever things normalize. But I don't know, man. I don't know what's going to be normal. I don't like when is that going to be and what's it going to be like? We've got, we've got some really, really big luxury resorts and townships and areas that are being built right now that are like they don't appear to be like hurting it all, you know? So I don't know. I mean, if demand stays high, I don't know when those things slow down. So I don't know.

Ron: That's super interesting. I ask most of my guests a similar question. So for regular listeners, you're getting an understanding of what's happening across the country. And it does seem to be, I don't know, the answers I'm getting are polarized. There are people that are just doing as good as they've ever done. And there are people that are shutting their doors. It's scary, it's fascinating. And I'm certainly not here to prescribe why anyone's doing well versus not doing well. But I am observing it as being the case.

Ryan: So let me just ask you a question. Are you finding that the ones that are doing that are having a tough go is that a specific type of business, or is that a specific area of the country?

Ron: Yes, and yes, I'm seeing that you know, what's known to be true, is that in markets where there's higher inflation and more uncertainty, economic uncertainty, that you're wealthy and your upper middle class will often pull back. They'll spend less. So you know upper middle class, we're a little more mindful, maybe of how much we spend for that trip or for that, you know, thing for our home. And whereas the Uber luxury wealthy level, I'm going to call that, you know, you could argue 10 million plus in net worth up to hundreds of millions up to billions. You know, those folks, that class, they generally have advisers in their life that help make sure they make money and good markets and bad. So like they're often making more money and times of despair like this than they do even in good times. So I'm hearing that those types of projects are generally an abundance in most markets. That consumer that Spender is still moving forward with their projects. They're not slowing down. So that's happening. But if you as a business or an integrator are also used to having more of a diversity of project types, maybe you normally have big projects, medium projects, and small projects. I'll call it a medium project. Maybe a $100,000 job or $75,000 job. And maybe a small job is a $25,000 job. Then those projects in some pockets around the country seem to be in less supply of those jobs. And so if you're an integrator that was normally benefiting from the cash flow, you've built your business around the cash flow that comes out of smaller, medium jobs, and if now you're only securing large jobs. Well, the cash flow cycle on that large job is very different. You could do a 25 K job and you could be in and out in a week. That money is in your bank account. But if you go and score a $250,000 project or a half $1 million project, you're going to get lumps of payments spread out over the next 18 months. Or more.

Ryan: Yep.

Ron: And if you aren't optimized to know how to handle your cash, you can put yourself unknowingly in a very stressful situation. And it's often that what I would daresay mismanagement of funds and just not truly understanding the financials of your business, that cause people who aren't aware and then all of a sudden they look up and they're staring at a freight train. And that freight train is a call on their funds you know. And that's what I'm seeing. I'm seeing that companies need to pivot. Yeah, there are small integrators that would do small and medium jobs. And that was their business model that I go, oh my goodness, there's less of those now. I need to figure out how to go get big jobs. Or if I'm only doing big jobs, but I've normally had smaller projects. Well, they're still there. They're just less of them. And not forever, only in this span of time. And so it's, well, what do I need to do to win that work over my competitors? This is a market or an economy. I mean, I've personally lived through multiple recessions at this point. I've been in business. I joined the industry in 2000. So I lived, you know, I observed the 9-11 kind of recession that happened right after that. And then the O8 , O9 recession, and the Great Recession launched my business during that time period. So that was a trial by fire. And now, the little mini one or two-month recession in March of 2020, and now this economic period, which is, you know, every economy goes through recessions. You go through growth periods and pull-back periods. Its tail is as old as time. It's just people act surprised when the recession happens. Like, oh my God, I didn't realize it was going to happen. Yeah. Well, guess what? It's going to happen again. And again, and again and again, it's just you need to be prepared. We don't want a bit of a rant there, but I'll let you riff for many of those talking points. What are your thoughts on that?

Ryan: No, I think that I mean, I remember in 2008 thinking the same thing is that, you know, esteemed all doom and gloom, but there was still opportunity. There was still stuff going on. And I remember, you know, I've got one of my customers and subsequently kind of become a friend of mine was one of the owners of visual comfort who was, you know, one of that's the parent company of like tech lighting and, you know, like they're a pretty big deal, man. They're a big company. And he just said, I remember one 9-11 happened, and he said, honestly, like I just sat there and I thought, this is it. Like, nothing's going to work after this. Like, this is going to be the end of everything, you know, like my business will never be the same. And he basically just talked about how, you know, one possibility grew out of another possibility and things were able to, you know, connect here and there and like eventually things were just great and, you know, connections were made and everything turned out just great. You know, but I mean, he just, I mean, he was telling me this just when we were having breakfast one time and I thought, man, there's so much truth to it. I mean, there's always something that can be done to progress your business probably like regardless of how poor the situation seems. And it's sort of like when people, I don't know, I've always thought that probably like the most, probably the biggest moves that we can make, or the most. I'm trying to think of the right word, but the moves that can launch us the farthest down the road, I guess, are probably the ones that are the most uncomfortable. They seem like the biggest gamble, but they're also like the ones that you have to make when things are like a little tricky, right? Like a real estate investment when things are bad, right? Like when you're buying houses when they've been foreclosed on for $49,000 or whatever, but it's like, but I don't really have $49,000, but you know, okay, well, I figured out a way to do it anyway, but now the house is worth $600,000. Well, that was a really great investment. But it almost made me puke when I did it you know. But of course, you'd go back and do it 20 times more later, but at the time, it almost ruined me, you know? So I just think about stuff like that. Like we've got to do uncomfortable things sometimes, but maybe not all the time.

Ron: No, I think that's great advice. I tell my team all the time, they have to be comfortable being uncomfortable. You know, if you think about it, I'm a business where my primary expense in the business is labor. It's people. We're a design agency, a marketing agency. And so in order to grow, we have to build org structures and processes and departments and capabilities. But the idea, I mean, for my business to double again, we've doubled a couple of times in the last 6 years. And when you double again, the structure that got you there is probably not the structure that gets you to the next level. And so you have to, in many cases, deconstruct and rebuild, deconstruct and rebuild. And particularly if you're a growth company. And there's no there's nothing that says you should be a growth company. It's like a choice. We at One Firefly were a growth company. We want to grow. And so that has its own set of opportunities and its own set of challenges. And there are going to be integrators listening to this, that they choose man, they're doing a certain amount of revenue and a certain level of profitability. And they could stay at that level and not grow at all. And live a very good life and make a very good income, regardless of whether they ever sell their business or not. If you're netting 15% or 20% on a $5 million business, you can do really well for yourself and go do that for 20 or 30 years and you're going to have most, you know, more money than most people on the planet. And so it's not that growth is preordained as successful as good or bad. It just is. But in my business, we're a growth company. And so structures often have to be deconstructed. And that can be uncomfortable. And you need the right people that believe they want to be in a growth organization if that is in fact what you are, and they want to be a part of that. So that's my two cents on that is the idea of being uncomfortable and I think your advice about being uncomfortable and investments, there's what Warren Buffett has the favorite, but the statement of something like being greedy when there's blood in the streets. Something like that. In other words, when it looks like death and despair out there, that's actually the time to go out and do the deals. And to bring it back to our industry, those are actually some of the deals that are getting done right now because there's some businesses and hard spots. So acquirers are coming in and they're getting deals. And I would say that's not good or bad. It just is. So which side of that equation do you want to be on? The one acquiring and leveraging and leveraging up or the one that's having to do whatever is necessary to survive.

Ryan: Yeah, all right.

Ron: Quick question. Racing. Last time we had John, we talked about your Baja racing. What's the status? What's the status of race land?

Ryan: Well, we raced in November and we won our class in the Baja 1000. So things are awesome there. So that was our 11th time. Racing in the bar 1000.

Ron: It filled the audience that may not be aware oh, by the way, look who just stopped in. I got to say hello. What's up, Matt?

Ryan: There he is.

Ron: Matt Berna says, hey, I know these guys. Yes.

Ryan: We did mention you, Matt. We did. I made sure to not only talk about Steve and Paul. Those greedy bastards.

Ron: Exactly. We gave you some airtime mats. You gotta send Ryan here like a $20 discount on his next bill.

Ryan: And for the record, Matt has a way better mustache than those guys.

Ron: Matt is sporting a stache. It's quite enviable.

Ryan: Yep.

Ron: But yeah, racing, what's coming up? What's coming up here in 23? Anything?

Ryan: So same thing, we'll do the 1000 again this year. They alternate that race. They change the course a little bit from year to year. So two out of three years will be a loop race, so it'll start in Ensenada, and then it will loop back around to Ensenada, and usually those are like 800 to 950-mile races. And then one out of every three years will be a full Peninsula run. Those are and those are usually longer. So those are usually like somewhere between 1013 hundred miles. And those go all the way from Ensenada to La Paz. So this year will be a Peninsula run, but they've already announced that it's going to be a reverse Peninsula run, which we've never done, and nobody has ever really done before. So it'll start in La Paz, and it will end in Ensenada, which is totally backward from the way that it normally is. So that'll be interesting.

Ron: And what is your role on the team?

Ryan: So I'm the crew chief. I kind of like to help make key decisions and kind of help keep things upright and moving. I drive sometimes. I co-drive sometimes. I am not a key part of the driving equation. Usually, my driving row would be just like the first 130, 150 miles. Usually, the bigger driving rolls are around 300 miles. And I've certainly done those. The first 6 or 7 years that we were raised, I took full driving legs, which equates to about 12 hours in the car. It's a long time to be in the car.

Ron: I've seen those races on TV. They look utterly brutal.

Ryan: It's brutal. Yeah, it's brutal, man. And you know I'm usually fine for about a hundred or 110 miles. And then I start to get a little bit nauseous after a while. And I'm not puke or in the car, but just start to kind of get tossed around enough that you just start to feel kind of queasy and you know, I don't know. It's rough, man. It's tough. It's tough on my body. So I would say that the toughest thing for me is just feeling sick all the time when I'm in the car. So, and then it's really hard to eat and drink when you're in the car all the time. And you're just getting tossed around a lot. So it's really tough to stay energetic and to stay focused for a long stint in the car like that. So when you stop for fuel or whatever, you can pound down a little bit of energy, but other than that, it's pretty tough to open the visor on your helmet and kind of sneak a bar or something down through there.

Ron: That's great. What is the typical length of the race? You said three or four hours is what the typical time a driver will stay in the cockpit and be driving, or did I miss you or you?

Ryan: Yeah, you misheard. So typically on the thousand. So we have 36 hours to finish the race. I mean, 36 on a normal loop race and then 45 hours. I mean, 42 to 45 on a Peninsula run. So. Depending on how long the leg is, we could be in the car for, you know, ten to 14 hours, depending on, you know, how long that leg is. So that's the length.

Ron: That's crazy. I mean, all right, I don't want to be ageist, but is it like, is there young men that do the young men or women or is there like an age bias towards the drivers that are able to go through that punishment? Or are they of all ages? It just depends.

Ryan: There's a ball age in fact, there are actually some people who have actually held up extremely well over the years that still have done great. And there's actually a legend class trophy trucks that are the biggest baddest trucks in desert racing. These are $1 million trucks basically. And there's a class called the trophy truck legends class, which are basically like that, like people who are maybe, I guess, 55 and older or whatever, you know, or people that, maybe don't have quite the same edge as the dudes that are in their 30s or 40s or whatever. But, I mean, they're still really competitive, and they still have it in them to drive these long legs. And but there's people who have, you know, Ivan Stewart, who's one of our heroes, we race a Toyota, and he's a Toyota guy through and through. But Ivan Stewart, he's in his 70s now, and he raced even up until I think the last time he raced was probably, you know, ten years ago or something like that, but he raised easily into his 60s and has taken stint in cars, semi-recently .

Ron: I have three bulging discs in my lower back, and the idea of being in a car, like a truck like that, being tossed through the washing machine for 12 hours that just, it literally sounds, it sounds so exciting, and it sounds like torture.

Ryan: Yeah, you would not last long with those three bulging discs. I can tell you that. So yeah. There was a famous racer Parnelli Jones, and he said, racing in the Baja 1000 is like being in a 24-hour plane wreck.

Ron: Wow. So it really is an impressive feat to simply finish the race.

Ryan: Yeah, and honestly, like, I mean, we usually say, I mean, it's kind of a war of attrition. So there are a lot of people who break from they drop out from mechanicals or from whatever. And usually, we say if we can save the car, we practice mechanical sympathy is what we say. If we can get a running-driving car to the next set of drivers and then ultimately to the finish line, we stand a pretty good chance of being on the podium. And if we can get it there, a lot of times we can just be first place, too.

Ron: I'm curious just to run to pull that thread, how do you keep the car mechanically sound? Is it in the preparation of replacement pieces and parts and kind of like how you stage to be prepared when the truck rolls into the next pit and you already probably know what needs to be swapped out or fixed? Or is it the other side of the equation? The driving side needs to be done a particular way for it to stand a chance. Or is it all the above?

Ryan: There's actually there's actually two parts to that. Well, three, and two of them are the two that you mentioned. We normally aren't swapping parts unless we know that they've had a problem. But the part that you didn't mention was the prep, the race prep. So, you know, we'll start in September or October for the November race. Usually September and we replace a crazy number of parts on the car just because we know that's what it's going to take to get it across the finish line. So every just I mean, it's the number of parts that were replaced. And ultimately, they'll end up being our spares for the next races and that kind of thing. But so we start with a really clean race prep and then ultimately, during the race, we're driving in a way that we know the car is going to hold up. We're trying not to, you know, there's a line, there's a really cool movie about the Baja 1000 called Dust to Glory. And if you haven't seen it, you need to go watch it because it will vividly paint the picture about what it's like. But there's a guy in there that says any idiot can get in a car and pin it, in other words, like you can anybody can go stomp on the gas, right? But there's actually some skill to avoiding rocks or driving in a certain way that the suspension doesn't get tweaked out all the time. And I think all of our drivers do a really good job keeping the car together and not beating the crap out of the car. So that's probably the number one thing is driving the car in a way that it keeps everything nice and then the third thing is for sure. Like we have every single spare part you could possibly imagine and our crew is like top-notch , man. Like we could replace anything.

Ron: That's amazing.

Ryan: Yeah.

Ron: Well, Ryan, we've done it again, my friend, we've landed at just over an hour. So I think we're going to wrap up here anyone that's tuned in and wants to get in touch with you directly. Where would you send them?

Ryan: Well, I mean, dick and contact me through, I mean, they could just email me on my email, Ryan, a ratioav.com, or my phone number. Phone numbers on the website or I mean, it's probably the easiest thing, just phone numbers on the website, or by email.

Ron: Go ahead and read us out that phone number for our listeners.

Ryan: 801-215-7070. That's the office phone number.

Ron: Awesome. Ryan, thanks again for joining us on show #244.

Ryan: Thanks for having me, Ron. It's been awesome.

Ron: Thanks for tuning in to another episode of automation unplugged. For a full transcript of this show and all previous shows, head over to our website at onefirefly.com forward slash AU. There you'll find links to all transcripts, show notes, Facebook Live recordings, and resources mentioned during the show. If you enjoyed this episode and like to hear more, follow us on Spotify, iTunes, or wherever you listen to your podcast. Please follow us on social media. We are at One Firefly LLC on all platforms. Don't forget to tune in next week for another episode of automation unplugged as we dive deeper into technology trends and the fascinating people that make up the custom integration industry. Bye for now.

SHOW NOTES:

In 2002, Ryan founded Ratio Inc while studying at the University of Utah, where he earned his Bachelor's degree in Mechanical Engineering in 2005.

Since then, the Ratio team has grown to a dozen people and countless great customers and vendors. Ratio Inc caters to luxury clientele in Utah's mountain communities and the Wasatch Front and specializes in low voltage systems, including Audio/Video, Lighting Controls, Motorized Shading, and Security Products.

When Ryan isn't messing with AV systems (at work or for fun), he might be found crew-chiefing for his off-road race team, fantasizing about snowcats, or playing bad covers in his power duo "Real Topeka".

Ron Callis is the CEO of One Firefly, LLC, a digital marketing agency based out of South Florida and creator of Automation Unplugged. Founded in 2007, One Firefly has quickly became the leading marketing firm specializing in the integrated technology and security space. The One Firefly team work hard to create innovative solutions to help Integrators boost their online presence, such as the elite website solution, Mercury Pro.

Resources and links from the interview:

• Ratio Inc. Webpage
• Ratio Inc. Facebook
• Ryan Davis LinkedIn
• About HTSA

See Also: Automation Unplugged #162 with Ryan Davis