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Join Ron Callis, Owner & CEO of One Firefly and industry veteran, as he talks business development, technology trends, and more with leading personalities in the tech industry. Automation Unplugged (AU) is produced and broadcast live every week.
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An AV and integration-focused podcast broadcast live weekly
Join Ron Callis, Owner & CEO of One Firefly and industry veteran, as he talks business development, technology trends, and more with leading personalities in the tech industry. Automation Unplugged (AU) is produced and broadcast live every week.
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Show #258 features John Heyman, Chief Executive Officer of Snap One

Don’t miss the conversation with John Heyman, CEO of Snap One. Livestream Automation Unplugged on Wednesday, January 31, 2024, at 12:30 pm EST.

This week's episode of Automation Unplugged features our host Ron Callis interviewing John Heyman. Recorded live on Wednesday, January 31st at 12:30 pm EST.

About John Heyman

John Heyman is the Chief Executive Officer of Snap One and has worked in the technology industry for over 30 years, including as the CEO of Radiant Systems, Inc., a publicly traded business until its $1.3 billion sale in 2011. Since joining Snap One in 2015, John has led the company through explosive growth via new product introductions, entry into new markets, key strategic acquisitions, and an IPO in July 2021.

John has also been a successful investor in a number of software firms across many sectors. He served as Executive Chairman of Influence Health, the Board of Directors of Manhattan & Associates and Dinova, LLC, and Chairman of Impact Innovations. He has also served the non-profit sector, in various roles at University of Georgia, the Metro Atlanta YMCA and Holy Innocents Episcopal School.

Interview Recap

  • He has been CEO of Snap One for nine years.
  • Being an entrepreneur and making a career pivot into technology after working in consulting.
  • Company experienced significant growth, reaching $400 million in revenue.
  • Instituting Challenges in Small Business Evolution

SEE ALSO: Show #257 features Tom Doherty, David Weinstein and Joaquin Rivera

Transcript

Ron:

Hello there, Ron Callis, here with another episode of Automation Unplugged. Today is our normal day, and it's our normal time. So it's Wednesday, January 31st. For all those in sales, I feel for you. I know you're out there trying to hit your numbers to close out a strong month. Myself included, and my team included. We are certainly trying to do that. And today we are here for show number 258. So for those that have been tuning in for a long time, this year, we're currently on a run of trying to put out two good shows, quality shows, quality guests a month. And our guest today certainly fits that bill. And in fact, this one happened pretty quick because John Heyman, CEO of Snap One, I saw him on the socials. I've known John for a long time, but I saw him out on the socials, and he was out talking about just some big moves that are happening at Snap One and happening with C4. And I said, "John, I would love nothing more than to bring you on the show. And number one, just learn more about you and your background and your leadership style and some of those experiences. I know that there'd be a lot of knowledge there to share with our audience. And also, you know, hear it directly from John, you know, his vision for the industry and why they've made some of these business model changes that, it's my opinion, they're super interesting, and I think they're absolutely moving us in the right direction. So we're gonna, we're gonna have fun exploring that. And without further ado, let me bring in John Heyman.

Ron:

John, how are you, sir?

John:

Doing great, Ron. How you been?

Ron:

I'm good, man. I'm embarrassed that I've been doing this show since 2017, and I haven't had you on the show before. So shame on me, but we have you here today.

John:

Good to be here. Good to be here.

Ron:

So John, for those that are not familiar, first of all, let's maybe just go through your role. Go through a little bit about your role, what that entails. Go through Snap 1. If you're living under a rock in this industry and you don't know what Snap 1 is, I'm betting anyone listening or watching to this is probably your customer, but there's a chance there's someone out there that's not your customer. So give us the high level of your role and the company.

John:

Great. Sure. I'm the CEO of the company. I've been the CEO for nine years now. I used to say that I was an industry outsider, but I can no longer say that. And so I joined the company nine years ago. Snap One is a company that was built by integrators, and it was built for integrators. And I think you know the guiding principle over the past quarter of a century for the company that we try to continue every day is that we're here for the integration community. They have a very, very big opportunity in front of them. They have a very complex job to do the installs and provide the support that they do. And many of our people have been integrators. They've been on ladders. They've pulled wire. They know the problems that can arise. And what we've always tried to do is build hardware products and software platforms and make it really easy to buy from us and get service from us. And as the industry has continued to evolve in terms of the experiences we try to deliver, we've tried to evolve with it. And so you know my job is, you know, we have a fairly sizable company now. We're public. We do over a billion dollars of revenue. I don't really do anything on a day-to-day basis that affects our end customer or our integrator's experiences. So you know my job is really around setting the strategy of the company, providing leadership to our teams, making sure I'm doing my job in terms of getting out into the integration community and listening to what integrators want and need to succeed in their business, and listening to our team members and providing the support that they need to do their jobs.

Ron:

Where are you coming to us today from? Are you from?

John:

Today, I'm in Atlanta, Georgia. We have an office here. We have some people here. We have a local office here. It's home for me, has always been home since the late '60s. We have obviously very sizable offices in Salt Lake City and Charlotte, but you know, capabilities elsewhere around the world, too.

Ron:

And you're public, so I'm assuming this is a public stat. How many people are in the company today?

John:

The exact number today, I don't know, you know, north of 1,500. North of 1500.

Ron:

Oh my goodness. And see, here at one Firefly, we have 80 people, and I'm like, man, we have so many people. I can only imagine it's just different grades of large in 1500s. Definitely a couple of steps up the ladder.

John:

Yeah, but you know, I think sometimes the hardest thing to do is go from zero to 100 employees. I mean, congrats to you guys for everything you've done. And when I joined the company, there were, I think, about 150 people inside the business. So it's been, it's been great watching it grow.

Ron:

That's amazing. That really is extraordinary. Now, John, a lot of folks are not that familiar with your background. And I promise for everyone tuned in and/or listening, I'll get to a lot of the current events and what's going on with C4 and some of the business model changes. But John, if you could take us back, man, you've been in the technology space for many decades now. Help us understand a little bit about your background. Feel free to go back as far as you're willing to go and take us through some of that experience.

John:

Well, I've always been an entrepreneur. And when I got out of school, I spent a couple of years in consulting and realized that you know billing my time by the hour wasn't something that I wanted to do the rest of my life. I was fortunate enough to get into a couple of exciting businesses early in my career. One of those businesses was being really affected by technology. This is in the late '80s, early '90s. I made a career decision that I needed to kind of pivot my own career into the technology field. I was fortunate enough to meet two software developers. And together, we built a business that changed the retail and restaurant technology industry and very specifically led the industry from using solid state cash registers at the point of sale to open personal computers with graphical software running on it, which was really easy to use. And that led to us building other services around that point of sale, around customer loyalty programs, email marketing, food cost systems, inventory control, labor management. And as the prices of PCs plummeted in the mid to late '90s, that meant far more small businesses could afford it. So, not unlike this industry that we're in today, we went to market through a set of channel partners integrators. It's just integrators that, rather than serve the home, serve the restaurant or the retailer. And we built a model where they sold our point-of-sale systems and led the transition and the capabilities of a small business restaurateur or retailer to do so many more things with technology than they could have with a cash register system. And you know, we then lay it on a SaaS model for the industry. And we built that company over close to a 20-year period. We were public. I was the CEO of the company. And then we were purchased by a cash register company, if you will, NCR, in 2011. And I since then was an investor in technology companies, helped start a couple of other ones, and met the founders and the investors in Snap AV at the time.

Ron:

Before we go there, John, can I just ask? I'm curious. This probably is not stating it accurately, but it sounds like you almost helped convert the point of purchase from analog to digital. At least that's what I'm visualizing, hearing you describe that. Yeah. What was that like? How much resistance? Was there resistance or friction in that change? And if so, what was it like for you to be basically the tip of the spear causing that change?

John:

Yeah, well, we were probably too young to know better. We were all in our early 30s, but what we felt like was a cash register cost a very small amount of money. And it had very little in the way of feature and functionality in terms of things that, for instance, a restaurateur could do with their, you know, building a customer list, emailing to them, understanding what food they were wasting in the back office, being out of stock, helping them with pricing decisions. And so we came to market with a system that was, you know, probably around five times the cost of a cash register system at the time, which is a big sale. Like you're now talking to a restaurateur about investing instead of a few thousand, $30,000. And so you really had to focus on the value that you were going to provide and really change the conversation from one that you know here is a device that lets you process a transaction to here's a system that's going to let you run your business, manage your labor, manage your inventory, drive growth through marketing programs with your customer. And so, you know, changing the narrative in the industry that this was a strategic investment versus something you just had to do to be able to cash somebody out at the register was quite a change. And you know, it took, you know, five years to really catch on. I mean, we went from zero to $400 million. It wasn't exactly linear. The first five, six years, you know.

Ron:

Were there some points in that, John, where you weren't sure you were going to make it? Or did you always know this was a brilliant idea?

John:

Personally or the company. Yeah, yeah. I mean, we worked. We worked till midnight. We really worked. A lot of people say they worked till midnight. We worked till midnight all the time. You know We were beg barring and scraping together money. We never raised venture capital. So sure, there were times when, you know, we didn't know if we were going to make payroll on a couple of Fridays throughout that. But we were always able to scrape money together. And so it was a +.

Ron:

What did it feel like on the other side of that? You know, if you were in your early 30s, then you were in your early 50s when you sold, you sold that company, correct?

John:

Yeah. I mean, it was in a way sad because, I mean, you build a company like that in the same way I would say around SNAP 1. And I think everybody on your, I've met so many integrators who consider their team like their families. Yeah. And you know, when we sold it, it was the right thing to do for the company. We didn't have the kind of reach globally that NCR had. And so by selling the company, it was clearly the right thing to do for shareholders, but for our team members. Like It gave them growth opportunities that we weren't able to provide them. And so, you know, it was sad, but it was exciting to see the company kind of fall into somebody's hands who could do something more with it. And you know I still, a lot of those people are friends of mine. The channel partners are friends of mine still. And you know, it's just exciting to see kind of the businesses they've built with somebody, again, bigger behind them than we were. Ron:When that transaction happened, did you stay on for a bit for some time period or were you immediately out? John: I left the day of the deal. You know, I think you know the best thing to do for the integration of those two businesses was for me to get out of the way. We had built a strong team. It was time for them to step up. It was an opportunity for them to step up. And you know, I think once you've been the CEO, it's hard not to be the CEO.

Ron:

Yeah, that makes sense. Well, bring us to Snap.

John:

Yeah, so you know found Snap, realized I didn't love just investing. I really missed being part of a team that woke up every Monday morning and had to make the sausage. Snap had a few ingredients that I really loved. I loved the passion they had about the integrator. I remember when I went into the building the first time, there were banners everywhere that said, create raving fans by making their lives easier. And that continues to be a big part of the mantra inside the company. And I'm a customer satisfaction zealot. And seeing that culture was something that was really important to me. I spoke to a number of integrators. I, by the way, had installed two very large control systems previously in my home. And I saw the effort it took to do that. And I compared that to what an install in a restaurant or a retailer looked like. And I said this can be a better experience. So I saw a problem, not in the company, but in an industry. I saw a problem in an opportunity. And I saw a company with a culture. And so you know, I jumped right in, and you know, amazing people that care deeply about this industry and are committed to doing the right thing. So it's been a great nine years.

Ron:

When you jump into a new company, or you jump into an existing company, a tenured company that's been around a while, what do you do? Do you immediately come in and start making change? Do you come in and start observing? Like, what was your process of understanding the state of the company and the industry?

John:

I promised everybody I was going to ask a lot of questions but just sit back and learn for the first six months. I went out with I remember my first week, I went out with Jeep Paul Hess, who is our Chief Product Officer today, and David Moore, who's our Executive Vice President of Engineering, two longtime leaders in the industry. And I remember going out to the West Coast and spending a week out there. And I had expected us to try to go meet with every owner of every integrator I could. And what I was so impressed with is, you know, we stayed out there a long time, and we started super early in the morning because that's when the techs are loading the trucks. And these guys wanted to talk to the techs. They had notepads. We talked about every single product and what, the issues were they had or what they liked and how we could make them better. And so I did that in every area of the company. I promised there'd be no changes for the first six months. In six months, we made some changes. But you got to go in, you know, Snap head and heads, amazing people. And so I had to learn about the industry. I'm still learning about the industry.

John:

How would you describe your style of leadership?

John:

I think most people would say, probably if they use two words, probably collaborative. And I would hope they say kind of transparent. I think it's really important if you're the only way we can deliver for our integrators and their customers is through our team. And I think, you know, people want to understand kind of what's happening in the business, what we're being successful with, what we're not being successful with. You know, I think if you sat inside a meeting inside the company, you'd find us celebrating the success we've had if it's a 60-minute meeting for five minutes. And then the other 55 minutes are, what are the challenges? Where can we be doing better? And that's where we focus. And you have to have a transparent and collaborative style so people feel the freedom to speak up. Even, you know, I'm on some integrator tech groups. I want to hear the constructive feedback. That's how, that's how we get better as a company.

Ron:

I know, because I've watched you speak in the last year, I know you're very focused about the customer experience. And we have our installers and integrators delivering varying levels of quality, and that execution from excellent to, you know, lacking, just stating the obvious. Just staying on that topic of leadership, what comes to mind for you? Or what are some of your first or initial thoughts about what the folks listening could do to be better leaders, better leaders for their team and for this industry? Anything that strikes you as obvious or maybe interesting to consider?

John:

That's a great question. I think, you know, part of leading is setting expectations. And you know what we do for our end customer, what they dream about when they're buying the technology. I think too frequently is, the expectations are set very high. And there's very little in terms of expectations around what it's going to take to get that system to really come to life in your home. And so, you know, inevitably, I think there are systems that are oversold and then under-implemented, and that creates issues. And it is hard. My current integrator, the lead tech is amazing. His name is Maui. I hope he's listening. But you know, sometimes when I'm pinging him at night, I know he's with his family or doing something else. Or if it's during the day, I'm taking him off the job that he's trying to implement for somebody else. God forbid if it's on a weekend that I feel like I'm bothering them. And the expectation, it's really important to set an expectation with a customer around what you're going to have to invest in your own time as we take this system from the initial install to the wonderful experience that we want you to live with for the next ten years. And I think that selling better, first of all, I think we can sell more. I actually believe this industry could give itself a 30% or more raise just by selling better. And then that creates a much better environment for the techs to operate in. And I think you know that leads to really great team engagement. And we all know the labor challenges of the industry. Let's first figure out a way how to make our team members happy, productive, want to spend their careers in this industry and drive more for the end customer and for the integrator they're working for.

Ron:

I agree. No, no, that's great. That's a line of, you know, a line of thinking and a line of beliefs that I have. You know, going all the way back to 2010, I was, you know, involved in volunteering with CEDIA and their education. And, all the way to the present, I've participated in one Fireflies participated in different types of CEDIA business education. But something I've observed is that when you go to training, whether it's a CEDIA Tech Summit or a CEDIA show, or I mean, you could be on the AVIXA side of the equation as well, is that so often the trainings that the techs and the integrators want to participate in and volume is often all the black box stuff. I'm not trying to call anyone out, but I'm saying a lot of, you know, learning about the products, learning about the latest and greatest, and not always on the softer skills of leadership and culture and HR. And as you just were talking about loving on your people, and taking great care of your people, being an attractive workplace, being an attractive industry to participate in, it's often not where these businesses gravitate to if they're going to even go get training. Yeah. So I'm assuming some of this is going to come to some of the changes that you guys are making or instituting. Yeah. But it's been a challenge. Is it not? I mean, are you seeing that from the Snap One side of things of how to bring that set of beliefs that it sounds like you certainly have personally and professionally, but to try to get these small businesses to evolve in their level of professionalism and execution so that overall their execution and delivery in the last 10% is better?

John:

Yeah, yeah, I think that's what, you know, all the millions of dollars of investment we make every day is in that regard. I think first of all, let's recognize that integrators have been heroes in this country and outside this country over the past three years. When COVID hit and everybody started working at home, and you know, the integrators, the demand for their services was never greater. And they're working overtime outside their home every week so people could live or work inside their home. So they were heroes. And because the capacity of the industry was constrained, they had to work really hard to do that. And they weren't able to work on things what I call around their business. They were working inside their business. I mean, every single morning, they were waking up and doing installs and proposals. And they didn't have time to do anything else. So, you know, now is a time for the industry to take its breath a little bit and kind of lift itself up and think about what are the things we have to do as an industry to prosper over the next decade. Because over the next decade, they're going to see demand like they've never seen before. Inside the United States, the United States is underhoused by roughly 17 million homes. Seventeen million homes are going to be built over the next decade. All the homes today that have technology that this industry has installed in it will have to go through some sort of upgrade over the next ten years. And people aren't going to want to sell their homes with their 3% mortgage. So they're going to keep investing in those homes. And technology keeps improving. I'll cite our Luma. You know Luma X20 is a significantly better product than Luma X10. So when we come out with products that improve people's experiences in the home or in the business, people are going to want to upgrade. So, the industry has to get ready for that. And coming off kind of the COVID and supply chain, you know, headaches, I think this is a great time to set the foundation for the future.

Ron:

Talk to me about your vision. I mean, speaking about future vision, what do you see as the issues or concerns of the delivery of systems today and the effect that's having on the perception of our industry today? And I believe that you believe similar set of, I don't know, I'll say the word belief again. And that is that our integrators, by and large if you were to pull them in a room and say, could the customers that you serve ultimately be happier? They could be happier. I think that some integrators, many of them, many of them that I know, do exceptional jobs of making customers very happy. But sadly, many of them are very focused on moving on to the next project. And, you know, we're a marketing agency, and I say, "Well, hey, don't you want to go back and email your customers?" Sadly, some of them go, "Absolutely not." I don't want to call them or email them because they might tell me that something's wrong. And I just, it's an issue. It's an issue that's been going on for decades for our industry. And I know I believe you have strong convictions around this. I'm just curious. Would you mind sharing that? Kind of What do you see?

John:

Well, I see a couple of things, and I think they're both related. I think the first thing is we ask integrators, we do surveys. Everybody's participated in our surveys. We ask integrators on a 1 to 10 scale, what kind of kind of service do you think you provide to your customers? And on a 1 to 10 scale, they say, on average, an 8. The integrators think very highly of the service we provide. Then, we do extensive customer surveys of the industry without regard to the products they're using or the integrators they're using. And when we ask the customers, we ask them the ultimate question. On a 1 to 10 scale, they're at a 4. There's a disconnect. And you've been in this industry a long time. I've now been in it. We talk to end customers all the time. And I think four is closer to the truth. Almost regardless of integrator, customers are not content with their experience. So that creates an issue for certainly an integrator to get the upgrade opportunity. The last thing the customer wants to do is use their existing products or their existing integrator. That's a problem for the industry, but it's an opportunity for the industry. And so, and, by the way, we don't view that as a situation that we as an industry can tolerate. We say we have to create raving fans, not just with the integrators, but we got to create raving fans at the end customer level with this industry. And so then we try to ask the question, why? Why are customers unhappy? And this has been a journey we've been on since we bought Control 4, and Snap AV, at the time, had gotten big enough that we decided as an executive team that our growth depended on the industry's growth. And the industry's growth was going to be hampered if we didn't fix this customer satisfaction problem. And so we said to ourselves, how do we do that? How do we do that? It's a big problem. It's a big, hairy problem. Especially in a community of integrators that there is no standard way of doing business. They serve different customer sets. They have different preferences around products, et cetera. And so we said, what do we have to do as a company? And that has led to the Control 4 investment. That has led to the opening of brick-and-mortar stores. That has led to the launch we did a couple of weeks ago of Control 4 Connect and Control For Assist Premium. And what we're trying to do is make investments to make the installs easier, better, and make the systems after the install as reliable as the discerning customer we serve expects them to be. And that's guided us along the way.

Ron:

You're using a tool called an NPS score. Can you talk to the audience a little bit about what is that and how are you guys using that?

John:

So let me just first say the ultimate question was the first book. It was written by a gentleman named Fred Reicheld. And the ultimate question is, on a 1 to 10 scale, how likely are you to refer a friend to the service or product you're using? There's a science behind this. I would encourage everybody to read this book. It's called The Ultimate Question. It's one of the easiest reads of any business book I've ever read. It changed my life 25 years ago. We'll drop it in the show notes and on the socials. We'll put it down in the comments. Great. And hopefully, you'll get some sort of commission, Ron. You know what? We need to set up an affiliate fee thing. But at the moment, we'll just do it out of kindness. So we'll put that in the notes. And basically, you know, after extensive studies, what it shows is if you take care of those companies that have the highest net promoter scores, basically grow one and a half to two times faster than the industries they're in. So this is why SNAP one is so focused on making sure our scores with the integrator community are high, which they are, why our technical support is so strong, why we've opened brick-and-mortar stores because people said we want you in our local communities. But what we hadn't done until we bought Control 4 was really look at what's the end customer's happiness with the industry. And so I've talked to so many friends who will say, give me an integrator. And I'll give them an integrator's name and say, I've used that one. I don't want to use them again. I mean, that's bad for your business. They're not going to call you to do a network upgrade. They're not going to call you to do a surveillance upgrade. They're going to call somebody else. And so taking care of your customers, you know, becomes the lifeline for your business's growth in the future. It makes it easier to sell to your customers. It gives you references. And when you're providing that kind of service, people generally don't argue with you about price. So your margins on every project are better. And then, by the way, you have happier customers. They're not complaining to your employees. So your employees are happier and love working for you. So, this has been a book that has guided me throughout my career. I didn't have to implement it at Snap. It was already there, which was great. And I would encourage, I've also gotten some notes from integrators recently as I've spoken about this. They're implementing it in their businesses. So, if you're not implementing it in your business, my guess is your customer set is going to trail your competitors. And it's just a really easy system to implement. Ron, I think you guys have implemented it as well. So now the problem is when you identify that the customer's not happy, that's a symptom. What do you do about it? What's the cause? And that leads to a number of decisions you can make inside your business to drive that customer setup. But the first question.

Ron:

I'm going to ask a technical question, a question of detail, and I'm betting you know the answer, but don't feel bad if you don't. I don't immediately know it. What percentage of your customers? So let's just talk about you, snap one of your customers, you're serving, let's say, users of your technical support. 'Cause I know you have an NPS score. It's very high for users of your technical support. When you survey a population of users of your service, what percentage of that population needs to respond for that answer to be statistically valid or viable?

John:

Yeah, I think we have, you know, we have a large number of integrators who do business with us. So, I think we're looking for something in the high single digits, which generally creates hundreds of responses.

Ron:

Hundreds of, and that's, it's all about statistical validity of the population.

John:

The population is in the hundreds and sometimes more, depending on the question we ask.

Ron:

Okay. All right. So what do you do when you, what do you do when you notice the score? And I'm gonna say you as SNAP or you as the integrator pulling your customers, what do you do when the number's not where you want it to be?

John:

Well, first of all, this is back to the notion of being transparent. Like, we have to have a transparent conversation with ourselves about why. Like, if the answer is around service and understanding that when the customer has an issue on Saturday night and they can't use their movie theater, the callback on Monday doesn't work for them. Their kids are crying because they can't watch the latest Disney movie. And then you start to cry because they're come up to the main floor and bug you when you're trying to have company over. So that's an example, but we've kind of deconstructed it. And generally speaking, it gets to the ongoing reliability of these wonderful systems we install. People love the movie theaters we build. People love the outdoor experiences. They love the security they get from a great surveillance system, et cetera. And they love those things so much that when they're not working, they're very frustrating. And these, again, are discerning customers we serve. When they go on vacation, they stay at the Ritz. They eat at nice restaurants. They drive nice cars and have those service experiences.

Ron:

They have high expectations.

John:

And that's what they expect of us. And if we don't deliver it, the industry is not going to prosper the way it should. And so when we break it down, it comes down to product, and it comes down to service. On the product side, this industry has evolved a little bit like my old industry. You know When I used to buy systems of this industry, they were solid state. The software was firmware running on the devices. There wasn't true open software like OS 3 or oversee. It was all kind of solid state. You put it in, and you didn't really have to change it for the years of ownership. So today, number one, everything's running depends on software in the home or small business. Two is there's been a proliferation of the types of devices that are going in. So there's far more devices that are connected. And they're generally disparate. Integrators are great at picking what they think are the best products for the job. But they're generally from a number of different manufacturers. Sometimes, they're designed to work better together, and sometimes, they're not. And sometimes, firmware upgrades happen from one manufacturer, and the control system can't test them and guess what happens to the install. And so keeping the software platforms current and tested, building product solutions that are more integrated than not, and then understanding that these are still products that, because of the technology in them, there are going to be times when they require service. And so building a service model that the customer can rely upon. So, on Saturday night, if the movie theater's not working with a phone call, they can get it working. Those are all the things, the components we see when we ask the customer, why aren't you happy that we need to improve on as an industry?

Ron:

So here at One Firefly, we have the perspective of building websites and doing marketing for integrators. And I can go back, I'm going to go back 10 years, back to Ehiji, you know, one of the first service software solution, hardware companies. And then, you know, bring that back to, you know, all the various solutions of today. And I know C4 ultimately acquired Ahiji, and of course, Snap acquired C4. But it's my observation, I'm going to say, take this with a grain of salt, that still, although Jason Knott, formerly of CE Pro, and Julie Jacobson, formerly of CE Pro, were regularly talking about RMR and service and maintenance plans, and this just being not only great for the customer, but just great for the business model of the integration firm to build a recurring revenue stream. It still strikes me that the vast majority of our industry do not have such a program in place. Yeah. Such a program of recurring revenue, but I'm going to zoom in on the service and maintenance and upkeep. And I'm going to challenge the ongoing customer happiness of their customer. Some do, some of the best and brightest businesses in our countries absolutely have that in place, and they lead with it. And every customer gets a choice. But I have an opinion that the majority, I'm going to call it more than 50%, do not have that in place. And I think that's one of the symptoms of the maybe an unreasonably high level of dissatisfaction at the consumer level. Yeah, Because they buy this stuff, and they put it in their house, and this stuff breaks. Yep. And that's no one's fault. It just does. It's electronics. It breaks.

John:

Yeah, well, it's electronics and a software. And you know this is back to expectation setting. Nobody's telling the consumer that they're putting a robust piece of software in the home. And with that software that you, the customer, as you own this for the next 10 years, you can actually expect the products to improve. They're not solid state. They're going to have new features and functionality like voice, like new ways to control your lighting, like surveillance analytics. You're going to, in this world of cybersecurity, there are going to be investments to keep it more secure. You can expect the experience to improve over time, but it happens through software. And that is something that these same customers are used to seeing in other things they buy or other ways they operate their own businesses. And so what we've done, what we did after years of being in the market with products like Foresight and Parasol, we said, we've got to be the partner we want to be to this industry and to help the integrators build more healthy businesses. We've got to do this for the industry. And this is the beginnings of a software model. That's number one. Number two, they should have an expectation that because of this software model that's very moderately priced, your system's going to improve over time. And here's a service model. Here's a service model that if the integrator feels like they provide great service, great. If they do the ultimate question survey and find out their service should improve, we're providing a service platform for them to introduce to their customer. And we're doing it in a way that they make money from day one, that they can depend on a partner who they know is going to be there. It's a billion dollar plus business that has tools like Composer that can help the customer on the fly do things, but the integrator can still control the system and the experience and differentiate their offering to the customer. And we think that model of a moderately priced software model and a service model are the things that are going to drive raving fans at the end customer level. And so when they build their second home, or they're at a cocktail party, and everybody's complaining about their system, they'll say, call these guys because they'll do it for you.

Ron:

So Andrew, I had just put it on the screen. And for my audio listeners, I'll just read it. Andrew says, they get it about their iPhone. They forget it about it with their home systems. So it's so accurate. So you're going to help them. Snap one is going to help the industry and help the customer get a better experience. There's a component of software upgrades or a software model that is going to be required at some point here in the coming year. I'd love for that detail. What is that, and when is that? And then there's a variable component. There's another level of service that's going to be optional. Can you kind of break that into describing.

John:

Three different products. First, we're making the Control for Connect, which is the software model, mandatory. It's got three pricing tiers, zero, $99 a year, and $249 a year. Zero is on our CA1 controller. And the other price points have been tested out in the market with our Partner Advisory Board. And we also have the experience of Foresight, which has over 100,000 subscribers on it. So 0, 99, 249. It's mandatory. And with that, you get upgrades. By the way, the integrator controls when the upgrade is done. You'll get new features and functionality. We've got some really exciting things planned in that regard. And you can be assured that the integrations in your home will continue to be kept up to date. Then, we have a service model for the industry. That is not mandatory. If you're asking me as the CEO of SNAPone, I think it's really important that you, as an integrator, drive very high customer satisfaction. You can do it through your own service model, but we have a model that you can do it day one. And the two models are Control 4 Assist, which is $899 a year, or Control 4 Assist Premium, which is $2,999 a year. And the difference between those products is one is reactive. If there's an issue, call us, and we'll respond. Proactive gives you what you would expect. We're monitoring the health of the home and the devices, but it also gives you some other services like our Assist premium techs have access to Composer Pro. If you need something done, like a quick scene creation, we can do it for you. We'll tell the integrator about it. There's a lot of things that we won't touch because the integrator needs to have control over the system. But those service products are optional. Again, we think it's really important that the industry provides great service. Here's a way to do it. And so you know, we've been in the market with Parasol. We've been in market with Foresight. We are really excited about this. At the summit we had a couple of weeks ago, I was pleasantly surprised by the number of integrators who see assist and assist premium as real leverage points for their business, not just to improve customer set, but make their techs productive. Like this industry has a labor issue that we all know about. What better way to kind of address the labor issue than make your own techs more productive? And so, you know, I was really inspired by that at our summit.

Ron:

And in all of those programs, there's a revenue share with the integrator. So you're moving all of these businesses automatically into a recurring revenue stream business.

John:

We're building rails for the integrator to deliver services to their customer. And so with Control 4 Connect, they get 40% of the revenues every year with Control 4 Assist and Assist Premium because there's more labor on our side. I forget the exact percentage, but it's below 40, but it's above 30. And we've already got other products in the works like Luma Insights, which, by the way, just won a big award at ISE that I found out about.

Ron:

Congratulations.

John:

Thank you. And you know we're easing into that. The subscription around Luma Insight is free for the first few years, but we're going to keep investing in video analytics.

Ron:

Is that an AI analytics type solution?

John:

Yeah, it's very exciting. Very exciting.

Ron:

It's such a neat new frontier for video.

John:

I think there's so much discussion in the industry about lighting. And I think lighting is a very exciting area. We're making big investments there. Surveillance, like the security of your home or business, and the traditional security systems, which tells you when somebody's broken in, versus, again, a service driven by video analytics and cameras that's going to drive recurring revenues. So we're thinking about these things, and this is our initial kind of launch of a service-based model for the industry.

Ron:

I'm going to ask you a total wild card curveball. Promise you it's not a gotcha of any kind, but I'm just curious. It's something that's been close to my heart, and I've been kind of on top of it and thinking about it critically for a while. This artificial intelligence surge, really, you know, since ChatGPT was released in, what, November of 2022? Yep. It was really took the whole world by storm in 2023. It's likely gonna be impacting, not just ChatGPT, but AI at a, you know, the big picture, it's gonna change the world we live in. Is there any high level thoughts you have? Kind of what are you doing at SnapONE?

John:

Yeah, it is very exciting. I mean, there have been points in my own career that something excites me about technology, and this is one of those. I've played around with it personally. I think there's two different avenues of it. One is how we can use it to run our business and help the integrator. I think, first of all, I think we have to be very careful as an industry with the data of the homeowner or the small business. So that is sacrosanct. We're not going to leverage that in any way, shape, or form. But what it can tell us is things around the quality and the reliability of certain solutions. Oversea is in over 500,000 homes today. We know what the reliability of those homes look like. We can start thinking about that data and making suggestions around what you might better put into a home. It also will tell us things about our products to improve them. And maybe we can tell other manufacturers things about their products in terms of benchmarking to improve them. So that's one area. The second area, though, is how these smart living experiences are going to come to life. And when you have a system in your home, and you know again, you know our install base continues to grow. There's learnings we can take to make suggestions to you about how to use your system, how your system will learn about things like you've walked into the home. The lights just automatically turn on, but only the lights you want it to turn on. So I think, you know, one of the appeals to me of joining the company was, you know, I'm old enough that I used to watch a cartoon called The Jetsons. And I used to really enjoy it. By the way, I watched it when it was on prime time at night.

Ron:

All right, I watched the reruns in the '80s. You watched it first runs?

John:

That's right. And so you know, I think I think this is what's exciting about the industry is how all this is going to come to life. And I think AI is going to be important, but I think it's also something we do have to kind of watch out for in terms of the protection of customer data.

Ron:

Yeah, I agree. Andrew's still tuned in. Andrew says insightful use of data for clients benefits. I think using AI for analysis of data and insights is one of the most powerful superhuman abilities of those tools. And I think the fact that you guys are already thinking about that, thinking forward about how to benefit the customer and your customers, the dealers. That's really neat. It's actually one of the first times I've heard a industry leader in our channel talk about using AI in that way. And it's classic, and by the book, the immediate benefits of these tools are to have it analyze your big data. And I understand keeping client data and small business data sacrosanct and out of those data sets, but letting it crunch those data and help you see things that can be hard for the human to see without that superhuman computer ability. That's super interesting.

John:

It's been great for our quality group. We take a lot of that a lot of our R&D just goes into making our existing products better. And so that's something. Yeah, I think one of the biggest opportunities for the industry is just make what we do better for that.

Ron:

Just better, just higher standards, just do better work. I'm going to close out here, I'm mindful of time and your time, John. I'd love you to pull out your crystal ball, maybe your crystal Magic 8 ball, and look forward into 2024 and maybe the next year or two. This is an election year. Obviously, the world has all these scary events happening all over the world. I don't need repetition. I personally try to watch as little of the news as possible. It just helps me sleep better at night. And you've already expressed earlier in this conversation, there's a big picture shortage of housing in North America. And that's super positive for our industry when you look forward ten years. And at some point, those homes are going to get built, and there's going to be a demand. What do you see in the next 12 to 24 months? And I'm mindful you're a publicly traded company. So you can say what you're allowed to say.

John:

Well, I won't speak about kind of the company per se, because we are public. I'll do that on our investor call.

Ron:

Earnings calls, yeah.

John:

Yeah. I feel like we had a bit of a bottoming out over the past six months in the industry. Again, I've spoken with a number of integrators. I've also spoken with a number of CEOs in the industry. Generally, I think business was down last year. And it was down. Let's not forget, prices were up. So, volume was actually down more than we thought. I think that I think, you know, there was a shock to the system around interest rates, and there was a shock to the system around the stock market. The stock markets come back. The Fed has indicated that they're going to make some interest rate cuts this year. In fact, in 30 minutes, they're about to speak. I don't expect the interest cut will be today.

Ron:

What's your over-under on them lowering rates?

John:

Today, I would say 80%, they're going to go, I think, with one more call before they reduce rates. But I think we're getting close. Mortgages have come down. I think you see a lot of corporate layoffs right now, but that actually will lead to more small business formation. So if you're an integrator and you got a business serving kind of small businesses and residences in your community, I think you can, I think at a minimum, expect a stable environment. But I think what we'll see is more growth in the second half of the year as interest rates come down. The presidential election usually is healthy from a business standpoint. And the thing that is, you cannot argue is that there will be 17 million homes built. I mean, that is a factual analysis based on the number of homes today and the population growth. It could vary a little bit up or down. You can't argue about that. You can't argue that more technology is going to be in every one of those homes. You can't argue about the fact that existing homes are going to go through an upgrade. So you know I think now is a great time as an integrator to take your breath a little bit, think about your business. There's some really interesting things that are going on from people who are trying to help from a business standpoint as opposed to a product standpoint. You guys are doing some really interesting things. I feel like Snap is trying to do some really interesting things. There's others who are helping people focus on their business and so forth. And so now is a great time to take your breath and get prepared for, I think, a sustainable demand coming at this industry.

Ron:

I'm going to close on a high note, John. That sounds exciting. I love that vision of the future. I love your focus on excellence. And ultimately, we as an industry raising our standards to deliver a better experience for the customer and a better work environment for our people. And if we do, I mean, how can doing those things lead to a bad result? I mean, it seems obvious, but, you know, obviously wise and with a lot of experience behind that vision and advice. John, for anyone tuned in here watching or listening that wants to get in touch with you directly, how could we advise them or direct them?

John:

I think the best way to do it is John at Snap1, JOHN at Snap1.com. And if you sent, first of all, I'd love your thoughts about this for anyone listening. And the way we get better is to keep the conversation going with the industry. So, if you send me an email, you'll probably get a response that day. Otherwise, you'll get a response the next day.

Ron:

Awesome. John, it really has been a pleasure having you on the show. Hopefully, you'll consider coming back in the future. And it's just, I've learned a lot. I'm honored to have you here and appreciate everything you're doing for certainly SNAPone, but for the industry at large. It's very cool.

John:

Back at you, Ron. Really appreciate it. Thank you for your time. Thank you, sir.

Ron:

All right, folks, there you have it. Show 258, John Heyman, CEO of Snap One. John is clearly not afraid to come in and gather a lot of information, a lot of discovery and counsel with his team. And really, they are out there trying to move and shake and make big changes that keep this industry moving forward. And I mean, you can't help but be impressed. He said he came in, they were around 150 to 200 people. And here they are nine years later, they've 10xed in size. You know, there are business books. There's actually a business book I have on my shelf about 10Xing your company. And John has 10X Snap 1. And I think as an industry, we're all better for it. There are standards around excellence and performance. Anyone here that's works in a business, whether you're the owner of the business or you're at any level in the business, you know that working on your business and improving, it's not as easy saying and defining that standard, but now it's about motivating those around you to also raise their standard and perform at a higher level. And that is easier said than done. I mean, here at One Firefly, we work every day to raise the standard and to do good work and to serve our clients and serve the industry and be a great place to work. And it takes, roll up your sleeve. It takes work. And look what John and his team of visionaries over there are doing. It's really neat. I'm a bit of a fanboy, I'm going to admit. So it's pretty cool to see what they're doing. And appreciate all of you that have been tuned in for the show here. Here, I'll put up my show art. If you haven't already done so, certainly follow us or subscribe out there on your favorite podcast environment. And I'm gonna go ahead and sign off, and we'll see you real soon. I want to say we got a show next week. Deborah, look at me. She's gonna ask her for a thought. Yeah, we have a show next week. So tune in. You'll see another live interview, another awesome guest. And until next time, thanks, everybody.

SHOW NOTES:

John Heyman is the Chief Executive Officer of Snap One and has worked in the technology industry for over 30 years, including as the CEO of Radiant Systems, Inc., a publicly traded business until its $1.3 billion sale in 2011. Since joining Snap One in 2015, John has led the company through explosive growth via new product introductions, entry into new markets, key strategic acquisitions, and an IPO in July 2021.

John has also been a successful investor in a number of software firms across many sectors. He served as Executive Chairman of Influence Health, the Board of Directors of Manhattan & Associates and Dinova, LLC, and Chairman of Impact Innovations. He has also served the non-profit sector, in various roles at University of Georgia, the Metro Atlanta YMCA and Holy Innocents Episcopal School.

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: