CEDIA Chairman Federico Bausone: Success South of the Border
Even though CEDIA chairman Federico Bausone’s company is based in Mexico, his business operation can be a model for U.S. dealers.
Federico Bausone, president of Multimedia, is proof that you are never too old to learn. Despite successfully running several different types of companies in the custom electronics field, Bausone still pushes to educate himself in both technology and business. That thirst for learning is what drew him to CEDIA way back in 1993, and today he sits as the first non-U.S.-based chairman of the association.
But learning is a two-way street. Even though Bausone’s installation company, Multimedia, is based on foreign soil (Mexico City and Monterrey) where there are certainly different market conditions and supply chains, there are several operational lessons that translate very well for CE pros, including how to create a strong incentive program for employees.
Granted, certain market realities in Mexico are much different than in the U.S. Namely, there is “blurring” of the sales channel. For instance, Bausone not only runs his high-end $8.4 million Multimedia firm, but also has a completely separate installation company called Casa Multimedia that focuses on more entry-level systems working with homebuilders.
Meanwhile, he also owns Tecso, a leading distributor in the country. Likewise, he co-owns Crestron Latin America, operates 10 Bose retail stores across various regions of the country, along with one ultra-high-end Meridian retail store. Lastly, Bausone is also a partner with Ron Callis in One Firefly LLC, a Miami-based enterprise offering services such as Crestron programming, creative marketing and system design. In total, it’s a $40 million empire covering various stages of the supply chain, from manufacturing to distribution to design to retail to programming to installation.
Not Much Difference from U.S.
In terms of overall market conditions, Mexico is very similar to the U.S. Currently, the country is very affected by the U.S. recession as fewer Americans build second homes at resort areas like Cabo San Lucas and Cancun. Also, crime is a continuing problem in the country, so much so that Multimedia does not install monitored security systems because police response is sketchy. So the oft-heard argument from U.S. integrators that it’s “easier” to run a business in a nation where there is less regulation comes with a separate set of challenges.
“Markets have a way of controlling themselves,” notes Bausone. “The Mexican market is obviously smaller than the U.S. market, but there are less competitors; however, the barriers to entry into the custom installation market (as in the U.S.) seem very low , so we have new companies coming in and companies going out of the market constantly.”
Location: Mexico City, Monterrey
Principals: Federico Bausone, president
Revenues (for 2011): $8,400,000
Years in Business: 24
Number of Employees: 38
Revenue Sources: 60% Commercial/40% Residential
Specialty: High-end custom integration with a strong focus on integrating by design.
Top Brands: Crestron, Cisco, Liberty, Mitsubishi (pro)
FYI: Don’t lose money; seriously, don’t do it.
In fact, Bausone cites the difficulty of doing business in Mexico as one of his biggest challenges. “As a country we are making huge progress, but we are just not set to facilitate business as most developed countries are. Simple things like letting go of an employee are much more complicated in Mexico. Not to mention the tax structure and the different flavors of taxes we have,” he notes.
When pressed to name an advantage to operating south of the border, Bausone can’t come up with anything, especially since the economy has slowed.
“You could say that before 2008, Cabo was a booming market. Americans would come down and buy $5 million homes by the hundreds. But that’s all part of the past,” he says.
In order to deploy more entry-level systems, Casa Multimedia targets developers and builders. Bausone maintains it completely separate from high-end Multimedia, which focuses on high-end residential installations, dubbed “Multimedia Homes” in his marketing, using showrooms in both Mexico City and Monterrey. There is no crossover in personnel because Casa Multimedia uses entirely outsourced labor.
Instead of more expensive Crestron-based control, the company features Elk Products as its primary home automation product with lighting control and energy and water management. Bausone estimates these production homes count less than 2 percent to 3 percent of their value from electronics. He calls these offerings “iPod–Ready Smart Homes” in his marketing and works with builders to create no-options offerings for communities as large as 600 homes. To build strong partnerships with the builders, Casa Multimedia’s contract includes a clause that commits the company to spend 20 percent of the contract cost on marketing, primarily in newspapers, magazines and online.
‘Pixels’ Employee Recognition Program
Multimedia has developed a unique way to recognize its employees. The program consists of three colored recognition stars - red, green and blue (RGB); thus, it’s appropriately called “Pixels.”
In the program, paper red stars, or pixels, are awarded to employees for “pats on the back” from other employees, such as following a process with excellence, contributing a great idea, or helping to create an extraordinary experience for a client. Green pixels are given by direct managers, and blue pixels are given by a consensus of directors from the company for conduct that supports the core values of the company (Communications/Teamwork/Responsibility/Recognition).
Each level is correspondingly more difficult to earn. Throughout the year, prizes are awarded based on the number of RGB pixels an employee has. At the end of the year, the employee with the most pixels earns a big prize, like an automobile. “It’s very powerful and very motivational,” says Bausone.
Thirst for Learning
It was a historic day last year when CEDIA voted Federico Bausone as its new chairman. After all, there had never been a chairman based outside the United States. But Bausone’s audio roots are akin to how many U.S. integrators got their starts.
“It all started in a garage. Well, not really, that’s where we kept the speakers,” says Bausone wryly. “My career in A/V started back in 1982 while I was still in high school. I formed a ‘mobile DJ’ company with two friends called Conceptos Digitales. We did what many other entrepreneurial kids were doing but added an amazing new technology to our mix called the ‘CD’ as well as the incorporation of video into our shows. Conceptos Digitales took me through high school and college.”
Learning is part of Bausone’s DNA. “My father’s career with Purina took our family around the world including stints in the U.S., Brazil and around Mexico. I have always been fascinated by doing things ‘differently,’ which led me to study marketing at the Monterrey Institute of Technology. When I graduated from college in 1988, I got together with one of my Conceptos Digitales partners and we formed Multimedia,” he says.
Like many integration companies, Multimedia has evolved over the years. Back in 1987-88, the plan was to just sell A/V equipment in Monterrey, but unfortunately, clients would routinely drive across the border into Texas to buy the equipment for a lower price.
“So we had to sell more than just equipment and start selling solutions. That’s how Multimedia started. At first it was just a big screen with a projector, then surround sound, pretty soon we started selling lighting control and automation,” he recalls.
“Learning has always been one of my passions, so after many years in business I went back to school to learn more about business. In 2007 I went to Business School and in 2011 I attended Singularity University in Silicon Valley to learn about accelerating technologies and what impact they will have in our homes and lives,” he adds.
Multimedia became a member of CEDIA at the Dallas Expo in 1993. That participation has helped the company hone its processes.
Jason has covered low-voltage electronics as an editor since 1990. He joined EH Publishing in 2000, and before that served as publisher and editor of Security Sales, a leading magazine for the security industry. He served as chairman of the Security Industry Association’s Education Committee from 2000-2004 and sat on the board of that association from 1998-2002. He is also a former board member of the Alarm Industry Research and Educational Foundation. He is currently a member of the CEDIA Education Action Team for Electronic Systems Business. Jason graduated from the University of Southern California. Have a suggestion or a topic you want to read more about? Email Jason at email@example.com
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