How Casaplex Acquired a Competitor to Own the Home Theater Market
Commercial experts Casaplex acquires residential integrator Encore AV to drive dedicated home theater business and offer opportunities for other CE pros to leverage the combined entity’s processes and skillsets.
In a city known for its division, integration companies Casaplex and Encore AV are a rare case of unity. The two Washington, D.C.-area custom installation companies recently completed a merger that brings together Kensington, Md.-based Casaplex’s commercial expertise and back-end operational skill with Sterling, Va.-based Encore AV’s residential prowess to create a formidable full integration firm.
Together, the two companies dedicate time to “designing and building electronic environments, which are the most intimate convergence of construction and technology,” says CEO Derek Goldstein succinctly.
The results speak for themselves. Thirteen-year-old Casaplex has grown about 20 percent annually over the past five years and expects to hit $7 million in revenue in 2017 doing both commercial and residential projects ranging from $20,000 to as high as $2.5 million.
The strategic acquisition of Encore AV, led by Ian Williams, recipient of the 2015 Consumer Technology Association (CTA) TechHome Integrator of the Year award, sets the stage for the company to hit the ground running with its residential growth initiatives, particularly in high-end whole-house automation and home theater.
Reasons for the Casaplex/Encore AV Merger
Like many integration companies, Casaplex has humble roots. The firm launched in 2004 with two employees: Goldstein, who has a background in programming, and vice president Nelson Garcia, who has an engineering and installation background. The duo did everything.
Melding their skillsets, they started in the residential space, trending toward higher-end residential. “That ended up leapfrogging us into some commercial work: we’d go to C-level execs’ homes, and then be asked to go into their businesses to install technology in their boardrooms,” Goldstein says. That marked the beginning of their transition into the commercial market.
It also helped that Garcia has a background in pro audio coming from the DJ world. The company installed a number of nightclub systems for many years, growing organically. But they knew that in order for the company to grow rapidly and efficiently, they needed to establish best practices. Today, that manifests itself in a holistic set of products, processes and philosophy Casaplex calls System One (more on that here).
Goldstein and Garcia saw many of the same attention-to-detail qualities in Encore AV that they espouse at Casaplex. So when the discussion to merge came up with Williams at Encore, the synergy between the companies seemed ideal. But more than that, the best practices methodology is enabling them to blend their cultures more easily.
On the surface, it might appeal the merger is simply one high-end integrator acquiring another to bolster its home theater division. That would be an incomplete understanding of the depth of the Encore team, and of the future that Casaplex is building and growing toward, according to Goldstein. Together, the combined entity amounts to far more.
Encore’s knowledge of designing and constructing a built environment tailored to a defined user experience is a skillset that Casaplex wanted to add as a core competency. That expertise, honed in home theater, will serve as the foundation for future developments, a trajectory on which Casaplex is quickly accelerating, comments Goldstein.
Williams immediately saw commonalities. “We had the same product lines, the same high-end residential focus, and the same ideologies,” he says. “The two companies never competed against each other.”
Setting Best Practices
Certainly, there are solid business reasons behind the acquisition, but Casaplex’s drive is not to be just another custom integration company.
Quantum mechanics advances the theory that everything in the world is connected. Humans, trees, insects — everything is merely strings of subatomic particles connected in various ways. It is only the human mind, say scientists, that tricks us into believing we are “separated” from each other or all living things.
Goldstein mirrors those quantum mechanics theories inside Casaplex, because he believes everything is interconnected, especially as it relates to his company. Indeed, from back-office software to engineering to sales to installation to customer service ... if one element of a custom installation business is lacking or needs improvement, it affects the entire company.
That methodology facilitated the integration of the Encore brand and team, all of which moved to Casaplex intact.
Some of the reasons for the merger are self-evident: the complementary areas of expertise and focus, the shared commitment to excellence, the emphasis on developing meaningful partnerships with their select vendors. But others go deeper. For Encore’s part, it had reached its ceiling in terms of success and growth potential with the resources at hand. Additionally, Williams wanted to narrow his own focus in the way that owning and operating a business no longer allowed, explains Goldstein.
For Casaplex, acquiring a specialized company and team of this caliber represented an efficient path to growth, a strategy it may again deploy in the future as it continues to expand and extend its reach.
“In this industry if you’re not growing, team members tend to look elsewhere,” comments Goldstein. “Finding intelligent ways to grow is what they’re about now: they want to grow exponentially, and generate more brand awareness. They have a mindset of looking for ways to grow smartly, and finding the complementary skillsets they want to incorporate to guide them in the direction they are heading as a team.”
For instance, Casaplex has designed and installed a handful of great home theaters over the past 13 years, “but it’s only been a handful. Ian and his team were focused on that segment of the market. It’s something we enjoy doing, and something we weren’t doing enough of,” admits Goldstein.
For Williams’ part, he saw the merger as an opportunity to access some broader expertise. “The other thing we’re leveraging is the Casaplex process — all the back-end processes, from the programming to design to engineering. Those are resources I didn’t have before. This is really allowing us to take this to the next level,” he says.
Casaplex plans to create a package of home theater offerings that will be branded as Casaplex Encore Theaters. The package will include a well-tested and curated set of high-endcomponents from industry-leading manufacturers.
Holistic Approach to Operations
Goldstein describes the company’s best practices mantra as “infusing the human element with technology” with an emphasis on engineering and programming.
“We are wrapping process around change,” he says. Their team is focused on making sure engineering comes first when it comes to the technology. When it comes to servicing clients, having their systems self-heal or help automatically open service tickets are examples of how the Casaplex support team provides reliable and consistent service.
Specifically, Casaplex has very stringent requirements on the network, power protection, battery backup, and reporting features, which are the first line of defense and will prevent many service calls from ever occurring. One of the requirements is extensive remote sensing, or the ability to “sense” anything that could go wrong in the system and provide Casaplex with immediate intelligence.
“If a speaker is blown, we’d like to know that,” describes Goldstein. “We don’t just want to know that the music stopped playing. For example, we want to know that a specific speaker in the living room is the one that’s blown, so we can go out there with the right product.”
That means every piece of equipment Casaplex installs is addressable, can report back and can self-diagnose. “Some of that is software functionality, but the hardware has to also give you that type of insight. We need to have that level of visibility in the field, so remote management is definitely a requirement of anything we put out there,” says Goldstein.
From sales to design to programming, the entire Casaplex team is focused on efficiency and synergy. For example, a salesperson is not just taught various sales techniques, but also shown how the sales function ties in closely with the other aspects of the business. Likewise, new programmers are educated in multiple web programming languages, and are often sent out on service calls so they are exposed to every type of system, from security to lighting control to networking.
“We do a lot of cross-training. Everything is holistic. At the end of the day, these are all interconnected systems that will need to be serviced in the future by the same workforce,” Goldstein says. “The basic principles behind all these systems are similar — and until we have companies and clients who really understand this, we can’t advance the smart home user experience.”
Casaplex installed a full-blown system at its headquarters in Kensington to act as a “living lab” where employees can experiment on different features without pressure, and showcase those features to clients when they visit the office.
“Putting the system in place here was a huge step in the right direction. We spent the past year and a half putting it in place — and it will continue to evolve for as long as we continue to generate new ideas,” comments Goldstein.
That holistic approach starts with sales. Goldstein equates it to a relay race where the baton has to be handed off successfully to each runner.
“We conduct a site survey and educate the client on all the different subsystems, really helping them understand the difference between what they have heard about DIY products, and what we offer. We’re not just going in starting and ending the conversation with A/V,” Goldstein explains. The sales team addresses climate control, lighting control, security systems and how all these systems can interact with each other. Then they discuss who Casaplex is and how the integrator operates as a company, not merely focusing on technology.
There’s also a focus on making sure that critical components are not compromising or “value engineered” out of the system. He uses the example of selling battery backup/power conditioning, which is a component that many times a customer will try to eliminate from the project to save costs. But Casaplex knows how vital that battery backup power can be to reduce service calls.
“In our approach, that’s something we may not budge on. We’re not value engineering the system. We’re coming to the table with mandatory components,” says Goldstein.
To monitor company efficiency, Casaplex uses its Q360 enterprise resource planning (ERP) software system. It allows the execs to track every employee’s time put into a particular project, see the metrics, and create different dashboards to see if the project is on track. Eventually, Casaplex envisions the software also allowing clients to track the job and offer feedback during the design, programming and pre-fabrication phases.
Broader Company Vision
Goldstein says Casaplex is driven by a vision to be innovators that make a real difference in people’s lives. For example, the company is currently working on the design of a project that uses technology to help the intellectually disabled integrate with mainstream living in a high-tech living environment.
“We want to make a difference. We want to inspire,” Goldstein says.
That vision is also apparent in another project Casaplex is undertaking in support of the National Building Museum’s upcoming exhibition “Making Room: Housing for a Changing America.” Casaplex is designing a home technology system that can accommodate all types of families at any stage of their lives. The idea is to show that you can build flexibility and adaptability into systems that will work over time.
The exhibition’s Open House will depict how the same living space can be well suited for Millennial roommates, a multigenerational household with kids, or even an older couple living with a live-in health aide. The multiroom audio system, for example, will morph from music distribution to intercom before becoming a bedside-alert system.
Goldstein believes that integrators have to think about long-term applications for the equipment, and realize that it generally stays with the home for the next occupant vs. moving with the owner, just like plumbing does, for instance
“Let’s put more time and effort into making technology a ‘living application’ that adapts based on the needs of the homeowners,” he says. “If we think this way, it can be a game-changer for our industry.”
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 protected]
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