It is certainly rare when a custom integrator and a supplier announce that they are partnering on a new product. And the origin of the new joint venture software development agreement announced by D-Tools and California CE Pro 100 integrator AudioVisions last week is certainly unique.
In case you missed it, the deal calls for D-Tools to have unrestricted access to AudioVisions’ Pro Integrator (PI) back-office software while AudioVisions will have unrestricted use of current and future D-Tools software and support while also serving in an advisory role for D-Tools System Integrator releases.
But just as interesting are the roots of the deal, which trace back 30 years and include the involvement from multiple CE Pro 100 companies, including Best Buy and even now-defunct VIA. Indeed, the fingerprints of these companies are all over the project, making it an intriguing story that invites playing a game of Six Degrees of Separation, which is the theory that everything and everyone is six or fewer steps away, by way of introduction, from any other person or thing in the world.
1990s: PI Software Developed
Way back in the early 1990s, CE Pro 100 company AudioVisions, based in Lake Forest, Calif., was one of the first custom integration companies to hone its operations for maximum efficiency. The company, led by president Mark Hoffenberg, has a unique business structure in which design/engineering, sales and installation crews are organized as cohesive “teams” within the company. The structure leads to internal competition with incentives in play and fosters relentless growth. Part of the company’s success was that it developed its own back-office end-to-end software solution for managing the business on a daily basis. The software, initially called AV Wizard, then Proposal Wizard Pro, and ultimately Pro Integrator (PI), was so successful that Hoffenberg and crew made it available for other integrators to use.
By the mid-1990s, Hoffenberg estimates 250 of CEDIA’s total 350 members at the time were using the software, which is designed to breed operational efficiency by tracking key business metrics from job costing, inventory control, scheduling, work orders, and labor tracking with tie-ins to accounting. One of the companies using it back then was fellow CE Pro 100 company Engineered Environments based in Oakland Hills, Calif., run by Randy Stearns, current CEO of D-Tools and founder and former CEO of VIA.
“That is where Randy and I met and became friends,” says Hoffenberg. But as every integrator knows, software is a moving target. It requires manpower to constantly maintain the database, create reports, etc. So by the year 2000, AudioVisions just couldn’t keep up and stopped sharing the software.
“The main reason is that we weren’t making any money on it,” admits Hoffenberg. Then in late 2005, the PI software, along with AudioVision’s other business processes, were cited as primary reasons that mega-retailer Best Buy purchased AudioVisions for $7 million, according to Hoffenberg. Best Buy used AudioVisions as the cornerstone for its ultra-high-end custom solutions, aligning it in a quasi-good/better/best offering with Geek Squad and Magnolia Hi-Fi.
But the marriage did not last. “For the vast majority of our nine-year existence as part of Best Buy, we had a valuable collaboration and Best Buy protected the unique culture and value proposition of AudioVisions. Ultimately, as Best Buy began to transform its business model, the opportunity to re-acquire the company presented itself,” says Hoffenberg.
So, in March 2014, Hoffenberg and his team bought AudioVisions back from Best Buy. In its first year back on its own, the company did $12.5 million in revenue on 95 installations with 67 employees.
VIA Collapse, 'PI in the Sky'
Meanwhile, Stearns left VIA in the spring of 2015 for D-Tools, and not long afterwards, VIA collapsed in October 2015. His focus there was to migrate D-Tools' System Integrator software from beyond just handling proposal and engineering/design to encompass back-office operations.
“When I joined D-Tools I was the only member of the team with actual custom integration background,” notes Stearns. “Everyone else came from a software background and they got their feedback from D-Tools’ users. They did not have intricate knowledge of how to run a custom installation company.”
He has since hired two other former integrators for the D-Tools deal and they are sharing best practices and other operational tactics that can help shape the software.
Back at AudioVisions, Hoffenberg says the company is experiencing rapid growth, and some of it is due to VIA’s demise.
“We hired 13 of the ‘cream of the crop VIA employees. Four for our Northern California office and nine for our newest office in the Los Angeles area serving affluent neighborhoods like Pacific Palisades, Malibu, Beverly Hills, Bel Air and Brentwood. That office has already booked $2 million in business in just a few short months,” says Hoffenberg. AudioVisions already has other offices in Palm Springs and Northern California, in addition to its Orange County headquarters.
With all of those locations to manage, the company turned its attention back to its PI software to try to develop a fully functional cloud-based end-to-end software solution for running a custom installation company, which was dubbed “PI in the Sky.”
“My friendship with Randy continued as he moved over the D-Tools,” says Hoffenberg. “And in our discussions, we discovered that D-Tools was working on the same software development as we were. So we combined forces.”
So the deal was made. AudioVisions’ sole software developer has migrated over to work for D-Tools, which has 16 developers (and four data managers) on staff in India. Plus, the company no longer has to spend time or money developing the cloud-based version of its software. As noted previously, the deal also means that AudioVisions gets an unlimited number of free seats on D-Tools for the life of the company.
For D-Tools, it is also a win.
“One of the great things from our standpoint about having the partnership is that we have someone in the field that we can lean on and bounce ideas off of for new features and other changes. The partnership will help us further define the software,” says Stearns. “This partnership will help us flesh out an end-to-end solution for the industry.”
The target for the release of SI 2017 encompassing both front-end and back-office is mid 2017.