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Why Home Director Failed

Home Director, one of the most icononic figures in structured wiring–indeed the home systems industry–has gone belly up. Why? The company chased crazy schemes instead of doting on its dealers.

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Home Director, one of the most icononic figures in structured wiring—indeed the home systems industry—has gone belly up. Why? The company chased crazy schemes instead of doting on its dealers.

We've been pretty diplomatic about Home Director in our magazine, but I for one never believed they would make it.

The company's demise was made official today in a press release. Home Director did not go so far as declaring bankruptcy, but said that, “due to its current negative cash position and its inability to raise new equity or borrow funds that it had ceased operations.”

The reason is simple: Home Director has not respected the integrator since Mark Schmidt left the company several years ago.

Since then, Home Director has failed to grow the company the old fashioned way: by slowly, methodically nurturing a base of loyal dealers. Instead, the company always seemed to chase the next best thing, investing too much money on pie-in-the-sky products and distribution methods. Not a single one of the company's technological or business innovations ever went anywhere. They wasted millions of dollars on trying to manufacture automation and IP-based A/V distribution systems. Yet they hardly shipped a thing beyond run-of-the-mill structured-wiring systems. Remember the Home Director bus? That was a good investment.

To assuage investors, the company acquired Digital Interiors, an integration company that quickly added to Home Director's top line, but one which Home Director was ill equipped to manage. Home Director just divested the $8 million (est. revenues) company for a paltry $350,000.

Look at industry leaders On-Q/LegrandLevitonChannel VisionChannel Plus and others. Their products and methods are nothing terribly extraordinary (sorry). They do well by doting on their dealers and distributors, and putting out a steady stream of useful, but not off-the-wall products.

When Bob Wise took the Home Director helm a few years ago (he was replaced by Don Witmer, then Michael Liddle in January 2004), he boasted about the things he was doing to help Home Director rebound. He had just tapped a top-notch PR firm, hired an investor relations firm and brought in an internal marketing guy. I remember asking him, “Well, what are you doing for the customer?”

His reply, “What do you mean?”

What Home Director did for the customer was eliminate all the field support folks, and pile on the corporate staff. Even in the end, when Home Director couldn't pay suppliers, and therefore couldn't ship products to their integrator customers, the company was still forking out big bucks to sponsor the Phoenix Open and Hanley Wood's Big Builder event.

You know, I'm usually sympathetic when companies in our industry go out of business for good reasons. But while Home Director execs were on the links in Phoenix, their customers were forced to improvise on products that the company could not fulfill. And that makes me more than a little resentful.

Anyone can schmooze a homebuilder. It takes a real company to deliver.

About the Author

Julie Jacobson
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Julie Jacobson:

Julie Jacobson is founding editor of CE Pro, the leading media brand for the home-technology channel. She has covered the smart-home industry since 1994, long before there was much of an Internet, let alone an Internet of things. Currently she studies, speaks, writes and rabble-rouses in the areas of home automation, security, networked A/V, wellness-related technology, biophilic design, and the business of home technology. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, and earned an MBA from the University of Texas at Austin. She is a recipient of the annual CTA TechHome Leadership Award, and a CEDIA Fellows honoree. A washed-up Ultimate Frisbee player, Julie currently resides in San Antonio, Texas and sometimes St. Paul, Minn. Follow on Twitter: @juliejacobson

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