Three founders of Xssentials, a high-end integration firm based in Denver, plan to attack the broader market for security and home automation … and bring the rest of the industry with 'em. The home-technology veterans — David Daniels, Mike Thul and John Carlen — have launched HAUS (Home Automation University), a school and support program for high-quality, high-volume installations.
HAUS is not a franchise organization, but it has many elements of a franchise, including intensive training on both technical and business subjects, back-end software for operations, sales and marketing services, dealer (“franchisee”) collaboration, membership fees and metrics — lots and lots of bench-marking metrics based on member performance.
Nor is HAUS a buying group, but the company will standardize on a core group of vendors, most likely anchored by Savant for home automation and Sonos for multiroom audio.
The investment in the new program is substantial, with a 25,000 square-foot campus in Denver to house training and other services, plus an army of instructors and support staff (25 of them at launch) to help dealer members thrive in the mid-market.
The new venture is completely separate from Xssentials, according to Daniels, who is CEO of both entities but now working full-time at HAUS, along with his partners.
“We have been 100-percent focused on HAUS for two years now,” he says, adding that area presidents have been appointed to the run the day-to-day business of Xssentials, which has Colorado offices in Denver, Aspen, Vail and Glenwood Springs, as well as a presence in Jackson Hole, Wy.
Ebode, a Proof-of-Concept Business
It all started two years ago, when Xssentials launched a new business, Ebode, for the mainstream home automation market. Xssentials CEO Daniels outlined the plan in 2014, urging other integrators to conquer the broad market.
“It’s not going to be easy but there can be damn big rewards if you decide to play,” he said. “If you tiptoe in, you’re probably going to fail.”
Unlike Xssentials’ ultra-custom business, the new company would take a limited portfolio of products (initially Savant, Sonos, Lutron, Honeywell and Ubiquiti) and create a repeatable process for sales, installation, service and recurring revenue.
Xssentials realized that, to grow its mid-market business, Ebode would require a separate organization built for volume, which would take a different mentality, different skillsets and all new processes.
Imagine how much easier it would be to receive financing or to sell your business if ROI becomes predictable.
“If we wanted to be an exceptional customer service company, we would need to train a whole new organization,” says Daniels. “But there was no training for that.”
The semi-custom, or “less-custom” business model has largely eluded the “custom” electronics industry, in which one-off installations are the norm, and 100 projects per year is “high-volume.”
If Ebode wanted to play in a mainstream smart-home industry, it would have to help create that industry.
“Why start a new industry with no training, no resources, no business processes?” Daniels and team wondered. “It doesn’t make sense as an industry.”
So HAUS was born.
What is HAUS?
HAUS is a membership program – not unlike a franchise model — in which dealers pay to get trained online and in HAUS’s Denver facility, and then receive ongoing support from HAUS’s sales, marketing, technical and operations specialists.
The education component of HAUS is serious business. The company hired Shuli Steele, a former account manager from Pearson adult education, to run the educational program. Trainers generally come from the ranks of teachers rather than “industry experts.”
The company has spent the last two years “putting together an effective curriculum,” says Daniels, “with real trainers that do nothing but adult education.”
The schooling is “all collaborative, hands-on learning, with playbooks that are experiential,” Daniels explains. “There are real deliverables you can take home and execute.”
While education for custom integrators is fairly abundant through trade shows, conferences, manufacturer training and industry organizations like CEDIA, “it’s hard to come away with real executables,” Daniels says.
The takeaways from HAUS are both immediate and ongoing.
As part of the program, members have open access to Ebode, with license to drill down into the proof-of-concept business.
“It’s a very transparent, open business,” Daniels says. “You can come in and talk to operations, accounting, sales ….”
Training for the first round of HAUS dealer members begins Q1 2016 in Denver.
While Daniels hasn’t specified the price for the program, he says it is comparable to those of a CE industry buying group. Typically these groups charge about $1,000 to $6,000 per year for membership, with additional fees for materials and special services.
A list of HAUS services and benefits is below.
Savant and the Role of Vendors in the HAUS Program
Daniels emphasizes that HAUS is not about specific products per se, but the program will revolve around a “narrow sandbox” of “five to 10 core manufacturers.”
Savant will figure largely in the program, with the $499 Savant Remote as the home automation centerpiece – or so it appears. Daniels so far won’t confirm specific vendor partners pending final agreements, but HAUS was announced in October during a Savant road show in Denver, and the HAUS Website clearly shows Savant as the core partner in the new venture.
Daniels also has not confirmed that Ebode’s other vendor partners – Lutron, Honeywell, Ubiquiti and Sonos – will be part of HAUS; however, Daniels did promote HAUS in October at Honeywell Connect, a conference for Honeywell’s top security dealers. Furthermore, Sonos is shown in the HAUS promotional video (below), and because of the tight relationship between Savant and Sonos (both partially owned by KKR), we can expect Sonos to be part of the program.
Besides, it would make sense to model the HAUS program on products and services offered by the proof-of-concept business, Ebode.
VIDEO: Introducing HAUS, the home automation university
Why products and manufacturers matter so much to HAUS and its members – beyond the financial and other support that each vendor brings – is that a standard product line helps to streamline technical training and business-related support.
After all, there will be hands-on technical training on a select group of products; marketing materials will include images of those products; tech-support will know those products and any integration quirks; and the entire network of dealers and HAUS representatives will be able to talk the same product language.
Most importantly, key performance indicators (KPI) will be gleaned from sales, installation, revenues and other metrics based on businesses that install similar products.
“The way to be successful, to offer a great customer experience, is to work in a narrow sandbox where you can wash, rinse, repeat and raise the bar on customer satisfaction,” Daniels says. “I think if you stay focused, you can learn to perfect the process.”
Even though the product portfolio will figure largely in the HAUS model, Daniels says the group does not require members to patronize any given vendor, and HAUS itself does not sell products.
“Getting a dealer certified on a brand is between them and the vendors,” Daniels says. “We don’t do discounts or negotiate pricing. This is not a buying group.”
Kind of Like a Franchise, but Not
In many ways, HAUS is like a franchise organization, providing the fundamental training and ongoing support typically provided by franchisors. Like HAUS, most franchisors profit from these services.
But most franchisors also profit from selling proprietary products/supplies to franchisees. In the case of Subway, for example, that might be tables, chairs, cash registers, ovens, bread-making ingredients, bags of lettuce and slices of American cheese.
HAUS might sell literature, Websites and signage but at this time the organization is not selling system “ingredients.”
Likewise, HAUS won’t be collecting royalties from members – a source of income for most franchise organizations.
One of the main benefits offered by franchisors is benchmarking. With participants all using the same or similar products and systems (e.g., ERP and CRM), the franchisor can establish and share key metrics with all members. Such benchmarking will be a hallmark of HAUS.
For example, based on the aggregate data from all HAUS members, integrators should know how long it takes to install a four-zone system, and how much profit they should make. They might compare their prices with other HAUS members to determine if they’re too high or too low, given the average income in the target market.
And, here’s the key: They should be able to use the KPIs of other member companies to establish with some degree of certainty the ROI of any given investment in a HAUS-driven business.
Imagine how much easier it would be to receive financing or to sell your business if ROI becomes predictable.
It might seem the next logical move for HAUS would be to propagate its brand nationwide, creating hundreds or thousands of related businesses that could be merged or sold fairly easily – a foreign concept to the traditional custom-electronics industry. But that’s not exactly the plan.
Daniels stops short of suggesting that HAUS is a vehicle for a national dealer roll-up. Even so, he and his colleagues do want a “HAUS-certified” business to mean something.
“Over time,” he says, “we want the HAUS brand to be something that consumers equate to quality.”
RMR and The Market for HAUS
For all the momentum in mainstream home automation, few home-technology integrators have made a real business of it.
Most of the success stories come from the security industry, where integrated alarm systems, surveillance cameras, lighting and thermostat controls, automated door locks and other smart devices are sold and installed by the hundreds of thousands every year. Individual security dealers often log thousands or tens of thousands of installs per year.
But they don’t include entertainment (audio and video) in their mass-market offerings.
In the home-technology integration sector, many dealers offer affordable automation and A/V systems, but not in large volumes. Relatively few integrators install more than 1,000 systems per year, and typically those volumes come from deals with new-home builders.
Also evading the traditional home-technology channel is recurring monthly revenue (RMR), which not only feeds an installation business with cash flow, but also ups the valuation of the business.
Integrators don't “do” RMR because 1) they don't do monitored security systems, the most common category for RMR and 2) they don't have enough clients to make RMR really matter.
HAUS addresses those challenges head-on, with security training (HAUS co-founder Mike Thul started out in the security business with Thul Alarm), as well as the overarching principle of scalable, high-volume installations in the broad market.
“Ebode has many security accounts today and growing fast,” Daniels says. “Security will be a major part of the program — lots and lots and lots of security.”
HAUS intends to go further with RMR opportunities, however. For example, Ebode promotes “reliable managed networks starting at $29.95 per month,” and the operation is testing other potential offerings.
“RMR is one of the cornerstones of success,” says Daniels, “and we are raising the bar.”
With this novel approach to the home-tech business, HAUS should have a bountiful market of prospects — not just from the security and home technology channels, but also from the entrepreneurial ranks, given the end-to-end support available.
Free Webinar, Dec. 16, 2015, presented by CE Pro’s Julie Jacobson
(from HAUS Website)
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