Stampede Moves Forward At A Gallop

Stampede Presentation Products, based in Amherst, NY, a few miles north of New York City, celebrates its 15th anniversary in 2012. But to limit the company to the display category does a disservice to what is a remarkably diverse array of initiatives that company president Kevin Kelly and CEO Mark Wilkins have implemented. They include having invested over $10 million in the business in 2011 alone and adding more than 35 new lines since 2010 to its 9,000-plus dealers. This year [2012], Stampede plans several initiatives that they say will solidify and extend the gains they made in the last several years. These include increasing its technical support staff to 10 from the present six members; increasing inventory levels for existing and additional products and manufacturers; leveraging its relationship with its financial partners, including HSBC, to increase the amount of credit that it can offer dealer customers; expanding relationships with customers with a new Vendor Portal program that takes the entire transaction securely online; and expanding its Stampede University training program to include more business-oriented courses and a consulting program designed to help its residential dealers develop commercial markets. It’s a full agenda, but Kelly and Wilkins say that’s what it takes to maintain that position as a bridge between dealer and manufacturer,

NewBay: Congratulations on a great year. It’s closing with a 51 percent increase in unit sales in your core categories, nearly 50 percent increase in operating profit, and a whopping 257 percent increase in net income, which is pretty amazing in the context of this kind of an economy. You take advantage of the times to increase investment.

Mark Wilkins: Basically we did and we’ve really been investing over the last two or three years. Two or three years ago, when the crush happened when Lehman hit, we literally overnight saw a 20 percent to 30 percent drop in revenues. And then we spent the next year shoring up what we already had, and really reestablishing ourselves. We were very well supported by financial institutions, HSBC, and others, and our financial partners really helped us through the tough period, which everybody went through. But then we saw Electrograph, one of our major competitors, go out of business, we saw the opportunity. We talked to our financial partners and decided it was time to invest and time to go back at it again. Really it was as simple as that.

Kevin Kelly: The reality of the situation is that we’ve invested more this year in reinforcing our commitment to the pro AV business and maximizing the opportunity that we bring to both the manufacturers and our dealers. That investment has come in a couple of different ways. First and foremost we acquired Spire Global, which is the exclusive distributor of Sony videoconferencing in the United States. That acquisition was done solely to enable Stampede to bring the videoconferencing category to dealers that are in need of the category and certainly videoconferencing has proven to be one of the growth areas of AV. In addition, we’ve invested millions of dollars more in accounts receivable, extending more than $55 million in credit to the trade. In addition to that we support our manufacturers by carrying more inventory than ever before in our entire history. So we’ve invested millions of dollars in additional inventory to be able to provide that value to those manufacturer partners, and to be able to have that product on hand and available for immediate shipment to our dealers.

NB: The extension of credit offers more buying opportunities to your customers but banks have still tightened credit conditions.

MW: If you think back to the credit crisis back in 2008 when the credit lines were being closed down, people were fearful of extending credit. When the recession hit and things got tough the first thing that usually goes is the commercial [credit] marketplace. So what you found was banks stopped lending, CEOs stopped buying capital equipment, and we’re in the capital equipment business. Stampede throughout this entire time has provided stable and growing credit to the pro AV marketplace, which is obviously a value-add to those dealers that need to do commercial projects because those projects are not the same size every month, those projects vary in size and scope and we like to go ahead and provide that additional resource, and dealers take advantage of it. Kevin and I circled the wagons and with our advisors we decided that this can’t go on forever. Part of the timing came is when we believed that the commercial marketplace was beginning to free up again, a year or two ago.

NB: How do you expand so extensively yet remain centered on your core market of displays?

MW: We will always sell the core pro AV product. We are a pro AV specialist and usually the pro AV market is based around a display of some sort. Our philosophy hasn’t changed in that we will always be an expert and a specialist in the display market. Now what you find during this time is that technology has changed and new markets have arisen around the display. So you find video conferencing coming into play much more with technology. You find digital signage coming into play much more with the technology. You find digital media coming in. So there’s all these other things that are happening but still the core product if you like is around the display, because what you’re trying to do is you’re trying to show information to a number of people more than just the individual person. So part of our investment strategy wasn’t just coming out of the recession and coming out of corporations buying again and things like that, but also this migration between the different technologies around the display enabling people that have the expertise to take advantage of the corporate market spending money again.

NB: You state that Stampede continues to grow in a tough economic environment and offer more opportunities than ever for your partners. What kind of opportunities are you talking about there?

MW: If you look back five years we had dealers that would just buy flat panels or projectors from us. Now what we’re doing with, for example, the video conferencing side of the business, we went out and acquired a company and bolted it into ours. What this did was brought the technical skills that were required to sell that type of product. We’re now out there educating our dealers, giving them the opportunity to sell that type of product to their end users. So not only are they now selling the displays but they’re now saying with our support, with Stampede’s support, the dealers now able to go to their end user and say, hey I can also sell you video conferencing stuff that’s plugged into your projector.

KK: At the end of the day what we’re doing is we’re enabling dealers to come up with new ways to make up for lost revenues. So part of what we try to do is we enable dealers to do a job that they may not have been able to do themselves without the values and value-adds that we provide. It could have been that they were doing a conference room but didn’t have access on a direct basis to a video conferencing product line and they would have to bring somebody else in, or worse yet, they would have to pass on the deal. It could be a situation where they didn’t have access to a certain category of products. It could be a situation where they didn’t’ have access to certain credit facilities that would enable them to do a larger job. We step in and fill those gaps. We’re built to enable people to go pro. We have more product lines, we have more resources, we have more expertise on the telephone, more technical support, we’ve got engineers, we have certainly level one, level two technical support on staff to enable dealers to go into a job, competently quote it, competently spec it, quote it, and then go ahead and execute the job in a way that makes them profitable.

MW: Let me add another point to that as well, which is part of our strategy is to take the pro AV dealer and give him skills in other areas, but also part of our remit to manufacturers, and one of the reasons why manufacturers like us is not only do we talk to pro AV dealers but then we also talk to the other types of dealers like the telco dealers, or the PC dealers, IT dealers, and give them pro AV expertise. So it’s actually growing the overall market so there’s really two avenues we take. We go after the pro AV and give them skills in other areas, then we go after other types of dealers and give them skills in the pro AV market.

NB: This year Stampede created a new sales group called Stampede Visual Communications Group to leverage video conferencing at a time when video conferencing has reached a new level of access for business. Stampede has a promotion for Sony Services that’s priced under $100. Will video conferencing become as ubiquitous as the telephone, is there a danger it could reach a commodity status and concomitant commodity pricing?

MW: I’ve been in the display business for 25 years now and what I’ve always said is everybody every year has said oh my God it’s a commodity, margins are coming down. When a product becomes commodity you move away from it. We like to take products on that are leading edge, not bleeding edge, but also not commodity. I used to say when the LCD projector was first launched it was phenomenal., but we didn’t have many people to sell it too. What really changed it was actually Microsoft put PowerPoint on everybody’s desktop, and then they decided, now I can do presentations on the PC but now I need to show it to lots of people. So the LCD projector then took off. So what I believe is going to happen with video conferencing is very similar. Skype is now on everybody’s desktop and I use it personally on my kids, but I would never use it in the business world. So what you’re now seeing is the next level of technology that will come out. One might say it’s becoming commodity, it’s becoming commodity, everybody’s coming out with $99 units. That is true. But there’s also the person that wants to spend a lot more money. There’s also the person that needs to spend a lot more money getting a complete robust system for a commercial marketplace.

NB: What are the most viable new markets for videoconferencing?

KK: It’s first and foremost education, second would be small-medium size business with multiple locations, it could be a medical school communicating with a surgical unit at a particular hospital, a learning hospital, it could be a lot of government institutions, both at the federal level and the state level utilize video conferencing. If you look at a $99-a-month solution it’s a step up from a free connection and the fact that you’re able to do multi-point, which is two or three or four locations at one time, with a high quality signal and also controls, you can operate a proper meeting

DD: Where’s the particular opportunity here for the commercial integrator when it comes to video conferencing?

KK: It all starts with the conference room, and you’ll see more and more new video conferences going in there as an automatic piece of that puzzle. So if a dealer is out talking about technology with their customers and making calls to do new business development with current or new customers it would make perfect sense that a dealer would call on video conferencing first as a way to secure the entire conference room versus calling about the projector or just the display device.

MW: This type of technology tends to span lots of different verticals and a lot of it really depends on how much money is available to upgrade or how important it is to upgrade the system that they’re already using or move to a new way of conducting business. The education market should be the major vertical actually that’s buying this type of technology. However, as we know, the education marketplace in not spending money. So what you see is that it isn’t necessarily one particular vertical that takes off with this. It tends to be the smart manager or the smart corporate that’s got an opportunity to improve what they’re already doing, or the smart CEO, or the smart IT manager. So it reaches across a broad aspect.

NB: Stampede has said it will “launch a breakthrough Cloud-based video conferencing solution that will bring new sales opportunity to its dealer base.” What is that?

KK: Basically at the end of the day many of the dealers that we certainly sell and support have customers that need multi-point solutions and they may only need that multi-point solution one, two, three times a year. And let’s say for instance one of the leads that we pass along to the dealer turned out to be a sale and maybe they want to do that 35-to-50-person meeting four times a year. With the Cloud-based service they could just simply rent the time that they need on in essence our provider that would enable that meeting to take place and it’s more of a rent what you need for a particular point in time versus making the investment to go ahead and have that capability all the time that you may only use once in a while.

NB: You’re emphasizing education and communication in relationship to Stampede’s customers. For instance, the launch of an expanded Stampede University that’s going to feature a curriculum of online classes in key product categories, as well as a new Stampede vendor portal that’s going to let your customers manage all of their claims online and interact with your account managers. It sounds like you’re building almost a new infrastructure here.

MW: Part of our mission is that not only do we have to offer a value to our customers but also we have to offer a value to our suppliers. Part of the value we offer to a manufacturer through Stampede University is through educating the marketplace in new technologies. Not only is it part of the value to the dealer that he’s being educated, manufacturers actually do want to teach dealers how to use their products and how to sell their products. So when you see infrastructure changes and stuff like that there’s usually different reasons why we’re doing it. One of the things we’ve found in the U.S. over the last 10, 15 years, a lot of the manufacturers set up their own operations and a lot of the manufacturers try to do their own distribution throughout the U.S. When the market grew, and the market keeps growing, you get more dealers coming on board, more types of resellers, more customers and such. A lot of manufacturers lost their plot frankly, [by not taking] advantage of concentrating on their products and looking at their product and manufacturing their product, and they spent too much time on the distribution of their product. Whereas if they employed a professional proactive distributor they might have been able to reinvest that money back into making new product and staying ahead of the technology curve. So our goal is, [to be] an extension of their sales and marketing divisions, so we will actually work at going out to educate the marketplace, to create a sales channel.

NB: Another thing that you’re doing is you’re expanding your technical services support team from six to ten, and embedding employees at certain dealers. Is that a new tactic?

KK: It is something that has been done in other industries, but certainly inside the pro AV world it is not a traditional approach.

MW: As the pro AV market expands and as the opportunities expand, what we’re doing is we’re going to some of these other types of dealers that don’t have the expertise in the pro AV market and saying hey, we’ve got the expertise, we’ll help support you through this. And if we don’t have the expertise, we’re very interested in acquiring it. So looking forward one of the things you might see in the future is more acquisitions that have skills that we don’t have so we can add it into our portfolio of services.

NB: There’s several new technology trends germinating now including Cloud-based storage and retrieval systems, more mobile device control of installed systems. What are the technology trends AV integrators need to be aware of in 2012? We talked about video conferencing obviously but what are the other broad strokes that they need to be paying attention to?

KK: I think that you’re going to see, and this was something that was talked about at our Vendor Summit, is you’re going to see that migration certainly in the classroom to larger flat panels. And if you think about the traditional white board being 77 inches diagonal and you see the proliferation of products available anywhere from 65 to 80 inches it makes perfect sense that you’ll see large flat panels in classrooms potentially with touch overlays that continue the teaching process and keeping it very similar yet just using new technology to do it.

MW: There’s whole integration of IT, 3D technology, video conferencing technology, all these things coming together. I think that from an overall point of view if I was a pro AV dealer I’d certainly look at partnering with someone like a Stampede from the point of view of offering them the other services that they need. AV now is becoming mainstream, it’s being added into the whole decision-making process when you figure out how you communicate. And that’s really what’s changing I think in the world today.

NB: What does 2012 hold for Stampede?

MW: We’ve experienced tremendous growth over the last 15 years and our goal is twofold. We want to see substantial growth over the next two or three years. We believe we have the right investment partners to be able to do that, we have the right mentality and the mindset to it. We see more acquisitions in the near future; if there’s holes in our portfolio we tend to plug them. I see no reason why we can’t be looking at 20% to 30% growth from a revenue point of view without the acquisitions, and then having the acquisitions on top of that.

KK: And obviously our goal is to make sure that we’re continuing to add more value to both sets of partners that we have. Certainly giving dealers more product categories that they can buy from us and then sell, and to be profitable doing it. The real key categories enable folks to get into businesses or get into areas of the market they may not have been playing in before but that offers them ways to make additional income and ways to make incremental profits that they weren’t making in prior years. Some will be done organically, some will be done through acquisition, but it absolutely will yield more growth, and then that growth offers our core manufacturers more opportunity because as we serve more of our customers we continue to grow the level of dedication and loyalty from our customer base. That only adds more value to the manufacturers we serve because then they have more opportunities at certain types of dealers, more opportunities at certain types of end user opportunities.

MW: We do intend to stay specialists though, I think that’s really important to note is we are a pro AV distributor, and we will carry on selling displays as our core product and then we’ll build around it, so when we do acquisitions we are looking at acquisitions of complementary technologies our new technologies that complement the pro AV dealer, or the pro AV integrator. We’re not looking to go and sell washing machines.

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