Using IP to Unlock A Huge Market – Smart Home Water Leak Detection– Larry Beger EP 60

Larry Beger: Making Homes Smart with Smart Technology

What does it take to grow a multimillion-dollar company in a billion-dollar industry? Imagine creating an ever-improving technological system that caters to the consumer and hence increased trust.

In this episode of the Page One Podcast, Luke Peters speaks with Larry Beger, the CEO of Elexa Consumer Products. This is the company that offers the water leakage detectors system and valve controller, Guardian. He has been with Elexa since the late 90s and has driven it to immense successes, some failures, and struggles.

Listen in to learn Elexa’s business model that has enabled them to scale globally and garner much consumer trust. You will also learn the advantages of labor outsourcing and a strong online marketing strategy.

Key Takeaways:

  • The power of outsourcing labor to cut expenses and have room for flexibility.
  • The benefits of having a strong online presence as a brand in 2020.
  • How to use technology to do online marketing and establish customer trust.
  • The importance of developing a simple product with the consumer in mind.

Episode Timeline:

  • [2:19] Larry explains how their leak detector works, other products, and how they have improved it with technology over the years to make homes smart.
  • [6:27] He explains how the sense detectors detect leakage which works as a physical connection.
  • [7:39] The cost of setting up these technologized leak detectors and other future products that will bring the cost further down.
  • [9:49] The scale of the business across the world and how they outsource for technical labor through third-party logistics to cut expenses.
  • [11:17] He mentions their retailers, online market and presence, their internal sales team, and outside sales representatives.
  • [13:10] He shares a story of how he was surprised when they once made massive sales 2 days after Christmas.
  • [15:10] Larry describes himself as an idea person and how they have positioned themselves in the market.
  • [20:22] How they use technology to market and gain customer trust.
  • [21:56] He explains one of their competitive advantages as the ease of installation and the DIY installation aspect of the Guardian products.
  • [27:28] How he struggled with the mechanical side of the business when they first started since he wants the customers to get the best.
  • [31:31] He shares an interesting story of a business failure he made 15 years ago and the lessons it taught him.

Relevant Links:

Website: https://www.elexausa.com/

LinkedIn: https://www.linkedin.com/in/larry-beger-9028825/

Speaker 1: Welcome to the Page 1 Podcast, a twice weekly podcast featuring a variety of guests and thought leaders on topics ranging from channel strategies to tariffs, influencer marketing, best in class product launches, and all the details about how to accelerate your eCommerce sales with the big box retailers or what we call, rCommerce. Now here’s your host, Luke Peters.

Luke Peters: Thanks for joining us on the Page 1 Podcast. I am your host, Luke Peters, and this is the podcast where I bring you the best and brightest leaders to share consumer product sales and marketing strategies that will help you grow your business. I’m the CEO and founder of Newair appliances where I cut my teeth selling products online. And now I’ve started Retail Band where I hope to help other brands succeed in online product launches, influencer marketing, B2B online sales strategy, and even online account management like through Amazon or Wayfair or Home Depot. And right now I’m offering a free evaluation of your online sales strategy.

Luke Peters: So if you’re interested, find me on LinkedIn or email me at luke@retailband.com and it’d be awesome. We can present that free evaluation right to you and see if we can increase your sales online through your different selling channels or using influencer marketing. So in this episode you’re going to learn from Larry Beger on how he created sensors to detect leaks in homes and entered a $10 billion industry. That’s billion with a B. So how he grew this multimillion dollar company by selling into the world’s largest retailers and how he keeps fun and humor at the company. Larry studied law, has a JD and a BS in management from Northern Michigan university. Larry, thanks for joining me today on the Page 1 Podcast.

Larry Beger: Great to be here, Luke. Thank you know. You took me by surprise actually right from the beginning. You said the best and the brightest and I looked behind me. I thought somebody was waiting to talk.

Luke Peters: We’re reaching there. No, I’m sure you’ll have a lot to add and I mean it sounds like an amazing story. And why don’t we start with just learning more about Elexa Consumer Products. Let’s talk about these leak detectors, how do they work? What is the product and where do you guys sell?

Larry Beger: Sure. So just a real quick intro about Elexa. Elexa Consumer Products was founded in 1993 by a large overseas conglomerate. And basically the primary focus was to have a U.S. entity to penetrate the U.S. market and then in big box and selling to big box retailers. So over the years, the company’s launched several different product lines and most recently, which a smart home launched a line of smart home devices. And I always tell people, when they ask, what does the company do? I say, well we make your home smart because you’re not. But in truth we make smart devices that protect your home. So most recently we’ve launched a product called the Guardian and it’s a whole house leak prevention system.

Larry Beger: So basically what you do is you set Guardian up on your… It’s a retrofittable valve controller that goes right over your home’s main water line shut off. So what we do is that you put the Guardian valve controller over the main shut off and then you deploy leak detectors around the home. And if a leak is detected, if you have one by your washing machine or by your hot water heater, the leak will be detected by the leak detector, sends a signal to the valve controller and it shuts the water off. Now I’m going to just, can I go into the beauty of the leak sensors on how we develop them?

Luke Peters: Yeah. Let’s run into that quickly.

Larry Beger: Sure. So I looked around at the market. The company has been in consumer products as I said, for 27 years. And we know consumer habits. So one of the first things we looked at, and I said to our team, our technical team, I said listen, consumers typically, and I’m including myself in this batch, are lazy. We don’t want to change batteries. So we built the leak detector with a 15 year battery life. So, and then we also put into the leak detector, ambient temperature sensing. So it will sense if your home is getting cold, send you a push notification and if it gets down to 35 degrees in the home, we’ll shut the water off. It also detects movement of the leak detector.

Larry Beger: So if a kid or maybe the dog picked it up or whatever, moved it out of where you wanted it. It will send you a notification that the detector has been moved. And then we also have a thousand foot range from the leak detector to the control valve, and it’s done on a proprietary wire, RF radio frequency, wireless technology. And the reason we did that was we wanted to get a super long range. And another beautiful thing about it is even if your wifi goes down in your home, your home is still protected because of this proprietary wireless technology that will still send a signal to the valve controller. Now you won’t get a push notification to your phone, but the water will be shut off in the home.

Luke Peters: Wow.

Larry Beger: And we also make a line of Z-Wave products. And the problem was, to be honest with you Luke, I was testing them at my house, but every time the wifi would go down and I live outside of Chicago. I probably lose wifi probably once, at least once a quarter or sometimes once every two months. If the wifi signal goes down, all of your sensors go offline. So that was a problem. So when we developed Guardian, I said, we’ve got to do something because we can’t have this happening, because if there’s a flood in the home, we don’t want to be reliant on wifi.

Luke Peters: Yeah.

Larry Beger: So, and that’s why we did it with this proprietary wireless technology. I hope that wasn’t too long an answer.

Luke Peters: No. I think it’s actually really interesting because I’ve got a few questions around that and development. But quickly, Larry, just so I can understand these sensors now, most homes are going to have some sort of copper piping that’s holding the water going, and it’s in the drywall. How are the sensors actually detecting that there is a leak? Are they looking at some sort of pressure decrease or do they literally have to physically have a camera that watches water dripping on the ground? How do they actually understand that?

Larry Beger: So the leak detectors have basically pins on the bottom of them. So when the contact is made between the pins by as little as one drop of water, that activates and sends a signal to the control valve. So what you want to do is we list a hole, a myriad of places where leaks are normally a detected. For instance, hot water heaters are probably number one. Hot water heaters will have a basic shelf life from five to 10 years. And oddly enough, I just had a leak in a hot water heater, and these hot water heaters were installed new 10 years ago.

Luke Peters: Yeah.

Larry Beger: So I had to replace the hot water heater. So a hot water heat is a number one. Toilets are a problem too. Toilets, but not only overflowing but the valve and the tank fittings become loose over time and they will leak and can cause a lot of damage.

Luke Peters: So there’s like a physical connection. So the homeowner would put these all over the house then?

Larry Beger: Correct.

Luke Peters: And how much is it typically or quickly cost to outfit a home with this Guardian product?

Larry Beger: So typically it would cost around $299 and for the system with three leak detectors and then you would want to add leak detectors, I would assume from there. And the leak detectors are about $49 retail. But think about it, it’d cost you about 25 cents a month to have a leak detector, because it’s with the 15 year battery life.

Luke Peters: Yeah, I know that that’s really inexpensive. I mean, obviously with all that technology.

Larry Beger: Right. And then they’ve also got ambient temperature as something. We are coming out with generation two leak detectors and making them probably at half the cost with a 10 year battery life, but they’re not going to be as robust. They’re not going to have ambient temperature sensing movement. They’re just going to be leak detectors. So that’s basically what the homeowner does. Here’s the beautiful thing, Luke. If we’re working with a company called, SmartInsure, and I actually just talked to the CEO, a gentleman by the name of Daniel Turgel. So if we’re teaming up with SmartInsure, so let’s say you, Luke, buy Guardian at Home Depot or Lowe’s or Costco, you install it. You call up SmartInsure, all you do is give them the pin number off of the control valve. So it’s usually a four digit alpha numeric pin number. And you let SmartInsure know that you purchased it and they will guarantee you between a five and 25% discount on your homeowners insurance policy.

Luke Peters: That’s awesome.

Larry Beger: So then Guardian pays for itself. We’re just getting this relationship consummated and we’re really excited about it. And like I said, I was on the phone with the CEO of the company. I said, okay, hold on. How does this work? I don’t have to change my carrier. So let’s say for instance you have, I mean, do you know your insurance company is, Luke?

Luke Peters: Well, and let’s get into that maybe later on.

Larry Beger: Okay. Sure.

Luke Peters: What I wanted to run into here is if you don’t mind, why don’t we talk a little bit about more about the company so that way the listener kind of has an idea for scale of the company. How many total employees do you guys have? And do you have your own warehouse? If so, how big? Or do you 3PL these products?

Larry Beger: Sure. So we have four offices around the world. So we have one office in Hong Kong, we have an office in China, we have an office in the UK and then in Brazil. And so all collectively, we’re probably around 40, 45 people and a lot of engineering, as you can imagine, a lot of technical people. We actually outsource and we use a third party, what they call a 3PL, third party logistic. So we outsource our logistics. So we don’t own our own warehouse. And the beautiful thing about that is as you grow and contract, your business grows. And that’s never a problem. I mean, it’s a third party logistic. They’re able to expand and give us more space or they can cut our space down and we’re not stuck in a longterm lease with 400,000 square feet, which we’re only occupying maybe 150,000 square feet.

Luke Peters: Yeah. It’s a very variable expense.

Larry Beger: Right.

Luke Peters: So for a lot of companies, yeah, definitely. And then there’s a lot of systems involved, which with shipping your own product. So about 45 people, but all over the world, which is awesome.

Larry Beger: Right.

Luke Peters: Your different offices around the world. And then how about your sales mix between in store versus online? What’s the about percentage? Is it mostly an in store product or how is the mix there?

Larry Beger: Right. Okay. So basically like you’re taking the case of a Home Depot, were not only in the store, but we’re online. And the same with Lowe’s, ACE Hardware. So we’re in all of the home improvement channels except for one customer that we’re not in with them. So we’re in Lowe’s, we’re Home Depot, ACE, True Value, Do it Best.

Luke Peters: Yup.

Larry Beger: And we’re online, although Home Depot does a great job, Lowe’s does a great job. We’re on Amazon, we’re on costco.com. We do in and out type of promotions with Costco So that’s kind of the bulk of our distribution.

Luke Peters: So do you think most of it is in store sales or are you guys doing it pretty… Because I’m just curious if consumers are buying this one off… I realize you’re in store and then also online at HD, but is it mostly an in store sales or are customers actually also you’re getting purchases from the online side of the business?

Larry Beger: Yeah. The online business is very strong and I can tell you why. I mean people like to do research and they like to read. And so I mean obviously you can do it from the comfort of your own home. So people will shop online and they’ll go to the various e-tailers and look in at the products and read the comments and all of that. So we do a big online business. Of course when we promote it online, it’s gangbusters.

Luke Peters: Yup.

Larry Beger: But we still have this brick and mortar presence as well.

Luke Peters: Yeah. And do you guys have your own sales team or do you use reps for a lot of those large retailers?

Larry Beger: Right. So we have an insight. So we do have an inside Salesforce and we do utilize a lot of reps around the country as well.

Luke Peters: What’s been your biggest surprise as far as sales channels go? Was there one of them that you’re doing more sales than you would have thought or something that’s trending lately or anything stand out there?

Larry Beger: I’ll tell you one a surprise that happened, it was almost a year ago over Christmas. So I typically at the company like to give people off to visit with their family over the Christmas holiday and then one of our… Well, I’ll tell you who it was, it was Costco, ran a promotion on the 27th of December and they ran it for I think a week or so, and the sales were gangbusters and I couldn’t believe it. So I had operations people calling me and I was trying to visit with my family between Christmas and New Years. And they’re calling me and they’re like, you’re not going to believe the sales and they’re going crazy. I said, who shops two days after Christmas?

Luke Peters: Yeah.

Larry Beger: And I was kind of upset by the timing of this ad. At first, I said, well that was a pretty lousy placement. Two days after Christmas, the thing starts going and it’s over. Just after the first of the year, people are just kind of winding down from the holidays. And I didn’t think anybody was shopping, but the sales were just gangbusters and it shocked us. So we did quite a large amount of sales in a very short time, like I said, right after Christmas. So that was pretty shocking.

Luke Peters: Yeah, Costco. I mean, incredible customers. So and have you guys been working with Costco for a while?

Larry Beger: Yeah, we’ve actually been with Costco for a number of probably the last, going to be seven to 10 years.

Luke Peters: Yeah.

Larry Beger: With various different products. Right.

Luke Peters: So it sounds like, I mean, it’s a really unique product. You’re able to position yourselves in a competitive way and I’ll ask questions about IP, I guess coming up. But I guess before I get into that, is that kind of your strength with the company? I mean, you’re obviously CEO of the company and have led the company I think for over 20 years.

Larry Beger: Right.

Luke Peters: Is it in product development or do you just happen… Do you guys… Was that just something that the company spent a lot of time developing teams around product development? Is that the strength or is it more on the sales side?

Larry Beger: Well, I’m going to tell you somebody, you probably already had guess, Luke. My mother used to say to me, oh son, you’ve never met a microphone you didn’t love.

Luke Peters: Funny.

Larry Beger: So I do love talking to them. I do love talking to people. I do love getting up and I’m not obviously a shy person, but then on the other side of it, I grew up outside of Detroit. And so it’d be in the Motor City and I did grow up around cars and all of that stuff. And some of my family were in the automotive industry. So I love tinkering and playing with cars and mechanical things. I remember being in my parents’ basement when something would break like a toaster or whatever, I would take it down on the basement and try to fix it. And nine times out of 10 I was successful. So that kind of started it.

Larry Beger: So it was like tinkering and then getting into the more of the mechanical things. And then of course when I started owning cars and being able to do things. And so that kind of started the ball rolling. So as I went into business, I always had an affinity for product development, and could see from the mechanical side. And a lot of times from the electrical side and what would work and what won’t. And although I’m not an electrical engineer, I have great electrical engineers and in app developers. I’m more of the, I guess the idea person. I said, can we do this? Just like I was talking about the leak detectors.

Luke Peters: Yeah.

Larry Beger: I said, we got five years out of it. And I said, well, certainly we can get 10 and they all, engineers are looking at me like, oh. Then we got 10 and I said, well, if we got 10 we can definitely get 15. And so they of course they just don’t ask us for 20 years. But I thought 15 years was safe. So I come up with the ideas. Some are doable, some are not. I mean, some are good ideas, some are horrible and by my own admission, but I like the ideas. But then I like getting out in the road and selling.

Larry Beger: And the crazy thing, and I told this to our sales team and to our director of the sales, Jonathan Storino and I said, Jonathan, I have never had a product in my 30 some odd years in consumer products, that a buyer hasn’t had something negative to say. I mean, we walked out of one of our retailers and after the presentation of Guardian, and the retailer called my rep and my rep called me and he said, the buyer said it was like you guys were selling magic. And that’s kind of the reaction we get with Guardian. It’s like people can’t believe it.

Luke Peters: Yeah. Well you’ve differentiated it and you’ve positioned yourselves in also a pretty unique category. It’s a $10 billion problem, but it’s not an obvious, I don’t think, I’m sure you guys have competitors.

Larry Beger: Sure.

Luke Peters: But maybe not at the same rate as other more common to our mind, consumer electronics. So I think kind of mean in those, I always like the plumbing categories and the construction categories and some stuff that kind of requires the hands to get involved. I used to be in the pool business. So kind of have a little bit of background. But yeah, so we did leak detection and pools, by the way.

Larry Beger: Oh, okay.

Luke Peters: That’s a whole different thing. You know, why is my pool draining two inches a week here? Well it’s probably not the sun.

Larry Beger: Yeah, probably because your kid was wearing his football cleats in the pool walking around, I don’t know.

Luke Peters: More than that.

Larry Beger: Yeah.

Luke Peters: So it’s the industry. I mean it’s a good, but then you talk about your product development and you never found a microphone that you didn’t fall in love with. So I love that story. Is the product made in China? You have a team over there. So is it made in China and then does it have a IP? You kind of have it protected with a bunch of IP around it or is there anything you can share on that end?

Larry Beger: Sure. So yes, we do. We applied for a patent sometime ago and actually the patent issues and get this, on Christmas day in 2018 I got the patent in my hand. I look when it issued. I said, let me ask you a question. I showed it to the team. I said, who in the government is working on Christmas day? Seriously?

Luke Peters: Yeah.

Larry Beger: So we laughed about it, but it issued in 2018 so we have a patent on the product. We use a very large patent office, a very good one. They’ve got offices here in Chicago and all over the country. And I think pretty much all, I don’t want to say all over the world, but they’re called Barnes and Thornburg and they’re very thorough, very good patent house. And so, we use them and really happy when that patent dropped. We have another product that we have patent pending, we can talk about that probably another time, but.

Luke Peters: So the Guardian product is relatively new. You’ve been running the company for 20 plus years. This product’s relatively new. And I guess I’m speaking for you, you can correct me, but you’re in all these stores probably because you have relationships and maybe other products that are in those stores. And then you bring Guardian out and you’re able to capitalize on that. Talk about building the brand. How do you build customer awareness besides getting in the stores? Was there anything on the website or on the marketing or advertising side that you had to do with the brand to really build awareness and also kind of educate the customer I guess, because they might need it for this type of product.

Larry Beger: Right, right. So yeah, we had to hire a marketing group that we had to… Basically they go out on the web and look for people who are searching leak detection, and then they ping them with the incentives of the Guardian site. We use a lot of them. Some of the analytics and what have you. We’re doing some in store promotions. My next goal if we get the funding is, my goal is to get on TV and really explain the product. And I’d like to use just the right TV. But we’re doing a lot of things online and our marketing team is. I mean, I didn’t grow up in the area or era of online. I mean, I remember when we got our first, my first email account was like in 1995. So this whole web thing that these kids grow up with and their smart devices, it’s just incredible. But as also incredible, the reach that you can get with smart devices and the web. And it’s just an incredible tool for us. So we do a lot of online marketing.

Luke Peters: Wow. And then talk about competitive advantage. I mean, is that something that you really think about when you’re positioning the product and looking at the competitors and just curious to hear your thoughts because you have so many years of experience in consumer electronics, with regards to competitive advantage. And then maybe even an example of specific positioning that you took.

Larry Beger: Yeah. So typically with, like I have a law background or studied law, but you try to look at mitigating risk. And I look at things from a risk mitigation standpoint. So when we were developing Guardian, I said, I want something that’s retrofittable that the average consumer could install or take off if they wanted to when they move or whatever. And so we went back and forth about this and people were like, why? I said, well, I’ve been in consumer products my entire life and products fail. They just do. I mean, it’s not any fault of in manufacturing you do the best that you can, but you could get one little component that goes haywire in a product sale. And I remember talking to a gentleman at CEDIA and he said, well, why did you come up with this retrofittable solution or product instead of inline?

Larry Beger: And I said, well, the problem with… I mean, we could develop an inline solution. And what I mean by inline is you cut the pipe, you put this device in the waterline and then you seal it, right? But it’s there, and if it fails, what do you do? And I was talking to this gentleman and I said, if the motor fails, it’s going to be a catastrophe. And he said, you would have to say that. He said, I installed one for a lady and he didn’t give me the name of the competitor. And he said, the motor failed and six o’clock in the morning, he said, I had a lady calling me screaming, my water’s off. I can’t turn it on. I’ve got to go to work, I’ve got to shower. I’ve got to get kids, got to get ready for school.

Larry Beger: So it was a minor catastrophe, but still. So with our product, like I said it’s retrofittable, and you could just unclamp it from the pipe if the motor fails and just turn the water on manually. So that was one of the things I looked at. And so that give us a real competitive advantage because when you buy Guardian, if you buy it for 299 or $199 depending on the kit, you’ve got everything you need. You don’t have to call a plumber. And then if you are having trouble installing it, you can go online and look at our tutorial, kind of walks you through the steps of installing it. And it’s simple, very simple to install. So that’s one of our competitive advantages.

Luke Peters: Yeah. That’s a great example. A really perfect example actually, and I like what you’re talking about mitigating risk. Definitely your experiences has you thinking right there, and even maybe said a different way is eliminating friction. I mean, I know because listen, I’ve had to do minor, I mean, not an expert, but I’ve had to plumb in pools.

Larry Beger: Right.

Luke Peters: And heaters and stuff like that. And it’s mostly PVC, but you’re still plumbing and connecting and 100% that if there’s a single point of failure in there, that thing will eventually fail you’re going to be in big trouble. But here for the consumer, what you’re telling them, they don’t have to do any… They don’t have to cut the copper. They don’t have to hire a plumber, they can somehow just connect it on top. And that’s going to probably eliminate a ton of friction for the do-it-yourself consumer. So instead of, because I guess if you’re in line, your customer would then probably end up being the plumber. You may have like a completely different person you’re selling to and now you can just sell to all the consumers. So that has a huge effect on who you’re marketing to and who your adjustable market is. So that’s a great example there.

Larry Beger: Right. And we try to make it for… And I always look at the average consumer, what are they capable of? And you may be handy, like you’re talking about being able to do some plumbing and fitting and even though it’s PVC, but it’s still for a lot of people that’s outside of their pay grade. I could sweat copper lines, I could do a lot of that, but I’m open a little bit different. A lot of people don’t know how to do this. So we try to make it as simple as possible. I use the example of my sisters, I give them smart devices and try to hook them up. And I want to know what the problems are with the devices. Well, sometimes it’s the instruction manual. Well it didn’t say you’re supposed to do that. Okay. That’s good to know. So I use them and my cousins as kind of, guinea pigs. Right?

Luke Peters: Yeah.

Larry Beger: Because I think typically most men, we don’t read instructions, right?

Luke Peters: Never.

Larry Beger: We’re just like, okay, I saw this online, I could do this. No big deal. And with YouTube out there, you really don’t need an instruction manuals, so we tossed that away immediately. But I just wanted to know what are the problems. I wanted people to read the instruction manual. Don’t go to the… So with my family and friends and people in the office. I have them install these products, give me feedback. What did you like, what didn’t you like about it? And then we’re to tweak some things with the instructions or maybe in the design and to help people to make it easy, very easy. For instance, we’re now putting QR codes in all of the leak detectors. So you don’t even have to punch in a pin number anymore. You just scan it with your phone and it pairs and then you just type in where it is and master bathroom, toilet or shower or whatever and boom, it’s done. So we’re always trying to improve the customer experience.

Luke Peters: Yeah. Make it easy for them.

Larry Beger: Right.

Luke Peters: What’s the single biggest hurdle that you’ve overcome? And maybe in more of a way that the audience can learn from it and maybe they can kind of look at their own business. What do you think is something that might stand out there?

Larry Beger: Yeah. I mean, when you’re developing a technical product like Guardian, I mean there is a lot that goes into it with the development, not only of the technology but the backend of the app development. And there are a lot of moving pieces and parts. So for me being really kind of a nuts and bolts mechanical and then dipping our toes into the sensor market, and then building out a platform on our own with Guardian. That was a huge challenge, and that’s been ongoing for the last four years. You have so many moving pieces and parts to put together. I mean not only do you have the valve controller, the PC board and then with every component and you’ve got to make sure you’ve got the antenna strength to connect to the wifi, because the thing’s going to be in the basement or it’s going to be outside or it’s going to be in a crawl space. So it’s got to have the bandwidth to be able to get a signal and to send a signal. So all of these things were very, very new to me and it was monumental when we started.

Larry Beger: I was like, oh my gosh, this is a mountain of things that we have… And I’m a pretty thorough guy. One of the expressions in the office is I tell the team is when somebody spends 200 bucks or 300 bucks for a product, I want them to feel like they’ve got every penny’s worth, every cents worth out of this product. That they feel like, wow, this is a great value. Not that this thing was junk or was put together cheaply or whatever. I want them to really be proud they have the product. So a lot of thought has to go into it. And like I said, it’s not only the mechanical side of it, the back end is the real.. It’s monumental to make sure that the valve controller, the leak sensors are communicating to the cloud, that they’re not dropping off line and that the data is being preserved and all of this stuff. So that’s kind of where it’s at.

Luke Peters: Yeah. And what was the main takeaway though? What’s something that you learned? So you went through this, it’s a technical product, you had so many things that had to mesh together. Was there like a singular learning from that if you had to do it again?

Larry Beger: Yeah. I mean there’s a better way to streamline this and I think that’s what’s taken so long in the development side, because we kept coming up with other things that we needed to add and needed to do and wasn’t fully aware of it in the inception. So we had to kind of play catch up before the product was launched and there was many, many delays. And as you know, this just doesn’t translate well to shareholders that are saying, well look, we’ve invested all this money, millions of dollars, when is this thing going to launch? And there’s nobody left to blame but the CEO who… I just had no idea how many moving pieces and parts as I said, worked for those projects. So on the next order, we’re talking about the next two or three projects to bring into the Guardian family. So I’m already laying out the strategy and writing the documentation for it so that we can basically bypass a lot of this development, these development issues and bring this out more efficiently. Let’s put it that way.

Luke Peters: It sounds like more planning up front. So that’s a.

Larry Beger: Right, correct.

Luke Peters: I guess we could all do… I mean we just converted to an ERP. Luckily, it wasn’t me doing it because I would’ve not been good, but my team was amazing and there’s just tons of planning that’s required upfront to do these types of things. And it sounds like similar type of situation here.

Larry Beger: Right.

Luke Peters: Yeah. No, that’s an interesting takeaway there. Larry, what is your biggest failure? Just a really tough one, something that you’ve learned from or that helped you improve yourself or your business maybe.

Larry Beger: Right. So this goes back, oh gosh, I want to say 15 years ago. Okay, so universal remote controls were just coming into the market or I shouldn’t say just coming in, but there were gaining popularity. So we went out or I could just say I went out, and licensed the brand name La-Z-Boy because of the old joke. What are you going to do, sit in your recliner in your La-Z-Boy with a remote? So I thought, well this is something that would work well at retail. So we started developing, we saw a gap in the market. First of all, we saw a gap. There was a lot of cheap stuff out there. $19, $24. But in the 49 to $99 range, there was really nothing. And there was a dominant player at like 129 and above. So we thought, wow, this is a sweet spot and we can develop a line of universal remote controls and license this name and of course we were on the hook for the licensing fees, because you have to hit certain minimums.

Larry Beger: So we went full board, developed four items from like 49 to 99. And at that point, and by the time we were launching, the main competitor who was in the 129, $39 range decided to launch their own line in the 49 to $99 range, and kind of blow us out of the water because they had market share, they had shelf space. It didn’t matter. The retailers were like, we don’t care if it’s just La-Z-Boy. And I’ll tell you who it was, it’s Logitech. So Logitech had the space locked up and in the distribution. And we really failed miserably with that line. So that was a good learning experience. And you know, I tell people, don’t be afraid to fail. I mean, you can always learn from your mistakes. Right? And we took a chance and we failed, and we failed miserably with it. And to make matters worse, then we found out somebody had a patent on the back lit keypad of all things.

Luke Peters: Oh, geez. Really? Wow.

Larry Beger: So typical. This was another reason that I mean, well, typical patent troll. It comes out of Dallas and we get the call, I get the call. And I’ll accept services, send me the suit. So they sent me the suit, and so I had to hire an attorney and defendant and all that stuff. But yeah, so for a back lit keypad, they had a patent. They wanted royalties and luckily we didn’t sell a lot of products, so…

Luke Peters: Exactly.

Larry Beger: There was a minimum settlement. But a lot of people, in fact, Motorola got hit pretty hard by that lawsuit. Like I said, that was at least 10 years ago, maybe even 15.

Luke Peters: That’s a smart patent to have, I guess.

Larry Beger: Yeah.

Luke Peters: That’s a useful everywhere.

Larry Beger: Right.

Luke Peters: Wow. Well that’s a great story. And like you said though, I guess, listen. You’ve been in business a long time, so we’re all going to have our product failures. But yeah, really interesting details about you did everything right, you had the market share planned out and like you said, sometimes the license is amazing and sometimes licenses don’t matter to buyers. In fact, a lot of times buyers don’t care. It’s like, do they matter to the customer? And then that then the buyer all of a sudden will care if there’s demand.

Larry Beger: Right.

Luke Peters: But that’s a great story and in a good way to wrap this up and just to show your breadth of knowledge, and thanks for sharing all of that wisdom and experience with the audience. How can listeners learn more about you or connect with you?

Larry Beger: Well, I’m on LinkedIn of course, but through our website even learn a little bit more about the product and I’m kind of a low profile guy, right? Even though I love to talk, but I consider myself just one of the team, right?

Luke Peters: Yup.

Larry Beger: I always tell people, look at a company like a puzzle, right? If you remove three pieces, you’re going to notice something is wrong. Everybody fills, we all fit together perfectly in an organization and we need everybody. The puzzle’s incomplete without these three pieces. So, but at any rate, yeah, I’m available on LinkedIn. That’s where I… There’s a lot of traffic there. I mean, you can always contact us or me through our website, and that.

Luke Peters: Well listen, Larry, thanks for joining us on the Page 1 Podcast. Guardian sounds like an amazing product and thanks for sharing kind of your wisdom and details about product design and the company and hopefully there’s a lot of value there for the audience. And just want to thank everybody for listening. And also a quick reminder that I’m offering that free evaluation of your online sales strategy. We can look at your digital strategy on Amazon, home Depot, Wayfair. We can also look at your product reviews and check out different selling tools and I’ll present the findings directly to you for free. So contact me on LinkedIn or luke@retailband.com for more details. Again, want to thank everybody for listening to the Page 1 Podcast sponsored by Retail Band. I appreciate all of your comments, suggestions, and especially your reviews on iTunes. We’ll see you on the next episode.

Speaker 1: Thanks for listening to the Page 1 Podcast with Luke Peters. If you like our show and want to know more, check out our other segments. Also, please help us out by leaving us a rating on iTunes. Want to learn more about rCommerce? Check out www.retailband.com to get more great tips and tricks on how to accelerate your eCommerce sales with the big box retailers.

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Episode References:

Contact Larry Beger: LinkedIn

Contact Luke: luke@retailband.comLinkedIn 

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