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Pedersen Powers Vivint to Victory

Vivint has set the residential security world ablaze with exceptionally fast growth and a $2 billion sale price. In an exclusive interview, the company’s maverick CEO Todd Pedersen explains how innovation trumps competition, the value of growing a business one customer at a time and why everyone should have a security system. He also discusses expanding into commercial security, solar energy, wireless Internet and more.



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Among your businesses, which is growing the fastest now?

Pedersen: With solar we did a little over 3,000 installed customers the first 12 months in business. It’s growing at a substantially faster rate than Vivint. Vivint will probably grow at 30% of RMR. Solar will grow at hundreds of percent from this last year to this year. It’s probably 500% growth, maybe more than that. I guess it would kind of also come down to which entity is creating more long-term equity value. That’s debatable because our main competitor, Solar City, has a market cap of a billion dollars. We think we can get to where they are in very short order. We could catch Solar City by the end of 2013.

Do you expect many more competitors to enter that space?

Pedersen: Yeah, it’s a really hard business. The financing structure is very complicated. It’s not like security where you’re borrowing 27 times RMR. It’s extremely complicated. I think we’ll probably have competitors from the security business, but I don’t know of anyone that’s really going to try to step up and compete and be a fully integrated solar company. We’re really a utility is what we’re creating, because we sell electricity to the customer. We don’t sell solar panels. We own the panels and we sell them the electricity it produces on a monthly basis and charge them just like the utility. I don’t know of any security providers that are going to make the financial commitment, because again a security system of $1,200 to $1,500 of capital outlay, solar is $20,000 to $25,000 of capital outlay per customer.

Do you share technicians or installers across the solar and security businesses?

Pedersen: We’re converting installers of security over to solar. They don’t do both. We try to make sure our security installers and our fulltime service technicians are busy. We use them as much to maximum capacity as possible, and it’s the same with solar. From an ongoing service perspective, we’re definitely utilizing the service technicians on service calls in cross-training according to that perspective. Operationally, one of our massive advantages over a Solar City or Sun Run is we already have an operations base that handles 700,000 customers. If we add 15,000 new solar customers this year, it’s not even a blip on the radar as far as our capability to handle billing, service issues, customer service calls. We’ve got a huge leverage off our current operations for the solar business, which these other groups have to build out all of these operations to handle the current solar customers they have. It may be an unfair advantage, but we like it.

What’s your process for not only zeroing in on these great opportunities, but maybe even equally important or more important is developing and executing a go-to-market strategy that brings success?

Pedersen: It’s really important for us to test and test and test for the least amount of money possible, and fail as fast as possible. We have a very unique capability with this organization, from a customer acquisition perspective, to test new services, new products, new technologies very rapidly, for very low dollars. The solar business, for example, before we knew we nailed it, we hadn’t risked a million dollars. It was hundreds of thousands of dollars we’d risked.

Right now we’re attempting to build out an Internet network, wireless Internet network, with the same concept. We’ve got a few hundred thousand dollars, maybe $500,000 at risk right now. In $5 million dollars or less we’re going to know if we have at least the opportunity to roll this thing out nationwide. Our own proprietary wireless network, that’s the goal. If we fail, we only lost $5 million, not a billion, or $2 billion. You look at Clearwire and some of those companies; they spent $3 billion before they failed. Clearwire deployed towers in multiple cities and then tried to figure out how to get customers. We don’t do that. Our expertise is customer acquisition. That’s what we do.

What are some other top opportunities you see out there?

Pedersen: Obviously, our core is security and home automation. We’re not losing focus on that one bit. In fact, we’re growing it substantially. The one thing we’re not going to do is put the entire company at risk to chase one vertical. That’s why we deploy independent resources, personnel and capital at new projects. They’re kind of siloed until they’re ready to be integrated.

In addition to solar and wireless Internet businesses, we’re definitely launching a commercial division at some point in 2013. We intend to go into the commercial business in a very big way, kind of like we do everything else. That’s a no-brainer. Previously, it’s not we didn’t have the ability to do commercial; we just couldn’t because our lenders didn’t allow for it. We’ve got a very robust plan in place to roll out into the small and light commercial, not large-commercial space, at least in 2013.

Health-care services are also something we’re being really thoughtful around. We are developing a plan over the next year to 18 months of rolling out what we think are some interesting health-care services that are hopefully valuable, viable and perceived as good offerings to that market.

Should we expect to see Vivint make any acquisitions?

Pedersen: Not in the security space. First off, I can acquire a customer way less than on an individual account-by-account basis, with our model, than I can do an acquisition. That’s pretty important. Two, most likely it doesn’t have the right panel technology in the home, so it’s an antiquated panel in the home that does us no good for our future business model. We are not interested in acquiring customers when we always install new equipment. I would never acquire a bulk of customers because they’re going to have 32 different panel types and they’re not panels that can upgrade to cameras, thermostats, distributed audio, sprinkler controls and integrating into our solar panels. Why would I want that customer? I’ll just create more.

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Article Topics
Business Management · Cover Story · Door-to-Door Sales · Managing Your Business · Todd Pedersen · Vivint · All Topics

About the Author
Scott Goldfine
Scott joined SECURITY SALES & INTEGRATION in October 1998 and has distinguished himself by producing award-winning, exemplary work. His editorial achievements have included blockbuster articles featuring major industry executives, such as Tyco Electronic Products Group Managing Director Gerry Head; Protection One President/CEO Richard Ginsburg; former Brink’s Home Security President/CEO Peter Michel; GE Interlogix President/CEO Ken Boyda; Bosch Security Systems President/CEO Peter Ribinski; and former SecurityLink President/CEO Jim Covert. Scott, who is an NTS Certified alarm technician, has become a respected and in-demand speaker at security industry events, including presentations at the Central Station Alarm Association (CSAA) Annual Meeting; California Alarm Association (CAA) Summer and Winter Conferences; PSA Security Network Conference; International Security Conference and Exhibition (ISC); and Security Industry Association (SIA) Forum. Scott often acts as an ambassador to mainstream media and is a participant in several industry associations. His previous experience as a cable-TV technician/installer and running his own audio company -- along with a lifelong fascination with electronics and computers -- prepared Scott well for his current position. Since graduating in 1986 with honors from California State University, Northridge with a degree in Radio-Television- Film, his professional endeavors have encompassed magazines, radio, TV, film, records, teletext, books, the Internet and more. In 2005, Scott captured the prestigious Western Publisher Maggie Award for Best Interview/Profile Trade for "9/11 Hero Tells Tale of Loses, Lessons," his October 2004 interview with former FDNY Commander Richard Picciotto, the last man to escape the Ground Zero destruction alive.
Contact Scott Goldfine: sgoldfine@ehpub.com
View More by Scott Goldfine
Cover Story, Door-to-Door Sales, Managing Your Business, Todd Pedersen, Vivint


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