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.
Vivint has been associated with the summer sales model. What is your take on the controversy that’s surrounded it?
Pedersen: I can’t speak to other companies, other than the fact that not everyone is focused on trying to do it right every single time. We try to. We had 2,200 sales reps who went out this past summer. We probably knocked on seven to 10 million doors. We had a few hundred complaints. Better Business Bureau complaints against our sales force were probably fewer than 200, which is 200 too many but as a percentage is almost zero. I don’t care if you’re selling security door to door or delivering rides to Disneyland, you’ll get complaints from consumers. We believe we do an exceptional job.
We continue to improve. We’ve had to put more robust and better systems in for tracking complaints from consumers, from other employees, and we take that stuff very seriously. Does everyone take that stuff seriously? It doesn’t feel like it. I compete with a lot of companies out there and it’s not just about door to door, it’s also things like having unlicensed dealers. So this isn’t a door-to-door summer model issue; it’s an industry issue. If you allow people to go in unlicensed, and do things that are not appropriate, you should pay the price.
We always try to hire the right people upfront, train them properly. You’ve got to have the right procedures in place to warn and then eventually let go of employees who just don’t choose to have the customers’ or company’s best interests in mind first. Some of it, though, is that if you are classified as a door-to-door company, you’re kind of guilty before proven innocent.
What are the keys to staying ahead of the competition?
sen: We actually aren’t doing anything to stay ahead of the competition. Not a single decision made at Vivint is based on what ADT is doing, what Monitronics is doing, what Vector is doing. The topic never comes up. It’s what is inside the realm of possibility at some point in time in the future. Let’s come up with the craziest, best-case scenario that we could deliver at some point in time. What are the 10 best services that integrate, that would make sense to consumers, if we could integrate them? And it makes their lives better, it provides savings, more information, and is easy.
We pay attention to Google, Apple, AT&T and what they’re saying and the kind of things they’re doing, but we’ve got a vision of where we want to take this thing over the next three to 10 years. Maybe we’ll make adjustments based on what the competition does or maybe there’s a surprise that comes about that we have to turn on a dime and adjust to. But we’re just focused on looking at what we’re doing and saying, “What’s great, what’s not, what can we fix?”
At the end of the day, the consumer wins. For me, that’s the biggest driver. Are we doing things for consumers that are best for them, not what’s most profitable for us but what’s best for them? If we do what’s best for them, we win in the end. It all ends up working out. Another thing I would say is we’re always super focused on fixing things that don’t need to be fixed. The wrong time to fix it is when it needs to be fixed. It’s only taken me 22 years to figure that out.
The thing I love about this business is it’s so underpenetrated it’s crazy. It doesn’t feel like we’re really competing with people. A high percentage of our customers do not have an existing monitoring security system. We’re creating new customers, new markets almost every single time. It’s not like someone is messing up and we’re scooping it up. It’s a super wide-open market, at like 20% penetration since I’ve been in the business. That’s not even penetration.
That’s why we’re saying we must not be delivering exactly what people want. Let’s do it. Let’s figure it out. I think people want cheaper electricity. I think they want fast, cheaper Internet, cheaper content provided to them. If we can provide some relief on the health-care front inside the home and it saves them money, I think they want those things. Again, can we integrate the security component into all of those offerings? That’s what we’re doing. We need to be providing services that a higher percentage of the population base agrees is worth the money.
Do security providers today seem more eager and willing to change with consumer demands and technology compared to when you entered the industry?
Pedersen: The industry is sort of adopting it, but only because they have to. People are doing it because they have to, to compete. That’s a different mentality than doing it because it’s the right thing to do. That’s the difference. I’m not doing it because I’m being forced to because some Google or AT&T is doing it. We’re doing it because it’s the right thing for the consumer. Is the industry changing? Sure. Are people changing because they have a vision for where their company should end up being? It doesn’t necessarily feel like that, competing with them. Reacting in business is usually too late, in my opinion. If I’m reacting every day or every month or every year, I shouldn’t be the CEO. The second I feel I’m at that point where the need of the consumer is passing up my ability to deliver, I’m done.
I love the security business. It’s awesome, it’s fun, it’s a great service. Everyone should have security. I don’t think everybody believes they need it but there’s a way to deliver security over time, to everyone, maybe just not through the traditional way we’ve done it. I think if I gave everyone security, almost for free, they’d take it if it was part of a bundled package in a fully integrated home. Why wouldn’t they? There’s a way to deliver service people probably would like to have but some view as a luxury they can’t afford. If I can make that affordable to them through the service offerings or just simplification of life and therefore savings of time, or whatever the case might be, I think we can accomplish that, at least in a bigger, broader way than has been done at this point.
Editor-in-Chief Scott Goldfine has spent more than 14 years with SECURITY SALES & INTEGRATION. He can be reached at (704) 663-7125 or [email protected]
- 1995-98: APEX Marketing Group is formed by Todd Pedersen. His team of 13 college students sells pest control services door to door in Mesa, Ariz., selling 1,500 contracts in their first summer. Members of the sales team leave to work for a security company, which fails. They return bringing with them an idea for a new opportunity.
- 1999: Pedersen forms APEX Security Solutions Inc. to market third-party (Protection One) home security systems.
- 2000-02 — APEX partners with ADT to sell its home security services. APEX sells 12,000 ADT contracts in four months, obliterating sales goals.
- 2003-04: APEX ends relationship with ADT, and signs on with Monitronics. APEX team sells 20,000 Monitronics systems in just 108 days.
- 2006: Private equity partners Jupiter Capital and Goldman Sachs invest $50M of growth capital, allowing APEX to evolve into a full-service home security company. Company name changed to APX Alarm Security Solutions. APX signs a $75M credit facility agreement with Goldman Sachs.
- 2008: APX announces $220M credit facility led by Goldman Sachs Specialty Lending Group. Company breaks ground for new headquarters in Provo, Utah.
- 2009: APX acquires monitoring station in St. Paul, Minn. Another $440M credit facility agreement is completed, led by Goldman Sachs. New 125,000-square-foot corporate headquarters is opened.
- 2010: APX receives several customer service awards. Goldman Sachs increases credit facility agreement to $565M. Go!Control panel launched, giving customers more control over more types of devices and functions. Second central monitoring station opens at new corporate headquarters.
- 2011: Company purchases smart metering technology company, Meter Solutions. APX enters home automation market with products/services including automatic door locks, video surveillance, and lighting and small appliance control. Company changes its name from APX Alarm to Vivint. Expands energy division through partnerships with Tendril and Constellation, continues to build its Smart Grid business. Vivint Solar is launched.
- 2012: Blackstone Capital Partne
rs acquires Vivint Inc., including Vivint Solar and 2GIG Technologies, for more than $2 billion.
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