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.
The security industry’s biggest transaction in 2012 also involved one of its larger-than-life figures. The vision, tactical maneuvers and drive that made Vivint America’s fastest growing residential provider and led to Blackstone Capital Partners’ $2 billion purchase emanates squarely from company Founder and CEO Todd Pedersen. Seen widely as a renegade outsider when he began building his empire in the 2000s, Pedersen has become a poster child for the new era of innovative and interactive security services.
Raised in Idaho, Pedersen dropped out of BYU to pursue the pest control business before launching APEX Security Solutions in 1999. Later becoming APX Alarm and in 2011 Vivint, the Provo, Utah-based company has grown to more than 675,000 installed systems across the United States and Canada, and in excess of 3,200 employees. The company, whose customer base grew an astounding 825% from 2005-10, expanded its product set in October 2009 with the release of the Go!Control touchscreen panel. This enabled moving from being a security-only company to a provider of simple, affordable home automation solutions.
In conjunction with rebranding as Vivint (“vive” meaning “to live” combined with “intelligent”) came offering new products and services, such as lighting and small appliance controls, automatic door locks, energy management, and video surveillance. More recently, the company has aggressively moved into the solar energy business, which was another element its suitors found appealing. In addition, Vivint is looking into becoming a wireless Internet provider and planning to expand into commercial security.
Great success has a way of making those who are deemed threatening or far afield seem friendlier and more mainstream — like a grunge rocker who scores a No. 1 pop hit. And while many of his formerly radical ideas (e.g. summer sales model, home controls, energy management) are panning out as he promised and being adopted by others, Pedersen is continuing to push the proverbial envelope. In this exclusive and in-depth interview, among the many things Pedersen tells SSI is why everything, including money, pales compared to meeting the needs of the market and demands of the customer.
When we spoke a year ago, you cited 825% growth during the prior five-year period. Yet you said you’re never really satisfied. With the recent $2 billion sale, are you any more satisfied now than a year ago? What drives you?
Pedersen: Honestly, for me it was a piece of a big puzzle. The sale was not an end event for me or, in fact, anyone inside the company. I haven’t been doing what I’m doing to sell and make a bunch of money. That was kind of a byproduct that I sold some of my equity and made some money, but that’s not why I get up in the morning, at all. I like to compete and I think people attracted to Vivint are likeminded; we want to compete. We want to be relevant to consumers. We want to deliver best-in-class services in anything that we do. We have this probably sick mentality that it’s never good enough, no matter what. I’ve kind of been like that my whole life. I’m not a jerk about it, but it’s kind of like anything in life. It would be similar to if someone buys a car; you’re super stoked on it for about five minutes. Then it’s kind of over. That’s kind of how I feel, even about the sale process.
I appreciate the fact that we ended up with Blackstone. They are phenomenal partners. They have been hugely helpful in us thinking through the next three to five years, in all of the different businesses we’re in or contemplating getting into, and being really thoughtful around financing structures, and the ability to utilize cash flow off the current business to fund new ventures. Yet they’re still letting us 100% run the business and make decisions on the business. The thing I’m excited about is the sale gives us the capability; it puts us in the position to take on opportunities with the talent we have onboard, the vision around here, the atmosphere in this business, and take this thing to a whole other level. That’s why I go to work every day.
When you attack the business, with the vision you’ve shown, how big and extensive can it be? Have you had to win over or convert those within your organization to your mindset of how big it can be?
Pedersen: I never tell anyone too far in advance what I’m really thinking because people always think I’m crazy. I kind of hold things to the vest pretty tightly. We have pretty big goals for expansion, not just for the security business, but we’re in the solar business in a very big way. We’re the No. 2 player in the solar business. Our main competitor, Solar City, just did an IPO in their billion-dollar market cap, and we’re breathing down their neck in the solar space.
We’re getting into the wireless Internet space and content, and health care, all really big industries. These are things that you start to dabble in, in conversations, well in advance of trying to execute on rolling something out. Honestly, it’s a part of creating a vision around what the company should become to remain viable. I think anyone who knows business knows that if you do not innovate, you’re dead. It’s just when. You are walking dead if you’re not innovating. It’s a matter of time.
Sometimes you get lucky and in the security space there’s has not been a lot of innovation for many years. People are fine with that, but personally it feels like if it doesn’t change pretty rapidly, if we don’t have major plans to continue to innovate and improve the company, the services, integration of services, we’re not going to be viable in 10 years. We might be a decent-sized company but I don’t want to be a decent-sized company. I want to be viable.
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