Continuing our trade media partner series on the Independent Thinking Podcast, Jason Knott, Chief Content Officer at CE Pro, hops on to talk about his recent coverage of the COVID-19 pandemic, challenges technology integrators face and more.
Rob Stott: All right. We’re back on the Independent Thinking Podcast. Right now, continuing our series of podcasts with trade media partners and excited to have on Mr. Jason Knotts of CE Pro, chief content officer over there at CE Pro. Jason, appreciate you taking time and Skyping in, videoing in here and chatting.
Jason Knott: No, thanks for having me, Rob. I’m excited.
Rob Stott: So, Jason, you’ve got some great rapport with our custom installation guys and members here at Nationwide, but for audience members that don’t know you, listeners, explain a little bit about yourself and about CE Pro and who you guys are.
Jason Knott: Yeah, thanks. So CE Pro has been around for 27 years and we like to say we were around before the custom installation industry actually even existed because we coalesced all of these disparate groups of security guys and automation guys and AV guys and electricians and builders, anybody who is doing smart home automation, we created this group around CE Pro and myself.
Myself, I’ve been the editor of CE Pro since 2000. Before that, starting in 1990, I was the editor of a security publication, Security Sales & Integration, which is one of our sister publications. So for a lot of these low voltage guys, I’ve been talking to them for 30 years.
Rob Stott: Wow. That’s awesome. I mean, you build a lot of relationships that way for sure. Obviously, it gives you the chance too, to learn a lot about the business and the way these guys operate on a day to day basis, I can imagine.
Jason Knott: Yeah, it’s really a nuanced business. I’m sure you know from your membership, there’s so many different subsystem categories that these guys can get engaged with. There’s so many different ways to earn revenue from recurring revenue, through service plans, through monitoring on the security side, through storage, camera storage, through installation. For years it was perennially just a business where they wham, bam, thank you, ma’am, did the installation and didn’t hear from the guy anymore. Now it’s really progressed to this ongoing relationship that they have with their clients. So it’s a complicated business.
Rob Stott: For sure. And a lot of evolution taking place that I know we’ll get into. But one other thing I wanted to ask about CE Pro and you guys, for those that might not know, maybe this goes back to credit to my trade publication history, but the relationship with Emerald Expositions, explain that a little bit for those and what that’s done for you guys, at CE Pro over these last couple of years.
Jason Knott: Yeah. So Emerald Expositions, who’s the owner of the CEDIA Expo, acquired CE Pro and three of our other publications in August of 2018. So it’s really been a great collaboration because it gets us much more engaged with the audience at the show level.
I think, from their standpoint, one of the reasons they looked at purchasing CE Pro is to protect their investment in CEDIA Expo. This year that has become even more important because CEDIA Expo has been canceled. All these in-person events have been canceled and the reliance that the audience has on CE Pro print and especially CE Pro digital has been amazing. Our traffic has literally doubled since March. Every single month it has doubled from what we primarily would have done in those months. So the reliance that the market has on getting the information through CE Pro’s never been more important. And obviously, from Emerald’s standpoint, that helps them stay connected with the audience in a year when they’re not going to be able to have the show.
Rob Stott: Yeah. Incredible to think about that impact, obviously all going back to COVID and everything we’ve seen with that. But also just, I think, a testament to the importance and the awesome work you guys do over there.
So turning to COVID and coronavirus and everything we’ve seen there, what have these past few months been like for you? Obviously very different. We’re all facing some challenges. But my mind immediately goes back to 08, 09 and what that was. Does this even compare to that? How has the impact been taken from your standpoint and what are you seeing in your coverage?
Jason Knott: Well, it’s funny because I’ve been, as I said, 30 years covering this business. I was just yesterday talking to three guys who cumulatively were over 100 years and nobody’s seen anything like this. There’s no real comparative to compare the situation and the experience that’s going on right now. It’s different than 2008 and 2009 because it was so immediate versus that was a little more gradual. But at the same time, it’s different because I think there’s still a lot of underlying fundamentals that are very strong.
I have a lot of anecdotal information. We haven’t done in our actual industry surveys yet, but almost everybody I’ve talked to, it’s very regionally based. So some regions where they were immediately hit with the virus had horrendous March’s and April’s, where other regions where they were slow, the things weren’t so bad, they were actually doing fine.
Now it seems as the script has flipped a little bit and you’re seeing guys, where they started out slow, are now coming on strong. In fact, in the last two weeks, I’ve talked to about a dozen integrators and one guy on May 27th told me he had actually doubled his business from last year. Another guy was up 50%, another guy I spoke to told me that if he didn’t have recurring revenue he’d be out of business. So it’s really been a mixed bag of where everything stands.
Talking to distributors too in the space, same thing. There was that immediate last two weeks of March or early April when everything just stopped. But interestingly, they saw a spurt in business on the commercial side right at the outset because all the offices were empty, all the restaurants were empty. I think those restaurants and businesses at that time thought it was going to be a very short temporary thing, so they said, “Hey, come on in and upgrade our audio and video right now while we don’t have any patrons in the restaurant or nobody in the office.” And then the residential business had stopped because nobody wanted anybody in their home.
Now I talked to those same distributors, it’s just the opposite. The residential business is going very strong. People have been stuck in their homes for 90 days, realizing they have crummy audio, crummy video, crummy home networks. The genie’s out of the bottle, so to speak, from the working from home standpoint and people realize this may not be a temporary thing. This is going to be an ongoing need in my home. So the investment in the home is going up where at the same time, the commercial entities are like, “You know what? We don’t know if we’re going to come back business. We don’t know if we’re going to have people back in the office,” and the commercial business is slowing. So it’s really a weird situation.
Rob Stott: That’s really interesting. I mean, you think about how the whole thing is played out and some of those things make sense. You get the opportunity as a restaurant owner, or a business, or even an office space where your customers or your employees aren’t there, you take that chance. But now all of a sudden, did you drop that revenue too soon? If you’re not coming back, it’s just interesting to think about.
Maybe a tough way to ask this question because there is so many different challenges that these guys face regionally, but if you had to pinpoint either one or a couple of what some of these biggest challenges were for CI dealers, what did they face as far… Because some, I don’t think maybe the rest of Nationwide’s membership might not consider is that for a lot of these guys, retail isn’t necessarily a big part of the business. They don’t have showrooms necessarily to go to every day, or retail store. So they may not have been physically closed down in that aspect, but what other challenges then were they facing as integrators?
Jason Knott: I think the biggest challenges that they face were on the sales and marketing side in that a lot of integrators, they’re not online-based businesses. They don’t sell a lot online. They’re selling in the home, they’re selling in their showroom, as you mentioned. And their websites, we’re just not up to snuff. I think as things migrated to people wanting to see more online, I think a lot of them realized that their websites were not strong.
And then the same token, the ability to conduct selling virtually, nobody did that. Now you buy a car without even going and doing a test drive. So then I’ve heard from a lot of integrators that they’re selling things virtually, the biggest drawback they’re still having a challenge with is the comparative on the TVs. A lot of people want to see in person the side by side look at the TVs and that’s difficult to do, no matter how well you do it online, it’s not the same as seeing it in person. So I think a lot of those sales challenges were what they really faced. That was the initial thing. I think a lot of them still haven’t figured out how to sell virtually.
One other thing I’ll mention is the spurt in business is really happening in the upgrades. What we’re hearing from a lot of integrators is the new projects are pretty much on hold. So a lot of the business, if not all of the business happening right now, is upgrade business from clients that they had already that wanted to upgrade their network, wanted to upgrade their audio, wanted to upgrade their video. But in terms of launching into some new six-figure projects, those are few and far between right now.
Rob Stott: Gotcha. So that leads to what was going to be my next question and that’s about the construction side of things. Some of these guys, these projects, are so… They get involved in the process early on and they’re part of these projects that are new builds, whether it’s in a home or building out an extension on a home. So construction then, I guess, based on what you’re saying, has sort of stopped for these guys. Could that be considered another major challenge for them?
Jason Knott: Yeah, it’s funny because a lot of the dealers I talked to in the West where you see large housing tracks and those sorts of things, building is still taking place. So I don’t know that construction is necessarily stopped, but I think that maybe homeowners aren’t, even if it’s a new home buyer who’s doing that new home build, he’s not right now looking at that big investment because they probably have a lot of money in the stock market and that’s been a roller coaster over the last 90 days. So, again, I just have the anecdotal evidence from guys who told me their big projects have stopped and they’re really focused on upgrades right now across the board.
Rob Stott: Interesting. So any anecdotal, this kind of plays right into that. Have you heard any cool stories about an integrator doing something that’s very outside the box for this industry to, not take advantage, that sounds wrong, but use their skill set in a way that maybe they wouldn’t have thought about because of this coronavirus situation?
Jason Knott: It’s funny. I just wrote something up on the website yesterday. It was an interesting story of an integrator in Dayton, Ohio, Audio Etc. He has a trailer that has a six seat, basically, mobile home theater. It has a big screen in it and six seats that are motion seats, D box motion seats. He only used it for charity events and private outings where somebody went to a silent auction, where people would bid on it and you get a dinner and a movie night in this trailer brought to your home. So he’s now converted it to, it’s not just for those events because there’s not a lot of in-person charity events or golf tournaments and those sorts of things taking place, he rents it out, flat out for between $400 and $800 per night for people who can’t go to the movies anymore.
Think about it, nobody can go to the movies anymore. So he pulls up, he has a catered meal and he pulls up into their driveway and they get to watch this fantastic movie in a big screen experience with motion seating in their driveway with a meal. Then he, of course, disinfects it between every customer because it’s an enclosed space. But he said it’s been amazing. So that was a real unique one.
In terms of not so unique, but just in terms of business categories, a couple of things that are interesting. One is voice control. So I’ve heard from a handful of integrators who said that the demand for voice control is definitely growing because people don’t want to touch things. They don’t want to touch their door locks anymore. They don’t want to touch the touch panel and those sorts of things.
They’re seeing a lot of demand for voice control. One of the other things that goes hand in hand is if your home network stinks, your voice control isn’t as good. So in order to bring them a quality voice control experience, then they’re doing the home network.
The other thing, some substances category that I’ll mention, is surveillance cameras. I’ve talked to two dealers who told me they have never installed more surveillance cameras than they have in the last 60 days. A lot of that is a fear that comes with maybe some of the rioting that we’ve seen in the civil unrest. But it also is just the nature that with higher unemployment historically always comes higher crime. And so the crime may not have happened yet, but people are mentally preparing for that and dealers are able to accommodate those needs.
Rob Stott: That’s interesting. I mean, you talk about, to your first point, about voice control and then hand in hand with the network. Not even just the fact that people are paying more attention to that now, but they’re actively using it more. I think about all the people that are working from home, and I think you mentioned this earlier, too, just putting so much strain on their technology and doing video calls or video podcasts like this and really testing what they have out. You get to learn really quickly how good or how bad that was for you and then who do you turn to but your local AV or CI guy to help you take care of that.
Jason Knott: Yeah. I talked to one of the suppliers just this morning and he told me they’re in the networking side of the business. They’re literally having supply chain issues because the networking, they cannot keep the networking equipment in stock. So, networking is the engine of the car, it’s the equation of the engine of the car. If you don’t have a solid network then you’re streaming audio, you’re streaming video, your automation, your voice, all these things, don’t perform as well.
Rob Stott: Interesting. Well, networking is obviously one of them and you mentioned that being sort of the engine for the home, but are there any other… Looking ahead to the way COVID and this pandemic has retooled the way people think about health and wellness and things like that. And, are there other opportunities that moving forward inside the home or things like that, that a CI guy could look for or take advantage of as we come out of this?
Jason Knott: Yeah. A couple of things. You mentioned wellness. I also think the outdoor entertainment space is a hot, strong potential. I talked to an integrator in Florida who he does… He’s in Jupiter Island where a dirt lot there is $9 million type deal. Tiger Woods, Celine Dion, that kind of stuff. And he said, “Nobody, of course, wanted him in the home.” He goes, “But they had no hesitation whatsoever for them to go and do their outdoor projects.” So we’re seeing not just the outdoor entertainment with the TVs and audio, but landscape lighting that three years ago wasn’t even a category that integrators touched. And now you can go in and literally put in five-figure landscape lighting systems for customers.
And then wellness. You could go on and on about all the things. I was reading about, I think it was in Women’s Day magazine or Women’s Health that the circadian rhythm sleep patterns of people when you work from home is way off because you don’t have the commute anymore, so you stay up late. And so they were recommending wellness offerings and circadian rhythm lighting, human-centric lighting. I’ve talked to a couple of integrators who were actually outfitted in their showroom.
That’s another one of those where I think you’ve got to showcase it. It’s really hard to sell virtually. So you got to talk about the feelings that come from blue light versus yellow light versus those sorts of things. And then there are all sorts of other aspects to wellness. Aromatherapy, believe it or not, soundscaping, sound masking for sleeping. It’s a very diverse category. We’re right in the middle of a wellness study actually right now, trying to gauge the growth and interest in the category amongst the integrators.
Rob Stott: That’s interesting. Something you brought up there too, has me thinking, obviously, the showrooms for integrators aren’t necessarily retail focus, it’s more consultative and getting people in there to see what’s possible and have those project discussions and things like that. There’s been a lot of discussion around how the retail experience is going to change because of this pandemic. The showroom experience, is it very similar in terms of keeping things clean and sanitary? Is there going to need to be a lot of change in the showroom because of this pandemic moving forward?
Jason Knott: I’m sure there’ll have to be some changes. It certainly won’t be as drastic as what has to take place on the retail side because a lot of the showrooms in our space are appointment only. So you’re rarely going to have where you have this flood of people that are coming into the showroom. It’s based on appointment. So they’re able then, I think, to sanitize the space.
It might be interesting that there could be people who, as we were talking about the TV comparatives, who really want to buy a TV, but are maybe afraid to go into a retail environment. That actually could spur people to go more into the private showroom environment to see the comparatives there. So the verdict’s still out, I’d be totally guessing on what they might do. But I think a lot of the same WHO and CDC guidelines that they’re having to take, clearly, they’re all having to do all of that mitigation for going into the home.
All the N95 masks, the booties, the gloves, taking temperatures of all their technicians every single day. Even more so a lot of integrators have to take the temperature… They’re not having to take the temperature, but gaging the health of the client before they go into the home because they don’t want to infect their technicians. So it’s a two way street from that standpoint. A lot of them had to put that mitigation in place.
There was even one of the legal guides in the space who serves the industry was saying he felt that integrators should have a sign-off form for their clients and their technicians. Now, he said, it’s really not worth doing because when it first started out, you might’ve been able to trace how you got the disease or got the virus. Now it’s almost inconceivable that you could trace that and so he doesn’t really recommend it now. But at the outset he was recommending that every client and every technician sign some sort of a waiver form.
Rob Stott: Wow. I mean, the way you’re describing it, obviously, it kind of feels more like, I think as far as Nationwide members are concerned, it feels like either furniture or appliance guys, obviously CI guys for sure, but the way they handled delivery and installation of an appliance or delivering furniture, building it, that kind of thing. But the showroom aspect of it, not to say it was made for handling a situation like this, but we’ve seen retailers where they’ve added appointment retailing to their business model to keep the flow of traffic at a minimum in their stores. So CI was almost insulated from that in a sense because they were already doing those sorts of things, which is actually kind of cool to hear.
Jason Knott: Yeah. And if you look big picture, this is going to benefit the custom installation smart home market. All of these people, this huge amount of population stuck in their homes for 90 days, is only going to breed recognition of what they need to improve in their home. So I think we will see a softness because those big projects I mentioned that have not been specified are not being designed right now. So I think once we get through this upgrade surge, you might see some softness early in the fall or later in the summer, once integrators feed through those upgrades. But the long-term prospects from this are very beneficial for this industry. Whereas the flip side, if you think of your commercial real estate guy, you’d be not happy right now.
Rob Stott: Right. No, completely understandable and imaginable. I mean, you think about, just flipping to a different product category, but our furniture and mattress guys where sitting on a couch that you maybe only sit on an hour a night after getting home from the office. Now you’re putting long days of work in on that couch and the springs are starting to poke up into you. You feel it. So the same goes for the technology in the home where you’re using these networks to try to log into the office remotely or have these constant video calls. So only makes sense. It’ll be interesting to see how that plays itself out moving forward.
Jason Knott: It’s funny you say that Rob, because we are getting a new couch and my daughter’s getting a new bed. Swear to God.
Rob Stott: See? What can I say? We’re doing the same, getting our little one a new bed. Maybe it has something to do with outgrowing it during this time. But I mean, it’s crazy. You start putting it all this time on those things and the need rears its ugly head.
Jason Knott: Again, think about the longterm. We are all going to be spending more time in our homes. The theater business, I mentioned commercial real estate, restaurants, home and movie theaters. It’s going to be a while before a lot of people feel comfortable going back to those. So, I think for the next year, people are going to be looking to upgrade.
We’ve been watching movies at home almost every night as a family. We rarely did that before.
Rob Stott: Yeah. That’s awesome. I mean, it’s good for those who travel a lot. I don’t know, the familial relations and how those are handling through this. No upgrading there, but it’s cool to be able to spend that time and really get use out of these things that otherwise sat there for your eight hours a day while you were at the office.
Changing a little bit, obviously a lot of the conversation’s been around COVID and what we’ve been following there and what that’s done to the space. Are there any other big trends that you’ve been keeping an eye on that, looking ahead to the second half, that maybe, if you had an integrator in front of you and you wanted to tell them it’s something they should keep their eye on or that they could take advantage of, what would you point to as some of those growing trends?
Jason Knott: Well, we’ve already hit on a couple of them. I would definitely say the wellness space. It’s coming into its own is the best way I can describe it. My God, Oprah is doing a wellness tour. Oprah is doing wellness then you know it’s deep, deep, deep into households. So I think there’s an opportunity there for integrators to put themselves forth as a wellness solutions provider for their customer. Whether that be, as I mentioned, soundscaping, or even aromatherapy. Or we see it even with sleep therapy. Bedding is a vital part of wellness. So we’re seeing things like electronic skylights that are very expensive, but they mimic natural light in the ceiling of a home. Obviously the circadian rhythm programming in lighting. I think that was a hot category before this happened, a growing category. Now I think it’s growth is going to be even faster.
And then I think it’s an interesting thing, the dedicated theater might see a little bit of a comeback. The dedicated room has been going away in favor of the great room, with couches and those sorts of things and a big TV. Now I’ve heard from several of the manufacturers and several of the integrators about how they’re getting demand for dedicated theater space again in homes. So we’ll see if that trend continues or not. But like I said, everybody’s home watching movies.
Rob Stott: Right, and they want to upgrade that experience. I mean, there’s been a lot done around that in terms of improving these displays and panels that we look at, but nothing… If you’ve had that experience, which I know I’ve seen at a CEDIA or a CES or we’ve done it at PrimeTime as well, but it’s tough to compare when you get in front of one of those 140 some inch screens with 4k projectors. And we know what’s coming down the road too with, we already see a lot of AK stuff getting out there, but it’s unmatched when you get that kind of surround sound system. But to your point, you need the space to house that kind of thing, that kind of system, and really get the most out of it.
Jason Knott: Yeah. I think the tough part for integrators right now is it’s a tough time to be taking chances and risks and exploring into diverse markets. So a lot of them are really going back to their core competencies, which were AV and automation. When we talk about wellness, we talk about surveillance, talk about outdoor, we talk about voice, these are peripheral things that integrators do, and it’s hard in this kind of environment to really push into a diverse market when you really kind of go back to your core. So I think that’s the balance that integrators are going to have to find on their own is how much do they devote to their core competency and how much do they devote pushing themselves into some of these markets that we know are going to grow. The living at home, living in place market, which we used to call aging in place or home health.
There’s a huge population of people, which my brother and I had this conversation several years ago. We went and visited assisted living places for my mom. And we both talked to each other a couple months ago said, “Thank God we didn’t do that,” because look at how rampant the virus was in the nursing home environment. I think you’re going to see a tremendous number of people who do not want to put their loved ones in nursing care or assisted living facilities. That means they’re going to need technology in the home to take care of that person. So that’s another peripheral one, that market is going to explode. There’s no question. But how many resources do you devote to that right now? It’s a tough one.
Rob Stott: Right? No, that’s an interesting point. I mean, I know that this would be more of a gut feeling type of question, but interested in your thoughts. How do you find that balance as an integrator? Is it just based in your market? How do you know when’s right to push those peripheral buttons and maybe back away a little bit from the traditional home theaters and speaker systems and that sort of thing to strike that right balance for you?
Jason Knott: Yeah. It’s an interesting question because a lot of it is based on the talent that you have. And this is something that I’m sure all the Nationwide members know, now is a great time to be acquiring top talent. There are a lot of really strong technicians, salespeople, project managers, whatever positions that might be, who are probably with companies that maybe weren’t so efficient and they’re bouncing on the edge and they’re still very, very strong people. So these sorts of times are the time that you bring in a person of top talent for your team, and maybe that person becomes your champion for one of these things.
The custom integration business, they’re small companies. Our median size is seven employees, they’re doing just over a million dollars in business. It’s a cottage industry, very small companies. So a lot of times you need somebody on the team to be able to drive that. Maybe it’s when you acquire that top talent at this time.
Rob Stott: Yeah. That’s a great point and I feel like we could have entire conversations and podcasts around recruitment and talent and talent acquisition and that sort of thing. But no, I mean a lot of great stuff and I feel like we just kind of touched the surface on it, we could almost have our own series of a podcast, Mr. Jason Knott. But I feel like I took up enough of your time. What do you want to dive into? Is there anything else, or could we go on for hours like this?
Jason Knott: I think we could go on for hours, but you and I both got to get back to work. Thanks for having me Rob, and I’d love to participate whenever you want. Let me know.
Rob Stott: That’s awesome. Again, appreciate it. Certainly for those out there who weren’t aware, hopefully they get on the CE Pro train and see what you guys are doing because it’s great stuff and we enjoy having you at shows and hopefully, in person again here soon. So fingers crossed and stay safe and stay healthy out there.
Jason Knott: Yeah, you too, Rob. Thank you.