Custom Supplier DaVinci Group Hires Reps, Boosts Dealer List to 175

The DaVinci Group (TDG) said it signed manufacturer rep firms Aim High Audio and Innovative Marketing for its portfolio of products that are sold through the custom electronics channel.

Aim High will cover the Southeast region, including the Carolinas, Georgia, Alabama, Mississippi and Tennessee, and Innovative Marketing will handle the Southwest region, including Arizona, New Mexico and southern Nevada. The two firms had been representing Nortek’s Core Brands products until a rep consolidation was announced there last week. TDG CEO Daniel Kippycash told us Monday that TDG had been waiting for some of the industry “soap opera” events to play themselves out with sales reps, “which occurred last week” when Nortek consolidated its rep firms. “We didn’t want to settle for B-level firms and we're glad we waited,” he said. Monday’s TDG rep announcement was the company’s first, and eight more will be announced by the end of the month, Kippycash said. To date, the company has been working primarily direct to dealer, he said. Core Brands didn’t respond to questions by our deadline.

TDG was launched late last year by Kippycash, a former Crestron and SpeakerCraft executive, and ex-SpeakerCraft engineer Alex Chiou, who sought a “shared ownership model” where dealers, reps and company employees share “economic responsibility” (CED Dec 26 p1). TDG began shipping its first TDG and Vanguard series of flangeless in-ceiling speakers in April, with more in-ceiling and on-wall product to come mid-July, Kippycash said. He called the TDG Audio brand the “Lexus” of the tri-brand portfolio, with high-end flangeless designs, esoteric materials and high-performance sound quality. The roadmap for the line also includes soundbars, LCR speakers, subwoofers, multi-channel high-power, high-current amplifiers, and digital signal processing products. TDG Audio products can only be sold to and by direct dealers, he said. The premium brand “will never be on the Internet and can’t be in distribution,” he said.

The Blue Aura line is positioned in the middle of the group, and Kippycash referred to the specialty brand of wireless, multi-source and multi-zone products as the “Prius” of the offerings. All the Blue Aura products are shipping, he said. Products range from bookshelf to tabletop to tower loudspeakers, he said. The Blue Aura line “can go into distribution,” he said, “but it’s distribution controlled by us and our reps,” he said. TDG “has no desire” to go after large, nationwide distributors such as ADI and Avad, he said. “We're looking to control the business so we can control the margin for our partners and our dealers and not let things get so watered down,” he said. Nearly all of the rep firms TDG is working with have a separate distribution business, he said.

The broad-based line is Vanguard, which Kippycash called the “Toyota” of the line for its “great value, great product” sans bells and whistles. The in-wall and in-ceiling Vanguard speakers are affordable designs with flanges, and multi-room products include volume controls and amplifiers. The line also includes outdoor speakers, he said. A few Vanguard speakers are shipping now, with most slated for a July 15 ship date, and digital amplifiers due in August, he said.

TDG is reviewing its wireless speaker strategy, Kippycash said. It’s analyzing the Wireless Speaker and Audio (WiSA) standard and is currently offering wireless speakers based on 2.4 GHz and 5.8 GHz RF, he said. Next-generation Blue Aura speakers will pack Bluetooth and near field communication, he said. “Each approach has pros and cons, he said. NFC and Bluetooth have “tremendous potential because they're already there” in phones, he said. Samsung’s endorsement of NFC “is going to be around,” he said. The company has evaluation kits for the various standards such as WiSA to see “which one has the most legs and performs the best,” he said. “You have to be careful where you put your money,” he said.

Despite some broad-target products, TDG has no aspirations in the retail market, Kippycash said. It has “no desire” to build products for consumer or end user sales or the more limited distribution Magnolia/Best Buy channel. “We know our industry and we know who we are,” he said. To be able to play against companies with high-volume production, “you're talking hundreds of thousands of dollars in R&D,” he said. At that level, “you're going to compete in a market space that has lower margin,” he said. “We just don’t see the return on it,” so TDG focuses on custom, he said. While it also competes against larger companies in the custom market, TDG positions itself there with products that “fit a niche, offer better sound quality and provide our dealers the ability to make money and stay in business,” he said.

While TDG can’t produce the quantity orders a high-volume speaker company can to gain favorable pricing in manufacturing, the relationships that Chiou and Vice President of Sales Jeff Francisco nurtured with factories in China and Taiwan during their tenures with SpeakerCraft have paid off, Kippycash said. “We're able to make very, very serious commitments,” he said, comparing the buying process to what airlines do with fuel contracts. “If you work on your forecasts, you can buy the right things at the right time and get things as aggressively as you need,” and that has allowed the company to keep costs down, he said.

Kippycash maintained that TDG isn’t trying to pressure its manufacturers, in line with the company business model. “We're not trying to squeeze the last penny out of everybody,” something that is occurring more frequently in the industry, he said. Some competitors are going to factories and asking for commitments and contracts based on a 10 percent drop in pricing each year, he said. TDG is looking for its suppliers to “stay in business and remain a partner,” he said. The company “locks in parts costs so we're long-term safe, and then we can provide the value,” he said. That has allowed TDG to offer higher-end materials in its TDG Audio line, including neodymium magnets and Kevlar drivers. While competitors are trying to design away from neodymium because of wide spikes in pricing, and others are trying to “value-engineer” to use less neodymium, those cost-saving approaches “affect the performance,” Kippycash said. TDG has been able to lock in a price for neodymium and doesn’t have to worry about pricing volatility “for quite a while,” he said.

As a result of the long-term relationships and order commitments, manufacturers have “stepped up,” and have provided “hundreds of thousands of dollars of engineering time,” he said. TDG formed in December, manufacturers delivered working samples by CES, and the company began shipping production product by the end of March, he said. “That’s just unheard of,” he said.

At the CEDIA Expo, TDG will show multi-zone audio products and surround-sound gear, he said, emphasizing products with niche positioning. Referring to his background with Crestron, Kippycash said TDG is also looking at the “control side” and will have concepts to talk about with dealers at CEDIA.

TDG has about 170 dealers, and plans to max out the shareholder dealer roster at 350, Kippycash said. Another 350 will be able to sign on through minimum purchase deals, he said. The vaulted 350 receive profit-sharing and free demo gear, he said. All the dealer relationships will be handled through rep firms, he said. Almost 50 percent of the company is owned by employees, reps and dealers. “We wanted to create a model that was all-inclusive,” he said, “so everyone has an interest in the success and direction of the company.” Dealers pay an annual cash contribution of $2,000, which can be done on a payment plan with rep approval, he said. Dealers who sell $25,000 in combined products annually don’t have to make a contribution toward the next year, Kippycash said. Reps pay nothing to become a shareholder, he said.