Ex-SpeakerCraft Executives Launch TDG Custom Audio Brand
Daniel Kippycash, formerly with SpeakerCraft and Crestron, is now wearing two hats after being laid off by SpeakerCraft earlier this year, a casualty of SpeakerCraft’s ill-fated Nirv multi-room audio system that Nortek pulled due to overlap with SpeakerCraft sister company Elan’s home control system. Kippycash Friday was named executive director of Digital Delivery Group (DDG), a consortium of regional CE specialty distributors that calls itself “more than just a buying group” and a “strategic resource” for vendor partners and dealers.
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Kippycash also announced last week that he and former SpeakerCraft engineer Alex Chiou have formed a new company, TDG Audio, that’s bringing a new product line and business model to the custom market that’s based on shared ownership of TDG by dealers, reps and employees and “economic responsibility.” TDG Audio and DDG are discussing a private-labeled audio brand that would be exclusive to DDG, Kippycash told Consumer Electronics Daily. DDG has 12 members and is currently restructuring, he said. TDG Audio products will be geared exclusively to the custom channel under a “typical rep model,” Kippycash said, but TDG’s parent company, the DaVinci Group, will be handling custom design and collaboration with DDG on new products and technology ideas exclusive to DDG. “The two lines will never cross and be sold in the same spot,” he said, although there will be some synergies in engineering, he said. DDG products are likely to be lower end and more consumer market-focused, he said.
The co-op model Kippycash and Chiou adopted for their new company, TDG Audio, is decidedly different from what custom electronics companies have done in the past, Kippycash said. He voiced “frustration” with the way some well-capitalized companies have gone to market -- spending lavishly on marketing, trade shows and other activities. “When you're bloated and upper management is taking in salaries and benefits in excess of $750,000 or more, those all come from the bottom line,” he said, noting that at the same time other employees’ salaries have been a frozen for several years. Rather than turn to a bank or venture capitalists “who want to own 50-60 percent and know nothing about our industry,” TDG Audio devised a model of shared ownership where founders Kippycash and Chiou are providing seed money, and reps, employees and dealers pay a “nominal” yearly investment in exchange for profit-sharing.
TDG Audio, based in Chino, Calif., has 50 applications in house and plans to cap distribution at 700 storefronts to protect dealers, Kippycash said. The company will sell to specialists only -- dangling high margins -- and promises no distribution through large retailers such as Magnolia or via the Internet, he said. Reps were the first to grasp the potential of the unusual model, Kippycash said. Most companies use reps to build their business, but when they become successful often “it’s like parents eating their young,” Kippycash said. “At some point, upper management turns on reps and starts cutting commissions so that they have to work harder and get paid less,” he said.
The first TDG Audio products -- in-ceiling and outdoor speakers -- are expected to ship at the end of Q1, he said. A starter line for the commercial market includes flanged and flangeless models, and the residential lineup will be positioned as a good-better-best offering, he said. The line is expected to expand to electronics as well, he said.
On how a fledgling company will survive in a still-tough custom electronics market, Kippycash said it’s all about sound fiscal management. “The biggest thing for us is maintaining and running a properly funded and economically viable business,” he said. The founders “aren’t making $200,000-$300,000 salaries,” he said, and they're focused on minimizing costs. While the climate is “still challenging,” byproducts of the recession are working in their favor, he said. Real estate is now under 50 cents a square foot compared with several dollars per square foot a few years ago, he said, and the company is planning efficient LED lighting and a low-emission air conditioning system for its headquarters. Chiou’s audio engineering experience and existing relationships with manufacturers in Taiwan and China have allowed the company to “get things done without upfront fees or engineering costs,” he added.
TDG won’t work with existing buying groups such as HTSA, Kippycash said. “We don’t need to be in that group; we don’t see any advantage of doing so,” he said, saying the TDG distribution model “will cause agita for the competition.” TDG Audio Dealers will pay $50 a month for third-party services, including social networking, press outreach, newsletters and lead generation with disciplines outside of the field including architects, interior designers and builders, he said.