Read the complete discussion below or link to the podcast to listen to the conversation.
Home technology is no longer a future concept; we use it now. So how does a remodeling firm handle this technology: in-house techies or outsourced to technology gurus? Remodelers Harry Poehlmann and David Pekel discuss their strategy for coping with the latest technology for the home.
Jud: The first thing I want to try to do is define what we're calling "technology." What type of technology are your clients looking for?
Harry: Fort Collins is one of the highest educated cities per capita. HP is a big employer here and so is Intel. There's a lot of tech. With the clients, the minimum they want here is to be able to network all their computers. A lot of them have flex time with their jobs and will work anywhere from one, two or three days a week from their homes. One client of ours has gone so far as home automation. He can control his entire house from his Blackberry while traveling. He can control the heat, air conditioning — turn on and turn off. He can turn lights on and off. There are some devices in the house that, if the toilet overflows, that will be detected and will shut off all the water. He can get on there and control his home theater from his Blackberry as well. It is all integrated together, and he has touch screens all over the house that interact. Basically, with the Blackberry he's accessing those touch screens through the Internet.
Jud: David, what are you finding?
David: With our clientele, a given with any project has been putting in basic structured wiring to accommodate data and communication. Being that we're a remodeling company only, we don't always have access to the whole house. It's infrequent that we're talking about an entirely integrated system. That being said, things like lighting control, security and some home automation, data communication and video are generally components that many of our clients are requiring for their specific element of the project. Then integrating it into other elements of the home where it's practical for their individual needs.
Jud: When your client comes to you, what are they coming to you with? General ideas or more specific things?
Harry: Actually, it's all over the board. Some come with just general ideas; they want to be able to have their computers talk to each other. Can we hook our stereo together with our other components and control it from one location? Can you educate us on that? With those clients, we'll set up a meeting with the subcontractor we use on the sound/theater side so they can all correspond on how they want to design that system. We also get those who travel a lot. They'll have seen it in a friend's house and say, "They used this system and have an OnQ box." They know a lot about the system and are very specific about the items they want to use.
|David Pekel, Owner
Pekel Construction & Remodeling
Photo: Marc Berlow
David: Largely, our experience has been that our clients are looking to us as professionals to say, "Are you aware that this capability might exist for you?" That's where the consulting element of the design process comes in with our initial consultation. We're making them aware of things that they may not even suspect is available to them, much less how they might be able to use them in their home. It would be noble to say that it's incumbent upon us to be responsible to help them understand. The bottom line really is that it's an up-sell opportunity. If value can be created and enthusiasm can be created, it really becomes contagious with the homeowner. It becomes a circumstance where, "My friends don't have that. I could be the first kid on the block to have it, that's very interesting. I find that very 'cool' and want that in my house now that I know it's available."
Jud: Harry, why do you do this in-house, or do you outsource it?
Harry: Outsource. The technology changes so fast, there are so many things to offer. I don't feel I can adequately keep up and do a good job. I think it's better to outsource it in that regard. That's what the people that we outsource to do; they focus strictly on that. They're able to keep up with what's available currently, the current trends and the best way to approach different problems when it comes to the remodel side, where wireless might be better than a hard-wire structure, and what's available.
Jud: On the reverse of that, what's the disadvantage of outsourcing?
Harry Poelhmann, Owner
Harry: The disadvantage of outsourcing is that you're taking the clientele to someone, and you're marrying into them almost as a joint package. If they stumble, it can reflect badly on us. We actually have two that we outsource to. If the client is over 50, we would go to one; and if the client is under 50, we go to another. That is because one is younger, a "tech guy," and used to be an HP employee and tends to talk "over the heads" of people my age. The older people want something that's functional and easy, but they still want the cutting edge. They want it easy to use, whereas the younger ones are much more familiar with using ipods and everything else and are much more comfortable with a more complicated system. We try to screen them first and then decide which one we're going to outsource them to.
Jud: David, in-house or outsource?
David: Outsource. I would have to say, fundamentally, the differences between Harry's method of operation and ours is that we don't have an age point. We've actually found that some of our 50-plus clients are the most knowledgeable in these specific areas. That being said, we view our role and responsibility as having to know something about everything, but we can't possibly know everything there is to know. In the case of home automation, from a holistic standpoint there is, in my opinion, too much information to try to stay on top of while trying to run this business as a design/build firm as well. We've aligned ourselves with two specific companies that have two different approaches to home automation. They've been well trained by us as to how our clients expect to be treated. They are pre-conditioned before they are even exposed to the client in terms of to what extent should they go with them; what is the level of understanding that this client presents? What is the level of expectation that this client has? Our consultants don't walk away leaving their heads spinning. In addition to that, you certainly do run the risk, and I concur that there's a tangible risk that if they do stumble it reflects on you. This has been part of the indoctrination and training period in selecting these firms as being the two principals for referral. They know what the rules are and what the level of expectation is. They work well with our mechanical trades, particularly our two electrical contractors. They are familiar with them. We find it's the best way for us to go to give the client the most where they can get the best value for their dollar.
Harry: We sit down early on without the client and have a meeting between the electrical company and the data company, or the people who are going to do the technical side. Then we decide who is doing what, such as the phone wires, the cable lines. Depending on how much technology is going on, we'll pull those things out of the electrician's contract and let the data people do that. If it interfaces a lot, we want to try to eliminate the finger pointing if something goes wrong. We try to let the low voltage guys control the low voltage lines and the high voltage guys control the high voltage lines.
Jud: Harry, give me an idea of why you selected two companies.
Harry: That was a learning curve and something I would share with any other builders and remodelers. When they get someone to work with, they really need to research it, and spend some time and make sure that the personalities and your expectations and theirs are the same. David brought that up earlier, saying the company he works with basically already knows how they will present that to the client and what they're going to present. I thought that was an excellent point. You've got to make sure you're teaming up with someone where it's going to flow seamlessly to the client. You don't want what you're saying and what they're saying to be something different. We went through and we worked with several, and I learned the hard way that some of them don't work as well. I'm really picky about being clean. I want our job sites to be clean. I will say that sometimes people can't tell the difference between a good job and a bad job, but they can tell the difference between a clean job and a dirty job. You'll get the tech guys that come in and put their speakers in after the carpet is done, and they start drilling holes; you've got drywall in everywhere else. We make sure that, next time around, that their company's philosophy is the same as ours. That's really what we're trying to do. One is to make sure their company philosophy is the same and another is we make sure that the clients can match up.
Jud: David, do you want to go into any more detail as to why you chose two companies?
David: How did we decide on two companies? Much of that decision was based on network relationships that have been developed between us as the design/build firm and them as the provider. They've come through opportunities in our professional associations such as NARI and the Builders Association as well. We like to do business with people who share the same types of affiliations. We feel that just starting from that common ground is a good place for both of us to come from. Beyond that, we have always tended to steer away from firms that operate in a retail environment. With so much technology being so affordable from the hardware standpoint, what was for us seven years ago, a home theater could have been something as simple as a 60-inch television, which at the time was a $15,000 purchase. Now it's accessible at any big box store. We want our clients to not be distracted by a retail environment. The two firms we work with operate, for lack of a better term, salons. Some of our clients do not have the requirement to have the low-voltage side, they do not have the requirement for hardware. They don't need servers, audio or video equipment, or speakers. They have those elements. They just need the backbone or infrastructure to operate those. However, some of our clients have the requirement for all of those elements as well. And that's part of the deciding factor in who we select.
Jud: David, are you saying that you have one guy that does not have a showroom and another guy that does?
David: No, they both do. They would not be available for the general public to walk in off of the street.
Jud: OK. But they both have a showroom or demonstration area.
Jud: Harry, tell me about showrooms.
Harry: I feel the same way. They don't work out of their homes, but they don't have retail stores. They basically are both in industrial parks, but they have really nice showrooms. It's by appointment only. They spend more time on an individual basis. I'd say 70 to 80 percent of the clients don't need to even go into or have any interest to go into the showrooms. They want them to meet at their homes and show them and pick from that. Also, they might buy all their TVs from the big box stores. A lot of my guys here say they don't really want to provide the TVs because they'll bid it and 90 days later that TV will be cheaper. They'll go back 90 days later and think they're trying to gouge them, which they weren't; that's just what the price was 90 days ago. They are in one of the few industries where everything gets cheaper with time.
Jud: Very interesting. Those comments were not on our question list, and I'm glad you've added them. Both of you are saying you want them to have a demonstration area but not work in retail. Harry, I certainly understand the idea of not wanting to sell the big TVs, and some of those things you can buy in a big box someplace. Harry, how do you keep up with technology? I understand you don't know all the fine details, and that's why you're outsourcing. On the other hand, how do you keep up with what these folks offer?
Harry: A lot of it is through trade magazines. I think David brought up a good point. A lot of the people we use are in the same HBA with us, and affiliates like that. You tend to ask them a lot of questions. I'd say most of it is from publications.
Jud: You read those publications?
Harry: Yes, I try to read the publications and look through them. There is one put out for the electronics people in particular. Just like Builder magazine. We have that sent to us. I'll go through the articles and if there's any new gadgets, I'll pick up the phone and say, "I just saw this, tell me about it."
Jud: David, how do you keep up with technology?
David: I guess we get the same magazine! I'm a gadget freak myself. I tend to have an affinity toward those things. I don't get into all the technical aspects, the frequency aspects or those elements that the techie guys do. Here's how we stay above and beyond it. Here's our level of expectation, much like going to legal counsel. We know we have a challenge and a problem and we might have our own perception of a solution to that. But, we rely on these firms. We explain the particular circumstance and ask, how can we address it? In turn, as part of the relationship, we expect them to keep us current. That's part of the relationship. If we're going to work hard and generate these sales and create this enthusiasm with our client base — and essentially cultivate their business for them — the least they can do is equip us with the knowledge that's necessary of current trends, essential capabilities that we can appear a little bit ahead of the curve. At a minimum, at the same level of the well-educated and tuned-in client. I can't envision myself in any worse situation than sitting in front of a client that actually has more knowledge about an element of my industry than I do.
Jud: David, do trade shows help to stay up with technology?
David: Not for me. I view trade shows as something that we participate in as an exhibitor because we have to and it's a way to grow business. I generally don't gravitate toward trade shows as a source on that level for automation. Talking about the KBIS show or Builders' show or something of that nature, yes they are valuable in that respect. I really need to rely on my local experts to provide me and the industry periodicals specific to automation to keep me informed.
Jud: Harry, do trade shows help you?
Harry: Yes. To me, trade shows are a place where you can touch and feel. Typically, I have already learned about it or have knowledge of the product either through a publication, tradespeople or through a customer. It's pretty rare anymore that you'll see something new, at least in my perspective. You can say, "Oh, that's what it looks like" and you can touch and feel it. I think the trade shows are nice in that way.
Jud: Do you ever see yourself getting large enough where you would have in-house people doing this?
Harry: No. I think that it's such a specialized field. You'd have to be quite large, and it takes a whole lot of focus. It's one of those fields that takes almost continuous education. It's different than our in-house carpenters. An education is good for them but I don't think it's as necessary as it is in technology. Technology changes too much. When we first started out, we tried to do our surround-sound wiring in-house. It's a very simple thing, just run a few wires and connect everything. We learned in a hurry that one company would come in, and if it's pre-wired they'll say it's done wrong. The next will say, "No that should have been bell wire." The next guy will come in and say "no, that should have been copper wire!" It's an industry that doesn't seem to have a standard on some of the wiring. We learned quickly to get ourselves out of that picture and start teaming up with someone to offer that.
Jud: Didn't take long, did it?
Harry: No, I'm a slow learner, but when I learn it, I learn it!
Jud: David do you ever see the possibility of getting big enough to go in-house?
David: No, never.
Jud: Do either one of you have or look at an electrical contractor who will do high voltage and low voltage both? Have you seen combinations and stayed away from them, David?
David: Yes. We've seen combinations and yes, we do have electricians who will, on a limited basis, handle elements of this. The only other element beside the electrical would be specific to lighting control. Beyond that, there is nothing else that they would handle or that we would expect them to include, for the exact reasons Harry mentioned. It's too specialized. We've run into exactly the same situation and we've done exactly the same thing. What is it to run seven speaker wires in a 700 square foot home theater area for the homeowner's Lifestream television 7.1 system surround-sound only to come and find out that the people they bought the speakers from for in-wall and ceiling installation say, "No, we should have had this or that." We'd never get big enough to want to do it. We wouldn't allow the electrician to get involved beyond the lighting. In some cases, all the client is really looking for is the lighting control.
Jud: Harry, got a combination electrician doing this, too?
Harry: Yes, we do. They'll do low voltage via phone, cable and lighting. Beyond that, they're not going to do surround-sound, or anything to do with hi-fi. Once that's involved, then they're out of the picture or working with and providing a source of power for that equipment. The key is you need both. You can't get rid of one. You need them to work together well. That's something that can take some time, and you've got to have a lot of pre-construction meetings to make sure those two identities are really on the same page. If you can get them on the same page working together, it makes it easier for everyone.
Jud: Harry, one of your specifics in your comment — lets bring this out more so people understand — this is a combination low voltage and high voltage. Those two companies have to work together and you found that to be a very important element, is that true?
Harry: Yes. A simple example is they may say they need a 110 line coming into the box. Maybe it has to be on a direct breaker so it's on circuit. Or maybe they need that wire to be 10 feet long because they're going to wire that into their equipment and it's going to go from there. If you don't have simple things like that coordinated out early, it can lead to problems down the road.
Jud: David, do you get the electrician and the sound person put together?
David: They have to work in concert. It's essential to the success of the project and the sanity of our project managers. As a similar example, we have a cable provider that provides not only cable television, but high speed Internet and telephone all integrated through the same wire. Which is a coax or it can be a cap-five. But it comes into the house as coax. We also have several dish network providers as well. We have a client who has a $5,000 plasma television who thinks that all they need to do is plug a coax wire in when we have a wiring specialist who can tell them that in order to get the maximum performance from their television, it has the capability and we have the ability to hook them up with fiber optic. You need to have our voltage isolation for this particular equipment. Someone who can look not only at the basics, a place to plug it in, but they can say these are things that will actually be enhancements for you to allow your system — specifically audio and video — to perform better. In addition to that, if a client says, "I need another cable jack here," we'll have our electrician wire that from the point of origin to the point of ter-mination. We will not physically connect nor will our structured wiring people make the physical connections to the point of entry to the house for telephone, data or cable.
Jud: Realistically, at this point we've just added another trade contractor involved in it, which is really the person bringing it in from the outside.
David: Out here, it's Time-Warner the principal provider for cable TV or high-speed Internet and broadband phone service as well. If there's a problem, they're going to point the fingers. If the homeowner calls the service provider, they are going to tend to point the finger back at us unless they are the ones who actually make the physical connection. Yes, you have the structured wiring specialist, the electrician working closely hand in hand, lots of pre-construction consultation going on between them and the project manager with the homeowner's involvement where appropriate. We usually bring the homeowner's requirements to the table at those meetings, so as not to involve the homeowner, and then the coordination of the principal service provider.
Jud: David, do you have other sales people?
Jud: Harry, do you have other sales people?
Harry: No, I don't.
Jud: Neither one of you do. I'll ask a final question, and thanks, you've done a great job! If you had another sales person or other sales people on the team, would you expect them to know as much as you do or would you keep it separate or have one person in your organization try to help get them transferred over to this subcontractor? Harry?
Harry: I would say I'd want them to know as much as I do, and that's probably why I don't have one!
Jud: David, what about you?
David: Just what Harry said!
Jud: We often try to get two different opinions! You both agree a little too much! Have you two ever met?
Harry, David: No!
Jud: That's what's cool about this, at times none of us have met each other. Do either one of you have a closing comment you'd like to make, or something you've thought of? David?
David: No, thank you for the opportunity. It was a pleasure talking to you, Jud, and Harry. I'd like to talk to you in the future.
Harry: The last item we talked about what's available. Out here, we have Comcast, dish, Qwest — there's a lot of different choices. If you go to Comcast, you have one coax cable coming into the house, and that pretty much can take care of everything. The dish networks out here actually want four coaxes: two to go in the dish and two to come back out. That's another point. If someone doesn't know what the client wants or what's available in the technology, you could put two coaxes, and think I got a spare out there, and they put in a dish and find out you're too short.
Jud: That's a good point. That's one of those situations that's area specific, if you will. Key is communications back and forth with the trade contractors and the utilities to make sure we get all the information put together.