Vivint ramps up disruptive innovation with Matt Eyring
Home automation company Vivint -- which said its monthly revenue jumped 940 percent over the past five years -- is showing no signs of slowing down since being acquired for $2 billion by private equity firm Blackstone Group last fall.
The Provo, Utah-based maker of home automation systems is pursuing a set of audacious goals for its solar installation division, aiming to increase its customer count almost sevenfold to more than 10,000 in 2013 and become the No. 1 solar installer in the U.S., reported Bloomberg in October. If it's successful, that would vault Vivint ahead of industry leader SolarCity, which has a 16 percent market share of residential solar installations in the second quarter of last year compared to Vivint's 1 percent share.
And a new high-profile hire is leading the charge: Matt Eyring recently came on board as the company's chief strategy and innovation officer.
Eyring spent the last decade as a managing partner at Innosight, an innovation consulting firm co-founded by innovation guru and Harvard Business School professor Clay Christensen. Christensen is best known for his disruptive innovation concept, which describes how a product or service establishes itself near the bottom of a market and moves up while overtaking more established players.
Eyring is bringing some of those lessons to Vivint.
"Vivint is filling a big space in home automation," said Eyring. "It's a classic case of disruptive innovation: A lot of players that are expensive or had some sort of low-end home security system. There was a missing middle. Vivint has really hit that sweet spot with a business model that allows affordability."
The solar part of the business -- called Vivint Solar -- is another area where Eyring believes Vivint can be a disruptive player and experience major growth.
"The business model [in solar] has a very high barrier for customer entry. Getting that thing installed on the roof is a cumbersome process," he said. "[Vivint] has made it easy and quick. They will drive the economics of the industry. I think you'll see fairly soon an integrated panel showing power generation and consumption. … There will be much more energy awareness at a detailed level."
For a more uniform customer experience, Vivint is also planning on bringing in engineering talent from 2GIG, a home automation panel manufacturer. Blackstone purchased 2GIG along with Vivint in the $2 billion deal that closed in November.
Founded in 1999, Vivint began as a home security company and morphed in recent years into one of the largest players in the home automation industry, which includes energy management. Competition in this industry includes big companies such as Comcast, Honeywell, AT&T and ADT that started offering home automation services alongside their traditional services in cable and security systems. The market is expected to grow fast: Market research firm ABI Research predicts 90 million homes worldwide will have home automation systems installed by 2017.
“We're at the beginning of all of this,” said Tomas Freyman, valuations director at U.K.-based professional services firm BDO LLP, when I interviewed him last September about the home automation market. “The residential market is much more difficult to unlock than the commercial market. For corporations that are low-margin and high-energy users, the right energy efficiency projects materially impact bottom lines. [For residential], since energy bills are still a relatively small part of an average family’s outgoings, energy automation products on their own are a tough sell.”
Freyman expects home automation systems that include energy management will grow as energy costs rise.
Vivint currently has more than 175,000 home automation systems installed, and in 2012 alone, 54 percent of new customers opted for more features than just home security.
All this points to the way consumers are moving towards greater demand for smart systems, said Eyring.
"When the iPhone came out," he said, "it was not just a phone but a computer that happened to make calls. It was very disruptive. In the same way, home automation will disrupt a lot of other industries. It's simply a smart system in your home. People want intelligence in their homes; they don't just want one application."
While Eyring was being interviewed for the job, Blackstone asked him why he would consider leaving such a great job at Innosight. The reason, said Eyring, is the huge opportunity he sees in home automation and Vivint's leadership in the industry.
"With Blackstone on board, we're finally able to take some steps and get the backing we need to focus on growth areas. It's an exciting period of time."