ESX 2016 Report

Friday, June 10

I started the final day at ESX sitting in on a session titled, “Rethinking the Political Landscape - How to Impact the Industry through Legislative Action,” which was moderated by Robert Few, director, Time Warner Cable - IntelligentHome, and featured panelists Todd Baxter, regional vice president of government affairs, Texas, Time Warner Cable, and David Morris, founder, Modern Systems Inc.

The Panel emphasized taking a proactive role through industry representation with elected officials.

“ESA is currently tracking and monitoring 177 bills that could possibly affect the industry,” noted Baxter, who said it is imperative that security company owners get to know their state legislature, who can make them aware of impactful legislation.

“It is so important to meet and get to know them [state legislators],” he said. “They are there to represent you.”

Morris told his story of how he was able to block some legislation in his state of Kentucky that would have been harmful to security businesses by reaching out to his state legislators and getting the word out to others in the industry and within the state. “I knew it [the proposed legislation] wasn't good for our industry,” he said. “Don't assume the state knows what they are doing when it relates to our industry.”

Morris was able to work with his state legislators to amend and rewrite the bill to better reflect the needs of the security industry and professionals in his state. “Everything we suggested to the state they agreed to and added in the language of the bill.”

Although the bill died in committee, the panel all agreed that sometimes halting or killing a bill that is bad for business is an important first step.

“The entire process is set up to kill bills,” said Baxter. “I like to tell people that there are two things you should never watch being made: sausage and legislation. It is very difficult to get a bill through and more than half don't make it.”

For those looking to dip their toe into the legislative pool, Few said participating in the annual ESA legislative trip to Washington, D.C., “was the key to figuring out the process” for him.

For the closing keynote, Economist Alan Beaulieu, a principal of ITR Economics, returned by popular demand and did not disappoint, as he was able to mix economic forecasting with a wry sense of humor that had attendees both intellectually riveted and spitting out their drinks at the same time.

For starters, to get everyone's attention, Beaulieu started out by saying, “Another great depression is coming in 2030,” as baby boomers continue to age and put pressure on our healthcare system and finances.

“We have 80 million baby boomers, but we have 3- to 4 million more Millennials,” he said, pointing out, “The Millennials are going to need all of us baby boomers to die off because we are going to ruin the economy for them.”

In the short term, though, Beaulieu said that he sees a mild recession coming in 2019, similar to the one we had in the '90s. But before that happens, he says the next few years will be very good for the country and the security industry overall.

“2017 was a good year—record high levels of GDP and job opportunities, and the economy is growing,” he said. “I expect the fed rates to go up, so now is the time to get that loan, and make that purchase or acquisition, hire new people.”

He said that it is also imperative to “make sure your training and retention programs are top notch,” and “plan for higher wages and energy costs” down the road.

Although he wouldn't pick our next president, he did guarantee a “one term president,” because of the looming recession in 2019.

As for the Millennials, Beaulieu said, “Who knew it, but they are just like us, and want the same things we do—a family, kids and a house in the burbs. They will be a strength for our nation, but only after us baby boomers die off.”

He told the audience not to be afraid of hiring Millennials, especially at a time when it is so difficult to find quality employees in the security industry. “Just make sure you feed them,” Beaulieu said. “And I am talking actual food.”

Thursday, June 9

Day two at ESX 2016 began with the Industry Excellence Breakfast, which provided the perfect setting to recognize and honor the industry's leaders with awards. It also featured keynote speaker Michael Jagger, founder and CEO of Provident Security, who stressed to attendees that becoming great or “remarkable” at what you do involves staying focused on your business model, and many times saying no to the numerous opportunities that arise for companies in today's security industry.

He gave the example of renowned master chef Jiro Ono at Sukiyabashi Jiro in Tokyo, a three-star Michelin restaurant located in the basement of an office building that Jagger visited on a recent trip. Ono has made a name for himself, Jagger pointed out, by “intentionally not being bigger, staying smaller and being the best sushi chef he can be,” he said.

After the Industry Excellence Breakfast, I sat in on an educational session titled, “Video is the New RMR,” moderated by Scott Carpenter, president, Action Alarm Solutions, and featuring panelist Larry Folsom, president, i-View Now, Nik Gagvani, president, CheckVideo, LLC, and Daniel Forrest, CEO, Eyeforce Inc.

Carpenter led the session off by saying, “Video is the next market that will save everyone,” as it provides the opportunity to add a new level of RMR to your business.

Gagvani pointed out that in addition to the new wave of IP-based cameras available and the capability of cloud-based monitored video being readily available, “video analytics allows you to expand your monitoring capability.”

Forrest noted that although video is being used for small to enterprise commercial locations, he sees increased adoption of video on the residential side. “There have been some privacy issues in the past for the home but that is changing,” he said, opening up another area for increasing RMR for dealers today.

Gagvani added, “There are a lot of good use cases to draw on now in the home, so video will become more accessible to, and desired by home owners.”

Moving back to the main stage for the Public Safety Luncheon, featured speaker FBI Section Chief Philip Celestini provided an overview of what the FBi is doing to combat the ever-changing landscape of cyber threats. As a veteran special agent of the FBI, Celestini is the Senior Executive FBI Representative to the National Security Agency and U.S. Cyber Command, and has seen first-hand the financial and other impact cyber attacks have on the U.S. and throughout the world.

For example, ransom-ware attacks went from causing $25 million in losses to $200 million in just the last year in the U.S., as well as an astonishing $2 trillion in cyber crime losses worldwide. Furthermore, “80 percent of companies who have been attacked by ransom-ware are not reporting it to law enforcement,” he said, which is why the FBI is reaching out to the industry for its help in spreading the word of the importance of cyber security and working with law enforcement to minimize loss.

The second day on the trade show floor gave me another chance to check out the ESX Innovation Award winners' products up-close and personal, and demo the latest and greatest products in the industry today.

Wednesday, June 8

The first full day at ESX 2016 in Fort Worth, Texas, began with a thought-provoking OpenXchange Breakfast discussion led by ESX Chairman George De Marco, featuring panelists Nate Williams, chief revenue officer for August, and Tim Colleran, director of Business Development for Qualcomm.

De Marco started things off right with some fun by announcing a special guest—Amazon Echo's Alexa, who was given a seat on the panel to join the discussion. After some uncharacteristically witty banter from Alexa, it became apparent that it was not Alexa at all, but rather De Marco's daughter, Lauren, who with the help of her father provided some levity before some serious discussions on identifying disruptive technologies and emerging trends in the industry today.

De Marco started the discussion by saying, “Every aspect of your business is about to change,” which as the day went on, emerged as a major theme for the show, as it reflects the pivotal time in the industry right now, especially on the residential side.

Williams pointed out that the industry needs to pay attention to the success of Amazon's Alexa, which he pointed out is in 4.5 million homes, as “voice is the next big thing, and you will see an explosion in the next five years,” he said. “Voice control is just more natural and people want that today.”

“The big challenge,” he continued, “is integrating and bridging products in the home. Over time, we have to be able to show how devices work in concert, which is already starting to happen.”

After the OpenXchange breakfast, I sat in on a spirited session, “Go Big or Go Home? Expanding & Extending into New Markets,” which was moderated by Greg Simmons, co-owner/VP of Eagle Sentry, and included a great panel featuring Jeremy Bates, general manager and co-owner of Bates Security/Sonitrol of Lexington, Inc., Barry Epstein, president of Vertex Capital and Tom Kerber, director, Research, Home Controls & Energy for Parks Associates.

The panel was well balanced, with Kerber handling the research side of things, Epstein looking at acquisitions and Bates providing a dealer's perspective.

Kerber pointed out to the packed session of interested dealers that today “a majority of security subscribers—more than 50 percent—have interactive services,” he said. “RMR growth, for the most part, has been driven by this increase in interactive services adoption. And security is the leading channel to the smart home,” providing an opportunity for dealers to increase RMR by being able to provide these options for their customers.

Bates pointed out that with so many smart home and interactive products and new opportunities, “dealers need to be careful what they chase and stay focused on their business model” as they look to possibly expand or grow into new markets or geographical areas.

For dealers who are trying to navigate the acquisition landscape, Epstein noted that there are certain criteria that must be met before a dealer decides to buy another company. The first thing to ask is “do they have good, solid contracts?” he said, “Because if they don't have contracts, tell them to call you back when they have contracts.”

Prior to the trade show floor opening, the Opening Keynote Luncheon featured world-renowned business futurist and innovation thought leader Nicholas Webb, author of Innovation Playbook and The Digital Innovation Playbook, who raised some important questions to ponder in this new smart-home driven world we are now living.

Webb pointed out that there are a lot of hackers, so to speak, who will try to disrupt the industry by providing innovative technology or services that consumers today want, and provided examples of what Uber did to the taxi industry and what the WAZE app did to GPS devices like Garmin.

His take-home message to a packed house: “You either become a hacker—a disruptive innovator—or you get hacked by a disruptive innovator.”

Note: Please check back here and at SSN Editor Martha Entwistle's blog page for updates from the show.