Directed Electronics starts out selling vehicle security, grows to include audio systems

VISTA ---- The story of Directed Electronics Inc. was long inseparable from that of its founder, entrepreneur Darrell Issa. Now a Republican congressman from Vista, Issa in a Friday interview said the 22-year-old company started out as a "mom-and-pop" operation, although in the high-tech field of vehicle security.

Five years after Issa and his wife, Kathy, sold the company to Miami-based Trivest, Directed Electronics is a different company. It's larger, with $200 million in sales expected this year, compared with $60 million in 1999.

It also has a much bigger product line. Leveraging its relationship with thousands of consumer electronics dealers, Directed Electronics sells high-end home theater systems, tower speakers and outdoor speakers. Its 160,000 square feet of office, warehouse and training space in Vista is continually being expanded, said spokesman Kennedy Gammage, an eight-year employee.


"At least half the products were not part of Directed Electronics when we sold the company," Issa said. He remains on the board to represent his family's foundation, which has minority ownership. Issa at times still visits the company, which employs nearly 200 people in Vista.

But while Issa takes pride in the company's history, today's Directed Electronics is run by a strategy formulated by Chief Executive Jim Minarik, a longtime friend of Issa's. Minarik was introduced by Issa to Trivest, which then recruited him to succeed Issa as chief executive in 2000.

A changing strategy

Since then, Minarik has emphasized growth by acquisition, and has also introduced products in other areas of consumer electronics. That is a change from how the company was run for most of its history. Founded in Cleveland in 1982, the company moved to North County in 1986.

Issa kept Directed Electronics focused on vehicle security and remote start systems until the company and its Viper brand were dominant. In the late 1990s, the company came out on top of a bitter patent fight against rival Code-Alarm Inc. of Madison Heights, Mich.

But with an estimated 60 percent of the market, there simply wasn't much more room for Directed Electronics to grow, Issa said.

"There's only so much you can do to increase your bottom line profits if you can't increase top line sales," Issa said. "It was logical for my successor to say he wanted to grow the business externally."

Selling car audio systems and related equipment was also logical, Gammage said, because Directed deals with the same retailers as it does for vehicle security products. So it's efficient to go back to the same retailers and offer a larger selection of products. That gives it greater leverage to offer discounts and other incentives, he said.

In late September, Directed announced its latest acquisition, Definitive Technology, a maker of home audio speakers based in Owing Mills, Md. Along with the purchase, Directed created a home audio division.

Despite this growth in consumer electronics, the company still gets most of its revenues from the vehicle security and remote start business, Gammage said.

Compatible cultures

Minarik, reached by e-mail Friday, said the main challenge in an acquisition "is to make sure the company cultures are compatible."

"In the case of Definitive Technology, they share with Directed an intense focus on customer and technical service and support and providing value for customers," Minarik said.

Another principle is to give productive acquisitions autonomy, and keep troubled ones under close watch. Minarik said Directive Technology's headquarters will remain in Maryland and engineering in Canada, because the company is "healthy and profitable."

But an earlier acquisition, ADST, was "far from healthy, and we soon closed their Phoenix facility and moved them in house," Minarik said.

Issa said he still senses that the "mom-and-pop" essence, one of personal bonds, is alive whenever he visits Directed Electronics, where a number of employees are still veterans of the pre-Trivest company.

Will to succeed

The other element of corporate culture still strong at the company, Issa said, is a "will to succeed." He described that as a function of teamwork, when the company sets a goal and the team puts its energy into making the goal a reality.

"In 22 years, the company has never stopped growing and never had a layoff," Issa said.

Some of the latest fruits of that work will be on display in early January at the Consumer Electronics Show in Las Vegas, Minarik said. These include a two-way spread-spectrum key chain transceiver, which can work on a vehicle up to one mile away.

For in-vehicle entertainment, there are rear-set overhead video monitors with a removable DVD player that can be detached and used in the home. And the company's West Coast Customs brand has become "increasingly famous," Minarik said, due to exposure on MTV's "Pimp My Ride."

Just as Comdex once was the signature event of the computer industry, Gammage said the Consumer Electronics Show is the best place for companies to get their products noticed, both in the press and with potential partners.

"It's an extremely productive four days," Minarik said.

Contact staff writer Bradley J. Fikes at (760) 739-6641 or bfikes@nctimes.com.

Author:  

Email:    

Topic:    

Content: