Fred D’Alessandro & Eric Hutto, Diversified

The 16:9 PODCAST IS SPONSORED BY SCREENFEED – DIGITAL SIGNAGE CONTENT

New Jersey-based Diversified has grown into one of the world's largest AV integration companies, and certainly among the most active in digital signage.

The company was started almost 30 years ago by Fred D'Alessandro, who just recently announced he was shifting his role in Diversified to make way for a new CEO. He's still going to be very much involved, but says former Unisys executive Eric Hutto is now very much in charge of the company.

The two of them kindly set aside some time recently to talk about that big news, and what's ahead for Diversified. Among many things, we get into the steady convergence of AV and IT.

Fred also relates a story I'd not heard before, about how and why Diversified got started, which funnily  traces to a job he didn't want at the Home Shopping Network.

Subscribe to this podcast: iTunes * Google Play * RSS

TRANSCRIPT

Fred and Eric, thank you for joining me. Fred, congratulations on your decision to slow down and Eric, welcome to pro AV!

Eric Hutto: Thank you. 

Fred D'Alessandro: Thank you. I don't know about slowing down, but thank you. 

Is this a transition that's about to happen or it's been underway for a while and you're now just talking about it?

Fred D'Alessandro: No, it's been under way and it has happened. So yeah, Eric is the new Diversified CEO and I couldn't be happier to have him on the team. Absolutely great move by us, and I'll say it by myself as well. 

You finally did something right! 

Fred D'Alessandro: Exactly, only took 29 years. 

So why now? 

Fred D'Alessandro: A lot of good reasons. I've been blessed to start Diversified in 1993, really as a startup, it's a garage story and to have the opportunity to lead it for 29 years, create a $1 billion organization, I think the first ever in our industry, which is, absolutely exciting and just a real honor, we have an army of industry expertise in the organization. But what the organization doesn't have is somebody with Eric's leadership at this level, when you're trying to build an organization that has a clear path to being a multi-billion dollar organization. So from,the strategy, from the vision, from the operations, how to, I would say, continue to exceed our client's expectations and our employees development, it's the right time and it’s the right team and the right place. So yeah, thrilled. 

Coming out of COVID, we're financially sound. So now's the time. 

So this is not just you deciding, you know what, I want to go down to Boca Raton and lawn bowling?

Fred D'Alessandro: No, I'm a young 63 year old, so I have a lot of energy. But you know what I feel why my value at this point in time for the organization can be used in other areas. I think strategic accounts and clients that I've known for years, employee mentorship, development, things that, again, I know that I'm really good at and I know Eric's really good at taking a financially sound organization, and I've said this in the past it's not so much about how big we are, it's just really continuing to be the best as we get bigger, and that's really important. 

To me, as a founder, again it's about being unselfish and doing what's right for our customers, doing what's right for our employees, and Eric is the right guy to do that for us. So I'm excited. 

So sometimes when a company is founded by a particular person who's still there and when they maybe not step aside, but step back into another role, it could be a bit of a balancing act to say, “No, you need to go talk to Eric about that.” How are you going to work that out? 

Fred D'Alessandro: Yeah look, there's no ego in this organization. 

I've met people there.

Fred D'Alessandro: There's no ego at the leadership level, let’s say that and I will be the first to say that, I am here in a different role, I've made that very clear over the past week to all the employees and that Eric is going to make the decisions on the strategy, the operating model, so the vision is going forward. I'm going to help him as a chairman of our Diversified board of directors. So from that perspective, I'll listen to Eric, I'll challenge him. But at the end of the day, he's going to make those decisions. And if somebody comes to me, I'm pointing them to Eric.

I said this again and again last week, I am very content with the role and making the decision to do this, and really to bring Eric on. We're fortunate to just think sometimes you need luck, and hard work brings that, but yeah, Eric's are going to be great for this role and I really feel he's going to take us to the next level and take our clients to the next level.

Was there somebody you knew or was this kind of a headhunter thing? 

Fred D'Alessandro: So we did a search. Fortunately, the timing worked out so it happened rather quickly. I've spent the last month with Eric, spending a couple of days here and there just to get to know the person and to see how Eric would fit in the organization, and like I said, in many ways, I felt like his skills and tone were similar to mine, but his expertise and where he's been through his career, it's hard to beat. Like I said, it was a pretty easy decision on my part at the end of the day, after spending, like I said, the last month with Eric. 

It's interesting. The pro AV community, particularly people like Gary Kayye, have been going on and on for some time now about how pro AV and IT are converging and pro AV people need to be thinking about this. So to bring somebody on as CEO who comes from pure IT services seems a really sharp move and something that had to be done in a lot of ways. 

Fred D'Alessandro: I would agree with you. I think it is converging. It's been converging, it is more an IT managed services play in a lot of ways. And again, Eric’s expertise is spot on, and we have, like I said, we have an army of AV knowledge and expertise. There's no shortage of that at Diversified. Now it's just bringing that all together with everything else that's happening and training. 

Eric, you come from Unisys IT services and consulting and so on. I'm curious from your background, were you hearing the same thing, but on the flip side that IT people need to be more aware of video delivery and AV in general, in terms of their overall practice? 

Eric Hutto: Yeah, I think, the pandemic simply heightened it. We all got sent home. So if you think about the audio video, quality of calls and the ability to keep things running right, it is a bit different now and I think that forced people to get more educated, appreciate more of the components that go into it versus just servers and storage in clouds and I think it has merged the IT industry over 30 years and has just been completely collapsing all the stacks of technology, and now its technology product gets out and it gets software updated and it lasts for lot longer than it used to because it can be updated.

And I think that's where we're headed with this, I think of it as experiential experiences that we're going to be having in these environments. We're going to have to come together. The morning show can't be broadcast in the afternoon because you went down because of your cloud or your server or you were hacked. So I do think it is the natural progression to take all the sophistication that Fred and team have built around how to create a great experience in a stadium. But now we move just beyond that, to what's coming into the stadium, and how do we keep that under control? Because bandwidth and those things affect the quality of the experience.

I think of Diversified in deployment integration, traditional pro AV roles, but I know you also do services. Do you see Diversified getting more and more into the services and consulting side of the business? 

Eric Hutto: Absolutely. Where we're headed with this digital world, It's all about design thinking. Now I do think that one thing that is core to Diversified that I've seen already is the ability to sit down and really design and layout to an outcome. Where we do that is in big, large, complex things. Not to say that we don't do that in Google Rooms and so forth. Now that's going to have to get a bit more sophisticated, right? As we bring cloud, bring security, bring software-defined networks into the conversation. 

I think I was reading the other day just to get up to speed on what's happening in the business. They say that by 2030, there'll be another $10 billion invested in stadiums. So they're not standing still. It's not a place of slowness. It's speeding up, but it's going to speed up in a software platform as a service model, and people are going to be able to really track and see what's happening almost at the seat level, if you can imagine that at, in a stadium, when they're having a concert of what and how they move sound around. I think it's going to be all software and it is going to be really important.

I come at this from the angle of digital signage. So that's always what I'm thinking about and less so about some of the more traditional sides of IT and AV collaboration and that sort of thing. I've always thought of Diversified in the sense of the last decade or so as among the big integrators, the one that by far was paying the most attention to and most active in digital signage.

Fred, do you still see it that way or the other guy is coming on and realizing, “Hey, we need to do more in this area”?

Fred D'Alessandro: No, I would agree. I think, look, it's still a key business unit for us that drives a lot of value to our customers, and I think continuing to innovate. That is most important, especially in these kinds of markets.

So large network deployments, content creation is an experiential piece to what that digital signage is going to do for the eyeballs that are looking at it. So it continues to really be a focus for us and it is growing. Coming out of the pandemic, we have large opportunities to grow even bigger in that area.

One of your main competitors now has an experience design group for, big, wow factor, corporate office, campuses and things like that. You guys have always worked with the Gensler's and the ESI Design, that sort of thing, and stayed in your lane. Is it important to do what you're good at, but let the experienced people do what they're good at as opposed to compete with them? 

Fred D'Alessandro: Look, that's always been my philosophy. Best in class, usually at the end of the day wins the day. When you're trying to create that total solution and you don't quite have the best people on your staff, it's usually not a good outcome for the client and that's what it's really about. 

What is what's best for the client? I think our approach is the best. 

The IT services business, and I guess to some degree, the AV services business has grown because you have enterprise level customers of all different stripes and sizes. I gather, saying, “We want to do what we're good at. So can you guys take this other stuff on for us?”

Are you seeing that and seeing growth in that area of being turnkey for a lot of these kinds of projects? 

Fred D'Alessandro: It  usually goes in cycles, but I do think that clients are realizing, especially on a global scale to have a single partner that could provide various solution sets that we have, and I think Diversified is the only company in the world, honestly, that has the portfolio of offerings, and then it's managing for the clients, all these different technology platforms and services and we've seen a tremendous uptick in that requirement and the ask of clients, the technology, even though a user base often feels easier to use, the behind the scenes, the back end and all that stuff, it's complicated, and so many customers don't have the staff that can actually operate or maintain the technology. So that's a big growth area for us, for sure. 

Eric Hutto: One of the things that I've learned over 16 years in IT services is that it is a relationship, and that relationship is trusted and you don't get to be a trusted partner advisor if you’re making decisions that are oriented towards yourself, and I think Fred's right, it's always been outcome-based, and I do think that it gets hard to be the best at every single component of the solution, because it's so complicated these days. There's so many things that you have to consider. 

I absolutely would and I have always leveraged specialty partnerships where they bring it. Even Apple doesn't necessarily do all their own gooey work for their applications and what we interface with because they're very good at what they do, and I do think that's exactly how we'll look at this going forward. Will we need to have some knowledge, onsite with us that understand cloud or security? Absolutely, you always want that, but we'll use strong partnerships in areas where people are really specialized to get the best outcome for the client. 

Yeah. It would be difficult for you guys to hire on the level of creative to compete with the guys who you instead partner with? 

Eric Hutto: Right, and that talent wants a place to grow, and we're not a creative company by core, even though it's something that we can do. 

Yeah, you go into the kitchen to have your lunch and you end up talking to somebody who's a sales engineer and you can talk about football or baseball or whatever, but not so much about the core discipline.

Fred D'Alessandro: Yeah, and we're a company of scale. So again, you can't have one person that understands it and believe that you have an end to end solution, which is quite the story in many cases. 

Eric Hutto: Yeah, and just the IT industry skills are going to evolve in our company. If you go back 15 years, you had storage people and server people and network people. You don't really have that as much anymore. They're still out there, but it's all converged and so integrated that we all have different types of enterprise, and I would imagine it will evolve as this stuff converges, as things merge, as we get more platform oriented software that helps us extend our services and capabilities of the people who will need, will grow into a different skill set.

Security has been obviously a huge component of IT services. Fred, have you started to see that becoming a demand on the AV side as well? 

Fred D'Alessandro: It absolutely is a demand. As all the AV equipment, digital signage players have touched the network, it is absolutely a vulnerable point for IT. So yes, the bottom line is it's been going on and it's just every day gets more and more.y scrutinized and restricted. So you have to have that skill. 

French. You mentioned that 29 years ago, this was a garage story. I don't think I've ever heard that, how the company got started? 

Fred D'Alessandro: I'm a broadcast engineer by trade. I was working in the New York, New Jersey area for the station I worked for, I was blessed to be able to work in many different departments. So I got a well-rounded education for my first seven years of employment there and the home shopping network purchased our TV station when they started up, and it was a decision between going to work for the home shopping network and I'd taken a shot at going out there in the world and doing it on your own, and that's literally what happened. 

I was like, “Let's go. Let's try to make something happen,” and yeah, and so again, we went everywhere up to 300 television towers, replacing antennas to studios. So yeah, absolutely whatever dirty work we could get, we did. 

Wow, I had not heard of the home shopping network thing. I was like, do I want to spend the next 10 years sticking an ice pick in my eyes or move on?

Fred D'Alessandro: So that's why I say, things happen for a reason. I'm a true believer in that. 

So today what's the scale of the company? You're much more than just a US company now and there's a lot of bodies, much more so even than 10 years ago. 

Fred D'Alessandro: Now, our revenue is around a billion dollars. We have around 2,700+ employees worldwide. We have 52 offices, 35 of those are in the US, the rest are overseas. All our offices are sales, integration, and service. So they're not just sales offices. We build and service out of those locations, and about 80% of our revenue is out of the US and about 20% is currently overseas and growing and our latest international operation opened up in Bangalore, India and it is really exciting. 

That's a big road trip!

Fred D'Alessandro: Yes, it is. But when I look at all the players in the industry, what I'll say is by far Diversified has invested the most internally to be a global organization. We use partners but our goal is really to be our own entity and work through the rest of the world, and provide our customers with a consistent and standard experience. 

Have you been going to other countries because you see North America as somewhat capped out or crowded in terms of competition versus other markets, or is it just that there's a lot of growth potential in India? 

Fred D'Alessandro: The view of this and the strategy has always been to be where our customers are. So it really had nothing to do with North America being saturated and there's no more business. There's a lot of business here going forward, but those customers that we work with and touch our global customers. 

So if you want to service them the right way and the best you need to be where they are and so that's been our strategy today. 

Is that a demand, when you're working, as you say, with a global customer, like a Fortune 100 kind of company where they want to roll in multiple countries and in the old days, you'd have to say we can do it here, and we'll see who we can find to do this in France and see if we can find to do this in Japan and so on?

Fred D'Alessandro: Yeah we want to make it easy for them to do business Diversified. So that's a saying that we've had in a company a long time: make it easy for our customers to do business with us, and so being able to work and have established entities in these various countries, you're able to buy in the country, you're able to transact in the country for them, and you just avoid a lot of the inefficiencies that you get when you're trying to do things from just the US. 

Eric Hutto: Just like a lot of companies in IT, you get taken to places by clients, right? So you have to be able to operate where their clients took you. Over time, I think as Fred alluded to, we're going to have our competencies and our direct associates, if you will, but there'll be markets that we're choosing to be in because we see the growth in versus we got taken there by client, but we will always have the ability through partnerships and other relationships to service a client wherever they need to be.

I think that's the balance of, direct labor, indirect labor, having more of a variable bottle. It allows you to stay extremely nimble and flexible, but at the same time where you have decided to be in a market, that is where your associates are. 

Has most of the growth that you've seen both domestically and internationally being through acquisition, or are you going into some markets and just opening up as Diversified and starting to hire and do sales?

Fred D'Alessandro: I would say all our expansion has been strategic. We've absolutely never just gone in and said, we hope there's business there and that we're going to sell. So I think Eric's point is very true, you look at what opportunities are in the country, and who our global clients are and where they are. So when you put those two together, you have a really large opportunity. 

Eric Hutto: In my initial, what solid 14 days, Fred, what I have seen in talking with, and I've talked to surprisingly, quite a few people. That's just how I work and learn, I start at the frontline and work backwards. We are growing a lot and mainly from relationships we have because we're tried and true, and we've always done great quality work. 

So I see a lot of organic growth really in this year, Fred, I would say because we've learned how to, really get in with a client and understand the problems and solve them and they continue to consume more from us, and as our portfolio expands and we're able to do other things besides just to your point earlier about integration and putting things in, we just continue to create a stickiness with our clients and create the value. 

Where do you guys see the opportunity over the next couple of years as we get out of this mess with COVID?

Fred D'Alessandro: What I'll say is, I see a tremendous amount of opportunity with, like you said, returning to work is one, which obviously is the collaboration and that piece of it. I think when you look at how digital signage, how media, how IT are all stitching together these disparate technologies into one experience, for, I think our customers, their employees, their customers, is what is really exciting and the opportunity that I think with the pandemic brought a lot of new thinking into our organization about how we can help our customers, not just during a pandemic, but long after and make what we design, what we create, what we install and maintain more valuable than it was in the past. So there's a big opportunity in all these stitching together. 

Did you learn things out of the pandemic as well? 

I saw a lot of investments, a lot of marketing of products that were pandemic-specific like thermal sensors, temperature scanners, alternatives to touch screens and so on, and while there was a lot of noise around it, I didn't see a lot of commercial take-up of them. 

Fred D'Alessandro: Yeah, I would agree. I think that at the end of the day, some of those were needed at the time, but, I don't think there's a future for a lot of these products. As I said, when you think to the core of what companies need to do, their employees need to collaborate. Those types of tools I think, we'll continue to add value. 

When you think about streaming and media and virtual events, those will, I think, continue. So there are a number of things that I think the new workplace and a workforce will embrace, and I think it will add efficiency and it will be a better outcome for all.

Eric Hutto: It also gives us a chance to help companies rethink their work environment. Because even when I was at Unisys, we didn't have everybody coming back to the office yet, but as they start to come back, what kind of office is it, right? And really what people need is collaborative spaces where they can come, engage, connect, get things done, and then move on. 

But I think that's a huge opportunity for us to, again, help them think through the design of what it is they want to achieve with their associate base when they do come back. 

A lot of what I've seen around the workplace has been so focused on the front of house, so to speak, the white collar areas, the offices, and not that much about the production floors, the warehouses and all those sorts of things. Have you seen more understanding of that as an opportunity and a need? 

Fred D'Alessandro: We see a lot of digital signage, IP TV opportunities in the warehouse workplaces, because corporate communications is key.  I mean we have Rachel on the phone here with us, but I think that's one of the things that you learned, especially during a pandemic of how important communication is. So I think companies going forward will need to step up their game, to make sure that everybody is connected because everybody is now always in the office or in the warehouse these days.

So it's important, but that's where I see digital signage, corporate communications, IP TV really being the leader and that's what we do really well. That's an area we've been doing extremely well in. 

So just the last question, what's been the reception around the industry to the news that you're taking on a different role and Eric stepping in?

Fred D'Alessandro: Well, from my perspective I'll say, look, everybody's congratulated me. 

Are they saying, “Oh, thank God”?

Fred D'Alessandro: Exactly, to some degree. People are happy that I'm not going anywhere that I'm still around. But again, as I've made clear, Eric has the football now and I'm here to support him and I'm here to support the organization and our clients. So yeah, it's been really positive, very rewarding. I'm humbled by a lot of the emails and phone calls. 

Well, congratulations to both of you and a pleasure chatting with you. 

Eric Hutto: Thanks, I appreciate it. 

Fred D'Alessandro: Thank you.