Alumni Success StoriesBruce Garipay, M.B.A. '92
What kind of business did the entrepreneur start?
In November of 1996, Bruce Garipay began Automated Homes, a business that designs and installs electronically automated homes. Each home is equipped with a network that brings sub-systems under the control of a variety of button tools. Essentially, anything that uses electricity can be brought under control in the network, from lighting and sound to climate control and telecommunications, the possibilities are limitless.
Bruce builds each network specifically for the client; thus, he works closely with them in order to create the ideal system. For example, his first client wanted a sports bar in his home. Garipay designed a network in which, at the touch of a button, the four televisions turned on to the proper station depending on the time, day and athletic season. Additional capabilities of the network include telephoning your system on your way home and instructing it to prepare for your arrival (i.e., cooling down or warming up, etc.).
Garipay will first meet with potential clients when they are creating their architectural designs. Assuming he convinces them to automate their new home, he installs the necessary wiring when the framework is constructed. The last phase occurs when the house is nearing completion, at which time he installs the button tools or "goodies" that his clients will use to operate the system which is done with a touch screen, a small keypad, a wireless remote control, or by telephone.
The length of installation time is contingent upon the square footage of the home and the extent of automation. Currently, he primarily installs networks into newly constructed homes. Since the majority of his clients build homes in excess of six thousand square feet, the entire process takes approximately one year.
What is the background of the entrepreneur?
Similar to the Wright brothers, Garipay's parents instilled the values and ideals that have formed the foundation of his life. He believes in his goals, follows his instincts, learns from his mistakes, and, for Garipay, failure is not an option.
After catholic elementary and high school, Garipay attended California State University, Long Beach to pursue a B.S. in Financial Management. After graduating in December of 1995, he began his career at Amplicon, Inc., a financing company. Amplicon’s primary business is lending money in leasing transactions, then bundling the leases, and, subsequently, selling them to banking institutions. At the time, Amplicon was one of California's 100 fastest growing companies. Their revenues increased from $45 million to $100 million over a two-year time span. Throughout his employment at Amplicon, he was involved in many deals that provided him invaluable experience in direct marketing and negotiating transactions that he has adopted as his business plan.
In 1988, he wanted to come to USC for graduate school, but Amplicon wanted him to attend UC Irvine. Consequently, he left Amplicon in 1988 to work for Hughes Aircraft where he worked for a year and a half before following his father's example and attending the University of Southern California in the fall of 1989. Garipay’s father received his Masters of Science in from USC. In addition, Garipay continued working full time at Hughes while enrolled part time in the MBA Program at USC.
In 1992, he demonstrated his entrepreneurial skill when he won USC’s award for Best Business Plan. His business plan was based on a concept now known as ‘DirecTV’. Upon graduating from USC in 1992, his ultimate goal was to begin his own business.
A year and a half later, February of 1994, he left the security of Hughes to move to Arizona where he assisted an entrepreneur in a startup that eventually failed. In mid-1995, he worked with an entrepreneur who was turning around an existing business. However, after spending his entire career working for others, he wanted to operate a business his way. Thus, in November of 1996, he started Automated Homes.
How did the entrepreneur get the idea for starting this business?
Garipay has a strong technical background, both his father and sister earned their Masters in Engineering from USC. While at USC, he traveled to Tokyo, Japan with the IBEAR program (International Business Education And Research). Visiting the NEC Super Tower in Tokyo was the first time he experienced electronic automation in the work environment; it had a profound influence on him. In addition, Garipay was exposed to the future of technology and telecommunications over the six years he worked at Hughes Aircraft that also had a profound influence on him.
In 1995, he bought a piece of land to build his house; however, he was unable to find anyone who could install in it what he envisioned. Thus, in order to automate the home himself, he thoroughly researched and read the available literature in order to learn about electronic automation and it was through this research that his experiences and ideas converged.
Essentially, as Perkins and Weber suggest, there was not an epiphany. All of the experiences and ideas throughout his life converged together: "There is an element of luck in discovery, however, chance favors those who are prepared." Due to his technical background, work experiences and fascination with computers, Garipay was destined to succeed.
What did the entrepreneur do to start the business? When did the entrepreneur do these activities?
In April of 1996, he decided to pursue his idea for home automation and in order to determine if Arizona was an optimal location, he conducted a feasibility study. He concluded that Arizona's real estate market was very strong and, in fact, it had the second highest number of housing starts in the USA. This is crucial because he currently implements most systems into newly constructed homes. Second, Arizona was very low-tech, thus lacking any significant head-to-head competition. Hence, it was extremely feasible.
The following September he searched for investors that could provide both technical skill and funding. Garipay nearly signed a deal with an investor that would have provided both, but he walked away. "I had to prove I could do it. I had the education, the experience, and the idea, I wanted to stand up and make it work." On January 16, 1997, he signed his first client.
Initially, he tried cold calling and sending letters, but had little success. In addition, he did not advertise at all through the mainstream media, instead, he directly targeted developers and architects. Due to minimal work his first year, Garipay had extra time on his hands and to capitalize on this free time, he went to nearby construction sites to obtain the telephone numbers of the developers. He then called each of them and explained his ideas, but this was not successful either.
Garipay's first client was a high profile, friend of his father-in-law. One evening at a Phoenix Suns basketball game, his father-in-law mentioned home automation to this friend and it intrigued him; he wanted to learn more. The following week Garipay met with him and discussed the endless possibilities of automation. Garipay's finesse and effective communication skills convinced the gentleman to automate his existing home which brought significant exposure to Garipay's business.
In March of 1997, Garipay was at a cocktail party and overheard someone discussing plans to build his new home, thus, through a mutual friend, Garipay obtained his telephone number and, the following day, called him. Initially he was not interested, but Garipay persisted and following Garipay’s ingenious demonstration, the man reconsidered and they negotiated a deal.
Later that year, impressed by his honest and sincere reputation, friends of his family who were building a home contacted Garipay and, after he demonstrated home automation and its endless possibilities, they signed a deal. Unfortunately, they were his third and last clients of 1997.
In early 1998, Garipay was at a Phoenix Suns basketball game with his wife who bumped into a friend who mentioned that she and her husband were remodeling their home. His wife gave her friend Garipay’s business card and the following week, he demonstrated home automation to them. They, too, were impressed with his knowledge, skill and products and immediately hired him.
Initially, networking and word of mouth referrals were the primary means by which Garipay obtained clients and his first four clients were a direct result of this type of marketing. Moreover, most of them knew him or knew of his in-laws. He admits, "I have to give credit to my wife. Her connections have been a tremendous asset."
In the beginning, Garipay was primarily selling to individuals; however, presently, he has builders and architects calling him and, in fact, a builder recently called him with four client referrals. Subsequently, Garipay demonstrated automation to these referrals and is currently in negotiations with each.
Garipay employed several strategies that were crucial during the startup of his business. First, he shared an office with a developer and by minimizing operating expenses, he was able to focus on creating and selling his products. Second, under the stipulation that he could use their homes for demonstrations, Garipay provided equipment to clients at a discount. Currently, he is building his own fully automated home to use for demonstrations. In addition, Garipay is always thinking about tomorrow and consequently has purchased a CD-ROM disc that lists all USC alumni. In sorting this list by zip code, he discovered that there were approximately 100 alumni in his immediate area and in the upcoming months, he plans to send them letters explaining home automation.
What major problems did the entrepreneur encounter during the startup of this business?
Garipay encountered several major problems throughout the course of his startup. First, trying to justify the expense of a product foreign to most people and subsequently selling it to them was Garipay's greatest problem. He was investing his money into a product knowing society may not understand or be prepared for it. Second, he went from unlimited resources at Hughes to limited resources without any backup. Moreover, he is involved with an industry in its infancy that requires sophisticated labor, which is difficult to find.
How were those problems solved?
Garipay spends a significant amount of time educating clients about how the network operates and why it is necessary. "In my mind I can conceptualize ideas, but I try to focus on the functionality of how things work in basic terms that most can comprehend." He is well spoken and his communication skills are exceptional; they have helped him narrow the gap between his vision and what society will accept. To further demonstrate and educate about home automation, Garipay attends several trade shows in Las Vegas each year. When trying to sell a product new and foreign to most, trade shows are a powerful educational tool. They provide a venue to both demonstrate his products and to keep abreast of technological advancements. Moreover, with the recent popularity and increased usage of the Internet and digital TVs being discussed in the media, educating and justifying expenses to potential clients has become easier.
With Garipay's drive to succeed and diligence, he was destined to persevere despite limited resources. When he has a technical problem, he is not afraid to call people and ask questions. "Technology is always changing and evolving, it is the smart guy who isn't afraid to ask questions, the smart guy finds answers."
Intentionally keeping labor at a minimum, he currently has four people working for him and, in order to meet demand, he sub-contracts for the additional labor. It is more cost effective for him to sub-contract for qualified labor than to hire full time. However, he is planning and when he exceeds $1 million in revenue, he will upgrade both his office and support staff.
Garipay believes in his products and is honest and sincere with his clients. These values have helped him gain their trust, build a credible reputation within the industry, and endure the trials and tribulations of the startup. His reputation has become so widespread that clients are actually pursuing him.
Who did the entrepreneur use for help and guidance during the startup of this business?
Garipay receives tremendous support from his family, friends, and former professors. His wife, father, and father-in-law have been great sources of comfort throughout the glory and the grief. In addition, there are two professors at USC who have been mentors. First, Garipay learned the finer points of selling and sales management from William Crookston. Considering that sales are important in his business, this knowledge has influenced his career enormously. The network he installs for each client must reflect that clients’ specific needs and desires, thus understanding them are imperative. Second, James Stancill provided Garipay with the essential fundamentals of financial management that have helped in developing his young business. Former USC classmates have also been sources of comfort and guidance. Nevertheless, in spite of the advice he receives, he acknowledges that "you can only rely on others so much. In the end when it is time to make decisions, you must have the determination within yourself."
What advice would the entrepreneur give to someone thinking about starting a business?
He stressed the importance of making business contacts and obtaining experience through internships. In addition, the guidance of family and mentors is extremely helpful and comforting when trying something different. He suggested finding a person who you trust and respect. Most importantly, however, he stressed the importance of believing in yourself, your ideas, and your tenacity and always being determined to succeed, and not afraid to fail. Fear of failure is a detriment, especially when doing something different. He stated, "defy conventional wisdom, follow your instincts, and be confident in your ideas, because things are done by those who find a way to make them work."
Why was the entrepreneur successful at getting into business?
A significant contributor to Garipay’s early success was that he possessed the cognitive characteristics described by Perkins and Weber: ingenuity, articulateness, and intelligence. His ingenious business strategies helped him secure work as well as mitigate many of the risks associated with startups. By securing work, not debt, and maintaining minimal operating costs, he increased revenues from $100,000 in his first year to a projected $1 million this year. Furthermore, he has recently closed a deal with a developer to build a ‘smart community’ on 800 acres of ocean front property in Puerto Vallarta, Mexico in 1999. This project will enable him to gain significant exposure on both a national and international scale.
Technology is complex. It surrounds us, supports us, and directly influences our lives. Garipay's expertise is in electronic automation and his strength is communication. This is valuable because, thus far, only one of his clients had understood automation prior to meeting with him, and that was just three weeks ago. Society fears that which they do not understand. Thus, Garipay’s primary objective is to educate and make certain they do understand and, if given the opportunity to talk with someone face-to-face, Garipay will close the deal.
Another factor in his success was that he possessed Perkins and Weber’s attitudinal trait of persistence. He has received numerous rejections, primarily due to society’s misunderstanding of automation. Unfortunately, society prefers to forgo home automation rather than take the time to understand it; however, they do not know with whom they are dealing. Garipay, as with most of us, does not like to lose. Nor does he falter in the face of rejection, rather, he persists. His upbringing, education, and experiences have provided him with the courage and confidence to persist despite rejection.
Garipay did not set out to discover a way to automate the home. Nor did an overnight "breakthrough" occur. Essentially, he followed what Perkins and Weber describe as a "good bet". He had several experiences throughout his young life -visiting the NEC Super Tower, working at Hughes Aircraft, Bill Gates’ development of the ‘smart house’- that contributed to the emergence of this idea. Because of his background in technology, he was able to make it work.
Essentially, his success relates back to the values and ideals instilled in him by his parents. He has high standards for himself as well as for those working for him. He is not satisfied with the easy solution, nor does he buckle under pressure. In contrast to Beethoven who stimulated creativity by pouring ice-cold water on his head, Garipay's stimulation comes from pressure. When the game is on the line, he wants the ball. He is always thinking about tomorrow’s game, and has the utmost confidence that he will win and achieve his goals.
- Colleen C. Gately