Meet Richard Schneider, President of Antennas Direct, a leading manufacturer of high definition television antennas.
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Again my name is Richard Schneider, I’m the president of the company called Antennas Direct, and a lot of people find it surprising, it’s 2009, and we’re talking about television antennas. We are supposed to be getting our TV by now on our iphones, our fiver optics. And in fact I just read Broadcom just spending a billion dollars on wireless broadband licenses. So we can all watch Oprah on our cellphone. And, you know, one of the undiscovered technology is out there is television antennas. And there is a resurgence as a country going back to over the air television antennas. And I’m probably as surprised as most, you know, antennas are coming back with a vengeance and a lot of people, you know, are still calling them old fashion or something that your grandparents, you know, would’ve use to watch I Love Lucy. But they’re now the new video delivery method, and I’ll go over some of the, some of the merits that we are discovering why, you know, the trustee antenna is popular again. But, you know, I mentioned, you know, I wasn’t so sure 5 years ago that this would be as successful as it was. I began this in, I actually started this as a hobby. My hobby was home theater, and I put in a home theater and in 2000, and at the time there was only one signal available, that was CamoV, they had a test loop that they were running. And I was so excited to be able to call my friends over and neighbors and show them this high definition test loop, I was thrilled. And in the process of getting it, I end up buying 8 antennas, none of them worked reliably. And I was on the phone almost daily with Walton Nickoldy, the head of engineering at the CamoV. They said, Richard this is the only form of broadcasting where I knew all of our viewers in the first name basis. So what I had in a prior career, I had developed a, I worked for a company that developed mapping software and we had done some worked with cellular companies and I knew I kind of an ignorant. I’m not an engineer by training, I’m actually a map maker, but the, the theories of wave propagation were not completely unfamiliar to me, so I got some textbooks, I found some formulas and we actually started making our own antennas just for my own use. And then, you know, blogging about it or actually posting on a chat rooms and forums, people started asking me if I could help them out with their antennas. And there is this community of other fanatics that were also struggling with the same problem. So, you know, not a problem, so I started, you know, just in my garage, we would actually take existing designs and modify them. And then, at first I was giving them away and then, you know, I was trying to cover my costs. So we started charging some nominal fee, you know, for the antennas. And then a funny thing happened, my wife looked out the window and said, what are all these nerds doing in our driveway? People were starting to find out, and they were stopping by my house, they were stopping by my office, and I was actually selling antennas out of my trunk. But my coworkers thought maybe I was a drug dealer or something coz all these kind scruffy looking nerds were coming in and saying, you know, you got the good stuff. And I’m like, yeah I’ll hook you up. So, this went on for a couple of years, and, you know, I’m a little bit slow on a lot of things, and then it occurred to me that hey, this might actually be an actual business. So we throw up a website, and made up a batch of 50 antennas, and we got our first sale in 15 minutes of putting up our website. Well Google Ad worlds helped, but we end up having to take that website down in 72 hours coz we sold everything out, the first batch. And my objective was I wanted a new home theater projector, and it was 8,000 dollars. And I was thinking, you know, if I could just sell maybe 20 or 30 antennas a month, I could get a new projector, and my wife wouldn’t be any the wiser. So I had this plan, this could not possibly fail. So we ended up finding a partner, we couldn’t find anyone, unfortunately in the United States that would work with someone , you know, working on such small volumes, because I really thought the market would’ve been maybe 500 units a year, you know. So I didn’t want to commit to a 50,000, you know, unit build. So, you know, coz even I thought, you know, what is the community of lunatics that really are still committed to over the air, it cant be that large, right? Well, what happened was, we ended up finding this partner, we made up a batch of about 500 and that sold out, again within several weeks. So we then realized that this is something that maybe we should start taking this a little more seriously. So I engaged, with the help of some industrial designers and some RF engineers to refine some of my original designs and we started now creating our own antennas and then we started the process of applying for a patent in 2004. We ended up getting identified because this state of the art, there hardly been any development in television antennas in 30 years. So the stuff that you’re, even today, that you buy in a lot of the electronics retailers is really unchanged since the ‘50s. And there’s not a lot of consumer electronics that I can point to that, you know, may be the exception of the extension cords have virtually no refinement in 50 years. So we ended up hitting a million dollars in sales in 2006, we virtually doubled every year in business except for this year, which we might triple or quadruple, and we were named Inc500 as number… where’d Kathy go? 340Inc, Kathy? I think 500, by 340, one of the fastest growing companies in the country. And as David, yeah, David mentioned, we never did, we haven’t borrowed money. In fact, we never got a line of credit until just about a year and a half ago. So we did, again, everything has been or all our growth has been out of cash flow. And I’d like to take credit for my clairvoyance and my, you know, my foresight but I actually, we are in the middle of this perfect storm. All the stars are lining up for someone to sell television antennas right now. You’ve got a government mandate that every television has a new digital tuner in it, that’s s not an option. They’re also subsidizing this converter boxes for people who don’t have digital tuners, to the tune of, well probably it would be over 2 billion dollars. We’ve got the 1,600 full powered license television broadcasters have collectively spent 4 billion dollars in upgrading all of their transmission facilities. New cameras, new switch gear, new transmitters, new towers, also you can get high definition television for free. All you need is an antenna, that’s the only part that’s missing. The other thing that has helped is within the last 2 or 3 years, there has been a dramatic improvement in the testing, analysis, and simulation technologies to make antennas. Now they weren’t necessary designed for television antennas, they were really intended for military applications, target acquisitions, wired band radar systems, but you can adapt those things for antenna design. So now, we can make an antenna, we can go through thousands and thousands for iteration of geometries in a matter of weeks, which would’ve taken lifetimes before. So we can dramatically shorten the development cycle, you know, by 10x, and in process create it more reliable, more powerful antennas and at a lower cost of development that would have, you know, we wouldn’t be able to do this 4 or 5 years ago. And then the other big, big thing, you know, you don’t want to take pleasure in a down economy, but this is a natural fit. When people are looking to cut their monthly out lays, the average cable bill in America is hovering around 80 bucks a month, that’s about a thousand, roughly a thousand dollars a year, you know. And if you’re worried about your job, you know, a thousand bucks a year, you know that’s grocery money there. At the same time, you know, in Los Angeles, you can get over 60 channels. Over the year, in digital and high definitions for free. In St. Louis, well were a little bit slower than the rest of the country right now, we have about 15, but eventually we will likely have 30 or 40 channels that you’ll be able to get without any cost, which is just a simple antenna and the tuner, that’s mandated to be included in your television set. So, we see as a country, that there’s gonna be a shift, right now, the American households are about 15 percent antenna only. We have seen in Britain, who is about three years ahead of us in their digital transition, they have a system called Freeview, and they can get about 40 channels over the air, standard definition only and now almost 50 percent of the British population is antenna only. They were like us, they had the similar cable and satellite penetration and now they’re switching back more to over the air. Now as the content catches up and the quality of the programming and these new channels start populating, I’m not suggesting we’re gonna be a 50 percent antenna only in this country. But I think it’s very realistic to think that we might be 25 or 35 percent of our country will be antenna only. And remember, people who subscribe to satellite and cable are also customers of ours because there’s a lot of channels that you can get over the air that you can’t get in satellite cable, and this is the icing on the cake. The picture quality, believe it or not, on high definition from an antenna is dramatically better than satellite or cable. And that’s due to the fact the charter and these others, they got ten pounds of potatoes that they got to fit in a three pound sack, you got 500 channels of programming, you got pay per view, you got telephony, Rotweillers broadband all fitting down the same coaxial cable. So something’s got to give, and some of that is picture quality. So you’d be surprised that even a coat hanger, if aimed correctly can deliver a better picture quality. Now this is my second favorite slide here, this just charts our growth. You know, we, it used to be a smiley face, we’re a little bit slower on the summer than on the falls and the winter. That’s kinda hard to tell because the last month sales kinda threw off the scale of the graph. So we started out our first year, we did 35,000 dollars in sales for the whole year. Last month we did just under 800,000 dollars, which, you know, compared to the year before and the year before, we’ve always had, you know, generally double digit growth of month over month. And, you know, that’s just one of my favorite charts, and we’re estimating, you know, I don’t know, maybe, it’s hard to say where we’ll be this year. I’m guessing 6, 7, 8, I don’t really know, but I already touched on this, but, this is not a French accessory anymore. This is now, we are now plunging into the mainstream. And one of the advantages we have is we’re, to our knowledge, we look a lot of the patent pilings, we’re one of the still the only organizations that is actually putting any serious research and development in the new antenna development. One of the problems we’ve had is with antenna acceptance. This is one of our Legacy antennas, when we still sell this in some markets. This is what you might be familiar with that maybe, you know, your grandparents or parents, you know, used. This is what we call a low wife acceptance factor. I have a 15 year supply of this in the warehouse, so if anyone wants a good deal, but what’s interesting is in this journey, we actually been able to refine the geometry and this antenna right here is actually 5 to 10 times powerful than this. So the government has given us a gift, have you heard of the broadcasters into narrower spectrum, and from an antenna designers point of view you can focus on a narrower or subset of frequencies, you can get dramatic improvements in performance. You can make the antenna more reliable and you can make it smaller. And that was, sort of the tipping point with the dish, direct TV and those, if you remember the days of the big 6 foot C band dishes. Probably not a lot of you would’ve bought those, because they probably pissed off the neighbors or the spouse, but once they got that size down to 18 inches, they brought heaven to earth and they figured out how they make that, well it’s not quite so offensive. And same thing with this, this just one of our most popular models, one which we have a hard time keeping in stock. But now we’ve gotten the size down to, you know, 10 inch square, and this antenna would have a range of about 35 miles. So the majority of the population can put this, preferably outside, and it really, even if you’re in a real peersnickity homeowners association, it’s probably not gonna offend the neighbors that much. You know, we got a form factor and the best part about it is, it’s gonna be more reliable and easier to aim. So we have this kinda of confluence of neat things that all happened. The market is demanding this, and the technology now has gotten to the point where consumers are gonna be less resistant. We just have to get the word out. And we’re in the middle of this publicity tour where we’re just, we’re out, I just got back from Vloxy, Mississippi, and Montgomery, and I think we got 30 more cities to go, I think. And we’re just, people are surprised, even the on air personalities, the television stations are actually surprised that people actually watch their signal from an antenna. So I mean, we’re not just having to convert the general public but even people in television. We, this antenna was featured in the today’s show, and they did a segment on gifts for, budgets for guys or something and Matt Lower said what is that? What this is, is an antenna that’s built into a picture frame trying to, again, we’re trying to mask the elements to, again, make it more consumer friendly. But of the striking comments Matt Lower made was that’s an antenna and you’re telling me I can get high definition from an antenna. Wow, that’s remarkable. He didn’t even know, I mean, he works in television and you would expect he might know how his product is delivered, you know, that the assumption is if you don’t have satellite cable, you’re not getting it. So we invested quite a bit of money, we’re gonna commit well over a million dollars this year, we got a staff of 3 Ph. D’s, we got a laboratory in Salt Lake City, and we’ll probably developed to the market, release to the market, maybe 6 or 7 new geometries this year. And as well as, our products, our development methodologies and our claims of performance are actually peer reviewed. So it’s not just marketing hype, and there’s a lot of that in the market. There’s a lot of rabbit ears, you can go and buy that say HDTV in antenna, it’s just the same old rabbit ears they’ve been selling for 50 years. So we’re actually trying to be a little more ethical here, I mean we still hype, but, you know, we’ll be, it’ll be defensible hype. And this is our, this is what we really been excited about of this new clear shape geometries. It’s really the first new, really original geometries for television reception in 25 or 30 years, and they’re a fraction of the size of what’s come ahead. So, we release this Clearstreams, this is coming out here in a matter of weeks. This is a new indoor antenna, and this one is a remarkable one. We actually built a digital converter box circuitry in the base of it. So it’s actually a converter box and antenna combination. And it’s the only one in the market. No one’s thought to a, no one’s had an antenna reliable enough that they could marry with a converter box. And then, the really game changer, the big killer application will be, these are more variants of these antennas, but the new smart antennas. And what we’ll be releasing in summer is we have an antenna that’s a continuously variable antenna, that’s 2,000 possible combinations of geometry. So it’ll know what station you’re watching, it’ll know the distance, it’ll know the signal strength, the data quality, the polarity, certainly the frequency, their C frequency and be able to continuously optimize it for that. The whole idea and we’re being funded by the National Association of Broadcasters to develop this. This is a, this is kind of a, one of the, they start getting more exponentially expensive to develop as we grow in sophistication. But the idea is to get an indoor antenna with the same reliability of satellite or cable. If that’s possible the National Association believes that we will be over 50 percent antenna only. And the local broadcasters, not the cable companies, not the satellite providers will be the new multichannel providers. Because really, the cable companies is just an orifice that the broadcasters have to go through to get to the viewers, and so, you know, we may, you know, if we can, this is some pretty sophisticated stuff. And it does require a jack on the television to tell the antenna how’s it’s doing, but once that’s out, this, you know, this will be certainly something that’s gonna be mainstream. So, and then the next project will be, we have a smartifier product which we call No Antenna Left Behind, which will take any dumb antenna and use the smart circuitry to smarten it up. So, and then I’m trying to think what else, we believe, you know, we’re really just a small fry. Even though, we’re kinda, we’ve gotta, you know, our goal is about 6 million this year. We have a whisper goal of about, you know, 8 million. But that’s just a drop in the bucket, you know, the overall market for television antennas is about quarter of a billion dollars. And overall antenna market, you know, including the antennas in your cellphone or microwave antennas is over 7 billion. So this technology that we’re developing for television antennas is really just the low hanging fruit. There really hasn’t been, since there hasn’t been much development in this area, we can use this as a, as a platform and springboard into other areas with the smart antenna developments. Because, you know, we’ll be, a lot of folks will be getting their internet via wireless broadband, you know, this spectrum auctions that are happening. You’re gonna be getting extremely high speed wireless at a fraction of the cost, because the infrastructure cost of wireless broadband is certainly less than that of fiber optics. And they all need antennas that are adaptive, dynamic, and then we’ll have the technology in order to capture that market based on what we did for the television. So we don’t see this ending just at television antennas. Antennas are really dumb, I mean, they can’t tell if it’s radio, or television or data that they’re receiving, we just have to get the geometries correct for the right frequencies. So, and this, I’m just stalling our virtues here about our some of the antenna mass. And this is my favorite graph here, no lawyers in the room here, are there? So, alright, that’s enough there, but, so, if you have any questions I’d be happy to… alright.
Male: I wonder kind of competitive pressure you’re getting from Signal Delivery Substitute, the Charters?
Richard: Yeah, I love Charter, I mean they just such a great, they helped me so much, if they hadn’t abuse their customers, I probably wouldn’t be growing as fast as I would. And I really hope they stay the course. I send Neil Smith a fruit basket every year when I hear their earnings, you know, so it’s great. Yeah, the, I can’t believe how you can really abuse your customers day in and day out and still stay in business. I mean, we go the extra mile, we have, you know, we have a lot, that’s one thing we won’t outsource our customer service. We take that very seriously, we have lifetime warranty on our products, we have no questions asked, money back guarantee from who buy from our website. And since I’m just a small organization, I can’t afford an ad campaign, a national ad campaign. So we have to rely on our customers to be sort of sales people. So, you know, really, you know, against the biggest competitor really is the misinformation out there and the ignorance. Most people aren’t aware that you can get high definition television for free over the air. Even educated, my, you know, my attorney, my CPA, my bankers, they all look at me like I was a mental patient when I brought, you know, when I brought these ideas to them. So it’s gonna take years probably for, you know, this awareness to grow, and something worth watching on television.
Male2: Just addition, I’m a homeowner, I wanna get an antenna like this, it’s got to be put in the attic, I can’t do it myself, so I searched around and it looked like I had to get an electrician or something like that to come to do the wiring. Do you have, I mean like, I do, you sell your products in the internet and I was trying to figure out how do I connect it?
Richard: Well we sell our products now, I mean, it used to be we sold, our name’s kinda misleading, because 80 percent of our sales is not direct. It’s actually through installers and retailers now. We do have a network of installers, I mean this is, it isn’t rocket science, I would say over half of our customers do self install, it’s just regular coax cable. But there is a, we do have a directory, should be either on our website or one of our affiliates. It has a directory of local handy man, and a lot of times, since the satellite install businesses has gotten flatter declining, those guys are actually getting in to the antenna business. So any direct TV or dish network installer can run coax cable, it’s the same cable that you would use for satellite. It’s actually a lot easier for them, so.
Male3: I have one of this 35-40 year old antennas on the roof of my house that gets a very nice digital signal now. Why should I use one of your antenna?
Richard: If you are getting a digital signal now and it’s reliable and consistent, you don’t need me. We sell antennas to folks that have already failed with another type of antenna or don’t have one to begin with. With digital and high definition over the year, it’s either perfect or a blank screen. So if you’re getting it with a coat hanger or rabbit ears, I’m not needed. But your experiences generally not representative of the larger viewing area, and so there’s a significant percentage of people who actually have bought, or using a Legacy antenna and their just not consistently reliable. Another advantage is, if you’re on a fringe area antennas tend to have higher gain and maybe you might get additional range and if you’re in the borderline of another market you might have potential of getting that.
Male4: On the question of counting, I suspect you less by market, what station are built?
Richard: Yeah, I really, we have a website called antennapoint.com. If you type in your address, it will install the digital transmitters, the distances from your house and the aiming vectors in a map of where they are.
Male5: Yeah, talking about these points, if you are in the center of the city, you have to have antennas for different stations, different towers, because they are partially pointing in different directions. Your antenna is wide angled, but, still cannot capture all of it.
Richard: Yah, we have, it’s tough, I mean, if you’re living in the shadow of the transmitting towers and they’re, I won’t get in all the antenna math, I mean the actual antennas have a very poor batting average. They’re very prone to interference, we come up with some, some designs that is sort of a nice high breeds, they have fairly wide aiming characteristics of the front and then a little bit off the rear lobe. So, we found with a combination of attenuator and just trial and error for people who have antennas in transmitting towers and different directions, you can usually find that sweet spot, where, you know, even off a back or side lobe, you should be able to get it. But a lot of times people think that their problem is weak signal, and we have more problems with people that are living 5 miles from the transmitting towers than people that are 50 miles, because of the problems. You’ve got a bunch of a one megawatt stations in south St. Louis and south county, and the signals are bouncing off water towers, trucks and things, sometimes and attenuator or something can actually drop those reflections down and be more…
Male6: What’s the average household pay from one of these?
Richard: What’s the average household…?
Male6: Average household. What is the average cost of one of these?
Richard: Oh, our antennas sell for between 39 dollars and a hundred and 49 dollars.
Male7: Richard, with all this growth how are you accommodating all the customer service, the volume that’s been growing.
Richard: Yeah, we just bought a new phone system and we’ve got 12 incoming lines and we happen to be in a space that have empty continuous offices. So we’ve been kind of morphing in to different rooms and now we got 8 people on customer service and Craiglist is a wonderful thing, you know, so, we’ve been finding there’s lots of, we have actually good luck with this area has a lot of retired engineers. And they actually are really excited to help out and so we get a great employee and in a little bit of a discount. And so we’re working with some, some older, older folks. And then also we’ve been finding our offices near the ledgens and there’s a number of very intelligent women on mommy track. You know, women with business degrees and MBA’s to, we can teach them the antennas that they have the intelligence and the presence to really do a good job with customer service and we offer them flexibility, you know, to be with their kids. I don’t wanna have a bunch of, you know, 6 or 7 dollar hour workers though in our office, it’s just, you know, we wanna make sure that. I always wondered why businesses interface with the customers is usually the lowest paid employees. And, you know, when you rely on your customers to be your surrogate sales force, you know, we’ve, that’s one area we’ve taken very seriously.
Female1: There’s a conversion delay in June 12, does that help you?
Richard: Yeah, I’m excited about that, it’s like delaying Christmas four more months for us, so, yeah, god bless them. Definitely create confusion in the minds of people, but it’s, you know, they’ll be additional news, news stories and most Americans are really unprepared, they may have their converter box on their new TV, but, you know, a lot of times the batting average with your Legacy antennas, the rabbit ears or what they make, you know, or what they have laying around, those tend not to work as well. So that at least help meter out the demand instead of having it all come in one week, you know, we can, we can spread that demand that over a few more months, so.
Male8: Will any of the premium content provider will discover your HBO, your Gamesport over the air there?
Richard: There’s a lot of talks, NBC is gonna launch a new sports channel, I don’t know, NBC Universal, they’re about to launch a new multi cast, and you know, ABC is owned by Disney, and they have the ESPN and there’s talk of refurbishing some of their content. Viacom owns CBS, and they’ve Comedy Central and Showtime. So you have all these libraries of contents, they’re just trying to wrap your minds around how to slice and dice. So it’s gonna be a mixture of national content. Probably, that first repurpose from some the premium cable sources and then a mixture of local narrowcasting. And a lot of markets, you know, they’ll be a program, you know, left handed cab drivers from Des Moines or something, and that will be very well received. And one of the highest rated shows in Miami is a broadcasting krill. The Asian community just goes nuts for it, they have, you know, 90 percent penetration to that market, so. You know, the technology allows up to 100 multicast per channel, you know, so I mean we’ve probably wont get to that, but, theoretically channel 5 could have a hundred channel 5s. I mean, likely it would probably never go more than 10 or 12 due to some compression issues with that, but, you know, we could theoretically have, you know 50, 60, 70 channels in St. Louis and, and for free. I’m sorry.
Male9: Can you say that you’re more about the demographic location of this 15 percent using over the air? Because I’ve not know a single person who does not get their television from cable or satellite.
Richard: Yeah, it’s mixture, you think all be just, you know, Hispanic or low income, but it’s, you know, we actually have lot of professionals, believe it or not. You know, that, you know, a lot of successful people, the reason why they’re successful is they’re not sitting around the house watching TV. So, it’s such a, no, it’s, it’s actually, it’s a growing group. So it’s a mixture of, you know, low income and none English speaking, but the fastest growing part is actually well hill professionals.
Male10: It’s an interesting point, I’m glad you brought it up coz I do listen to the radio primarily and one of the favorite stations for me is down at SIU Edwardsville, the JS station, and it’s very difficult to pick up sometimes. And so I was wondering how your antennas, you touch on the radio side a little bit in your presentation, how would one of this worth for me to pick up?
Richard: Well these particular geometries are not tuned for FM. You know, FM is from 88 to 108 megahertz, and we start going down in frequency, we get really big elements. And we’ve been getting a lot of calls and especially huge demands when we go to trade shows. People are screaming for a reliable FM antenna, and it’s very difficult, because the laws of physics dictate size. And it’s, you know, we’re actually working on, we hope to have one out in about 9 months, but the problem is getting it into a form factor. Again that would be spouse friendly, and, you know, we’re not gonna just sell, you know, a wire in a box and call it a FM antenna, like some of this things in the market now. I mean, this actually has got to be performing. And this new HD radio offerings, where they’re starting to multicast multiple channels, just like the television broadcasters are again driving demand for trustier radio antennas. The problem now isn’t really marketing, it’s the physics challenge, because ideally an element for FM radio, the optimal element is about 10 feet wide. So we think we have, we have a prototype, where we think we can have a loop that’s gonna measure maybe about 26 inches by about 19 inches. But, you know, it’s probably not gonna sit on your, on top of your, your bookshelf, but… but one of our engineers actually worked for General Motors and designed FM antennas, and they would actually used the body of the car as the radiator. Because again the size, or they embed it in the film within the windshields and loops, you might see in some of your cars, you might have this very faint looking wire that use transparent conductive film within wind shields. So, you know, it’s, you know, we’re working on trying to figure out some work arounds and, but, it is, it’s gonna be a challenge to getting that in an aesthetic package.
Male11: Last question, then I’m gonna ask Richard to stay afterwards for people with questions. One more question for Richard.
Male12: Congratulations, it’s a great success, comment to another question, if you’re not doing this already, you might want to think about going to Charter’s business office, so people returning to their central office…
Richard: Well actually, one thing about doing an antenna give away in front of Charter, if I wouldn’t get arrested, or this is a disconnect order.
Male13: My question is the following, in terms of all of these subsidy disputes, people getting discounted converter boxes, this are opportunities to you guys to utilize that coupon less you say…
Richard: Actually, I’m glad you ask that question, there is pending legislation, Kathy, there’s a senator…
Kathy: Bernard Sanders from Vermont.
Richard: Bernard Sanders from Vermont has entered his legislation proposing a coupon for to subsidize television antennas, but as it is now, current coupon system will not apply to anything other than the converter box. So we need to send him a fruit basket as well. Thank you.
Male11: Okay, come up afterwards and ask questions coz obviously…