Jacob Horwitz, Illuminology

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

All kinds of people in this industry are very aware that while there is lot of dodgy stuff, there is also lots of well made display technology available from Chinese manufacturers who have zero brand recognition outside of that country. Buy potential buyers don't tend to have the time or resources to make the big flights over the Pacific to visit China and directly source reliable manufacturing partners.

And they really - if they're smart - don't want to just order stuff, and then cross their fingers and toes hoping the stuff shows up, lines up with what was ordered, works, and then meets necessary certifications.

Jacob Horwitz saw an opportunity to create a new company that functions as something as a boutique digital signage distribution company that sources, curates and markets display and related technologies that its resellers can then take to market. Horwitz will be familiar to a lot of industry people for a pair of installation companies he started and ran the U.S. - IST and later Zutek. In both cases, he sold the companies, and he could have just retired ... but he didn't want to retire. Nor did his wife, because a Jacob with too much time on his hands would make her crazy.

So he started Illuminology with a longtime industry friend and business partner Stephen Gottlich, who for many years ran the digital file for Gable.

I caught up with Horwitz to talk about the origins and rationale for Illuminology, which is just spinning up but has some big plans.

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TRANSCRIPT

Jacob, it was nice speaking with you. You have started a company called Illuminology, which sounds like you started a cult, but I think that's not what it is. 

Jacob Horwitz: Not yet, no, We hope it will be at some point, a good following, but first off, Dave, thanks for having me. It's been nine years since you and I first chatted on a podcast. I don't know if you realize that. It was December of 2016, and we had just finished, I think maybe the nationwide rollout of Burger King, you and I had a chat about that, and it's hard to believe nine years have gone by. 

This was when you had IST? 

Jacob Horwitz: Installation Service Technologies was a nationwide installation and service company, that was sold in 2018 and then a year later, I restarted a company called Zootech, and I was approached by a customer who was looking to be entrepreneurial and that company is now owned by Karen Salmon. It's a woman-owned business mow, and her father was the founder of Powerpoint of Sale.

I took a couple of years off. I have a person that I have worked with for 30 years, my business partner, Stephen Gottlich. I think you've met Stephen, and he has been working with Gable Signs for the last 17 years and I think what Illuminology is now is a culmination of really two parallel journeys. Stephen took a traditional sign company 17 years ago down a path of innovation, and Gable went from a bending metal traditional sign company to a visual solutions company my background, which has been installation and service for the last 20 years, brings together two people who are a little bit older than when you and I first talked nine years ago. 

It was probably 60 pounds ago when I talked to you for the first time. I'm a little gray or a little wiser and a little bit older. So the two of us come from really parallel journeys in different areas of digital signage, and we wanted to create something a little different in the United States. We'd seen some business models and other parts of the world that seem to be working. So we wanted to create a marketplace that would expand digital signage to companies interested in expanding their scope of business. So we focus a lot on traditional sign companies other technology-type companies, and installation companies. They all have some type of footprint in the verticals with technology but they're not carrying digital signage. 

So we thought, how do we expand digital signage to reach a lot more people? And we've come up with this business model. 

So for people who are completely unfamiliar with it, how do you describe it in your elevator pitch?

Jacob Horwitz: The easiest way to describe it is to think of us as a traditional distributor of digital signage to authorized resellers. Much like a Blue Star, B&H, except that we're very boutique, and we're very focused, and we're very passionate. Stephen and I are not, we've been fortunate in business. I'm 65, Stephen is 70-ish, so we know we don't have a lot of time to build something that's going to take years and years, but we wanted to build something special. 

So you would be like, an Almo or those kinds of companies, but much more focused specifically on digital signage? 

Jacob Horwitz: … And being able to support them differently. So take a digital traditional sign company, next month, we'll be at the International Sign Show in Las Vegas, the USA, and a lot of those people are digital, but it's amazing how many fast signs, and banners to go, those types of places that are selling digital signage today and have no idea what digital is. They're very old and traditional. 

I think of it if you sold typewriters or telephones a couple of decades ago and you didn't evolve in the IP phones and computers, you're probably not in business anymore. So we're taking a lot of those types of sign companies. We have a course called Illuminology University. We take them through an 8 to 10-week course. These are live training classes and curricula we put together to train them about what is a sign in digital singage, what's LED, what's LCD, what is GOB versus COB, just really teaching them about the industry and they have a lot of reach in the verticals that traditional people selling digital signage today don't have.

The other thing that makes us unique. When you go to traditional companies like Blue Stars, you don't have everything available under one distributor. We have an experience center that's opening next week in Kansas City. It's a supermarket of visual solutions, so you'll be able to see not just LED or LCD, but you're also going to see light boxes, you're going to see different kiosks, you're going to see where AI comes into play with digital signage, you're going to have a good understanding in our experience center of the programmatic side of how things can be monetized with a digital retail network.

I think that because of the 30 years that Steven and I have been involved in technology and in the last twenty in digital signage, we can be much more of a boutique to help people with a wider range of solutions, not just a traditional 55-inch monitor, but LED posters, you had on your blog a few weeks ago that digital desk, which is part of our showroom, so I think it's about innovation. I think it's about a wider range of solutions, and it's hopefully in our last chapters of life, having a lot of fun with our partners. 

So I assume if I call or contact one of the larger distributors who do unified communications, do all kinds of different things, and I start asking them about it, I'm a POS company, I have a customer who's asking me about menu boards and things like that. I don't know where to start. 

If you talk to a larger distribution company, they have a sheet or a system that lists all the stuff they have and they can rattle off, here's what we have, what do you want, whereas you're saying because you're much more focused on this area and you have an experience center, people could come in and you can try to find something that's tailored to their needs as opposed to what we have. 

Jacob Horwitz: Yeah, I think that all those traditional distribution models are very good at taking orders and taking money. A couple of them even have some departments where they're trying to help you with that consultive part of the business but I think at the end of the day, from my installation side, conservatively, we installed well over 400,000 displays in every kind of vertical you could imagine when I owned IST. 

We did the new SoFi Stadium. We did all of their point of sale. Arlington Stadium, we did all of their digital assets when Daktronics had contracted us. And Stephen has done every kind of hardware installs you could think of when he was with Gable. So I think that being able to work with a company and be there to hold their hand too, we've already gotten on a plane and gone to sales calls with our partners. You're not going to get that from a traditional distributor. We work and do the RFPs with them. We work with them on pricing and quotes. So it's a little bit different than just trying to take an order so I think that's what makes us unique and the education and our school of hard knocks, you know, god knows, we've made an awful lot of mistakes in 20 years So I think we're gotten pretty good at what we do. 

So are you selling strictly third-party stuff, or are there products that fall under the Illuminology brand or a related brand? 

Jacob Horwitz: We've been going back and forth for a decade now to China. Stephen and I's first project together, was Simon Properties, 250 malls, and one of the largest media networks for digital out-of-home in the country, we designed the kiosk 10 years ago that they were still using and running in their malls, and that was a factory direct where we worked directly with the factories, built a kiosk, and were able to give Simon an amazing solution, especially where technology was 10 years ago. 

So through that experience and over the last decade, we've met absolutely the best factories in China. There are a lot of stereotypes of what a Chinese factory could look like, and until you go and you see the automation and the technology there, God knows you've done it. You've been all over the world. It's not what a lot of people think. So we work directly with factories. We are creating two brands. There are more later on in the year, we are white labeling or branding our product. There'll be a line of displays called LightScapes, and then there'll be a line of kiosks called EasyOSK. So these are part of our longer-term business plan to have a brand.

So you're not just saying, well, we bought these from some factories in Taiwan Korea Vietnam and China. We work very closely with the factories. We work very closely with people like AUO who are on the display side, and the panel side, and we will have some things that are unique within that brand. It will not just be the same product that everybody can buy. But because we're doing factory direct because we've got ten-year relationships with these factories, and they know Stephen and me well. We've been going except during COVID several times a year to China. I think that we're able to buy from them at incredibly good pricing and pass those savings on to our resellers.

So what if you had a Chinese manufacturer that's strong domestically in that country and has a lot of them trying to come to the U.S. or over to Europe and say, here we are, and not get anywhere, would you sell their product under their brand or would it have to fall under one of your brands?

Jacob Horwitz: No, we sell generic products as well. So for example, that desk that you talk about, I was in that factory last month. The person who owns that factory is a very small equity owner within Illuminology because we've known her for ten years and anything that comes from any factory out of China, she will go do that quality check before it ever hits the container to get over here. So she's a very instrumental part of our business over there, but we sell some of the stuff out of her factory as a generic product. It's not necessarily branded with LightScapes. It might be branded with Illuminology, but when you go look at the certification tags and serial numbers, it's still her company name on it, whereas LightScapes and EasyOSK are true white-labeled products that are going to be unique to us.

Does that get around any regulatory issues in terms of what can come over from China if it's coming through you? 

Jacob Horwitz: The regulations that are driving everybody in our industry crazy right now are the tariffs. But, to us, I think some of the big things that you don't see out of Chinese companies are the right approvals. We're very focused right now on our products being a UL or UL equivalent. There are five or six laboratories that are like MET. That is exactly like UL. It's UL-approved. We had a very large factory send us apart to test and they looked at it yesterday and we already rejected it because the power supply was not a UL-approved power supply. We said, we're not even going to test it. 

So I think that those are things that are not regulatory from the U.S., but they're important to us, from a safety side, especially when you're working with enterprise tier one customers, they, have to have the right certifications, but I think the only thing that's causing us headaches is not the regulatory side, but, trying to figure out the right pricing with tariffs and how we handle that.

Cause it's changing by the day. 

Jacob Horwitz: Every time I look up, I'm afraid to look at the TV to see if it's higher or whatnot, but all of our pricing that we post to our dealers today is a landed cost from Kansas City. So it's including if we had inbound shipping or we had tariffs, we don't want our resellers to have to worry about that and they know that this is the pricing and if the tariffs go away, then we can lower that price. But if it goes crazy, they need to be prepared. We're working closely with some factories right now in Taiwan, Korea, and others in Vietnam so that we have a backup solution because right now the lion's share is coming from China. 

If it's touched in Taiwan or touched in Vietnam, but with Chinese components, does that make a difference?

Jacob Horwitz: Yeah, we just had that problem. We had ordered some stuff that came in from Canada, and this was before the Canadian tariff of 25%. This was two-three weeks before that, and we got a bill for tariffs, and we were talking with the U.S. Customs and the experts at DHL and UPS, and it turns out, if you're buying something from, for example, the great area of Canada, where you're sitting at home, but the company we bought it from manufactured their part in China when they ship it to us and their commercial invoice to U.S. Customs asks the company in Canada, where the country of origin it was manufactured and even though I bought it from Canada, had no idea that the part I ordered was not manufactured in Canada, we got hit with that 20 percent tariff on that product, and that surprised us. We didn't think it through or understand and the hard part is even when you talk to the absolute top people at U.S. Customs at the borders that are doing this, they're not even sure hour by hour what the rules are. So it's been hard. 

We had another container come in and we had, I think, a $7k or $8k tariff. This is when it was 10%, but it landed in the U.S. before the tariff started and they still would not release it without us paying the tariff. Two days ago, we got that money back from U.S. customs. They realized they shouldn't have even charged it. It was before the date the tariff started. But unfortunately, by the time we released it, they held it hostage for a bit. So it's a hard situation, but we're going to work with other countries and I think that everybody's in the same boat, and I think in terms of pricing, our distribution model is much like the traditional guys. It's on a very low margin. So we have to have a lot of resellers that are looking to expand their business.

So I'm curious about markets like Vietnam and India, which I keep hearing about, having gotten into electronics and being alternatives to Korea, Taiwan, particularly China, is that industry, particularly on the display side, mature enough now to buy products from there? 

Jacob Horwitz: Since September, I've visited sixteen different countries across the world, I think on three or four continents and getting ready for the right factories and the right things and just enjoying travel at the same time, and the one thing that surprised me is how far behind the U.S. is compared to a lot of parts of the world and how much digital signage you see. Also, when you talk to these people what they're paying for digital signage throughout other parts of the world is far less money than the U.S. customers paying us companies for digital signage. The margins in Asia and Europe are much thinner than the traditional margins that resellers have been getting in the U.S. 

Our motto, and you see it across our website, is “The Best for Less”, and we have tried to find the best factories in the world and be able to give it at a price that is not greedy. That's a win for us, for our resellers, and most importantly for the companies that are trying to buy and put that digital signage into their business so they can inspire and tell a story to their customer. And I think that even in the smallest towns of Vietnam, you still see digital outdoor LEDs on the sides of buildings and you go into the shopping malls and it's far more digital than you see here. So that was interesting to me as I've got to travel the world in the last four months.

Is it a function of cost or awareness? 

Jacob Horwitz: I'm not sure, but I'm assuming first it's a function of cost because where they're working on margins that are so much less, it allows that to get into people's businesses, and when you're charging $1k for a 55-inch commercial grade LCD, 500 nit monitor, it's a barrier to entry. So we're trying to brand something and bring something to the market where we can be 20% less to the end user than a lot of the traditional things, and we think we've accomplished that. The tariffs hurt us a little bit, but they hurt everybody by and large.

So I think that's really why the U.S. is slower. I don't want to use the word greed. I own businesses, but people have tried to get margins that I don't think you can get anymore, and I think that you're going to have to find other ways to monetize your business through the installation side, through the content side, and I think that it's also helping companies. It's a big part of what we do. I think of Chris at Stratacash, he has a whole area where he helps monetize their solutions and it's helped, and we're looking at that closely. We're working with three or four companies right now where we can have our resellers work directly with them and educate their end users on how they can monetize the solution, through advertising in certain verticals. Not all verticals are conducive to digital out-of-home, but most are. 

So that's an important part of how we're going to help move products into places that normally maybe couldn't afford to put the right solutions in.

I assume that there are all kinds of people in North America, the U.S. in particular, who are aware that they can buy stuff via AliExpress or whatever. But they've heard enough to know, yes, you can pay substantially less, but you have to cross your fingers when it shows up. 

Is Illuminology positioned as a safe harbor way to do it? Like we're doing the sourcing, we've figured that part out so we could pass on those savings without all the worry.

Jacob Horwitz: Look to me, those sites are a lot like a box of chocolates. You never really know what you're going to get when that product shows up. As I said, even with the sample we got from somebody yesterday not being the right display, UL, and approvals, we're not going to be a website where you can buy whatever you want. It's going to be very focused on innovation. It's going to be the same factories. As I'm sure you've seen I get if I get one I get at least three emails every day from some Chinese factory trying to sell you whatever and everyone is a nickel cheaper than the other and I think that's just Pennywise and quality foolish. 

So we're not going to be that it's going to be the best for less, and if we can create this supermarket of visual solutions, and it's a great product and the pricing can hit the street to an end user, double-digit, less expensive, and we are distributing through companies that have reached where the traditional resellers aren't touching, then we think that will help expand digital signage across the U.S. 

So these would be reached to like the sign companies you mentioned, maybe the point of sale technology companies, those kinds of companies? 

Jacob Horwitz: I have a guy I talked to a couple of days ago who sells medical devices. Nothing to do with digital signage. He's out there every day selling blood pressure machines or whatever medical devices he's selling and in the last few days, I've probably talked three times to him now about the opportunity he has to do stuff in the medical world because he's already out there calling on places to put in screens and some LED posters. And, so I think it's all kinds of places that maybe haven't even thought about incorporating digital signage into their end-user business, and these people are now educating why being able to tell a story through digital is so much better than a static sign. 

So yeah, it's been enlightening to see all the different verticals you can all of a sudden make inroads that you never thought about.

Yeah. So many companies are just going down the same familiar path of chasing QSRs, chasing retail, and I've always advised people to look at those other kinds of companies that already have established trust with your target vertical who supply other things to them and partner with them.

Jacob Horwitz: Yeah, it's been interesting. When I was doing the installation side, we did a lot of QSR, McDonald's, Burger King, Sonic, Del Taco, that type of stuff, and a lot of them have seen a few of the first initial posts we've done and they're calling and asking more of what we can do and I'm excited just about window technology whether that be an LED, a double-sided LCD hanging in the window of a fast food restaurant is so much more effective than printing two breakfast sandwiches for $5 and shipping it out to the store, hoping the manager puts it in the window during the promotional time. Half the time, three weeks after the motions are over, they still have that digital thing in there saying breakfast sandwiches or the static poster thing, and then at 10:30 when breakfast is over, they're still talking about breakfast sandwiches instead of talking about Value meals or other desserts or other things they could be buying during dinner. So it makes nothing but sense to have those assets in there. 

But the people who are buying their outdoor digital menu board don't even offer that product. So we feel that a supermarket with a full set of solutions, in a C-store to be able to do a stretch screen and a gondola and still do their monitors over their register and doing their digital menu board and having things that inspire people to walk in from the pump into the C-store, we have that full range of product where a lot of people just don't have a full range of offerings to that. 

When you say a full range of products, is it purely display technology, or does your supermarket have other things? 

Jacob Horwitz: We do light boxes, which are just an aluminum extruded frame that hangs on a wall with backlit LED, but it's a fabric, you see them in every airport. So we do a lot of light boxes, and that's a very affordable and very effective solution. It's a static display, but it pops. 

We are doing music. We have partnered with CloudCover. CloudCover is owned by SiriusXM, I believe, and Pandora, because we think that it's part of the whole experience, it's touching all the senses of when you go into that business, we think music is a really important part of branding your business. So there are several out there that are there. We've hitched our ride there on the software side. Because we have to support the dealers, we have, we offer two software platforms, and it's because of relationship and stability and they're the best.

There's a saying, if you're the smartest guy in the room, you're in the wrong room and so we've partnered with people that make me where I am not even close to the smartest guy in the room. We love working with Navori. We think Jeffrey Weitzman is amazing. So we offer to our partners and we've worked aggressively to have a good distribution model in Navori to our partners and potential end users. So if I'm sitting in a room with Jeff Hastings, I'm not the smartest guy in the room anymore. So we offer BrightSign, and BrightAuthor, and the players we go with are either the Navori or the BrightSign players, and we offer that CMS. They're not. The cheapest CMS, you had a great interview with Alistair and what they're doing and I listened to you last night.

So there are a lot of options, but we have to support the dealer network. So to be able to have a dealer that wants to go off and do a different CMS, we support that. They can send us software and we'll test it to make sure, particularly if it's going to be SOC, that what they're using is going to run properly on that version of Android. So we'll support them that way or just before we order the product, we'll go into our lab and throw that on, but we can't support that dealer network on how to use the CMS. We have BrightAuthor and Novori, and we're good, and then we have two full-time people thatwho NOVA certified. So on the LED side, we're no, we have NOVA-certified experts, so we can help them with Novastar. So we can support that, but we can't support every CMS. So we encourage them, especially if they need a 4-a-month CMS, then I think that Alistair is a great solution, and there are a lot of those types of companies out there. But that won't be us. We'll have a couple of CMS, we'll have the music solution and we hope we can create a visual experience and a sensory experience that when they walk into an end user that's bought a product through one of our resellers, that product's inspiring consumers to spend more money.

You and Stephen are hands-on with this, but how many other people do you have working with you? 

Jacob Horwitz: Oh gosh, I've tapped into a lot of my old employees in a lot of years, so Stephen and I have known each other for 30 years. For us, it's more passionate at this age. It's certainly not about really the money.

This is because your wife said you need to do something. 

Jacob Horwitz: After years of being in the house and driving her crazy every 10 minutes, she made it clear I will either go find a job, or I'll have to support her next husband. So that had a little bit to do with it. But Stephen and I are wired the same way. It's about quality. It's about good solutions. It's never been about trying to make money on this. I think it's helping people. The people that I've brought in, I have a Project Manager who worked for me starting 15 years ago, and now she's ahead of our marketing, Becca, and she's been with me for a decade and a half.

The girl in my accounting department has been with me for over 15 years. I have a fragment in the house Legal who is my full-time in my old business and they've all been around at least 10 or 15 years. My CIO has been with me since 1999. So he was in college when he started. So we've got a good, like Stephen and I, that these are not newbies to this industry. One of my Project Managers started with me when we first talked nine years ago when she was a Senior Project Manager for Burger King. So, everybody that I've surrounded myself with so far, there's been at least a decade of hitting the shows, doing the installs, and that school of hard knocks.

So have you got 20 people, 40 people?

Jacob Horwitz: Right now, we're a team of maybe ten or eleven people. I have three people coming in next week for interviews after the experience center is open that are all industry veteran types and we're just getting started. The idea started in September. I went to Infocomm and then maybe I saw you and just started feeling the waters. We were going to launch in early January or February. We're a month old. The container of our showroom sat in Long Beach for six weeks before it got. It took longer to get from Long Beach to our offices than it did from China to Long Beach.

So we're just getting started. But we're going to stay in a boutique. We don't want to be all things to all people. 

Right, and they can find you online at Illuminology.com? 

Jacob Horwitz: Illuminology.com and there's an online brochure of the product and we thank you.

And Dave, I said this to you the other day, but I want to say it again. I need to thank you because, for everybody I've ever hired for the last decade, the first thing we have them do is go through your podcast and your blogs and learn about the industry, and what you do for us is so valuable and I mean that with all sincerity. 

Thank you. 

Jacob Horwitz: We hired a new sales guy and he started a month ago. He called me yesterday and said, Do you know this Dave Haynes guy? He didn't know, he did not know I had a podcast today. He goes, I am learning so much from him. And, I go, yeah, I'm chatting with him tomorrow. So thank you for what you do as well. 

Thank you. That's very kind. 

Jacob Horwitz: Very well deserved. So thank you for the opportunity to share our story and we look forward to working with the people in the industry, to help and expand digital signage into places that can be more like your Europe where it's everywhere.

All right. Thank you!