Make your business scalable
Wang says the biggest challenge facing the leader of a high-growth
company is managing your resources — time, money and people.
When he started his first company, he didn’t know how to do that
effectively.
Wang’s first foray into the entrepreneurial world came when he
was 26 years old. He had been working in tech support, answering
customers’ calls about their computer monitors, and he began to
think he could build a better monitor than IBM. So he founded
MAG Innovision, and the company became an instant success.
“When I started, business was pretty easy — the computer market was booming, and we pretty much rode the wave,” he says.
“But then the flip side of the wave came, and I wasn’t prepared.
The reality caught up and the company I built wasn’t strong
enough to weather the storm.”
After growing to $600 million in sales and 400 employees in six
years, the market changed and MAG couldn’t adapt. Wang ended
up having to conduct massive layoffs and sold the business.
He learned several lessons from his first attempt at starting his
own business and applied each of them when he founded VIZIO.
First, Wang knew that he didn’t want to deal with the pain of layoffs and budget cuts ever again. So he developed a scalable business model to help VIZIO handle the fluctuations of a changing
market.
“Because our business model is pretty scalable, that gives us the
flexibility to go real fast or slow down our growth,” he says.
As part of the business model, Wang outsources several tasks to professional management companies. By hiring other companies
to handle warehousing, shipping or manufacturing, VIZIO can
focus on its core competencies — like designing flat-panel TVs —
while leaving the other things to people who are specialized in that
area. Although the company designs its products, the assembly is
contracted to companies in China, Taiwan and Mexico.
Deciding which tasks to outsource and which tasks to keep in-house can be tricky, but Wang has a simple solution.
“Try to match it by value,” he says. “If we can do it better than
they can or if we can do it cheaper than they can, that will determine what we’re going to do. Some things we don’t want to out-source at all because we don’t believe we should trust a professional management team to outsource product concepts. That’s
something we’ll absolutely do ourselves. But there are things like
warehousing or shipping — we’re nowhere close to the experts
that they have. So we use them to perform such tasks for us.”
By using a scalable business model, Wang has the ability to ship
10,000 pieces per month or 10,000 pieces per hour. A range like
that could wreak havoc on a company with its own shipping
department. He would have to devote most of his time to managing the shipping department, which would leave no time for product concepts or strategic planning.
“It’s hard to keep up,” he says. “That’s one of the major reasons
we’ve been growing so fast, is that we don’t have those obstacles.”
