The big picture

Keep it lean

Wang has taken an aggressive approach to the LCD TV wars. To
compete with its major rivals, VIZIO has to watch its cash flow
very carefully.

“The money issue, you have to manage it with care,” he says. “Every
single dime counts.”

That may be hard to believe coming from the CEO of a $2 billion
company, but it’s the strategy he’s used from day one. One way
Wang keeps costs low is by keeping the company’s structure as
lean as possible. The company employs less than 100 people in the
U.S., and most of them provide customer support at the company’s
Irvine headquarters. There are no corporate jets or padded executive salaries at VIZIO.

The company maintains overhead costs at less than 1 percent of
its sales. At the largest consumer electronics companies, overhead
can be 10 percent of sales.

The frugality runs all the way through the company. Wang
makes sure his entire team knows how important cash flow is to
the business by showing them the effect even a small change can
have on the bottom line.

“For example, we watch our inventory closely,” he says. “We
watch our receivables closely, and we treat each dime — everybody on our team treats each dime — like it’s our money. You have
to handle those resources we have with extreme care.”

Another way Wang gets employees on board with his lean operations is showing them what happens to the money that is saved. By
investing that money in the company’s marketing and branding
efforts, Wang increases consumer awareness of VIZIO.

“At the end of the day, it’s about brand equity,” he says. “We value
our brand equity strongly, so if we make any money, we want to put
it back into the brand.”

Companies like Sony, Samsung and Sharp have the advantage of
decades of name recognition in their favor. That’s a tough hurdle
for a six-year-old company like VIZIO to overcome.

“The only way for us to establish that — compared to the giant
companies with $100 billion to $200 billion budgets — is we just
have to save every single dime and penny we make and put it back
into branding,” he says.

In the company’s early days, Wang limited advertising costs to
less than 1 percent of VIZIO’s total sales — just like he did with
overhead costs.

However, as part of its push to raise brand awareness, VIZIO has
increased its advertising and marketing budget. The biggest sign
that the company was ready to compete with the TV goliaths was
signing pro football star LaDainian Tomlinson to an endorsement
deal. The resulting advertising campaign helped raise its profile
among football fans — one of the market’s largest target demographics.

After becoming the top LCD TV seller for North America in the
second quarter of 2007, VIZIO held onto the top spot in the third
quarter but fell to third place in market share for the fourth quarter.

Still, the company’s six-month run established the company as a
force to be reckoned with in the LCD TV market, and Wang is
determined to prove his company is here for the long run.

“Business is not just about having a dream and chasing after a
dream,” he says. “It’s also about how to manage resources, how to
build a team, how to build enterprises, how you weather the storm
and how you go through the tough times.” <<

HOW TO REACH: VIZIO Inc., (949) 428-2525 or www.vizio.com