Supersecuring Supercars for SMS

The guy on the right in the picture above is a legend in the auto business. His name is Steve Saleen. He's a former Formula race car driver and the founder of Saleen, Inc., which manufactures specialty vehicles including the Saleen S7 and tricked-out modified Mustangs.

Mr. Saleen stopped by our booth at SEMA to say hello because we had just finalized an agreement to supply Guidepoint as the stolen vehicle recovery solution for two new ultra-high performance vehicles built by his new company, SMS Supercars.

SMS will initially offer Guidepoint as a security option on its new SMS Challenger vehicles: the fully certified and street legal SMS 570™ Challenger and SMS 570X™ Challenger, which are based on the 2009 Challenger R/T platform and feature an SMS Supercharged 5.7L Hemi with power ratings from 500 to 700 horsepower. Both models are fully equipped with a complement of SMS ultra-high performance components, including drive train, suspension, aerodynamics, tires, wheels and interiors.

Rand wasn't in Vegas, but had this to say: “The ultra-high performance vehicles built by SMS deserve an ultra-high performance security solution. Guidepoint integrates the most advanced GPS and wireless technology to protect vehicles from being moved by anyone other than their rightful owners and, if necessary, to recover the vehicle quickly before any damage can be done. We’re pleased to work with Steve Saleen and the entire SMS team to offer their customers the peace of mind that comes with Guidepoint.”

One-touch, hands-free Guidepoint

We're out at the SEMA Show in Las Vegas this week, showing off our products including a new prototype we've been working on with a company called Brandmotion. It's a bluetooth unit and an excellent one at that. What makes it different though, is that it's directly tied to Guidepoint's 24/7/365 response centers and that allows us to provide a range of services to the driver with one-touch, hands-free connectivity to Guidepoint.

I know. One-touch, hands-free sounds like an oxymoron. The notion here, though, is that more and more of our customers are using our safety and convenience services while they're driving -- and talking on the cell phone while the car is in motion is becoming increasingly dangerous (and, in a growing number of cities and states, illegal). Take a quick click on the video for a demo. Read our news release here.

One of our new motorcycle dealership customers made this nifty commercial, which he was airing in his local market to promote Guidepoint for Motorcycles. Our first full season selling Guidepoint for bikes was pretty good. Despite the tough economy, we managed to sign up several hundred dealers and the product got a good reception in the marketplace. We're hard at work on making our motorcycle unit "new and improved" for next spring.

We learned lots of lessons about the motorcycle market, confirming our decision to partner with experts in that channel and setting us up for next season. We're "car guys" who've spent a lot of years working with new and used car dealers, so it was crucial for us to find a channel partner who really understood (and had relationships) with the powersports/motorcylce channel.

No credit? No problem.

All of us at Guidepoint have always been somewhat contrarian. We tend to go against the grain because opportunities exist in spots where -- and when -- others aren't looking.

So, with the credit markets frozen and the number of car loans getting done dwindling every day, we've hired a guy to go out and build our business among finance companies. We just added Werner Scherz as a sales director to build our business among auto finance companies, particularly in the subprime and nonprime finance channels.

Even with money getting tight, there are still loans getting done, but lenders and dealers alike are looking for value-added services that can help them increase profits. And over the past two years, we've been developing a comprehensive range of services to help finance companies increase collections efficiency, reduce vehicle repossession costs, and enhance their relationships with dealers.

Werner's job is to go out and tell lenders about our services. He joins Guidepoint from Credit Acceptance Corporation, a Southfield, Mich.-based publicly traded sub-prime auto finance company. Previously, he spent a decade at Enterprise Fleet Services, a division of Enterprise Rent-A-Car. He brings a variety of experiences in sales, product development and remarketing to his new post.

Here's Rand's quote on Werner's addition to the Company: “Given the current turbulence in the financial sector and the limited access to capital, every company needs to be looking at ways to most efficiently and profitably deploy its capital. Guidepoint offers a service-oriented program that is proven to increase collection returns, reduce costs and strengthen the relationships between lenders and their dealers.”

Finding RVs, Finding God

Guidepoint got involved with an interesting promotional and branding opportunity that kicked off this morning. We're partnering with publisher Zondervan, which is sponsoring a five-month, 90-city tour to handwrite a new Bible, one verse at a time. We're providing the online tracking capability for people who want to find out where the Bible RV is traveling at any given time. You can check out the Bible Across America website here. We know that we can't help people find God, but we can help them find the Bible RV.

This isn't the only tracking unit we've installed in an RV lately. Last month, we outfitted a couple of RVs in California that tend to a different calling: they are mobil methadone clinics. They have a full range of services including stolen vehicle recovery, call center services and emergency dispatch. The group we're working with had been using another company, but they switched because they liked that we could provide more of a full-service approach instead of just tracking on a computer screen. As we like to say at Guidepoint: "We're not a technology company. We're a service company."

Guidepoint for Motorcycles

Guidepoint launched a newly designed tracking unit for motorcycles. It's our new box, which features an internal antenna and advanced GPS chipset for optimal performance.

Bikes are a good market because thieves love them. According to the National Insurance Crime Bureau (NICB), motorcycle thefts increased 135% from 2001 to 2005. A motorcycle is stolen every 7.5 minutes, and as soaring gas prices force more people to explore two-wheeled modes of transportation, a motorcycle antitheft device is becoming increasingly important.

Rand, our CEO, had this to say: "We've worked hard to make Guidepoint for motorcycles different from anything on the market. Other companies that sell GPS tracking systems deliver their service through the Web, but Guidepoint customers receive help from the Guidepoint owned and operated Response Center whose employees are specifically trained to handle theft and roadside emergencies. The system's features are unmatched, it's easy to install, and we have an impressive recovery rate, so it provides peace of mind for riders whose love of the open road may take them a little off the map."

The NICB indicates about 25 percent to 30 percent of stolen motorcycles are recovered, while the recovery rate for cars and trucks is 65 percent to 70 percent. However, Guidepoint's vehicle recovery rate is over 99 percent, with most vehicles recovered within two hours.

We're working with a partner on Guidepoint for Motorcycles: Guidepoint Powersports, LLC, which has already signed up more than 100 powersports dealerships nationwide. For information and dealer inquiries, contact Guidepoint Powersports at (916) 458-5433 or visit www.guidepointmc.com

Meatloaf and Guidepoint

We were given a unique award the other day from one of our investors, a private equity firm called Plymouth Management Company. PMC named us their first-ever “Coup de Ville” award winner, which represents their best- performing portfolio company over the past year based on the following attributes:

1. Exceptional leadership by the management team.
2. Exceptional performance to the business plan, including revenue growth, profitability, and positive cash flow.
3. Exceptional increase in shareholder value.
4. Exceptional performance by supporting roles such as the Board, professional advisors, and banking partners.

Here's what our CEO, Rand Mueller, had to say: “It’s an honor to be recognized for our business performance in what’s been a very chaotic market. We’ve been able to overcome many challenges in the past few years – from the sluggish new-car business to the rapidly changing telecommunication landscape – by sticking to our model, which is based on delivering unique, useful and cost-competitive services. Congratulations are due to our employees, customers, suppliers and financial partners – who all have contributed to Guidepoint's success."

As background, the “Coupe deVille Award” was inspired by the words of rock star Meat Loaf in his famous ballad “Two out of Three Ain’t Bad”, where he gave the following advice to listeners (and venture capitalists):

You’ll never find your gold on a sandy beach
You’ll never drill for oil on a city street
I know you’re looking for a ruby in a mountain of rocks
But there ain’t no Coupe deVille hiding at the bottom of a Cracker Jack box

PMC CEO Mark Horne commented: “In reviewing numerous business plans each year, PMC certainly sees its share of empty Cracker Jack boxes, but quite often we do find a Coupe deVille. Guidepoint certainly represents what we look for when investing for our fund, and has delivered on its potential. We are very proud of Rand and his team.”

New Tech Guy

We recently hired a guy named James Woody -- or just plain ole' Woody as everyone calls him. Woody is our new lead Technical Support Specialist at Guidepoint, which means he provides the highest level of tech support and can assist anyone with anything related to installing a Guidepoint. He's been a 12-volt guy for about 10 years, having gotten his start as an installer for Circuit City. He's MECP Certified and, on top of it all, he speaks plain English rather than techno-babble. That's important in our company, where one of our mantras is "We're a service company, not a tech company."

He's already paying some great dividends: He has taken our clunky, 8-page installation manual and slimmed it down to an elegant 2-sided install guide with pictures, charts and schematics. He's also working on streaming video versions of the installation materials and training our CSRs to better handle first- and second-level tech issues.

Of course, Woody has to share some of the credit for simplifying things with the product development team. One of the things that makes our unit appealing to a dealership is the fact that it is simple to install and that there is very little OEM customization that needs to be done, unlike, say, a remote starter. So a dealership can pitch Guidepoint on virtually any make or model and not have to worry about installation issues.

Of course, if there is an installation issue, the solution is simple. Call Woody, who sums up his philosophy this way: "I believe in getting the job done right, the first time, and taking care of our customers."

$700 million gorilla?

Another company in our industry that has tons of potential but little in the way of discernible results got sold for a huge amount yesterday. Hughes Telematics got bought by a public company called Polaris in a deal that values the combined companies at $700 million. Here's the thing: Polaris didn't have any business until doing this deal. They were a so-called "blank cheque" company -- they went public with the promise to build a company and are now using the proceeds of the offering and the stock to buy Hughes. Here's a good story on Forbes website that explains the transaction.

Don't get me wrong, Hughes has some business from the Networkcar business, and has indicated that it has contracts with Chrysler and Mercedes-Benz. A dig into its SEC filings shows them estimating $43 million in revenues this year and doubling up to $86 million in 2009. They are forecasting about 1.8 million installed units in Chrysler and Benz vehicles next year. Here's the real thing: They don't expect to be cash-flow positive until mid-2010 when sales have reached an estimate $250-300 million. That's a quarter-billion dollars before they generate positive cash from operations. Yikes.

Only time will tell if a $700 million valuation is justified. The more relevant question is, "What does this mean to Guidepoint?" Today, not much. We have built our business as a flexible enterprise that sells into multiple channels. The dealer business, which is where we started in 2002, is absolutely an important part of the mix today, but it's not the ONLY part like it was a few years ago. We've expanded into new channels like powersports and fleet, and are working on initiatives to conquer other channels in the coming year. More importantly, we need to keep working on the "little things" like customer service, making dealers happy and creating profit opportunities for everyone in the chain to ensure that some $700 million gorilla doesn't come and squash us in the future.

Expediting Guidepoint

Last week, we hosted our annual expediter conference in Fort Worth with 10 of our distributors from around the country. We spent a couple of days talking about the business, introducing new programs, conducting sales training and unveiling some new POP. The other cool thing that we announced is a new incentive program that should help our expediters drive their sales to car dealers even further. And, of course, we had a great steak at Ruth's Chris on Friday night. Geoff Dixon, our vice president of sales, put together a great program.

Geoff also did something really smart during the program: He stopped talking. Not that he's a gabber or anything, but Geoff (and the rest of us) got out of the way and let the expediters talk among themselves about "what works" in the field. Our veteran expediters shared how they pitch the product to dealers, incentivize F&I people and handle customer issues successfully. They also shared how they use Guidepoint as a unique product that they can open a dealer with, and then expand into other 12-volt and custom accessory products. My personal favorite part of the conference, though, was hearing the "expediter horror stories" about accidentally deployed airbags, screws through the roof of expensive import cars and sunroofs installed on the wrong vehicles. That is why these guys all carry expensive insurance policies.

On the whole, the conference and the way Geoff set it up was a great reminder to all of us that we need to sit back and listen sometimes, rather than feel the need to lead the discussion.

Special thanks to our boys from Boston, Jeff Fuller and Frank Salkovitz of Micorp, and our guy in Northern California, Manny Moncada of Autohaus, for sharing their successes -- and occasional failures -- with the group. Micorp and Autohaus have been selling Guidepoint since day one, and they've built some great relationships and some great brand equity for us. Am already looking forward to next year.

New sales veep, new accountabilities

We recently announced something that's been in place for about 3-4 months. Actually, I should say "someone" -- Rich Zeichner. (That's pronounced "Zike-ner" for those of you who are interested). Anyway, Rich is a senior sales guy who's come onboard to help us take the automotive dealer channel to the next level. He's a former Ford and Visteon sales guy, and he worked with our CEO Rand at Code-Alarm back in the day. Here's a link to the press release we put out this week.

In line with the addition of Rich, we've continued to re-squiggle the org chart. Geoff Dixon is now heading up marketing and member relations, which was one of my accountabilities, and I'm now going to be spending time developing a specialty channel, spending more time on PR and tending to one of our largest B2B customers.

Wrapping NADA

The NADA show is over and it was a pretty worthwhile endeavor, save for the last day when traffic to the booth slowed to a crawl. The Moscone Center was not an ideal place for the show because it was held in three separate buildings and we were no where near the car companies, so that had an impact on the number of dealer principals that wandered by our booth on their way to see Toyota, Ford, GM and others. Still, we had a good number of dealers that wandered by, stopped to look at our booth and then said: "You sell GPS?"

I will say that most dealers now "get" the difference between GPS navigation and GPS stolen vehicle recovery. I can only think of one dealer who asked me, "where's the screen?" In fact, most asked the question: "How does your price compare to Lojack?" (The answer, of course, is: "Price is beside the point...let's talk about the important thing: Your dealer profit and your customers' vehicle security -- both will be better with Guidepoint than with Lojack.")

At any rate, we secured lots of interest from dealers and distributors in markets where we do business and many where we don't have a strong presence yet. Based on the response at the show, that situation will begin to change in the next few months.

Subprime...coming into its prime?

One of the things we're noticing out here at NADA is the rise in dealers interested in finding a unit that can help them with their subprime business...that is, cars sold to people with poor credit. There seems to be an increase in the subprime end of the business for car dealers right now, and one of the biggest catalysts seems to be the collapse of the subprime loans in the housing business. "A lot of middle and lower-middle class people have had their credit damaged by the subprime mortage mess," one dealer told me, "and those people still have to have a car to get to work."

The result is that some people who would have traditionally qualified for traditional loans are now falling into the subprime -- or "nonprime" as it's sometimes called -- category. They're buying used cars and paying higher interest rates, and the dealers are all looking for devices that can help them track and monitor the vehicle if there is a default. Of course, you can't just slap a GPS device in the car and start tracking your customers' whereabouts. Along with the privacy issues, there are also disclosure requirements (ie, you have to tell them it's in the car) and fair lending concerns (e.g., do you put a device on every car you sell or just the ones with reaaally bad credit). For the companies that can navigate those tricky obstacles, though, this will be an emerging opportunity.

It's all about the relationships

One of our best dealership customers stopped by the booth today, a gentleman by the name of Ernie Boch, Jr. He operates several dealerships in England, including Boch Toyota and Boch Honda. The latter was recently named the #1 volume Honda dealership in North America, a fact that we acknowledged with an ad in Automotive News.

I'd only met Ernie once before, at NADA in New Orleans a few years ago, and my meeting with him yesterday left me with the same impression: He's a good guy. He was very gracious about Guidepoint and very complimentary of our expediter in Massachusetts (Micorp) that provides product, installation and service to his Boch dealerships. Actually, he complimented Frank, who works for Micorp and "handles" all things related to Boch for Guidepoint. In my humble estimation, it's cool that a guy like Ernie Boch, who owns dealership and auto-related businesses valued at more than $1 billion, not only knows who Frank is, but that he makes it happen and that he's a good guy (he is!) That's the thing about car dealers -- unlike a lot of companies and industries, car dealers still "get" that business is about relationships, and that it's important to get to know the people you do business with. We're having many good reminders of that out here in San Francisco.

2008 NADA Show

Time to get blogging again. Guidepoint is exhibiting at the NADA Show, which is being held in San Francisco this year. We're at Booth #2649W in the Moscone West Hall.

Gathering string

There's a mention of Guidepoint in today's Detroit Free Press. It's related to the annual Michigan Growth Capital Symposium, held by the University of Michigan each year. We presented at the Symposium a few years back, and that's where we met Plymouth Venture Partners, an Ann Arbor firm that ended up investing in the Company. The PVP deal then introduced us to Mike O'Brien, a serial entrepreneur from Detroit who sits on our board and is involved in several other businesses including Saxon Motorcycles. Well, Mike has since introduced us to some of his business partners in the motorcycle and powersports channel, and we've adapted our technology for that market. This spring, we intend to roll out Guidepoint for Motorcycles (and ATVs, snowmobiles, etc.) with the help of the folks Mike introduced us to.

It's been a great lesson -- and reminder -- of how business often works for entrepreneurial companies. You go out and meet people and learn somethings, then play off those relationships and knowledge to build new relationships and knowledge and so on. It's not unlike what my editors in the newspaper business used to call "gathering string." For you younger folks, it's kind of like how you used to surf the Web before Google. You would find a link and then follow that another site, and so forth. Honestly, Google's ruthless efficiency killed the whole notion of surfing the Web and the serendipity that comes with it, but that's another topic.