Dealerscope 2018 Hall of Fame Inductee: John Shalam
Few brands in the consumer technology industry are more synonymous with car audio and car electronics than VOXX International. Founded as Audiovox Corporation in 1965, the brand has seen its portfolio evolve from simple car radios and 4- and 8-track players to car security and now autonomous driving technology.
What’s ironic about VOXX, though, is that, for all of the good deals, acquisitions, and other moves founder John Shalam—a 2018 Dealerscope Hall of Fame inductee—has made in the last 60 years, it’s one deal that went sour before he even formed Audiovox that ultimately led to his starting the company.
“It’s a long story,” Shalam said, laughing when asked about the bad break. Boiled down, though, it involved Shalam—who at the time was importing car radios from an overseas factory—having to unload a few thousand radios after a customer reneged on a deal. Shalam was ultimately able to find enough interested buyers to take the rest of his inventory, but in doing so realized that he might have a real business opportunity on his hands.
“A light bulb went off,” he said.
The Egyptian emigrant and Wharton School graduate formed Audiovox and continued to ride a technological wave of change in car electronics, managing to turn a near financial disaster into a successful business worth more than $770 million in 2017.
When reflecting on his career and business, Shalam recalled two major instances as being the biggest milestones. The first was forming, and then subsequently selling, a successfully built car telephone business. Around the time Motorola introduced the first cellphone, Shalam was looking to branch into the telephone market with the first car phone.
“We wanted to combine the two greatest loves of American men,” he said. “Cars and communication.”
A little more than a decade later, Shalam negotiated what he called one of the most important contracts of his life to that point, agreeing to sell the cellphone unit to UTStarcom, Inc., a California-based company, for $90 million in cash.
The second major milestone Shalam recalled was bringing VOXX public in 1987.
“Up until then, we were always struggling desperately to find capital to finance the import of radios and other products. You have to remember that in those days, we didn’t have the financing tools like you see today with crowdfunding or just raising money on the Internet—that didn’t exist,” he said. “This gave me an opportunity to secure a loan, make the necessary investments, and start developing and growing.”
The Role of Relationships
It wasn’t just capital that helped Shalam develop VOXX into an international powerhouse in the consumer technology space. He also surrounded himself with talented executives both internally and on an industry-wide scale.
“I had the very good fortune to associate myself with some very talented and capable individuals who I asked to join the company in the early stages,” Shalam said. “Specifically, you have people like Philip Christopher, who ran the whole cellphone operation until we sold it; and Pat Lavelle, who’s been with me for a number of years and is the President and CEO of the company. These relationships, and so many others along the way, really opened a lot of good opportunities, and they’ve given me some great support in helping to grow the company.”
Shalam also offered a very large hat tip to the Consumer Technology Association, of which he’s been a very active member. He currently serves as the chair of the association’s Investment Committee, he’s the chairman emeritus of CTA’s Charitable Foundation, and he’s on CTA’s Board of Industry Leaders. In the past, Shalam helped get CTA involved in the wireless industry, establishing the association’s Wireless Communications Division in 2001. Other CTA honors include the association’s Digital Patriot Award in 2014, and in 2009 he was inducted into CTA’s Hall of Fame.
Aside from being an active member of CTA, Shalam acknowledged that he has developed countless personal and professional relationships through his involvement with the association.
“My relationship with the Consumer Technology Association, which I joined about 20 years ago, has allowed me to meet many other executives in the industry, and to network with a lot of people whom otherwise I would have not spoken to,” he said. “And many of the acquisitions that our company has successfully completed were the results of relationships that I’ve developed at CTA. The beginning for us was rough, the car radios, securing the financing—the next step was the cellphone business, selling that off and using those assets to make other subsequent acquisitions and diversify the company. Many of these steps happened and were possible because of relationships that were developed at CTA.”
Robots and Retail
Looking forward, Shalam said there’s never been a period in time as exciting as right now in the consumer technology space. “Things are happening so fast these days,” he said.
“I think we’re going to see many, many more changes coming in the next few years that you can’t even imagine or visualize at this point. With the huge benefits of artificial intelligence and the collection of massive data, the big developments are going to be enormous and very powerful,” Shalam said. “Our company is well positioned to take advantage of these developments, and we’re trying to develop strategies to benefit and to work in these areas.”
One area of tech that Shalam is excited about is robotics, and particularly the role robots will play in manufacturing. Though many see robots as being job killers for many industries, and especially for manufacturing, Shalam said that he believes the opposite to be true.
“Jobs are not going to disappear,” he said. “This is like the industrial revolution all over again. Jobs are going to require more qualifications. People are going to have to have better backgrounds, better training, better education, better knowledge of the digital world, computers, software, engineering.”
As for retail, Shalam’s message was a simple one: Differentiate yourself and modernize your services.
“Modern, young consumers want information instantly, everything is available online, a tremendous amount of knowledge now is provided online. And I think all of these things are going to dramatically change the way that we do business and the way we do things,” he said. “It’s not always a matter of just price, price, price. I think a lot of consumers are also looking for selection of product, the quality of the merchandise that’s being offered, the services being offered, and the reliability of returning product. For smaller retailers to survive in that kind of environment, they have to invest in these types of programs.”