How I Did It: William Wang, CEO, Vizio
As told to Mark Lacter
William Wang knows about keeping things in perspective. As one of 96 survivors aboard a Singapore Airlines 747 that took off on the wrong runway in Taiwan, struck a construction site, and broke in two, Wang instantly realized that the difficulties of his various technology businesses weren't such a big deal--not when 83 passengers and crew members were killed that day in 2000. Wang shut down all his businesses after the crash, and in 2003 got into the flat-screen TV business by launching Vizio. His idea was to combine low prices (now around $1,499 at retail for a 50-inch plasma) with high quality and exceptional customer support, and to make this approach profitable through extremely lean operations. Wang, 43, started the company with $600,000, and this year Vizio will generate more than $2 billion in sales. Yet it still employs just 80 people, most of them handling tech support out of the company's Irvine, California, headquarters.
I was born and raised in Taiwan. I came to California with my parents when I was 14. It was a difficult adjustment because of language problems, cultural problems. I came to the U.S. without any knowledge of English. I originally wanted to be an architect, but being an architect doesn't pay that much, so I got into electrical engineering. I went to USC, graduated from the engineering school in 1986, and answered a newspaper ad from a Chinese company that sold computer monitors. I was in tech support, answering customers' calls. I worked there until 1990. After a while, I thought I could build a better computer monitor than the IBM standard. So I started a company called MAG Innovision, just like that. I was 26--fearless, young, and foolish. My boss gave me $150,000. I borrowed some money from my parents. I had some money myself, and I found another shareholder from Asia who gave me $150,000. I founded the company on $350,000.
Those were the good old days after the computer boom. We grew to $600 million in six years. We started with two or three people and got to about 400. The manufacturing was done overseas, very similar to what we now have. Everything just happened. I had no experience, but looking back, there were not a lot of problems because the market was growing so fast. Then the industry took a different turn. By 1998, our revenue was around $470 million. The computer business had gone from a technology-driven industry to a commodity industry. Operations-wise, we spent too much money and I didn't have the right people in place. We lost a lot of money because I didn't change. We sold the company to our manufacturer.
I started another computer monitor company called Princeton Graphic Systems. I started an R&D facility in Asia that worked on high-definition TVs. I tried doing custom video displays for slot machines, Internet-enabled high-definition TV sets, and a few other businesses, but none of them really worked out. I was still looking for the next big thing. It was probably the most difficult time in my life. Financially, it was a disaster. When everything was collapsing on me--all my businesses--I was in an airplane crash. It was November of 2000. I had finished meeting some of my creditors about my cash-flow problems and was coming back to Los Angeles.
The captain took the wrong runway. Instead of 5-L, he took 5-R. The runway was under construction. So we took off and half the plane was in the air, 180 miles per hour, and on its way to lifting off when it hit some of the construction equipment and the plane blew up. It was a 747 ready for a transpacific flight, so it was full of fuel. The plane came back down on the unfinished runway and it kept on going because of the speed at which it was traveling. I was in the front. Fortunately, it went straight forward and just skidded. It was just the front of the plane--the back was gone already. It was like a silent movie. I don't even remember any noise. I assume people were screaming. When the plane stopped moving, I just got out. I couldn't breathe anymore because of the fumes. I was running for air, I was running for an exit. Half the passengers died. I wasn't really injured physically--I did have carbon monoxide poisoning. I guess several things went through my mind when the plane blew up. One thing was my family. The second thing was that all my headaches were suddenly gone. I was still stuck with all these bad businesses, but I had a better attitude. I mean, at the end of the day, we're all going to die, right? So after the plane crash, it took a year or two to clean everything up.
In 2001, Gateway asked me to help them put together a TV plan. Gateway (NYSE:GTW) had been one of my customers since my days at MAG. I got to know Ted Waitt [Gateway's then chairman]. He was like a mentor to me. Ted wanted to sell additional products for his retail stores besides personal computers. We helped them put together the entire plan, starting with a $2,999, 42-inch plasma TV. Up until then, plasma TVs were just for rich people. They had stayed expensive because not many of them were sold. We helped them locate the key vendors and key manufacturers overseas, and marketed the TV under the Gateway brand. It was pretty successful, but when Gateway got out of the retail stores, it also got out of the TV business. It's pretty difficult to sell televisions without a retail force. People want to see the picture quality and everything else. So we decided to get into the business ourselves.
Vizio started off really small--just two employees and me. We started the company with $600,000. I borrowed some money from my parents, mortgaged my house, and had a couple of friends who helped me. Basically, friends and family. Later we got venture financing. And a couple of manufacturers have ownership. I'm still the majority holder of the company.
Our first retailer was Costco (NASDAQ:COST). We had pretty good success with them from my years selling computer monitors. Today the majority of our business still comes from them. After that is Sam's Club. We sell both plasma and LCD screens. I personally think plasma is better technology and picture quality, but LCD has better resolution and doesn't reflect light, so a lot of people like that. About 60 percent of our manufacturing is done in China, about 40 percent in Taiwan, but we're in the process of moving some manufacturing to Mexico. The biggest cost remains the components--the plasma module and LCD module. Prices are going down. But to give you an idea, the U.S. duty for TVs from Asia is 5 percent. So the duty is a little higher than the labor cost. There is no duty from Mexico.
We're here to make innovative technology a commodity. Anything that's popular will become a commodity. We're not here to build a cheap product; we're here to make the product affordable.
It's hard to build a big company. You have to be a lot better than the competition. We also have to be careful how we spend our money. There's a difference between being lean and being cheap. Being cheap is when you don't want to spend any money and just keep it yourself. Lean is keeping costs really low--our overhead is just 0.7 percent of sales. At the really big consumer electronics companies, overhead is usually 10 percent of sales, or more.
Our revenue in 2006 was about $700 million. We'll be over $2 billion in 2007. I'm so fortunate that I've been able to do this one more time. When I started, I worked 14 hours a day. I've cut down on that. I work eight hours a day. The company is not me, it's many people's efforts. And it's not just all about work--it's being able to appreciate one another.