Hitting $10 Million by Putting People Over Profits

A Hatch Founder Interview Series

 

When meeting Matt Nederlanden, you’d probably pick up first on his unassuming kindness, scruffy beard, and casual golf shirt with board shorts. His approachability reminds you more of a friendly youth pastor than a tech CEO. He’s young, humble, and the kind of guy you want to have a beer with.

However, once you start having a conversation, you’ll be shocked to learn that Matt is in fact running a nearly $10 million company here in Asheville (Security Camera Warehouse), ranked at #1376 on the Forbes 5000 fastest growing privately-owned companies, and is featured often in publications like the New York Times, Huffington Post, and Mashable. He’s bright and determined in a refreshing kind of way.

And while Matt’s accomplishments at Security Camera Warehouse (SCW) are quite impressive for such a young company, what makes his business truly revolutionary, has little to do with the products they sell.

“I originally thought that I wanted to be a pastor, supporting the impoverished. However, I grew a little disillusioned with the solutions that I saw religion offering to people who were struggling, and felt that a lot of the reasons why people were stuck was simply a lack of adequate income.  So, I tried to use business to solve this problem instead,” explained Nederlanden.

Matt initially joined SCW as an independent marketing consultant to assist with improving the company’s website. However, after a few months, it came to light that the original founder and majority shareholder had been committing fraud against the customers, which eventually required FBI involvement. Even though he had little knowledge of security cameras, Matt was committed to doing what needed to be done. So, he took the helm.

“No one ever starts at a company because of fraud. It’s a pretty bad position to start from. But I agreed to bail the business out and the State then offered me the owner’s shares. That’s how me, and my partner at the time, ended up with SCW,” noted Matt. Amidst the challenges of $60,000 debt and judicial pressure, the experience of taking over a start-up in such a precarious position forces leadership to strategically define priorities.

“These events did a lot to shape our organizational ethos. We wanted to turn the negative event into something positive, and so we decided to refund everyone who had been defrauded and replace their products. From there, the SCW foundational principles were established. I knew that we needed to do the right thing, even if it cost us money,” stated Nederlanden.

SCW Principle 1 – Love the Customer

Matt now leads Security Camera Warehouse from his three core principles, which drive every major decision they make as a team and as a business.  In order to survive the damage done by the original founder, SCW had to actively repair their relationship with customers, which meant taking a completely different approach to how they sold their cameras.

Technical Support at Security Camera Warehouse

High quality Technical Support, Customer Support, and Product Quality are differentiating priorities for SCW.

“Seeing the frustration of customers when they are dealing with fraud has drastically informed our viewpoint. We offer the lowest cost product that meets their needs. We don’t oversell. We don’t upsell. And we try to alert customers on scams in the industry.  We now want to both inform our consumer and serve as a customer advocate at the same time,” explained Matt.

When it comes to marketing most tech products, it is difficult to focus too much attention on the unique benefits of the hardware, since the technology is easily copied or upgraded. Subsequently, Matt has found that their true power of persuasion lies instead in, “talking more about the software, our people, and our service, since those elements can’t be easily copied.”

By placing the customer first, SCW positioned themselves as industry leaders through ensuring their customers fully understood available warranties, tech support, customer service, and product updates. Even the way they communicate their value to the market works to empower the individual instead of exert influence. Matt explains: “We have a very different type of website than is often seen across the industry. Most of our competitors have flashy emotional images above the fold, to trigger people into making a purchase out of fear or anxiety. Our homepage though is like a long-page sales letter, with a lot of questions and information, to instead inform people to make a knowledgeable purchase. And this works really well for us.”

SCW Principle 2 – Love the Team

People tend to purchase a security camera, when they are feeling threatened or unsafe. This type of emotionally charged environment then requires customer service representatives to show up regularly with the capacity to connect with customers when they are already in places of heightened fear, confusion, or stress. To that end, Matt recognized early on that his market required a lot of personal stability from his team, to continually respond well to the emotional needs of the customer. He realized that if he truly intended to “Love his Customer,” then he needed to first “Love his Team.”

The Team at Security Camera Warehouse

Meet the Security Camera Warehouse team.

“Loving our Team is in fact the most revolutionary thing that we do here at Security Camera Warehouse,” Matt states proudly, with a broad, genuine smile now rolling across his face.  “This organization is committed to treating our employees well, it is as important as any other company objective. And since we are positioned as a customer service company, no one can provide good customer service if they also just got off the phone from dealing with their own debt collector. The nature of our business means that we deal with customer situations with a lot of emotional energy, and if our team can’t hold that space to offer support, then we won’t be successful.”

Matt’s passion around this topic is visible and undeniable. While he appreciates this principle on a business level, he clearly has other, deeper reasons behind driving the company priority. “Personally, I believe that everyone should be able to live where they work. So, we created our own minimum wage standard, which this year starts at $35k, even before benefits. We also provide support for our employees to help them work towards homeownership and to tackle debt, regardless of where it comes from. And we recently launched company-wide financial counseling and budgeting classes in partnership with OnTrack WNC, which employees even get a bonus for completing,” he shares.

Matt then stops for a minute, takes a deep breath and says confidently, “this work, to me, is even more important than being profitable.” And his team certainly agrees with him.

SCW Principle 3 – Be here in 200 years

Matt Nederlanden is undeniably a good CEO. He has grown the company from being $60,000 in debt to creeping close to $10 million in annual revenue in less than 8 years. He built a nationally recognized product line and is well respected for his top-notch customer service and technical support. In addition, his vision for a better way to empower his customers and staff is an inspiration to all business leaders.

But, what happens when Matt leaves? How will these revolutionary methods be continued in his absence?

“My main focus is that the company outlives me. As part of that, we are looking at becoming a B- Corporation or perhaps a trust. Part of the idea is to create a legal framework to keep our values the way that they are. If an outside investor came in and bought us out, we wouldn’t have the same priorities or internal programs. An investor would probably change those things. So, I’m looking into alternative business models to make sure that this culture can be lasting.”

In addition, the other side to this principle of being relevant long into the future is also tied to the product which Security Camera Warehouse sells: cameras.

Customer Service Headquarters

The SCW customer service office across from New Belgium Brewery.

“Being around for 200 years means that we need to make room for what we will be selling in the long run. Which allows us to create a new business structure to keep the company going far beyond my years. We prioritize new product creation all the time, even to the point where organizationally we will be changing our internal investment in new product development from 20% to 35%, which is a big shift.”

Serving as the lead disruptor, Matt understands the importance of innovation and the rapid evolution of technology. “I love disrupting things, to the point where my staff has to reign me in,” he jokes. “It is hard though. A lot of the way we approach product development now is that me and a staff member spend time focusing on the opportunity, but we are looking to expand that reality, so we are creating more disruptors on staff. This process has to outlast and outpace me.”

At SCW, they follow the Scrum method when it comes to product development. Scrum is an extremely popular framework where teams of people can address complex adaptive problems, while productively and creatively delivering products of the highest possible value. It’s a process leveraged often by technology companies to foster effective team collaboration on complex products.

At Security Camera Warehouse, they embody the Scrum roles of product owner, scrum master, and operational point-person. During their product development process, their team is always asking themselves, “How does this integrate? How could we support the product? How would we deliver this well?”

Just like with the evolution of the Facebook motto, Matt explains that,“they have had to mature from, ‘Run fast and break things,’ to ‘Run fast with stable infrastructure.’ It isn’t as sexy, but it certainly works better.”

Now that they have hundreds of thousands of loyal customers from all across the planet, it is harder to innovate as a business. “You have to be able to stay nimble. Our company is no longer ‘David,’ but we aren’t ‘Goliath’ either. We are having to constantly maintain operational integrity, but still compete with the behemoths by being faster. As a midsized company, we no longer get to go too crazy with new products that we throw a bunch of spaghetti at the wall to see what sticks. At our size, we now have 100,000 people expecting everything to stick. That can be a lot of pressure,” sighed Nederlanden.

Advice on Scaling in WNC

So, how do other companies in Western North Carolina emulate the success of Security Camera Warehouse? Ironically, this product supplier started on a national scale first, accessing larger distribution networks to establish competitive rates and global channels. However, they are now making the move to having a more local presence in the Asheville community. Matt has learned a lot about how to rapidly grow a company in WNC and is eager to offer his insight to other entrepreneurs across the region.

“How did we grow so quickly? We identified a market hole and then filled it. We saw a hole in the middle between a Fortune 500 company and a ‘Mom & Pop’ store. People want a reputable security system, while having access to a consistently accessible and reliable customer service network. But I also recognized that you can’t expect to make money when you’re scaling. The point is to scale, not to turn a profit. We didn’t start seriously turning a profit until after we hit scale, and that just had to be okay,” noted Matt.

One of the big challenges which all product-based companies face during the process of scaling, is navigating the waters of pricing and overhead. “The low-cost model, found often in the electronics industry, is highly problematic. If you are putting 35% of your bottom line into product development, which we are, then you can’t keep your overhead so dangerously low. The scaling process is meant to be aggressive. It’s best to be lower than your competition. Be competitive and aggressive. Grab that market share. Carve yourself a space in the industry, claim that space, and then hold onto it,” explains Matt.

What is especially important to note is that Nederlanden and his team were able to grow the SCW company without any outside investment. It was a constant juggling act of managing liquidity, debt, and the company’s immediate ability to scale. “We picked out marketing methods when we started the growth process, but we couldn’t ever turn them on 100%. So, most of our growth was based on what we already knew worked. Then we started slowly testing new channels as we had the capacity to take on new exposure. It’s all about taking calculated steps, one at a time, and then scaling accordingly.”

To learn more about Matt Nederlanden and the Security Camera Warehouse, visit their website at www.security-camera-warehouse.com.

 

Emily transforms communities through entrepreneurship and innovation. She is a Branding Specialist and Growth Strategist who specializes in building the framework, platforms, and partnerships needed to be impactful in today’s challenging economy. Currently serving as the Executive Director of the Hatch AVL Foundation,  a non-profit foundation supporting high-growth startups of WNC through incubation, regional programming, and events.