“It’s really not that fancy,” new Thiel CEO Bill Thomas told us with a chuckle and a noticeable Southern drawl when we asked about his private equity company that was mentioned in a Thiel press release announcing its acquisition last week. [See our post on the acquisition here…] In a telephone interview with strata-GEE.com earlier this week, the 55-year old Thomas said it was simply he and two friends that came together to purchase Thiel Audio Products Company – not some high-powered M&A company.
This was just one of several surprises the CEO shared with us about the acquisition…
Thomas has a quaint, laid-back, Southern gentleman-style manner…and he was quite open in discussing with us in detail the why’s and how’s of this deal coming together between a group of Nashville, Tennessee investors and the Lexington, Kentucky-based Thiel. He also has a self-deprecating style of humor that is really quite disarming.
But we sensed that underneath that smooth, country gravy-smothered mannerisms and quaint colloquialisms was a shrewd and smart businessman. And the deeper we got into the 45-minute interview, the more we felt this way.
It’s really not that fancy…
Bill Thomas was born “and bred” as he likes to say, in Nashville, Tennessee. And as you might suspect in this capital of the music industry, Thomas and his friends grew up with a tremendous love of music. But growing up, his exposure to audio was all “Pioneer and JBL,” Thomas told us. He had no exposure to “top-end” speakers like Thiel and he admitted that even up until one of his friends approached him about the Thiel opportunity – he still had never heard of them.
Early in our interview, Thomas seemed concerned that people may have a misconception of who the buyers of Thiel are. He had seen several comments on the Internet that seemed to suggest that some big financial company had bought Thiel with only financial gains in mind.
“It’s really not that fancy – there’s three of us that got together and bought Thiel,” Thomas told us. “So it’s not like a big conglomerate that goes around buying companies. This is the first company I’ve bought.”
Thomas’ background is in the construction material business, both in production and manufacturing. Thomas told us that his experience included dealing with international business – a topic that fascinates him. He has no experience in any consumer electronics-related businesses…up until now.
Two-and-a-half years ago, Thomas sold his Nashville company – Granite and Marble Concepts. Ever since then, he has been looking for another opportunity. It was then that a friend approached him with the idea of the two of them, along with a third friend, looking into Thiel. How did they hear about Thiel?
Silent investors who want to stay that way…
“I’m not sure if Thiel was actively shopping buyers or not,” Thomas said in a sincere tone. “There’s three investors that have 100 percent of the stock – me being one of them – and the other two are just stockholders, and they want to remain that way.”
Thomas declined to reveal who the other investors were. He did tell us that the silent investors will have no operating role at Thiel. However, these investors will hold seats on the board of directors.
We asked Thomas if either of the other two partners had any experience in the electronics business. “Uh…somewhat,” Thomas said haltingly. “But no one you’ve ever heard of.”
So how did this deal came about, we asked Thomas. “Do you want me to be completely honest with you?” When we assured him we’re big fans of complete honesty, he told us that after his friend suggested they take a look at Thiel, they literally hopped into a car and drove to Lexington.
A speaker’s a speaker…
“We were driving up and I looked over at my friend and said, ‘You know, a speaker’s a speaker.’ And he said, ‘I know what you mean.'” Thomas warmed up to his thoughts and was clearly reliving the experience as he continued on with his story. “And we got up to Thiel and said, ‘Gosh, you know it’s a pretty day…and it’s a pretty drive up here…the leaves were changing.'”
Thomas continued: “And we got up there [to Thiel] and went into the listening room…” Thomas’ Southern-tinged pace was slowing even further for dramatic effect, “…and they turned on the speakers…” Thomas paused, his voice trailing off. “And I was floored,” he roared. “I said, ‘Oh my gosh. I have never heard anything like this.'”
And he (and his partners) were hooked. “Because I have not been in the industry, I wasn’t familiar with these top-end speakers,” Thomas further explained. “And it was…just…amazing.”
Then we heard a word from Thomas, “excited,” that we would hear over and over again: “And we both got really excited about this and looked at the shop. And I started doing the research to see what the markets were and all of the due diligence that I should be doing,” Thomas’ pace picked up. “It was just an exciting opportunity.”
Loyal Thiel fans…
“I’m just chompin’ at the bit to get there,” Thomas exclaimed, by now almost breathless. Thomas is recovering from knee surgery last week, and will need another couple of weeks of healing before he can start his daily duties at Thiel.
Thomas told us he is also excited by the loyalty of Thiel fans: “And it’s as exciting as it can be to me, because the people that really know the business that have been doing Thiel speakers for years are still there – and that’s exciting to me.”
The opportunities were obvious…
But Thomas assured us that he is well aware of his lack of industry knowledge. “We can all learn as we go. I don’t want to come in and screw anything up,” he laughed. But what Thomas does have is production knowledge. When he toured the Thiel facility, he told us that opportunities to improve operations were immediately obvious to him.
“I could tell a lot of where the bottlenecks were,” Thomas said assuredly. “And it’s just a matter of making things a little more efficient…with the money to do it. That being said, that doesn’t mean that Thiel is all of a sudden going to start outsourcing everything. That is about as far from what we’re going to do as possible.”
We asked Thomas if he thought that Thiel had gotten off-track. “No I don’t think they were off track whatsoever. I think that they needed more finances to do exactly what they wanted to do. I guess it’s exciting because we’ve got the money to put into it to do what’s needed.”
Overall, though, Thomas suggests that many critical elements of Thiel’s existence are not going to change. “Everything’s going to remain the same,” he said. “We’re not going to come in and try and introduce a lot of less expensive products for the market. We’re going to remain high quality. We’re going to remain ‘Made in America.'”
CEO’s 2½-hour commute…
As if to further drive the “nothing’s changing” point, Thiel’s new Nashville-based CEO says the company is not moving. “We’re not trying to reinvent the wheel here,” Thomas assured us. “It’s [Thiel] been in Lexington for 35-years and everything’s going good. All the people [employees] have families – we are not uprooting anybody.”
Instead, it is Thomas who will commute, making the two-and-a-half hour drive to Thiel every week. “I do some of my best thinking when I’m driving.”
Also not changing, Thomas wanted us to know that Brad Paulsen, Thiel’s National Sales Manager, is staying with the company. “Brad Paulsen is just a wealth of knowledge,” Thomas told us. “He has done a phenomenal job with all the reps – and he’s been in the business for 35-years. We’re going to be leaning on him a whole lot.”
But ONE BIG CHANGE is unavoidable…
But not everything is staying the same – the company has officially said that co-founder Kathy Gornik has decided to retire from the company. We asked Thomas to comment on the rumors we heard that a major disagreement between the company and Kathy Gornik was the real reason for her departure. We also asked him to confirm that Gornik’s daughter, Dawn Cloyd – Thiel’s International Sales Manager – had left the company as well.
While Thomas confirmed that both Gornik and Cloyd had left the company, he declined to comment on the rumors we asked him about.
“I have the utmost respect for Kathy,” Thomas told us. “It was her baby – I probably would have felt the same way she did. I wish her all the best.”
We asked Thomas what his priorities are for the first 100-days of his term as Thiel’s new CEO.
First 100-day Agenda:
- Clear a large backorder of products that they currently have in-house. “They’ve got a lot of backorders that they were having trouble finalizing some of the crossovers and stuff like that,” Thomas told us. He will prioritize improving Thiel’s efficiency in getting products out the door.
- Bring engineering in-house. In the wake of Jim Thiel’s passing in 2009, the company had been outsourcing much of their engineering. Thomas has prioritized hiring engineers as he feels that this will dramatically improve their efficiency in designing and manufacturing a stream of new products.
- Contact dealers to better learn of their needs from Thiel. Thomas told us that Thiel will make a concerted effort to contact as many dealers as possible over the next 100-days to better understand their needs and wants from Thiel.
Other than these specific items, dealers will not see any other changes from Thiel – only improvements. Thomas told us that Thiel has pulled out of Amazon.com – a controversial distribution move that they made back in 2010. The company has no other major distribution changes planned.
“It [Thiel] is a wonderful company – wonderful reputation – and we’ve got to do our damnedest to not screw anything up with that.”
For more information on Thiel products, see: www.thielaudio.com.