Shalam Reflects On His 50-Year Career

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NEW YORK –

As 2010 closes, John Shalam, chairman of Audiovox, is celebrating the 50th year of his career.

Shalam founded Audiovox in 1965 but his original foray into consumer electronics was with Custom Imports, which, in his words, “sold anything and everything.” One cold December he was able to sell 2,000 car stereos before Christmas. When he got back to the office from the holidays there were messages from retailers saying they wanted more.

At first Shalam said, “There are no more radios,” but finally the entrepreneur in him kicked in and said, “How many do you need?” And as the old saying goes, the rest is history.

Shalam is now a legend in the CE industry, an active member of the Consumer Electronics Association (CEA) board and was inducted in the CEA Hall of Fame in 2009, among many other honors.

TWICE caught up with him recently to talk about his career and the industry he loves.

TWICE:

When you first sold car stereos at Custom Imports were you an electronics guy? Did you like CE products?

Shalam:

I couldn’t afford to buy any gadgets. I left school and was barely subsisting. But I loved all types of electronics. The first home stereo system I bought was from Marty Gutenplan [of legendary New York retailer Rabson’s], a Fisher tuner/amplifier with Britishmade speakers. That was my first first introduction of really quality sound.

One of the items with Custom Imports that generated a lot of business was the pocket transistor radio. We sold a ton of the six-transistor and a ton of the twotransistor radios to a couple of mass merchandisers. That was a very nice little business. But the sale of car radio, that was not by design. A lot of what happened in my career was by accident, by coincidence, and I happened to be there, saw an opportunity and moved on it. I did not get up and get out of school and say, “I’m going become a major electronics guy” or “learn how to assemble and ship radios.” I didn’t know anything. I came out of school, I was starving, stuck with these radios and had to sell them. That opened the door.

TWICE:

What decision or decisions have you made that you are most proud of?

Shalam:

I had a comfortable position with Continental Grain Company, a commodities trading company. I made the decision to leave there and start my own business. That was based on my father and all ancestors were all merchants in the Middle East, buying, trading, selling, importing and exporting products. Nobody ever worked for a company. They were all self-made men and had their own trading companies. I guess I must have that in my blood as well because I wanted to do something on my own and not be part of a organization like that. [Editor’s note: Shalam came to the U.S. from his hometown of Alexandria, Egypt, at the age of 13 in 1948.]

And that was the decision — to leave a secure, comfortable job and strike out and do something that was important for me, that is part of my heritage. That is the best decision I have ever made, but at the time I regretted it. I was struggling desperately with no money, trying sell anything to anybody. You got abused and kicked around but eventually you persevere. And little by little you get things to come together.

TWICE:

You have been involved with CEA for some time. How has your involvement influenced your career?

Shalam:

About 12 or 13 years ago someone suggested I attend CEA meetings. Bob Borchardt [then of Recoton] was the CEA chairman then and he established the first CEA CEO Summit in Bermuda. My wife Jane and I attended and had a great time, and we met many people there. Later I was told by [current CEA president/ CEO] Gary Shapiro that I was on the board of CEA.

I enjoyed the meetings and listened a lot. I remember meeting people like Bob, Kathy Gornik [Thiel Audio], Darrell Issa [founder of Directed Electronics and now a Republican congressman from California] who became CEA chairman, Jerry Kalov [then the CEA advisor and veteran of Cobra and Harman] and Lloyd Ivey [of Mitek] — really a great group. It is really worthwhile to meet your peers who run other consumer electronics companies, whether they were small businesses or large companies.

It created a lot of opportunities. Pat Lavelle [president/ CEO of Audiovox] and I met Neil Terk of Terk Technologies and met Bob through CEA meetings and bought their companies. It was very productive for us.

CEA has been a leading element in my career and life in last 15 years or so. It has opened my eyes to a lot of things. It has created a tremendous amount of enjoyment and participation. I go there because I like meeting the people, I like learning and listening to the presentations, and love running the [CEA] Investment Committee.

TWICE:

Who are some of the industry executives you have met who you have looked up to over the years?

Shalam:

Jerry Kalov for one. John McDonald, who headed Casio, he was a legendary guy and I loved to talk to him, and also Bob Borchardt. I have always respected Gary Shapiro as well. He has a tremendous amount of drive and a great enthusiasm. He’s the spark that makes things happen at the CEA. He is the energy, and I have always admired his ability to communicate with people, to go to CES and make all these speeches and introductions … the guy is tremendous.

I met Peter Lesser [of X-10 USA] serving on the CEA board, and he then became a member of the board of Audiovox. I have enjoyed a lot of good exchange of information and advice from Peter, and he has contributed substantially as well.

At the first CEA CEO Summit in Bermuda I met Brad Anderson from Best Buy. I was so inspired by his presentation and impressed with him. Jane and I also met Dick Schulze [founder of Best Buy] and his wife. That’s why without CEA I would never have met people like them, or through the CES keynotes, where I have had the chance to meet people like Bill Gates and other impressive people.

TWICE:

What are the most impressive CE categories Audiovox has introduced over the years?

Shalam:

I thought that autosound was a terrific thing. The development of autosound from eight-track to cassette and CD and all the opportunities was very impressive.

But what I thought had the absolutely greatest potential, in my mind, was car telephones. It blew my mind completely. Two things that American men love are cars and telephones. When the first carphones came out I told my guys that we had to get involved in this business, we had to find a source.

We went to Japan and had talks with Toshiba and they didn’t even want to look at me. Finally we convinced them to give us a chance and bring in some product to begin our entry into the cellphone business. I thought that was a very big opportunity.

In cellphones we were competing against Motorola and Nokia, the big names at the time. You have got to give credit to Philip Christopher, who worked for us and now heads PCD. He was such a driving force. He was enthusiastic and started to promote the phones and to establish the relationships with the carriers. He gets tremendous amount of credit for the success of Audiovox. And, course, Pat Lavelle, who continues to date to do a tremendous amount of work to build up the company.

We have a few more people who have made major contributions, and I’m not sure I could be the success I am without putting that team together. Perhaps the key to my success is to recognize that quality and talents of the people that can make things happen.

Maybe the most important element of all is having the people, the second is finding the capital and the third is finding the product. You can always find product to sell.

TWICE:

How do you see the CE industry evolving in the next five or 10 years?

Shalam:

In the next five or 10 years we will see things that don’t even exist today. The biggest development of the next few years will be in personal communications. Instant access to information and entertainment on devices will expand. People want to be in touch all the time and they will want to access information, news, entertainment. You will see a lot more products of that nature. They may take different forms but it never ceases to amaze me, on a daily basis, what you see coming out with companies developing more and more sophisticated products on a tiny device in your pocket.

The big, big developments will be in software and applications. Manufacturing the products themselves will become an automated, routine process. I think you may see some of the manufacturing come back to this country as China’s employees and other countries develop higher labor costs. Manufacturing has become so much simpler. I wouldn’t be surprised to see some high-end manufacturing returning to this country.

TWICE:

So, given the Internet, social websites and wireless communications of today, do you think it would be easier or harder for an entrepreneur to create Custom Imports today?

Shalam:

It would be much easier. There are so many more opportunities! Look at the number of companies that have created apps? Look at all these young geniuses and what they have created companies based on these applications on the Internet.

What I was doing then was the job of a peddler trying to sell a product. Today they create products, create fabulous software designs that that’s really super creative, that’s why they are making a lot of money. If I made $5 on a car radio back then it was a big deal. Today a good app you hear 20 million people have downloaded it, each one paying 5 cents or 10 cents.

TWICE:

What advice do you give young entrepreneurs you speak to today?

Shalam:

First element you have to have is a vision and passion to succeed. You have to devote yourself to your vision. That must be your first priority, to live and breathe your work, your business and your idea. You must continue, but you don’t get discouraged. You are going to have reverses, guaranteed. But you must keep working, keep pushing and keep plugging to succeed. The most important is to do the right thing. Act correctly, maintain your name, your reputation and your credit so people respect and trust you.

TWICE:

Are you still excited about this industry, given the economic times we are going through?

Shalam:

CE is still an exciting industry and still has an enormous potential. It is very competitive and very fast moving. But it still provides opportunities for advancement.

Also, not withstanding of all the bashing of America that is going on, the U.S. is still the greatest country in the world, in terms of opportunity for people who live here, or for people who emigrate from other parts of the world. If you work hard, you apply yourself, there is no limit of what you can become or what you can do which is the greatest thing going today. I am a living example of that.

Shalam Bio

Experience:

John Shalam founded Audiovox Corp. in 1965 and currently serves as its chairman. Audiovox Corp, is an international leader in the marketing of auto sound, vehicle security and mobile video systems and their related accessories. The company is listed on the Nasdaq and had sales of $600 million in 2009. Shalam is a member in the Consumer Electronics Association (CEA), where he serves on the Board of Industry Leaders (BIL), and is chairman of CEA’s Investment Committee. He was instrumental in helping CEA become an active participant in the Wireless Communications Industry, establishing the wireless communications division in 2001, and acting as its first and founding chairman. Shalam was inducted into the CEA Hall of Fame in October, 2009.

Education:

Shalam attended the Peekskill Military Academy in Peekskill, N.Y., and received a bachelor’s degree in economics from Wharton School, University of Pennsylvania.

Personal:

He is married to Jane Shalam, with whom he has three sons: Ari (president of Enterprise Asset Management, a New York City- based, private real estate investment firm); David (a VP for the e-commerce division of Audiovox); and Marc (who works in real estate management in London). Their primary residence is in Old Westbury, N.Y.

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