Ryan Negri, owner of one of the largest independent sellers of unlocked phones in the United States, announced today that he’s sold the company he started seven years and seven months ago. The buyer? New York-based private equity firm First Ascent LLC. Negri, the current CEO and founder of Negri Electronics, will stay on with the company as a sales executive and a member of the board of directors.
TechnoBuffalo had a chance to interview Negri about his experience starting and owning his own company, what he learned along the way, where he sees the future of the industry, and what his own plans are moving forward.
What’s the best thing you learned owning your own small business?
It’s not as easy as it looks from the outside. It’s more than a full time job to do it correctly and do it well. You need help along the way, nobody can do it by themselves and if they do it’s going to be a slow and painful process of making mistakes and having to correct them and making sure those mistakes aren’t too big.
Seeking advice is important, as is having trust in people you can seek advice from. That’s a thing that was a problem in this industry – there aren’t alot of competitors that are going to help you. They’ll give you tips here and there, but it’s mostly learn as you go. I made mistakes, but they weren’t big enough where it would take down the business. One example is when we started, chargebacks were huge and we were selling high-value items. It was hard taking those steps back with a huge $900 chargeback. One or two of those hits early in your business and you’re out of business. It was tough to learn that way, people basically taking money from you. But we got smarter, we got better, we protected the site and our company better. We screened customers orders and buying habits and now it’s a lot better with more protection in place. To start your own business, you have to make sure you have the time and your family does too. It takes a toll on everybody. You’re working 15-16 hours a day when you first start, and it can get to be more if you become busier, or successful. Making sure you have the dedication and the time to do it is probably the most important thing.
What was it like selling your business? Selling your baby?
It was really exciting but it was a lot. The buyer came in and was interested in a deal but they were first interested in investing. They wanted to close an investment deal by the end of the year. But once they saw the business, they made an offer for the entire thing.
We had to hustle and make sure everything was in line. We were already getting prepared over the last two years to take on an investor or a line of credit from a financial firm. So everything was spot on and clean. Multiple CPAs, accounting advisors, and our corporate attorney was great in getting the books in line to prepare for an investment. It was great to be able to impress investors instead of having them say ‘it’s going to take a lot of work, so we can only offer X’. It was a lengthy and expensive process over the last two years to get everything in line. We had to train our vendors to follow the right procedures; it was a learning process for us and a training process for the vendors we dealt with. The hardest part was absorbing the costs: the cost of bringing in corporate attorneys and CPAs is ridiculous. To be able to afford that on the budget we were working with and still grow, we had to space things out.
All the money the company made was put right back into the business: payroll, inventory, insurance, everything. No extra money except to be invested back into the company. We grew organically for 7 years. I started it with two credit cards with $10,000 limits, I bought and sold inventory over and over, hired a great team, managed our budget and got to where we are now. The buyers are taking over a debt free company with tremendous growth and potential. It was a great deal for FA, the company and my staff. Everyone is very happy.
Were there big hurdles?
It was smoother than I thought it would be because of how much they valued the business and how much potential they saw in the due diligence and meetings we had. There weren’t any big hurdles, but there were a lot of small ones. Contract verbiage, time crunches.
Advice for small business owners?
The one thing I will say that will help somebody do well in business: focus on relationships, they are the most important part of your business. It’s not the money or the product. There are so many people that don’t value relationships and think that customers and vendors are a dime a dozen. That’s not true. The less emphasis you put on relationships the less successful you’re going to be.
Why did you decide to let it go?
I knew that the potential of the company with me was limited by my resources, and by resources I mean connections to talent and funding… I have experience in managing a 15-20 person company. I don’t have experience managing a 100+ employee company and that’s where we want to get to eventually. The guys coming in have the experience and the resources. As hard as it is for me to say, it’s probably for the best that they take it from here. I did my best from day one, I’m still in love with the company and the industry and maybe it’s time I step aside and let someone with the experience take it to where it can be. My heart will always be with my company and my team at Negri Electronics – it’s still my baby I just get to watch it mature under someone else’s direction.
What was your best selling unlocked phone?
The Samsung Galaxy S4 was the best device. It has a lot to do with Samsung’s distribution. The stock was always available, any model. The iPhone was second, it could have been first had they had better distribution. They sold out on the first day. They ship four units to a store and everyone talks about how the store is sold out, but they have the stock and they create demand with this kind of power. I think it backfires, they could sell more.
You, more than others, worked closely with bloggers – Did this help generate new customers?
It was nice to work with people in the tech community through bloggers. It was even better to become close friends with them and give them a feel for how this business runs and learn how blogging works as well. It was nice to become friends with all of these people and have them believe and trust in the business not through me telling them, but experiencing it as well. Many bloggers and site owners are valued customers of ours.
I don’t think readers really get an idea of how difficult it is to run a business like this and having bloggers believe in you and believe in how hard it is is special; they go to bat for you. It’s nice to have these guys behind you, with tremendous reach that reaches much more than we can even with multiple millions of dollars advertising.
The blog reach is more trusted than advertising, too. A lot of our resources and my time went into working with different websites all over the world to try to get our name out there. It wasn’t so much to generate business, yes, that’s great, but people didn’t know about us and didn’t know that these devices are available. You don’t have to buy it from eBay and risk getting a non-working phone or something you aren’t happy with and have to return it. We can get you the same device and most of the time, get it to you within two days. If you want support from those guys (eBay, Amazon, Buy.com), good luck. To be able to reach new markets and introduce them to Negri was very important. Not just to buy from us but to learn that we’re there and we have it available. Word of mouth recommendations from these relationships with bloggers was outstanding.
Who was your largest market? Was there a specific age group/country/demographic that was more likely to be your customer?
We targeted the U.S. because a lot of the devices we offer are imported. We don’t want U.S. customers trying to order from overseas and trying to understand the import and shipping fees and getting disgruntled. We wanted to save the U.S. customer all of that hassle and save them money and bring in devices that aren’t available to the U.S. market.
The age group is like 18-50, mostly male but the female demographic has been increasing over the last few years.
We picked up Canada since a lot of our phones work in Canada and a lot of theirs work here. Australia was the same thing when they had just 3G. We would import from these countries, and export U.S. devices right back to them. We bounced around and learned the ropes of each area that we tried to target. Our main demographic is still North America, but we’re moving to South America aggressively next year.
With the Moto G, we’re seeing attraction to unlocked budget handsets. Do you think subsidies will soon be a thing of the past?
I absolutely do. I did an interview about this a few years ago and I predicted there will be no subsidies unless you want one. They’ll still be available to people who aren’t educated enough to avoid a 2-3 year contract. Carriers are now trying to swing it a different way and lock customers in a contract somehow, but that’s tricking customers from my point of view. You literally still sign a contract. It’s not going away, it’s shifting to something else and that will shift away as well. Sooner or later you’ll go to AT&T, pay $599 for a phone, pick up a $25 unlimited plan and not get locked into anything. It might plateau around the $500-$600 range. The budget phones like Moto G are good for the first phone for someone, maybe out of grade school, it’s perfect for them. If you want something nice… it’s like a status symbol… you’re out and you pull out a Moto G and everyone has a gold iPhone 5s.. you might put it away. This is a huge market, but when I started it was a niche. When I started selling $700 unlocked phones people called me crazy.
What are your personal plans moving forward? Do you want to stay in the tech industry?
I have a contract with Negri Electronics as a consultant and a sales professional and will be on the board of directors. I’ll help until the new CEO PJ Louis takes over. I’ll help with the transition and step down as CEO as soon as he feels comfortable with everything.
I’ll invest in my other companies, one is Laicos, where we’ll take ideas and build them into products and apps. Everything I’ve been holding in my head over the last seven years, we’re going to start to build on them. Kyle Matthews, ModMyI.com owner, is my partner in that. I’ll start investing my time and money into Laicos and develop it into something amazing, like i did with Negri. We’ll be hiring developers, designers and great idea people in the near future.
Any changes planned?
I want to assure our customers that nothing is going to change. They are still buying from the same great name, great company, same great morals and values. People are afraid of change but with this they shouldn’t be. It’s just going to advance what we’ve wanted to do to make the shopping experience better and reach a larger demographic. I was the only sales person for the past 2 years, before that it was just the website. There are customers I didn’t have time to get to and we’re going to get people that will have time to dedicate to the customers that need to buy devices they need.
We wish Ryan Negri the best of luck moving forward and offer him our congratulations on the sale. Additional information can be found in the press release below.
Negri Electronics Announces Acquisition by First Ascent, LLC
LAS VEGAS – Negri Electronics, Inc., a leading independent retailer and supplier of high-end, unlocked wireless devices, is pleased to announce its acquisition by First Ascent, LLC, in a deal that will position the company for long-term growth and expanded consumer offerings. Negri Electronics will remain headquartered in Las Vegas.
“First Ascent’s acquisition of Negri Electronics is a great opportunity for our company to grow further and faster and to continue to provide the same great products and service to our valued customers” said Ryan Negri, founder of Negri Electronics. “First Ascent has the additional resources, experience and management expertise to help our company get to the next level and reach more consumers across the world. This is an exciting growth opportunity for our company, and we look forward to the years ahead.”
Negri, who founded Negri Electronics in 2006, will remain actively involved in the company as a member of the board of directors. He will also continue to assist the company’s ongoing sales efforts to new and current enterprise customers and distributors around the world. As part of the acquisition, P.J. Louis, managing partner of First Ascent and a 30-year veteran of the telecommunications and technology industries, will assume the role of CEO for Negri Electronics.
“We are happy to have Negri Electronics become a part of the First Ascent family,” said Louis. “We are looking forward to continuing the company’s tradition of providing high-quality service, great products and competitive prices. Ryan and Philip Negri, CFO, and their team have done a great job of building a trusted and successful brand over the last seven years, and we look forward to propelling the company even further and having fun in the process.”
To learn more about Negri Electronics’ wide range of high-end, unlocked wireless devices and related products, visit www.negrielectronics.com.
Negri Electronics, Inc. is one of the nation’s leading independent distributors and online retailers of high-end, unlocked wireless devices. Founded in 2006, Negri Electronics is a privately owned corporation headquartered in a 6,000 square foot facility in Las Vegas, with an additional administrative office in Southern California. The company currently serves customers in over 190 countries, with more than 4,000 high-end electronics devices available for purchase via the website. It is the only unlocked electronics supplier that retails independently online, offers wholesale pricing to resellers and enterprise customers and provides an expedited drop-shipping program. Negri Electronic’s mission is to provide its customers with the best products and the best possible service, both before and after the sale. Website: www.negrielectronics.com
First Ascent, LLC
First Ascent, LLC is a New York –based private equity firm that is focused on acquiring and growing companies in the areas of telecommunications, information technology, data management, and media.