Technology sometimes flattens your business, and you have to find a new way to make money.
Ask Jon Meyer, 49, the scion of a Washington family of entrepreneurs dating back more than a century.
Meyer owned the local chain of high-end consumer-electronic stores called MyerEmco until he was forced to liquidate a year ago.
MyerEmco was a household name in D.C. for decades. Its flagship store on Connecticut Avenue was a hangout for stereo geeks.
It put hi-fi in the Kennedy White House and outfitted the vice president’s residence for Dick Cheney. The FBI, the Pentagon and big Washington stars like Bob Woodward were customers.
Reeling from a double whammy dealt by the Internet and big-box stores, MyerEmco then was hit by the Great Recession. Revenue dropped 25 percent overnight (the business’s most profitable niche was new-home installation).
SunTrust Bank called Meyer’s $3.5 million loan in August 2009.
He shuttered nine MyerEmco stores. He handed his 22 service trucks back to the leasing company. MyerEmco’s workforce dropped from 178 to two.
He sold some prime Tysons Corner real estate. He sold most of his 87-acre Virginia farm. His Bethesda home went too. His $1 million-plus stock portfolio was liquidated at 50 cents on the dollar.
Meyer’s net worth declined 80 percent to around $2 million.
After the last store closed in February 2010, Meyer found himself sitting in his empty Tysons Corner location with a clean piece of paper, two folding tables and a cellphone.
He kept something else: a database filled with the names of 280,000 MyerEmco customers.
He wrote down on that sheet of paper what he thought people wanted, and he invented his new business, MyerConnex, which designs and installs state-of-the-art integrated home theaters and sound systems. You can also program your home’s lighting, temperature, baby monitors and a bunch of other high-tech appliances that will shave the rough edges off your life.
It’s cool stuff. And more focused than MyerEmco’s previous business.
“I saw the changes in how people buy,” Meyer said. “The new buyer is a family who wants sound throughout the house. It’s not the male-oriented hobbyist or guy who is driven by brand. They want sound throughout the house. These are people that started listening to music on an iPod.”
MyerConnex has 12 employees, four installation crews and expects to earn $2 million in revenue this year. Most important, the company will be profitable.
Gone is the $258,000 a month in rent for Meyer’s retail stores, replaced with a $3,000-a-month office rent. Gone is the $4 million in inventory that he had to pay interest on until it sold. The administration and back-office costs — everything from heating bills to cellphones — that ate up 35 percent of his revenue are history. But so is the family business.
“The hardest hit to take was liquidating a family business,” Meyer said.
His great-grandfather was Simon Nathan Meyer, who ran Meyer’s Military Mfg. Co. at 14th and F streets in the late 1800s. The company sold gold braid and other uniform gear.
Jon Meyer’s father, Ed, was a radio operator in the Merchant Marine during World War II. After the war, Ed started a Silver Spring “hi-fi” shop for sound enthusiasts and moved it to Connecticut and 18th. He spelled it “Myer” so stereo freaks wouldn’t bother him at home.
“This was way back in the hobbyist days,” Jon said. “He didn’t want nuts calling him at home to pick his brain.” “Emco” was shorthand for “Ed Meyer Company.”
Jon joined his father in 1985 and expanded their holdings from three stores to 10, growing revenue from $5 million to almost $40 million by 2006. He bought his father out in 1995 for a few million.
The retail growth was propelled by timely sweet spots, which included the CD boom of the mid-1980s, which brought about a boom in the sales of CDs, CD players, speakers, audio equipment and earphones. The other was the high-definition, flat-panel TV craze that took off around 2003.
By 2006, MyerEmco was earning a couple of million a year on sales of $39 million.
“Some of that explosive growth was the flat-panel TV boom,” Meyer said. “Everyone had to have one. They were cool, and it was very expensive. The margins were great, especially with the custom installation. It was half our business.”
Even with the booms, MyerEmco’s margins were only around 3 percent of revenue, rising to 5 percent in its best years. Prior to 2008, the company was profitable every year. But not very profitable.
Asian manufacturers began flooding the market with flat screens, allowing discount stores like Costco to undersell premium retailers like MyerEmco.
“The worst point was when Costco was selling flat-panel screens for less than what I was buying them for at wholesale,” Meyer said. Amazon.com also pulled away customers, lured by no sales tax and Amazon’s reliable delivery.
The final nail was the real estate crash.
“In perfect hindsight, I should have seen it coming,” said Meyer, whose brick townhouse doubles as MyerConnex’s showroom. (Offices are in Montgomery County.) “I learned a lot of valuable lessons. It was a machine that didn’t throw off much profit.”
Write it down on a sheet of paper: You can’t run a business without profit.
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