For the latest Birthing of Giants podcast I interviewed Alex Rodriguez, founder and CEO of Azulle and a graduate of the Birthing of Giants Fellowship program. Azulle is a Miami, Florida based manufacturer of mini PC’s – a low power, fanless PC that’s right on the crossroads of where PC computing and internet connectivity meet. When Alex brought his company into this market, he had no idea that he was headed straight for a classic David vs. Goliath story that would pit Azulle against some of the top PC companies in the nation.
Into the Arena
When Azulle first entered the mini PC space, they had little to no competition, mostly due to tight profit margins, which a smaller company like Azulle could work comfortably with. Azulle’s growth was fast enough to debut at rank 249 with a whopping three year growth rate of 1720% on 2017’s Inc 5000 list. When competition did finally arrive, it landed with a bang. HP and Dell both released their own mini PC’s, thankfully not at the same time. Both companies had high brand recognition. Azulle took a revenue hit both times, but they stayed their course, building their own reputation as a high quality, reliable manufacturer.
Unwilling to continue support of their lower profit products, both HP & Dell came and left fairly quickly. There was no time, however, for Alex to rest on his laurels. Lenovo stepped in with their version of a PC stick, priced it competitively with Azulle’s Quantum Access, and dug their heels in. Azulle lowered the price on their PC stick. Lenovo did the same. A price war began that ended when Azulle finally priced lower than Lenovo could go. While Lenovo, like HP and Dell, struggled to justify supporting this market niche, Alex used the situation to bring new customers into Azulle’s fold.
“Our sales went back to what they were prior, obviously with a lot less profit, but it gave us the withstanding power for other companies to know that we were able to do it. And we didn’t change the quality of the product. So we used [the Quantum Access] as a loss leader to introduce companies to our other products where we did have the margin that we had prior.”
Within about a year Lenovo phased out of the mini PC market, leaving Azulle the leading company for the industry. They fought not one Goliath, but a few! In so doing they established themselves as a reliable, high quality brand with staying power. Azulle’s next big hurdle would bring him to Birthing of Giants.
A Single Source for Sales
When Alex founded Azulle in 2013, it was largely a seller of Android tablets using Amazon’s platform to reach a national audience. After transitioning over to mini PC manufacturing, Azulle continued to use Amazon for online sales, and were able to scale very quickly to a $5 million company. But as Amazon themselves grew their platform for independent sellers, they introduced changes to their operations that posed a major challenge for Azulle – now worth $6 million with a goal to reach $20 million in revenue. Alex explained the problem:
“Amazon is strictly run by algorithms. Those algorithms can in turn shut your account down and effectively disable it for 90 to 180 days without any human interaction. So it can literally shut down your business overnight if something that their algorithm deems is a threat or an issue comes up.”
Amazon was holding the reins on nearly 100% of Azulle’s sales. When Alex brought this information to his Fellowship cohort, they were suitably alarmed. It really ripples through the entire value of your enterprise when you’re dependent on one single source for sales. Money lenders don’t like it. Investors don’t like it. Potential buyers don’t like it. And, of course, customers don’t like it when a problem crops up that prevents them from ordering when they want to.
Alex returned to Miami and, as part of his plan to become a $20 million company, expanded their sales into different channels, including Walmart’s and Best Buy’s online stores, and via strengthened B2B outreach. Now that they’ve opened up new sales channels, Azulle is better positioned to bring innovation to the mini PC market.
The Internet of Things
Having worked with a broad B2C and B2B client base, Alex has a finger on the pulse of what people today are looking for, and he sees a trend: internet connectivity. Also called IoT (Internet of Things), this market focuses on connecting everyday objects or products to the internet. Smart appliances in your home, information sensors in industrial machinery, and soil sensors on farms are all examples of IoT technology. They’re generally powered by mini PC’s, and Azulle is perfectly positioned to anticipate and develop new solutions in the IoT market.
In this next phase for Azulle, Alex is working with, not against, industry giants.
“We’re actually partnering with Microsoft. We’ve created relationships with Intel. We’re creating relationships with software developers out there to be part of innovating technology that hasn’t come out yet, so that the next time something launches, Azulle is a hardware manufacturer that has a solution.”
At Birthing of Giants we talk about the transition from a scrappy, adaptable entrepreneur adjusting to every challenge (certainly important) to a planner and strategist for their business who anticipates challenges and very deliberately drives their company toward a specific goal. Alex is an excellent example of how to make that transition gracefully. We’ll be checking in on him periodically as he builds Azulle into an innovation driving, $20 million company and beyond.