Digital sign company projects growth

  • Article by: TODD NELSON , Special to the Star Tribune
  • Updated: June 12, 2011 - 9:15 PM

A focus on 3M distributorship boosted Minneapolis-based digital sign and display wholesaler Spyeglass.

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Paul Krumrich in the penthouse condo at the Reflections at Bloomington Central Station. His company bought the condo to use as a showroom to demonstrate how it can integrate digital signs and screens into a living environment.

Photo: David Brewster, Star Tribune

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Whatever Paul Krumrich was selling at that trade show, all anyone talked about was his booth's cool digital sign.

Krumrich, a self-professed AV fanatic then working as an independent sales rep, decided to find out what the sign was made of and how soon he could start selling it. The search led Krumrich to a familiar name, one that's close to home to boot -- 3M and its Vikuiti brand rear-projection film.

The film turns a clear surface such as glass or acrylic into a screen that displays digitally projected imagery and messages. With additional technology, a digital sign or display using the 3M film also can serve as a touch screen. Uses vary from retail to hospitality, health care, corporate, trade show and advertising signs to public information kiosks.

The 3M film, Krumrich said, produces a crisp, high-contrast picture with a wide viewing angle because it's coated with millions of "optical microspheres" or tiny glass beads embedded in a black chemical layer, which absorbs ambient light. The film also can be cut into shapes, unlike standard plasma or LCD displays.

Krumrich called 3M, got a meeting and heard about the $20,000 minimum order. Undaunted, he maxed out his credit cards, bought a bunch of 3M film sheets and launched a company, Spyeglass, in 2003.

Even as a start-up, with Krumrich working out of his garage and offering his display designs to companies around town, his larger goal was clear: persuading 3M, the state's largest manufacturer with $26 billion in revenue last year, to designate Spyeglass as the "master distributor'' in the United States for its Vikuiti rear-projection film and rigid acrylic screen products.

Krumrich believed he would prevail, figuring it would take a year or so to gain the designation, which would make Spyeglass the exclusive U.S. sales and service channel for the film.

He was partly right -- Spyeglass did get the master distributorship from 3M. But by the time the announcement came in January 2009, it had taken six years longer than he expected. 3M did not respond to requests for comment. However, its website does identify Spyeglass as its U.S. master distributor for Vikuiti rear projection film.

"They'd probably do a Harvard business case study on this and everyone would say that's the dumbest business move ever," said Krumrich, 38, who has a mechanical engineering degree from the University of Minnesota. "To start a company around someone else's product where you have no exclusive relationship, you have no territory, you have nothing. Every dollar I spent marketing Vikuiti was a dollar that may or may not come back to me."

The master distributorship solved most of those problems, including enabling him to halt online sales that could undercut his prices and those of his growing network of 150 resellers, Krumrich said.

Today, Krumrich oversees what he has formalized as the Spye group of companies. It consists of Spyeglass, his original wholesale company, and related spinoffs: Sensory Environment Design (SED), a local AV integrator that does high-end design and installation of commercial and residential digital signs and screens; and, beginning last January, two Spyeworks ventures, one offering content for Vikuiti signs and screens and LCD and plasma displays, the other consulting services for such installations.

Spyeglass and SED combined to finish 2010 with slightly more than $2 million in revenue, Krumrich said, ending three years of recession-related flat sales. The Spye group has 12 employees.

Just before the economy collapsed, the company bought a penthouse condo at the Reflections at Bloomington Central Station to use as a showroom to demonstrate how SED can integrate digital signs and screens into a living environment.

"It shows that we're not just tech geeks," Krumrich said. "We have good design sense."

This year, Krumrich said, he hopes the Spye group's sales would reach $3.5 million in this year, with the continued growth of Spyeglass and SED and a full year from the new Sypeworks content and consulting ventures.

Members of Trinity Lutheran Church of Minnehaha Falls in south Minneapolis have been very pleased with the two large projection screens and related equipment that SED installed in its sanctuary, said Jim Engstrom, the church's director of visual communication. The church uses the screens to display lyrics and text during Sunday services as well as slide shows, video presentations or live video of weddings and funerals.

Members can see what's on the 3M screens even when the many stained glass windows in the sanctuary let in lots of sunlight, which used to wash out images on the church's previous screen installation, Engstrom said.

"They're hearing the message but they're also seeing it and it helps people remember and retain the information," Engstrom said.

The expert says: David Deeds, director of the Morrison Center for Entrepreneurship and the Schulze Chair of Entrepreneurship at the University of St. Thomas' Opus College of Business, said starting Spyeglass was far from "the dumbest business move ever."

Krumrich might have been disappointed if the potential market for rear-projection film was huge -- $100 million or more, Deeds said. A market that size would be right in 3M's crosshairs. But "in this instance, large companies love partners that help them leverage their [intellectual property] in [smaller] market segments that are difficult for them to support," Deeds said.

While it's less visible than developing the next great medical device or widget, entrepreneurs can build successful companies distributing and tailoring others' products, Deeds said.

"Entrepreneurs using undervalued assets is generally a good idea," Deeds said. "There's a lot of research and development that goes on at corporations and universities that's never going to get developed.''

And there are a lot of people like Krumrich who find a growing business by leveraging the assets of another company.

Todd Nelson is a freelance writer in Woodbury. His e-mail address is todd_nelson@mac.com.

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