Vizio: William Wang

27:55Like, you were broke. Yeah, nothing. And you had to pay back the people you owed money to. I mean, here's just a weird question. Couldn't you declare bankruptcy and have those debts forgiven, I guess? I could, but I don't, I mean, that's not my motivation, right? I believe I want to do better for them. You know, we looked at bankruptcy, but I just don't want to do it. So what was your plan to pay back the debtors, the people that had, you know, that you had money to? How were you going to pay them back? I was making, I became like, for example, I know what's a new product. So instead of going through me, I say, you pay me two percent commission.

28:37I used that 2 % commission to pay you. So you were doing consulting work for some of the people you owed money to, basically for free. Yeah, for free to pay them off because I want to pay that off. And again, I know a lot of suppliers. They know I didn't do anything wrong. I didn't take the money or anything. And they still trust me. They just know that during that time, there was a major transition. And it was just poor management on my behalf. So they allowed me to give me some time to use my talent to make some money for them to pay all my debts. Wow. Okay. So this is, I think this is like a period of four, at least four years of trying to, you know, doing consulting work in part to try and pay back debts.

29:24And I think one of the things you got involved with was helping one of these companies try and figure out like a smart TV and also plasma screen televisions, right? Yeah. Back then, the plasma TVs started to emerge and were very expensive. They were like$20 ,000, I think. And I mean, today they cost, you know, like nothing. But back then, I mean, they were super expensive. Meanwhile, I want to talk about smart TVs for a moment because, I mean, this is the late 90s. And, I mean, no one was really interested in them yet, right? But I guess you were, right? You wanted to sort of make them or something that would resemble them, right?

30:06Well, yeah, I just built it. I said, hey, TV should be connected to the internet. I actually had a whole design lab. We laid out a board. We found a software company in Boston to do Linux-based software for us. I found a chip supplier. I put a CPU in the TV and connected to the internet. And when you turn on that TV, first page was apps. Back then, we didn't call it apps. Back then, we called it widgets. This was way before iPhone. The TV worked great, but the problem was the internet connectivity was rather slow. So it takes five minutes to warm out a TV because the motor needs to connect. And again, I was 98.

30:50And I lost all my money. Wow. That's part of the – Part of why your first business went under. Yeah. So, all right. Let me kind of set the context here because you are financially in crisis at this time, trying to figure out how to pay back debt. and also trying to figure out how to make money. I guess both of them are connected. And you are going back and forth between Asia and Southern California to do consulting work and to try and figure out different ideas, you know, that you could generate income from and innovation, but none of them really work. And you get on a flight, October 31st, Halloween, 2000.

31:39You're about to fly back, Singapore Airlines flight. You're in Taiwan, and you're going to fly back to Los Angeles. Tell me what happens. Yeah, so the reason I want to get back that evening was because it was my daughter's first trick-or-treat. Halloween. You were going to get back, even though you were leaving on the 31st, by the time you get back to LA, it was still the 31st. If I leave like 1130, I'll get back here like 630. I barely make it. I can still see my daughter in the... Her costume. In customs. Yeah, so everyone, she's like four years old, three years old. So I say, okay, let's do that.

32:19And by the time I finished my meeting at five o 'clock, I came out of the office, started to rain. I don't know what's going on in Taipei, the weather, I didn't pay attention, but a typhoon hit. It was very stormy that night. Very stormy that night. So by the time I got to the airport, Singapore Airlines is terminal. know. This is kind of creepy. There's nobody around. Most people are not in airport because I think most people in Taipei don't want to take the flight because of the typhoon. They don't even think, they don't even know that the plane's going to take off or not. But I asked Singapore, if you're taking off, I'm going to be on a plane.

32:57I need to go back. So I was the last person on a plane. This was a Boeing 747, obviously, because it's a transatlantic flight. It's a big plane. Yeah. So he started taxiing on the runway pretty rapidly because I think he wanted to beat the wind. Because what were the winds at, like 30, 40 miles an hour? Yeah, I think it's going over. So it's a little bit over 50. Over 50, yeah. I think the 747-400 can still take out on a headwind like 60 miles per hour. Right. Obviously, he just wanted to beat Typhoon. He wanted to get out there quick. So we took that out rather quickly. But I was on a plane. I was sitting on number, I think, 22.

33:36I requested a seat. Nobody was next to me, so I was watching People magazine. And we hit what? The liftoff speed, 165 miles per hour. And my portion of the plane was up in the air. And then I heard this noise like somebody knocking on the door. I say, what the heck is that? Then immediately, I started leaning to the left. Obviously, something really bad happened. The last tires of the plane hit the construction equipment and the concrete barricade where they were doing construction works. They eclipsed the concrete barrier as it's taking off. As it's taking off. And, you know, now you hear everybody scream.

34:30and you know the plane obviously came down and I was in the front of the plane came down and so I lift my feet up I lift my hand up that was my crash position and the moment right after I lift on my feet, my hand the fire came underneath me red orange fire came underneath me apparently the somehow 60 ,000 gallon of jet fuel exploded and the plane was torn into two pieces right where the fuselage was and the fire came underneath me and once it hit the wall I thought okay this is it, I'm going to get burned but the fire disappeared right away because I think the fire burned up all the oxygen in the pseudo explosion it sucked all the oxygen away from the plane I mean the images of the aftermath are shocking.

35:32I mean it was ripped in half and you were in the front half of the plane. 96 people survived. 83 people were killed in that flight. And you – I mean you – I can't even imagine what that was like. but when it stopped, when you could leave your seat and get out, what do you remember? Well, the fire came underneath me, and the fire disappeared. Immediately, I couldn't breathe. No oxygen, yeah. No oxygen. First thing that went to my mind was, I'm dead. And immediately, you know, within half a second, I thought, oh wow, you know, I miss all my family. My mom, my dad, my wife, my daughter, my sisters, my brother, everybody.

36:30Then the next thing flashed through my mind was, oh, okay. I have no more headache and no more stress. I'm kind of Relieved Because at the time My blood pressure was 160 over 130 Constantly because I was under a lot of stress Obviously because I was in debt So That was What went through my mind In like two seconds Because you were going to die And that was it I embarked on my seatbelt The plane was still moving I'm back on my CVL. I say, I'm going to get out of here. I need to breathe. So I went to the first door on the right. I tried to open that door while the plane was still moving. I couldn't open it.

37:21Obviously, because of pressure, pressure of the plane still fully engaged. And now I went to the door on the left. When I went from the door on the right to the door on the left, the plane stopped. But the last few seconds, I had no memory. I don't know what happened. And the next thing I knew was the door popped open and the rain hit my face. The rain. The rain hit my face and the door just exploded open. And along with the escape chute and the fire and the smoke rushing out of the plane, it pushed me. I got ejected from the plane.

38:11it's, it's unimaginable. And I mean, it's, it's almost a, you know, a cliche, I guess, which, which is when, when somebody has a near death experience, it does often change their life because it changes their perspective. And from what I gather that happened to you, I mean, Here you were focused on these stressful things about debt, and then you go through this experience. And I have to imagine that this was going to fundamentally change the way you saw your life. Yeah. It's really hard to describe because I'm always optimistic, always. I didn't really look back that much honestly it's kind of unfortunate it is unfortunate but I didn't want to think too much on that I never really dig into my own mind what really happened what did it really change me how did it really change me because I don't think it's going to help me anyway so I say just keep on looking forward what else can you do what other problem can you solve so I really focus on that instead So, yeah, did it really change me?

39:32I don't know. I'm still the same person. I guess my question is, did it change what matters to you? I know I really want to come back home. Yeah. That's one thing I really want to do during the fight. I mean, after the playing. That's something I really, really want to do at that time. I really want to be close to my family. and that matters to me the most versus anything else. Yeah, you have money, success, a lot of problems to solve, technology. But does it really matter? Yeah. I think the most important thing is love. I kind of differentiate love and passion, I guess. I went to Singapore and the next day I said, get me out of here, I want to go back.

40:26It was scary for me. I mean, I can't imagine getting on a flight after going through that. Yeah, it was tough. I mean, I don't have a sweaty palm, but I had a pretty sweaty palm that flight, the whole flight. But that's all right. I know. I just want to get back. I don't care. So you get back. and eventually you continue with your work. But I guess one of the things that you've been doing, one of the consulting jobs you've been doing was with your former customer, Gateway. I guess they had retail stores in the U.S. at that time and they wanted to sell other things besides computers because the market was getting competitive and presumably they wanted to build out their inventory, their product offering.

41:19And you suggested that they look into televisions, into plasma televisions, which were, again, in 2001, really expensive. I mean, they were like$15 ,000,$20 ,000. But I guess your idea was, hey, maybe you guys should get into the plasma TV business, but make them really cheap. Tell me about your proposal to them. Yeah, so I know high-definition TV is going to be a hot item because U.S. government was really pushing for HDTV, but high-definition TV wasn't affordable back then. It was$15 ,000,$20 ,000. So there's a problem. The problem is government want to push digital, and digital TV are not affordable.

42:05And I guess I should point out that the government had required this digital makeover at the time. They wanted televisions to move away from analog to digital video signals, high def. And high def was part of that. And so it required all manufacturers to move from analog televisions with an antenna, essentially, to a new type of digital. Well, there's digital antennas, but a digital, receiving digital video signals. Yeah. The government want to do that desperately. Their mandate was like 1998, 1999, 2000, 2001, 2000. They keep on pushing back. Right. Because TV, the Sony and Panasonic of the world and the retailer of the world don't care.

42:47They're making so much money on analog TV. Why should they give away the digital TV, right? They look at digital TVs as something that belongs to rich people. So knowing the cost of the components, I said, I think I can build this TV and sell it for like$3 ,000. So I was running around asking for money to fund my new project. And I went to the Consumer Electronics Show to talk to my friends at Gateway. And I said, how about investing in me? I want to do TV. At that time, Gateway had like 500 country stores, retail stores. All across the U.S. All across the U.S. And I found a U.S. retail store.

43:30The personal computers' price point went from like$2 ,500 average to like$1 ,000. Right. So, I mean, at that time, PCs were getting cheaper for consumers, but not much cheaper to make, I guess. So, imagine Gateway was just cutting their profit margin in half. Yeah. so they were suffering because they lost 50 % of their margin to support the stores so they went to the consumer electronics store and they wanted to know what else to put in the store and so I went to them and said I want to keep investing in me and so they turned around and said how about this, why don't you help us get into this place under the gateway brand so we can settle at the gateway country stores so later on they said okay, in that case, we'll pay you 2 % of all the revenue you help us generate on TV.

44:29And on top of that, we'll pay you$20 ,000 a month. So here I say, okay, I started Vizio as a consultant. And my own money started from my second mortgage, my house,$400 ,000 to fund my business. I hired a few people who's been with me for a long time. and we started the business. So just to clarify, you went to Gateway to pitch them an idea on cheaper plasma TVs, but then you started a business called Vizio? I started the business as V-Ink. V-Ink, okay. And the brand was called V? The brand initially was called V at the time. So actually my first TV was V. Right. Right. And the business was to make plasma televisions for Gateway under their brand?

45:20My original business was selling V TVs, but I had no funding. And Gateway said, help us get into the Gateway brand. I said, okay, we'll do Gateway brand instead. So I changed my business plan. I said, I'll do it because you're paying me. So from 2002, 2003, and 2004, the very beginning of the Vizio, V-In later became Vizio, we were making money from Gateway. So I went to Asia, set out a factory for them. I went to Korea to get the component for them. I went to the chip manufacturer to procure chair for them. Computer chips, yeah. With everything for them. And they just marketed the product, which we helped them build.

46:04You were trying to get the cost of a plasma TV down to under$3 ,000, which you did, and that was kind of crazy. How did you do that? How were you able to get them so much? If they were selling for$15 ,000, how were you able to get the retail price down to$3 ,000? Yeah, the same thing I have been doing all my life, right? Simplify the supply chain and control costs. The supply chain at that time for Sony and Panasonic is Sony will build a TV in Japan, which is very expensive. They will build everything, right? They'll build even their own plasma screen. They were vertically integrated, totally vertically integrated.

46:47Completely integrated, so they build it. It's already a little bit more expensive than it should. And they sell it to Sony US, another layer of margin, right? So Sony US has a big organization, and they do Sony marketing. and was adding additional overhead. And Sony would probably sell it to a distributor. The distributor would add more margin. The distributor would sell to Circuit City at a time. The Circuit City will market Plasma screen as their ultra high end for ultra rich, uber wealthy people. The billionaire in Beverly Hills. And they were just like white glove service. And they will mark out like 40 points.

47:28So what did you do to beat that? Like what was your strategy? I found the right factory in Taiwan that can be a lot cheaper than at the time the labor costs in Japan. And the components are all the same. At the same time, we're vertically deintegrated and use that efficiency and we pass the saving to the consumer. So I want the gateway to say, let's do the same thing we've done before. You have your own retail store. You don't need a lot of margin. You go direct.

48:02Why don't we come back in just a moment, how William's gateway strategy to go direct gets derailed, leading him to start a new business and revive an old idea. Stay with us. I'm Guy Raz and you're listening to How I Built This.

48:26Shopping for eggs should be simple. A happy hen makes a happy egg. And that's why eggs from Happy Egg are so delicious. Happy Egg partners with family farms across the Midwest to raise happy hens outdoors. The proof is inside the shell. A tasty orange yolk. It's the difference you can see and taste. I just made an incredible omelet with eggs from Happy Egg. It was delicious and so fresh. Once you crack open a Happy Egg, you can see and taste the difference right away. It's obvious. Visit www.happyegg.com slash built to find Happy Egg near you. Ever had one of those afternoons where your brain just quits on you?

49:14You're sluggish, hangry, maybe even a little foggy. What if it's your glucose? See, glucose is an energy currency for your mind and body. When it's stable, you're on point. When it crashes, so can you. That's why Lingo is so interesting. Lingo is a glucose wearable designed to help you connect the dots between your glucose and what you eat, how you move, and how you feel. It shows your glucose data in real time. Instead of guessing, you see the impact of your choices. Maybe that healthy snack is actually sending your glucose on a roller coaster. Or that afternoon walk is the perfect stabilizer.

49:51It's about unlocking your consistent best all day long by truly understanding your body's unique responses. Get to know your glucose and learn about how to build healthy habits that work for you with Lingo, designed for you by Abbott. Through November 30th, use code GUI10 on HelloLingo.com to get 10 % off a Lingo plan purchase, one use per customer. This offer cannot be combined with other offers, U.S., Puerto Rico, and U.K. only. The Lingo Glucose System is for users 18 years and older, not on insulin. It is not intended for diagnosis of diseases, including diabetes. Individual responses may vary.

50:35hey welcome back to how i built this i'm guy raz so it's 2004 and william has teamed up with his old partners at gateway to sell affordable flat screen tvs and they're selling well at first but then by 2004 gaby was under a lot of pressure because the pc price went down even further Right. And they had pressure to shut down the country stores because I think each store at that time is costing them like$1 million a year to run. So for finding a store, that's$500 million. So they had to shut down the store. But when you shut down the store, nobody, when people buy TV, they want to see it. Right.

51:15So they end up shutting down the store. Once they shut down the store, they say, we're going to get out of TV business. Which meant that you were going to focus on building at your brand, essentially. Yeah, so I tried to license the brand from them. They don't want to license to me. And I say, okay, what do I do, right? So I came up with my own brand called Vizio and I went to the supplier, tried to get them to build TV for me. But just to be clear, Gateway would not, even though they decided to get out of the business entirely, Plasma, they would not license the brand name to you. Yeah. So you decided, well, I'm just going to come up with a new brand name.

51:53Yeah. It's also an interesting time because most televisions in 2002, really when you launched Vizio, were still big rear projection TVs. They were like huge, heavy things. If you had a flat screen plasma TV, you were a very wealthy person. Yeah. So you start to produce these televisions. But I think you also did something which proved to be very prescient, which is you cut a deal with Costco, right, that they would sell your televisions. And did that happen almost immediately that you made that deal with them? Yeah. So around, I think, 2004, 2005, I used to sell computer monitor at Costco. So I know the people a little bit.

52:39You had a connection there. I had a connection there. So at the time, Costco had no market share for TVs. Yeah, people didn't buy that at Costco at the time. They still mainly bought, you know, food. Yeah, because people like Sony and Panasonic, they don't want to deal with Costco. Right. They give Costco the leftovers because they want to protect their existing dealership with Circuit City and Best Buy. So I went to Costco and say, you know, you guys are so aggressive in costs, and your biggest frustration is that you cannot get good brand product for you. What did you carry us? Let me prove to you that we can work together and disrupt the whole TV market.

53:25And they're very efficient because at that time their break-even is around 9.5%. And they don't want to make money on merchandising anyway. They just want to make money on membership fee, right? The membership fee, yeah. And merchandising for them is a service for members. And it was the same mentality. I say, I don't need to make a lot of money. I'm pretty small, but I can put together a great screen for you at$2 ,500. So we did the deal. $2 ,500 that they would buy the televisions from you. They would buy like$2 ,400 and sell it for$2 ,500. Wow. So their margins were, wow. And so all of a sudden, people would go to Costco and see these flat screen TVs for$2 ,500.

54:06Yeah. Yeah. It was so like a hot cake. And the government's happy because more people are buying digital TV. And Koso is really happy because all of a sudden there's somebody in the consumer electronics space. I started to grow my business. What's remarkable is that there are parallels between the Vizio story and your previous company, the mag, you know, the monitor company that really had this rapid rise and then a fall. But here, I mean, within a few years, you hit$700 million in revenue, right? Vizio, I think by 2007, so just a few years after you launch it, it was the number one HDTV brand in the US.

54:48It surpassed Samsung at a market share of like 14, you know, and a half percent. And from what I understand, that year, you did about$2 billion in sales, which is remarkable. But what I'm wondering is, why didn't the big players see this coming? Samsung, Sony, Panasonic. I mean, why didn't they compete when they saw you selling these TVs at Costco and just selling these TVs like hotcakes? Yeah, a legacy. I think their legacy relationship, their legacy business model, right? I mean, I pick a pounder like Costco. I mean, all they need is 9 % to break even. You got Circuit City require, what, 25 % to break even.

55:34They had to make 25 % margins to break even. To break even. And so Costco clear was the winner. And also, we look at inventory control like a hawk versus big companies like Sony and Panasonic. And for them to make a decision, the salesperson got to talk to their U.S. corporate. U.S. corporate got to talk to their Japanese counterpart. And Japanese counterpart got to go up. It was like 25. I don't know how many tiers are reporting. We had one tier. So if we believe it's the right thing to do, we'll do it right away. So it's about efficiency. And we have, you know, a few people and they have a lot of people.

56:12I read a stat that you claimed it in 2007 that your overhead was 0.7 % of sales. That was your overhead cost. And that your competitors, their overhead cost was 10 % of sales or more. Yeah. So your costs were a fraction. Yeah. Now, here's my question, though. I mean, you saw this happen in a different business before where you catch a wave. There's all this excitement, but then the other competitors come in. So I know you had this strategy of like, let's make cheap TVs. Let's sell them to cut through Costco and then eventually Walmart and Kmart and others. But you must have known in the back of your mind that history could repeat itself, that very soon the big players were going to figure out how to make cheap TVs and go after your customers.

57:02Yes. That was a tuition I paid dearly for. When did that start happening? I mean, when did you start seeing some of these competing brands start to come in? Right around the same time, there's a lot of people trying to compete in the space. A lot of new brands came in. It was a brand called Olivia. some of my suppliers even had their own brand so I say okay well we better be really efficient we're really smart we better have better product and we better have a better management team so that means I can't manage everything by myself by technology anymore I want a great team of people so I start to hire who understand finance better than me so I start to spend a lot of time putting together a great team Yeah.

57:50I mean, it's interesting because Vizio's sort of, you know, your sales would go up and down and up and down. Like, you know, 2007, I mentioned$2 billion in sales. But then there were some years, you know, where the sales were, you know,$3 billion, but then some years they went down to$1.5 billion. And I know that this is a tough business, right? And so was the outside pressure on your sales really just simply a matter of more competitors? A lot of competition, right? But we invest heavily into the company. I think that kind of set us apart, right? I say this time around, I'm not going to be – money is not the only thing, right?

58:35I want to make physio an enterprise. So we invest in the brand, we invest in the people. And around 2008, 2009, I think, God, my competitor on hardware is getting stronger and stronger. Sooner or later, I got to add more value. Right. And I guess to add more value, you revived this earlier idea you had about making smart TVs because right back in the late 90s, when you tried doing that, it didn't work. But now you're talking about 10 years later, the technology is better. So I guess you went for it again, right? Yeah, I went back to my roots. I say, we got to have a recurring revenue. I say, how do we do that?

59:18We got to get TV connected to the internet again. I think instead of making money once on TV sales, the same customer probably come back seven years later to replace their TV. I say, why don't we just make money every time people turn on the TV? How do we do that? And I started investing into internet TV in 2009. We started shipping the first internet TV on a digital TV in 2009. And did that really turn things around? Yeah, actually. And we got Hulu, YouTube, and Netflix. Although it's not 100 % of our volume, people respect that, right? So people say, well, what is the streaming? Right. We had the first Wi-Fi TV, and we had the first TV with a little keyboard, so you can browse the web.

1:00:11And back then, with T-Nob, it was Yahoo, and they built the first operating system for TV for us. Eventually, I mean, now we're going into 2024. I mean, you guys did eventually go public, but in 2024, you were outright acquired by Walmart. They bought Vizio for$2.3 billion. And Walmart, it's amazing, I read that. According to Walmart, 90 % of Americans shop at Walmart every year. Tell me about the decision to go with Walmart. Because I mean, you guys had gone public at one time, you were valued at$3.5 billion. And then the value had gone up and down. But, you know, pretty good outcome,$2.3 billion to acquire the business in 2024.

1:01:01Was it kind of a relief for you when that happened, when that offer came through? Well, it's bitter and sweet, right? As an entrepreneur, I don't think it's my intention to ever stop solving a world problem for this industry. I love attacking, making TV better. so when they came to us and they wanted us to consider this deal it was a tough decision for me but if I look at what's best for the company potentially this is big this is a lot bigger I built from this is way beyond my entrepreneurship we built a platform last year we did over$700 million in media this is not something out of my garage anymore.

1:01:52This is an enterprise. I think one of the happiest moments in my life, I told that to a lot of people, it's like 10 years ago when I walked into Visio, I felt Visio was bigger than me. Which is what I want. It's like, I describe that to a lot of people. It's like having a daughter. I have a daughter. It's like someday you're going to walk down the aisle for her, with her, and marry her to somebody else. I mean, it's sad that it's not your girl anymore. But it's actually great because that's the outcome you want. You want her to continue her own legacy. You want her to start her own family. You want her to create her own chasing after her dream.

1:02:35So I couldn't find a better partner at Walmart to do that because it reached 90 % of America. When you think about what you built and what you achieved and everything that happened, I mean, how much of your success do you attribute to the work you put in? And how much do you think has to do with just getting lucky? You know, okay, you need to define being lucky. Because I was real unlucky on the plane. Yeah. I was real unlucky when I lost my first millions of dollars on my first business. I was very unlucky when I had a great idea on connected TV, smart TV, but I was way ahead of time. So I think my definition of luck is always worry more about other people surrounding you than yourself.

1:03:27I think the luck doesn't drop out of the sky. You can't stay at home and be lucky. But luck is given to you by people around you. And sometimes you never know who's going to make you, who's going to help you. I wasn't lucky enough because I didn't hire good enough back 20, 30 years ago. But now I surround myself with very, very critical, very smart business people, a lot smarter than me. I'm lucky. Yeah. Because I have them.

1:03:57That's William Wong, founder and CEO of Vizio. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And please sign up for my newsletter at GuyRoz.com or on Substack. This episode was produced by J.C. Howard with music composed by Rumtin Arablui. It was edited by Neva Grant with research help from Alex Chung. Our audio engineers were Robert Rodriguez and Maggie Luthar. Our production staff also includes Catherine Seifer, Iman Mani, Casey Herman, Sam Paulson, Chris Messini, Carrie Thompson, John Isabella, and Elaine Coates.

1:04:36I'm Guy Raz, and you've been listening to How I Built This.

1:05:02If you like How I Built This, you can listen early and ad-free right now by joining Wondery Plus in the Wondery app or on Apple Podcasts. Prime members can listen ad-free on Amazon Music. Before you go, tell us about yourself by filling out a short survey at wondery.com slash survey.