How does a company sky rocket from zero to $10 million in annual revenue within a span of a few years, and then fall back to zero in a few months? This is the story of what happened to DSLRPros.com and why an entrepreneur decided to take the risk to save the brand and give out several hundred thousand dollars of his own money in refunds against his advisors? recommendations. Below, Mike Zaya, shares the story of why he acquired DSLRPros.com through an Asset Purchase Agreement and how he and his team are navigating the path to recovery.
Mike Zaya, CEO DSLRPros
DSLR Pros is an amazing brand with even more amazing customers. The company’s founder is a passionate and gifted engineer who knew exactly how to develop the drone products people wanted. At the time of the company?s founding a few years ago there was a huge gap in the drone market between what was available and what customers wanted. DSLR Pros was able to fill that gap and we can say without a shred of doubt that they understood what the market wanted out of drones. Initially, the company grew aggressively by developing original, custom kits to modify existing drones. With these kits, customers were able to use their drones for filming, photography, search and rescue and a lot more. DSLR Pros was paving the way for the products and features we see today. For example, the Nighthawk Kit defined what the industry could expect from a thermal capable drone and the Cannes HD Cinema Edition P2 Aerial Kit gave people the tools they needed to capture breathtaking aerial footage. Many of the features found in today?s DJI Phantom 3 were already being developed by DSLR Pros on their Phantom 2 kits. This innovative thinking and customer insight is what drew me to the company as a potential investor and entrepreneur.
So, what happened? How did a visionary company with explosive growth suddenly fall from grace? Well, it isn?t a simple answer. It was really a combination of things.
It all started a couple years ago. Given the company’s knack for developing advanced capabilities through drone modification kits, the founder decided the next step was to develop their own drones and multicopters. A department was created to develop the most advanced drones ever built for photography and filming. DSLRPros was breaking new ground and poised to change the market. Initially, it seemed like a fantastic idea. Website sales were strong and items were flying off the shelves, while R&D was humming along. Money was tight but it looked like a reasonable business decision. However, researching and developing new products costs a lot of money, time and focus. I?m not sure if the team understood what it would take to monetize their engineering efforts. There?s the saying, ?don?t let perfect be the enemy of good.? I think the team fell victim to chasing perfection. From what I can tell, the new drones in development were very nearly ready for launch. In hindsight, I?m pretty sure they could?ve released a very good product last year. But a growing list of additional capabilities and features kept delaying release dates. Now it?s 2016 and those drones never made it to market.
In addition to R&D costs eating up cash flow, the company ran into a problem with inventory management due to a pre-order mix-up in early 2015. A new high-end drone was being launched named the Solo by 3DR. The new Solo looked amazing and demand was high. Thanks to a solid vendor relationship with 3DR, DSLR Pros was selected to take preorders for the new Solo. While DSLR Pros had anticipated Solo sales would be big, there was no way they could?ve predicted how big. The initial shipment couldn?t cover the preorders and a second order was placed with 3DR immediately. Demand was skyrocketing and orders kept coming in. DSLR Pros believed that 3DR was going to ship more product, but due to a backlog of orders delays ensued. At some point it became clear that shipments were going to take longer than expected, so DSLRPros stopped taking preorders. Despite relentless follow-ups with 3DR, there simply wasn?t enough product to go around for all the vendors. Money needed to be refunded to customers. The company had invested heavily into promoting 3DR products and cash was tight. Inventory was shrinking and the core drone kit business was suffering due to a lack of inventory. In an effort to cut costs, a few employees of DSLR Pros had to be ?let go? and services were cut back. By Q3 2015, sales had been cut in half due to a lack of inventory and the loss of services revenue.
By October 2015, the company was in bad shape. Cash was gone and something had to be done. The owners decided to put the business up for sale. This is where I come into the picture. I first learned about DSLR Pros through an online classified listing. I met with the owners and learned about the problems the company was facing. Despite the issues, I was intrigued by the passion of the staff and excited by the innovative history of the company. Long story short, I decided DSLR Pros needed a second chance. I acquired the domain name, DSLRPros.com, and associated brand trademarks of the company from the original owners through an asset purchase agreement. This means my company, Neat Brands, Inc., purchased the domain and brand trademarks of DSLR Pros, but exist as a separate company from the owners. By purchasing the domain and branding, the transaction provided funds to the previous owners to work with their creditors, investors, and other vendors.
By November 2015, we officially owned DSLR Pros and begin the process of relaunching the brand. I knew from the very start that the loyal customers of DSLR Pros were the true value behind the brand name and so I made the decision to refund as many loyal customers as we possibly could. My legal and business advisors explained to me that under the terms of an asset purchase agreement the previous owners are liable for any debt, but I have always put customer happiness first. Even if I didn?t have to, there was never a doubt in my mind that we would do what it took to make things right with the customers of DSLR Pros. Within the first month, we reached out to hundreds of customers to begin the process of refunding orders, offering credit and shipping products. I personally called customers and spoke with a lot of people alongside my customer service team. We spent many days just contacting people non-stop to send them their refunds.
We are now operating on a new level of effectiveness. Customer service is open and you can reach us regularly by phone, chat or email. In 2016, I expect to invest millions of dollars to develop new products, kits, and services. The demand is there and I have a lot of faith in the staff and loyal customers behind DSLRPros.
While no one can ever predict what the future holds, I am excited to develop the company and bring it back to the resource that it once was. We’re starting to win back the support of our previous customers and sales are growing. I?m also working with the team to set deadlines on development and we should see new products launching very soon. We can learn from the missteps of the past and grow to be a stronger, faster, and better DSLRPros. Drones, like rollercoasters, have their ups and downs as well.
DSLRPros is working non-stop to get back to full operational level. The office of DSLR Pros has recently moved across country from Florida to California. In the new office, Mike is working alongside his employees to make DSLRPros a fantastic resource again for all levels of consumers.
Below is a recent customer testimonial:
“I just wanted to send a quick message to thank you for stepping up. I know back a few months ago a lot happened and a lot changed. First for the worst then for the best. When 3DR SOLO came out I was one of the first to pre order. At that time I know DSLR went through a rough time. For what ever reason I Did not receive my complete order. Yes very frustrating to say the least. At this time DSLR?fixed their internal problems and then reached out to me to, one be honest about this situation, an two, to Man up and fix the situation. Most companies could of let this go, lick of their wounds and try to bounce back, DSLR Pros hit it head on with respect and compassion. I just wanted to say Thank You and I appreciate how you handled the situation. You almost lost me as a customer! But by your actions I?will still?be using DSLR Pros in the Future.”
-Simon of Tri Valley Entertainment and Productions – Facebook