Interview: Sean Gallagher – Smart Homes
The move from the old unconnected world to the new information superhighway has been a painful one for many wannabe techies. It has usually meant a bedroom full of cables, with results based on trial and error, mixed with terror and despair as the old modems boing-boinged their way into our nightmares.
It was a hard road but the internet survived it and for those fortunate enough to have access to broadband or cable a bright new future has opened up. The content and possibilities of the wired world has expanded enormously as people now interact through blogs and chatrooms; buy practically anything through online shops and conduct a growing part of their lives in cyberspace.
But as the internet has improved many users are left to cope with amateur infrastructure in their own homes. This is where Sean Gallagher of Smarthomes hopes to find his market.
The idea behind Smarthomes is simple: new homes wired up to the latest professional standards. So much of what people expect from a modern home arrives by wire. Sean’s idea is to centralise the wiring so that cabling around a new home is optimised and the home owner has access to all the advantages of what used to be called “mod-cons” when they move in.
The range of services is very broad. What springs to mind immediately is TV and broadband. But there’s much more than that. PC networks allow the whole family to use computers spread around the house. The same network can allow all users to use one printer and one modem.
There’s the possibility of listening to music from a central player, or more commonly, a computer from where the music has been directly downloaded from the internet.
You can control the lighting. You can control the heating. You can install cctv and other security appliances. And when all of that has been considered there’s the new services and technologies coming down the line that you haven’t even heard of yet.
So how is it possible to build all this into new homes? Sean Gallaghers’s concept is the Smart Connection Centre. All the services coming in to a house are routed through the Centre and all the wiring around the house emanate from the centre. This centralises control and puts the user in charge of the technology.
Like all good ideas Smarthomes came about through bitter experience. Sean and his business partner – co-founder of Smarthomes – Derek Roddy bought new houses around the same time. Sean picks up the story.
“I met Derek on a trade trip to America for Louth businesses. We had both recently bought houses and they were so badly cabled that as soon a we moved in, we had to get people to come in a take up the skirting boards. There was one phone point supplied in the hall.
“To get Sky in, they had to drill a hole in the external wall and put up a big ugly box outside. To put in a music centre and home cinema speakers we had to run cables on top of the skirting boards and around the fireplace.
“So we had this discussion on a barstool in Chicago and we thought that there had to be a better way to cable houses for technology.”
But unlike a lot of the world-changing plans that many of us have hatched up over a few pints, when Sean got up the next morning it still seemed like a good idea. He spent the next three years researching the technology and coming up with a business model to make it work.
“We did a lot of market research to find out what the various stakeholders wanted in terms of solutions to this problem – people like builders, like property developers, like the electricians who wired houses.
“We found a solution that would meet all their needs and we then had to find a price point at which we could deliver it. Then we needed to find someone who could bring the technology together.
Sean hired a graduate from Dundalk IT for a year and together they did some development work. He left his job at Louth County Enterprise Board in 2000 and spent a year doing product development and market research.
By the end of 2001 Derek had left his job as well and joined up with Sean. In September 2002 Smarthomes was launched.
A lot of time and effort had been spent to get the company to this point. Sean has a background in enterprise start-up and he knew all about the dangers involved in burning up working capital. He and Derek came to an agreement.
“We agreed that neither of us would take a salary for the first two years. Both of us kept up other work during this period to keep ourselves going.”
The concept was launched at a number of trade shows and, as Sean concedes, trade was slow as people in the industry struggled to appreciate the idea behind Smarthomes.
“Also, it takes time to build a brand. And also the technology – like broadband – was just emerging here in 2002.
“More importantly, developers were selling houses off the plans and didn’t need to add extras. But now people have gotten used to having broadband in their offices and now they expect the same at home.”
Smarthomes now employs 45 people and turnover has reached e5 million. The aim is to increase the market here in Ireland and to expand into the UK with a projected turnover of e20m by 2009.
Sean was nominated as a finalist in the Ernst & Young Entrepreneur of the Year for 2006. The company also won the All-Island Seedcorn Business Competition by InterTrade Ireland in 2004.
The company was profitable almost from the start but not because sales were flying. A key point of Sean’s business philosophy was to keep costs under control so that along with the moratorium on their own wages they also used the cheapest premises and services they could find. They didn’t need to borrow any money to start the business.
Sean has plenty of advice for young entrepreneurs from his days in the enterprise board and from his own experience.
“An entrepreneur needs an idea they can believe in because there will be many dark days when you and your idea will be tested.
“Also you need to research the idea thoroughly because even the best idea in the world needs a market for it. If people are not prepared to pay for something then the market doesn’t exist.
“The other thing is to accept the gut feeling. There are many people who will tell you it won’t work but if you have a strong gut feeling and back it up with good research then you should go for it.”
An by way of learned advice Sean quotes Martin Naughton of Glen Dimplex: “Turnover is vanity, profit is sanity”.