A deal­maker re­sus­ci­tates the Vic­trola brand and makes a killing in, yes, record play­ers.

a deal­maker re­sus­ci­tates the Vic­trola brand and makes a killing in, yes, record play­ers.

Forbes - - CONTENTS - By zacK o’Mal­ley greenBurg

Corey Lieblein isn’t ex­actly old-fash­ioned. He lives in a Long Is­land, New York, home with mid­cen­tury mod­ern decor, and he named his com­pany In­no­va­tive Tech­nol­ogy in a nod to the elec­tronic gad­gets he’s been sell­ing since 2003. Yet the best busi­ness de­ci­sion he ever made was buy­ing a 112-year-old record-player brand: Vic­trola.

Three years ago, In­no­va­tive Tech­nol­ogy was do­ing $60 mil­lion in an­nual sales, a lit­tle over half of that com­ing from a bur­geon­ing busi­ness ped­dling generic turnta­bles through re­tail­ers like Sam’s Club and Kohl’s for as lit­tle as $49.99. But Lieblein longed for a brand iden­tity that would res­onate with con- sumers. So he pur­chased the de­funct trade­mark for Vic­trola, one of Amer­ica’s first man­u­fac­tur­ers of record play­ers, pay­ing “deep into the six fig­ures.” “It was the juici­est cherry on top of the most deca­dent sun­dae,” says the trim 46-yearold with Mitt Rom­ney hair. “Now we had the most his­tor­i­cally rich brand on planet Earth.”

Though Lieblein—a con­sum­mate sales­man who’s hawked ev­ery­thing from DVD play­ers to women’s cloth­ing—is prone to ex­ag­ger­a­tion, vinyl’s come­back has been im­pres­sive. Af­ter nearly spin­ning into obliv­ion, LP sales have in­creased 12 straight years, leap­ing 9% to 14.3 mil­lion in 2017. That’s 14% of all nondig­i­tal al­bum sales, a small slice of the phys­i­cal cat­e­gory that is still dom­i­nated by the de­clin­ing CD for­mat, but last year’s vinyl sales were the high­est since Nielsen started mea­sur­ing in the early 1990s. And they’re still grow­ing, says David Bakula, se­nior vice pres­i­dent of in­dus­try in­sights at Nielsen: “From a mass-merchant stand­point, you see them all the time in places like Ur­ban Out­fit­ters, Tar­get and Wal­mart.”

Lieblein’s prod­ucts can be found in those places and be­yond—in­clud­ing in the foyer of his head­quar­ters in Port Wash­ing­ton, New York, where suit­case turnta­bles gleam in chrome and ruby red (the ’50s Retro model) across from creaky wooden mu­sic play­ers (the Avi­a­tor) that look more likely to be found at a garage sale than a shop­ping mall.

Pri­vately held In­no­va­tive Tech­nol­ogy, which em­ploys about 50 full-time plus an­other 50 or so sales con­trac­tors, now does $100 mil­lion in an­nual rev­enue, roughly 80% of which comes from Vic­trola-branded units. And it’s been prof­itable for 15 straight years. Ac­cord­ing to the re­search out­fit NPD Group, that makes Lieblein’s com­pany the world’s top seller of record play­ers. Though au­dio­philes may pre­fer high-end Euro­pean op­tions that can run north of $100,000 per unit, Lieblein has more room to run with ca­sual lis­ten­ers at his lower price point. “As kids go out of col­lege dorms and they’re buy­ing their first homes or rent­ing, I see more of those things be­com--

ing a part of the house,” says Caren Kelle­her, founder of press­ing plant Gold Rush Vinyl in Austin, Texas. “It sends a signal of cool.”

Lieblein’s ré­sumé in­cludes a gig as a re­tail an­a­lyst with Saks Fifth Av­enue right out of col­lege and a stint sell­ing women’s pri­vate la­bel sports­wear in New York’s Gar­ment District. Then he moved back to Long Is­land and started a com­pany called Residue World­wide that traded in raw plastic. One month, two cus­tomers filed for bank­ruptcy, leav­ing him $60,000 in the hole. He got out of it by lin­ing up a deal to flip 50,000 whole­sale DVD play­ers to a friend at a big-box re­tailer. When the sale went through, Lieblein de­cided he’d found his call­ing and jet­ted off to Hong Kong, where he dis­cov­ered a sup­ply-chain-man­age­ment com­pany that helped him source elec­tron­ics from Chi­nese fac­to­ries. And thus In­no­va­tive Tech­nol­ogy was born.

Lieblein picked the name mostly be­cause he liked the ab­bre­vi­a­tion. (“Like, I’ve got IT,” he says. “You’ve got to have IT.”) He rented a 5-by-12-foot

of­fice in his fa­ther’s Port Wash­ing­ton build­ing for $1,000 a month. “I started the com­pany,” he says, “with one client and one item, sit­ting in a room by my­self hav­ing no idea what the hell I was do­ing.”

He be­gan sell­ing record play­ers af­ter he chanced upon a turntable-CD-cas­sette combo unit while walk­ing through a trade show in China. En­am­ored of the old-school look of its wooden cabi­net, he be­gan car­ry­ing the item in 2004, later adding a vinyl-to-CD trans­fer fea­ture at the re­quest of a cus­tomer. As sales in­creased, he started to think about the old Vic­trola his fa­ther had owned, and he tracked down the brand’s patent holder.

Af­ter the ac­qui­si­tion, Lieblein be­gan slap­ping the long-dor­mant name on his turnta­bles, im­bu­ing them with a vin­tage feel but mak­ing no changes to the com­po­nents. He promised his re­tail­ers the brand shift wouldn’t re­sult in higher prices—just greater demand, which is what hap­pened.

Not all of Lieblein’s ideas have worked. Five years ago he launched Golden So­lu­tions, a line of elec­tron­ics mar­keted to se­nior cit­i­zens (tele­phone am­pli­fiers, high-fre­quency head­phones) but couldn’t find a way to mar­ket them. Two years ago he came up with Bright Tunes, which called for tiny Blue­tooth speak­ers to be mounted on strings of dec­o­ra­tive lights, en­abling users to turn a Christ­mas tree into a boom box, but he says cus­tomers were re­luc­tant to pay more than $10 for tree lights. “I’m not afraid to fail,” Lieblein says.

Still, by 2015 he found him­self limited by the con­straints of be­ing an in­de­pen­dent small busi­ness. In the ramp-up to the hol­i­days one year, he had $6 mil­lion in the bank and $7.9 mil­lion in payables, ne­ces­si­tat­ing some ac­ro­batic short-term bor­row­ing. “I said, ‘This is sheer in­san­ity—I should be fo­cus­ing on how to grow my busi­ness, not how to fi­nance the busi­ness,’ ” he says. “At that point, what I wanted to do was find a fi­nan­cial part­ner.”

Two years ago RAF In­dus­tries, a Penn­syl­va­nia-based pri­vate eq­uity firm, came call­ing. RAF tends to hold po­si­tions in port­fo­lio com­pa­nies for 15 years in­stead of gut­ting and flip­ping them, which Lieblein liked. So he sold a ma­jor­ity stake— he won’t say ex­actly how much or what he got but notes that he still owns “a sig­nif­i­cant por­tion.” With RAF on board, Lieblein was able to un­der­take pricey projects like re­vamp­ing his in­ven­tory man­age­ment sys­tems. “The de­ci­sion to do a deal with Corey was a no-brainer,” says Rick Hor­rowitz, RAF’s pres­i­dent. “We aim to part­ner with tal­ented, driven and pas­sion­ate en­trepreneurs lead­ing high-growth com­pa­nies that have dif­fer­en­ti­ated prod­ucts or ser­vices and mean­ing­ful brands. Corey and Vic­trola ex­em­plify this.”

RAF seems to be bet­ting that Lieblein can— some­what iron­i­cally—con­tinue to ex­pand sales of his ana­log prod­ucts through digital chan­nels. His e-com­merce sales grew from $3 mil­lion in 2015 to some $30 mil­lion last year, aided by the poach­ing of a VP from Brook­stone.

Count Lieblein among those sur­prised by his tra­jec­tory. Back in 2003, he says, “if some­one had told me I’d be the mar­ket leader in turnta­bles 15 years later, I prob­a­bly would have laughed.”

Turn­ing the ta­bles: When Corey Lieblein, shown in his Port Wash­ing­ton, New York, head­quar­ters, added the Vic­trola brand, “the mar­ket went ab­so­lutely crazy.”

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