Making connections: New Age Electronics

Smart Business Los Angeles, Mar 01, 2006 by Patsko, Scott

When Lee Perlman was a young man working for his father's chain of electronics stores, he learned quickly that what you sell is important, but not as important as how you go about selling it.

After expanding his father's company into a successful wholesale business, Perlman found himself dealing with a diverse group of retailers.

"The customer was typically in a big city like Miami, New York, Chicago," Perlman says. "They'd have a photo store or a gift store or something like that. There were different ethnicities of businesspeople. Every group was represented. I got a life lesson very quickly in how to deal with people, how to be courteous and learn from their culture. You have to enjoy their company. That has stuck with me to this day."

Today, Perlman is CEO and chairman of New Age Electronics Inc., a sales outsourcing powerhouse that provides logistics, distribution and remanufacturing services to consumer technology manufacturers and retailers. The company earned $530 million in 2003, a 50 percent increase from 2002; 2004 sales were in excess of $700 million.

As New Age nears the billion-dollar mark, it's evident that relationships have had as much to do with its success as hard work and foresight.

"The No. 1 thing as a businessman and as businesspeople we have to do in every industry is earn a person's respect," says Perlman, who co-founded New Age in 1988. "You have to be very diplomatic and kind and make them understand how hard you are working. Be there to protect them. If they feel you're honest and can make a good buck out of it, they will be loyal to you."

That way of thinking led to New Age working with major manufacturers such as Hewlett-Packard, Canon, Sharp and Panasonic, and retailers such as Wal-Mart, Office Depot and Costco.

Perlman says New Age's strength is identifying underserved needs and finding innovative ways to serve those needs. However, convincing a billion-dollar company that you can help it achieve greater efficiency and success can be a tricky proposition.

"A lot of people make the mistake of drinking their own Kool-Aid day in and day out," says Perlman. "They think they are high and mighty, and they've got their own answers. Their first instinct is that you're not believable. They don't trust you.

"But I try to be very forthright, simple and clear as I'm describing what we can do for a vendor and what we can do for their customer and end user. No more, no less. You get your foot in the door, and you've got a start."

Sometimes it takes a while to get that foot in the door. New Age was mostly handling distribution for Sharp home office products and Packard Bell computers in the early 1990s when, after about five years of trying, it finally got the attention of somebody at HewlettPackard.

"I wrote a white paper on how we could sell their fax machines to retail," says Perlman. "We worked with them and were successful. Getting HP was a feather in our cap. It put us on the radar screen. And each year, HP gave us another opportunity."

Perlman says that there are two keys to success he's learned in his 18 years with New Age and his 28 years in the industry: consistency, and your word is your bond.

Consistency comes from identifying ways to help another company become more successful and efficient.

"It's not an innate quality," he says. "It becomes intuitive over time. If you're in a marketplace and you're visiting on a consistent basis with your customer, you've got your feet on the street and your ear listening to the ground. You've got your eyes wide open. You're getting input from the vendor and the customer. They're telling you what customers are looking for.

"At the same time, the manufacturer is telling you what they want in the marketplace. You know what could possibly work, and you show them that it would be the logical way. We don't win at everything we do, but we like to hit a lot of singles. Home runs come, but we like to be consistent."

Relationships form the basis of a solid business deal, but you still have to deliver on your promises with a business model that works.

From the mid-1970s to the rnid-1980s, Perlman helped his father's company, Zemex, become a national presence with the concept of low overhead, low head count and warehouses in key locations for quick and easy shipment. It's the same formula he used to build New Age. And though it works together with some of the largest retailers and wholesalers in the world, New Age has just 131 employees and four warehouses.

"We started out thinking we'd have a nice, small business," says Perlman. "Maybe do $20 million and have a nice living. Don't kill ourselves."

But the explosion of products for the small office/home office changed everything as fax machines, copiers and other products began making their way into homes. Soon, Perlman found Ids business booming as he continued building relationships and identifying ways he could help his customer base. This changed the way he managed New Age.

"In the old days, the one thing I would pride myself on was being a real myopic manager," says Perlman. "I would look at everything. I was a stickler for the process and dotting the I's and crossing the T's.