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- [00:03]
A
In roughly 1996, design build activity was maybe 15% of the market. In 2025, it was 35%. By 2030, it's anticipated that that goes to 50%.
- [00:24]
B
You see design firms buying design firms, you see reps buying reps, and you see manufacturers buying manufacturers. Why do people think they want to be in this business when they're not?
- [00:35]
A
This industry is far too inductive. You're going to have to understand what good gets you. The purpose isn't clear from a customer standpoint. Margin dollars aren't owed, they're earned. Partnership isn't owed, it's earned. Enthusiasm isn't owed, it's earned. Layer on the fact that this is a highly iterative process, that there is nothing sequential here. But you'd better understand who you have to talk to and what information you're going to have to translate. Right. The project will become punitive when it's not executed correctly. You can't miss it because it shows up. If we're going to say that a relationship is poetry, we're not going to get anywhere. You know, a relationship has definitive qualified elements to it that turn the dial. I'm not sure that. And this will be a little provocative, that everyone in the channel likes the members that are there. You know, does your manufacturer like the fact that it has a rep? Network. Foreign.
- [01:59]
C
I want to thank five companies that show up for this community. Gotham, Diode, led, Kelvix, Lead Flex and Targetta usa. Because this show exists thanks to their belief in designers and the work that they do every day. I'm really excited about this conversation and I want to start where design actually begins. Every designer begins by imagining how a space should feel calm, intimate, creating clarity or wonder. Yet lighting too often demands compromise. Performance versus flexibility, intent versus cost. Good instead of better. Gotham starts with a different belief. Those decisions shouldn't carry the weight they usually do because the right options are already built in. Their approach to architectural downlining is designed around freedom. The freedom to explore, adapt and refine without limitation. This is the new Gotham, where every option is already there.
- [02:52]
B
See it for yourself.
- [02:53]
C
Experience how Gotham's Ivo makes lighting design easier, faster and more intuitive. Request a sample customized to your specs@gothamlighting.com free samples now. I'm excited to share this conversation with Jeff. Let's get to it.
- [03:10]
B
Jeff, thanks for joining me.
- [03:11]
A
Yeah, thanks for having me.
- [03:13]
B
There's been a lot of consolidation. There's been a lot of opportunity, and there's also been a lot of change in architectural, lighting and Lighting in general over the last, we'll call it 15 to 20 years. When you look at where we're at today, what do you think every engineer, designer, contractor needs to be aware of because it's going to affect their business and the outcome of this industry in the next 24 months?
- [03:39]
A
I think there are at least three things. I would call it TTO. And what I mean by that is that there is talent scarcity, there is enhanced technical complexity, and there is a desire and a demand to move from an outlook of products and components to outcomes. So for me, organizing around this TTO is very important for the specification community. Community nethers to organize around the talent scarcity is you've got a massive egress from those that have understood the nuanced aspects of this business. And it's complicated. The technical complexity, it's far beyond what we knew earlier. You know, if you knew the lumens, the wattage, you know, the, the, the, the general ISO candela chart, you were pretty good. Today you're dealing with cybersecurity IoT applications that want to know what the experience is going to be from the minute I knock on the door to the moment I sit in this chair. And that complexity is far beyond what it was. And then by outcome driven, it's the same thing. The application wants to be fully understood and fully realized at the end of the day around all of that complexity. Look, I had a professor when I was in college and I had to fund my own college experience. And I remember going to a class and they put a big F on the board and proceeded to let us know as students what it would take to not get an F. And I left the class. I didn't say anything at the time, but I was horrified because what I wanted to hear was how to get an A. That's what I'm here for. And so I think for this talent, it's in search. It doesn't want to self heal, it doesn't want to figure out the problems on the run. It wants guidance and mentorship and someone to shepherd it through the process and that is less and less available. The process is taught as though it's linear. Start at, at programming, we move through schematic design, design development, bid negotiation, construction, commissioning, whatever the sequence is that you want to, but it's not linear. And we talk about who enters what when. Well, at programming it's the architect and they want to know if he can build a big building. Is that the time to start generating bills of material? Of course. Not, it's just the time to say, yes, I can do that. Where I'm headed is you take all of that in a linear process and, and then try to layer on the fact that this is a highly iterative process. It doesn't start and stop and there is nothing sequential here. Things are parallel processing. They're revisiting and retouching each other over and over again. I don't think long winded that there is an AI solution or something beyond people teaching people that, that fills that gap, you know, follow some basic tenets that we're going to have to deal with over the course of time. Right. You have the constraint of margins that are taking place. Some of this will drive back to how we opened around, you know, the tto. You have this outcome driven, a desire that's in the marketplace. You have market turmoil. You know, any one of these could become a whole, you know, big podcast in and of themselves. But, but, but we have to be prescriptive in addressing them in a, in a smaller way too. You have, you know, project complexity that's taking place. You have strategic ambiguity. You have this idea of scope shift that's taking place on a daily basis. And you have this concept of speed. How does that all go? Just so you know how I remember that, even for me, I reinforce that because the acronym for it in my own mind, and there's no brilliance here, just helps me remember is compass. And the idea isn't to be comprehensive around all of it, but you better start.
- [08:24]
B
So we're always on our toes. There's truth to that, but there's also challenge to it, right? Why does it have to be this way? Why can't we, why can't we all agree to simplify it and make this, I don't know, better.
- [08:42]
A
Very often in our attempt to optimize the parts, you suboptimize the whole. And this industry has run on that dynamic for way too long. We have too many pieces attempting to optimize their piece. But like I said at the end, just for emphasis, it suboptimizes the whole.
- [09:10]
B
Is there something in here that's critical that people are ignoring?
- [09:15]
A
My coaching is that try to be deductive, not inductive. Inductive is fun. You and I sit here, we have a bunch of blocks, we start laying them up and at some point it looks like something and somebody says, hey, you guys are building a. Maybe we were, maybe we weren't. Deductive is having a concept and a blueprint for where you want to go and Then building accordingly. This industry is far too inductive. We just start laying a brick somewhere and at the end of the day, that takes form. Won't work long time. Like I said, these projects are shifting from parts and pieces to outcomes. And outcomes need to be defined up front.
- [10:03]
B
What's a good example of something that could be deductive but isn't right now?
- [10:08]
A
Take a huge controls application. You have an airport. They want to create a lot to gate experience at the end of the day. X specifier based out of wherever that does this type of work is busy trying to lay it out. There's a sophisticated contractor that's the one that's going to get the job, that has to get, get, get moving and they're running in their own direction. Timing isn't aligned, things go forward and you end up with a completely inductive. Everybody thinks at the end that, oh, it was specified that way, therefore, no. In some cases you'd be shocked to find out that the contractor already had issued the PO for a system that wasn't even defined. You have to have a deductive blueprint. Where are we going with this thing? Who's going to be involved? When? Who are they going to have to talk to through the process? Do I have the right person talking to them? Controls people are excellent. Some can operate at 30,000ft, they're super cerebral. But by the time the rubber gets to hit the road and they have to deal with the local contractor doing the install, they might not be as good. That's okay. It doesn't have to be one person, but you'd better understand who you have to talk to and what information you're going to have to translate to have this come together effectively to get it done. That type of architecture, if you will, is just not nearly as prevalent as it ought to be.
- [11:45]
B
It doesn't matter what you say to use if it can't be used. It's this notion of specification. In theory, it should all work. We've listened to everyone, we've read all the literature and we verified this data against that data. The critical piece that we're missing,
- [12:07]
C
I guess.
- [12:07]
B
Are we missing it or have we just not figured it out yet?
- [12:11]
A
You can't miss it because it shows up. The project will become punitive when it's not executed correctly. Now the finger pointing can begin. I'd always much rather go back to taking a look at our own architecture and deciding whether or not we had it structured properly to address the challenge at hand. Again, I'd emphasize the fact that that we have to be focused on the outcome. If we can't all coalesce around what the outcome ought to be and to maybe weave a couple of these other wanderings in.
- [12:51]
B
There's so much that goes on in all of this, right? Lighting is one thing, lighting controls is another. But together they become this system. And this systemized approach is no longer an approach. It's just kind of a mandate. If we have a cable or a data point, how many things can we get out of it? That creates interest. Who does that create interest by? People who have money, who want to make more money.
- [13:19]
C
Investors.
- [13:20]
B
Why do people think they want to be in this business when they're not? And why do they believe they can make money in it?
- [13:27]
A
Well, they work a spreadsheet and they believe that the spreadsheet suggests financial synergies. We're seeing repeatedly that in any number of cases that is not working very well, one plus one is equaling maybe one. That's not good math from an investment standpoint. And the challenge in the math and the arithmetic is that it's not getting local the way this business is being conducted. Conducted. If I sacrifice our relationship and the context of what I'm able to provide in that relationship, then the math won't yield. And you're just seeing a good deal of that when we go back. And again, I'm going to anchor on this compass just for a second. One of the S's was shifts in local connectivity. It's rampant. The person that I talked to yesterday is now over here. Or they've moved on, or they've just become exasperated and moved out. In many cases there is an enormous financial consequence to all of that. It's a relay race in some cases. And if you think about it, what's the most important piece in, you know, in a four person relay? How fast you are matters. Right. We've kind of covered that with speed of market change. But what's the next piece? It's the handoff. It's the ability to create the appropriate handoffs. And that's where the challenge is. You know, sure. Moving fast. Rithmetic seems to play out. Handoffs are no good. If we're going to say that a relationship is poetry, we're not going to get anywhere. You know, a relationship has definitive qualified elements to it that turn the dial. It means that we've done work together, that there's trust, that we've probably exercised projects together where the outcome was positive when it wasn't positive. We resolved the. When I didn't know I knew how to go get you the answer. When I got you the answer, it was timely. The poets don't know how to be analysts or the analysts don't know how to be poets. We'd better figure out how to unify our approach and get rid of that language. If we have any intention of moving forward, it's understanding that we can be brilliant inside these four walls. We truly can. You know, given that we all get to spend the next hour together and share our thought and our ideologue, you know, we could do nothing but celebrate how bright we are. But the test of that is when we take it outside the walls. And that's what I think is key, is for, is for good thought. You've got to get into the market too often today. You know, I hear it all the time. You know, the leadership hasn't. Hasn't met their own employees. They haven't gone out and met the key specifiers or contractors. Distributors are a slightly different deal because you have the NADs and the NEMR meetings and everybody gathers and goes together. You know, there is this old. And I know I'm going long here, but I don't know what the show was where business owners would put on a fake mustache or wig and go work alongside the. You know, there's power in that. You learn. And I'm not suggesting people play dress up, but I'm suggesting that they go and take the action.
- [17:30]
B
The market as defined by you is what.
- [17:35]
A
For me, it's the built environment and all those that interact to make it happen. That's the market specific to lighting and controls. When I work more broadly, it really doesn't change. It might not be a construction element, but it's always the same. These things are translatable.
- [18:00]
B
If I'm not mistaken. It's one of the fundamental reasons this concept of, you know, reps and distributors across every industry exist. It's, well, you know, a portion of it and you partner with us. Is that fair?
- [18:14]
A
You know, I think that you've got to get your thought organized in not you specifically, but all of us in a way that we can better understand and organize that understanding. I'll give you an example. For years, managing specification salespeople, you might have somebody that called on the architect, but they could never call an engineer ever. And vice versa. The engineer, engineering salesperson did not want to call on the architect. Right. It. Yes, I think that's where they default. But I would argue that you could organize that differently. Right. There are four things. Three Things, arguably we'll throw in a fourth that everybody wants to know. And I only say this to drive it to how we really need to start thinking about all kinds of things. So the architect, let's take three buckets. Architectural appeal, engineering and manufacturing performance. Three different buckets. Architect wants to understand them one way, engineer wants to understand them a different way. If we take a, take a room and I start with an engineer and I say, oh, this is fascinating, it's a rectilinear room, you're probably looking for a curvilinear response. Peers, I can't really tell, but maybe you're looking for a modern but warm approach to dealing with this. Therefore I recommend nickel plated chrome to deal with this. By the way, here are the mechanical characteristics we use solid metals. And finally, the performance aspect might be okay for an architect. Some would argue that price is in here somewhere too. But if you approach an engineer that way, they're out the door, right? Because they're already fiddling inside the fixture and if I start talking to them about the warmth of nickel plated chrome, they're out. So. So I have to reorganize that conversation. This extends to most elements, I'm sorry, of. Of what we do. Price is another one. You know, through many cases you hear about pricing transparency to whom? Pricing transparency to whom? Sure, we can default if there's margin in mystery and it happens here and there. In the other place, you know, the GC wants to know that they had a competitive bid. The sub wants to know that they've, you know, either met the specification at the best price or value engineered it to, you know, the best margin. The distributor doesn't want to get locked into a PO that they didn't drive upstream nor understand. And holding the bag. And the specifier ultimately wants to know that that building is going to look something like what they were paid to think out to best satisfy the owner. Yes, within budget and I'm leaning for effect. But the idea again going back and forth between these two is we have to logically bucket these things so that we can understand them and then speak a shared language if we just wander in dialogue. It's interesting academically, but it doesn't allow us to forward. There are things in place that we just, we have to look at. We have to look at them in sequence and think if there are better answers. And on this concept of price, I'd start with price to who a little bit of Rumpelstiltsknn comes into play because I've been around to see it. When I started, every specification had to be listed as must, must be. And it was largely a performance specification that was, was listed must be A, B and C. Along the way, many agents and people in the marketplace decided that developing a salespeople is really tough. Yeah, they're hard to manage. They start asking for stuff, they get antsy and they move on. And so what I'd rather do is develop an A line card. And an A line card further got defined by the number of lines you represent, not necessarily whether they were synergistic, complementary, you know, best of brands going forward. And the specification evolved from there to the multi name three name by name spec, multi name spec. Best spec an agent can write is one that lists them five times.
- [23:07]
B
Right.
- [23:07]
A
I mean, I have a 100% chance of writing that those specifications are never the same. Those line items are never, never the same. And so, you know, then, then we moved from a timing standpoint where the architect was on job or the specifier, whomever you want to list, all the way through commissioning. They're not, they're not. They create the design and largely they're gone in, in many cases on today's project. So who's left? The general contractor, the contractor that bought it. And they have the owner ear. And it's not a condemnation, it's just the reality of how it works. And they hold up two black pens and the owner needs to know about the brick that was chosen, the carpet, the wood. They don't have time for this. And they say, like this black pen? Or do you like this black pen? And the owner might be sophisticated enough to say, do they both write? And you're like, yeah, they both write. Well, this one's 50% less. Would you like for me to buy this one? And they say, sure, brilliant. Thanks for coming to me. That's the arbitrage in the specification cycle that takes place. So all I'm trying to paint through this Rumpelstiltskin analogy is that it isn't one thing. There is a genesis of change that has taken place that has led us to here. Understanding the history and deciding what needs to be addressed, refine it, is what's critical.
- [24:49]
B
So where are we now? What is here?
- [24:53]
A
I think right here is muddy. I think people are overwhelmed with how to think about it, and they're just not sure how to start. I'm not sure that. And this will be a little provocative, that everyone in the channel likes the members that are there. You know, does your manufacturer like the fact that it has a REP network. Some do, some don't. You'd have to listen to the to the back channel discussion to fully understand.
- [25:27]
B
Everybody likes it so long as everybody makes money.
- [25:30]
A
I think whenever you have margin compression and the tariff activity that's taken place, there's a lot of pointing as to where dollars are and the demand to reconcile them.
- [25:43]
B
Give me more of what you have.
- [25:45]
A
Well, that's exactly right. And you know, how often does the GC proposal get audited or the ec? Really a lot of that ends up in the rep is I think you made a lot of money. I'd like to see how much it was so that I can understand whether it was justified. It's not the right answer. It's not the right question.
- [26:10]
C
Before we keep going, I want to spotlight someone who shares the same obsession with the design detail that this podcast is built on. Every designer knows the success of a space depends on actually what shows up on site, and that's where Diode LED comes in. Lighting performance isn't an add on, it's the foundation of every successful linear lighting project. Designers need solutions that carry ideas smoothly from specification through installation, and Diode LED is built to support that reality. With industry leading inventory, reliable delivery and responsive support, Diode LED keeps pace with real project timelines, not theoretical ones. Real solutions for real projects, no matter the scale. Learn more about what's happening in Reno, Nevada@diodled.com I also want to take a moment to share another company that I respect and enjoy learning from. Kelvix doesn't just move fast, they move with purpose, helping the design world turn ambitious ideas into seamless, buildable realities. The Kelvix team works at the pace of your project, delivering tailored solutions backed by the people who know how quality, timing and precision elevate the final outcome. In every spec and every collaboration, Kelvix proves lighting is more than illumination. Lighting protects design intent, sharpens the details that matter, and brings spaces to life with clarity and ease. See what's coming next. From breakthrough products to standout projects@kalfix.com or on their social channels, there's also one more company that I want to introduce you to, because they consistently show up where it matters. At ledflex, Linear light is designed to do more than illuminate. It's engineered to shape how spaces are experienced. Rooted in British manufacturing, LED Flex works alongside lighting designers, interior designers, and architects worldwide, supporting projects where detail, precision and execution matter. They're not just a manufacturer, they're a technical partner, providing bespoke Solutions, rapid prototyping, commissioning and long term support from early concept through final handover. A flight is integral to your architecture. Choose a partner who stays with the project and learn more@leadflexgroup.com Pretty neat, huh? All right, let's get back to the conversation.
- [28:34]
B
There's a graph, right? There's like a graph of adoption and then there's a graph of cost. It's like stuff starts to get adopted, it becomes more efficient to produce and then poof, here you are and a technology becomes more commoditized than it was. There's less opportunity to, quote, sell the news or sell the features. Innovation hasn't necessarily had the shiny opportunity it's had in this industry as opposed to the forced opportunity to comply with. Face it, everything we missed the first time around and then now all the, all the promises of the technology. You look at tiny little private companies, they're one story. You look at larger public companies are totally different story. They have to return value to their shareholders. And there is this immense opportunity at the base of our industry which is, you know, lighting becoming electronics and systems. Not just bulbs, right? And sheet metal that has growth attached
- [29:45]
C
to it, that has attention attached to it.
- [29:47]
B
That's where this spreadsheet comes in. That's where this opportunity to maybe buy it and scale it comes in. That's where people come into what you and I are very familiar of as a relationship driven environment with their own foreign ideas. And we've seen it time and time again, it fails. Yet people are still knocking, people are still coming. This is the M and A world. Where are we at? What's going on with all of that?
- [30:20]
A
Well, I think I love the analogy when you were talking about the graph. The graph itself is something that you can apply to any number of things. And what you're talking about is where are the intersects on the X and Y axis? You know, when we start to throw some lines on there. In the shift to led, we understood that, you know, when you had an X and Y graph and you had a line illustrating lumens per watt in one direction and cost in another, that this was going to become a ubiquitous source. When we got to a penny per lumen at 100 lumens, it's going to shift. We're going to be lighting everything with LEDs. We also understood all of the, all of the subsequent consequence of that, which was people are going to stop at that point asking what the source was. Nobody cared. Went back to a discussion about the fixture. Nobody cared about the LED module itself in where you're headed today, I think we can also create like graphs of where the points of intersect are and how to manage those effectively. That is where math can help us understand how things are going forward. OLEDs failed along the same dimension. Cool fixture you could look at, encouraged you. The old Peter Nye as he evolved. Boy, it invites you to look at it as opposed to a point source. But it never, it liked to be controlled, had good long life, had some design functionality. You could create asymmetry and address space and different ways using these various panels over the course of time. But it never really got to the point where the lumens per watt and the cost allowed it to become a ubiquitous source in any way, shape or form. And it, you know, remained a kitschy thing. It didn't get, didn't get fully realized. Point really is to make sure that we use that right brain, left brain to understand the problem and try to address the solution and not, not try to force it.
- [32:49]
B
Everybody wants to buy everything. Everybody wants to make another dollar on something. Manufacturers are like, give me some of your overage. You can't take that. You can't hide it. Like, I can't believe we, you know, we've compressed our margins and, you know, kept our commissions at 10% and you're making more money than you've ever made before and we're not making any more on it. Like, and then you have this whole
- [33:15]
C
PE situation where people are just like, oh, whatever.
- [33:18]
B
Like, we've watched all these companies get bought and sold. It's insane how there's all these fingers being pointed about, well, if I could just get some of the money you're making, we'd be better off. And then there's this whole outside force that's saying, we don't know what we don't know, we don't know anything about that. And like, there's just a market opportunity here. I want to know why people on the outside don't know about the inside. Like, isn't it a due diligence process? Like, how does this keep getting screwed up?
- [33:54]
A
It's such a good question. And I think it gets again, driven back to this. A ambiguity of strategy in that compass. But if you can't define your purpose beyond bringing two companies together to do some or solve some math problem that you think is greater than each of them together, then it's not going to work. Even from a leadership standpoint. I would tell you that oftentimes my debates around and I believe in having tools and I believed in lean tools over the course of time. But I would also argue the point, right? A, you have to demystify and not make it sound like it's, it's some, you know, some, some big thing that you came up with. That's scary, right? You know, but a three year BTO can be about weight, right? I'm 200 pounds and I want to be, you know, 170. You know, that's my BTO. My, my AIP is, you know, my annual improvement is I got to lose £10 a year. You know, my target to improve is, boy, I'd better stop with the milkshakes. You know, reduce caloric intake, exercise a little bit more. Whatever the case is, we measure, we adjust and we go on. Call it what you will, but there is a precedent to that that I think is key and relates to your question. People want to know four things before they get going on anything. And you and I had a bit of this discussion earlier. Do you care about them? And are you going to be their shepherd? Which means that I have to understand you and where you want to go. I have to clearly illustrate what good is, and we have to agree on that. You're going to have to understand what good gets you. If that's unclear or it's capped or it's not aligned with where you want to go, it becomes a problem. And the fourth element before you get to the tool is that I think increasingly people want to have a sense of purpose. And what's missing in many of these acquisitions or regional expansions or PE investments is the purpose isn't clear from a customer standpoint. So I would say that you can really take these four key principles before you get to the tool and apply them to exactly what we're talking about.
- [36:36]
B
The customer is very important. There's an argument right there to say, well, let's just understand our customer, make a better version of what they want and have less of the foo foo out there. It's this consolidation mindset, right? You see design firms buying design firms, you see reps buying reps, and you see manufacturers buying manufacturers. And then maybe we lump in the whole PE cycle of manufacturers buying manufacturers via the PE route. What's driving the rep consolidation? What's driving the manufacturer consolidation?
- [37:14]
A
I think they find financial synergies. There's a belief that it's easier to manage. At the end of the day, I think that there are economics. You know, in some cases, these rep firms are larger in total revenue than the manufacturer that they're representing. And I mean the big one that they represent. Look, I have a pretty firm belief that the local specification community, the contracting community, whatever the case is, even understanding that territories are getting crossed, nobody cares how many dots with your logo that you have on the map across the country. What the customer wants, and that was one of your discussions, is they want to understand how those dots connect, specific to them. Right. So you better understand there's an understanding of a customer story. I don't care how big you are, they want to know how well you're going to service them. Locally, there's money. I mean, these PA firms, the people have to ask what are they in business to do? I think there's simple maxims that can get executed too, if you and I are going to do business. But it has to matter to you. And this is where there's a customer obligation, too. You can't speak out of both sides of your mouth. You can't say that it matters and then not vote. You simply know you can. But you can't do it and expect change. So if I share with you that one of the elements of our relationship, and assuming you're the specifier, is I'm all about, here's my promise, I preserve value or values created. Jeff, what does that mean? I don't know. Let's look on our next project where you created the value and let's talk about it. Not all dollars feel the same to me. Oh, that's weird. What does that mean? Means that a dollar that has contingency or is being managed. Margin dollars aren't owed, they're earned. Partnership isn't owned, owed, it's earned. Enthusiasm isn't owed, it's earned. And we together need to send our margin dollars to those that we believe have earned the opportunity to receive them. If we're indifferent to that and there is indifference being executed as we sit here right this second out in the channel, then we can't expect the change. Now, that may seem Pollyannish, there may be an element of poetry to that, but I will tell you that I am increasingly considerate, even in my own daily spending. If that margin dollar doesn't feel like it's a full value going to the person that I believe deserves it, I'm not sending it there.
- [40:21]
B
I think all this applies to this specification world. Do you have a round number for me? If the market's 18 billion, how much of it is spec in terms of that total revenue?
- [40:34]
A
Oh, I think you can go with some of the larger folks and then skew it. So if you take the big ones that do well in stock and flow that are probably still sitting at 7:30, and then the what, you know, 70, 70% project, 30% flow. And then you factor in the ones that are terrible at flow, you know, that are maybe, you know, 92, 8. And then you go ahead and rush in all of the other white goods, you know, folks that have shown in from offshore. I think you'd be fair to say it's at least 50, 50.
- [41:13]
B
So 50% of the market depends on what you're alluding to, which is you have a choice and your customers also have a choice versus the other 50% where we'll just pick on like, I don't know, silly things, elevator pit lights, street lights. Probably not a good example because there's choices, more utility driven things that are, generally speaking, very commoditized. There are a couple options there.
- [41:43]
C
I guess I'm just curious, is there a disconnect?
- [41:46]
B
Because there is like, is there success happening somewhere in the lighting industry where specification doesn't matter? And people are trying to translate that into the world of where specification does matter? And what that means is relationships and customers really do come first.
- [42:04]
A
The answer is yes. Why in God's name would manufacturers think that it's a good idea to enter the 2 by 2 and 2 by 4 market en masse, the way they have lately or the downlighting? I mean this is marketing 101. We all learned about barriers to entry on the manufacturing level. We have to create the barriers to entry know to these folks, we know what they are. It's, it's price, it's local availability, you know, it's logistics, it's speed. That all merges into the ability to modify locally. It's enhanced commissions. I mean this is not mysterious. The challenge is, are you committed to defending the space or not? And are you going to create the heuristics or the filters for people to listen through so that they understand how to make good choice? I don't think that's done well at all. You can have this, you can have this, you can have this or you can have this. Is there any difference? We usually default to the fact no, they're all made out of the same factory. They're all pretty good and if they're UL listed, we're good to go. Fine. You want to stop there? Stop there, you'll lose. This is complicated in 500 ways, right? It could be. When we're talking about white goods and back of the house stuff, rebate programs to local distribution Right. You know, the system isn't set up properly. So you know by example a distributor salesperson on discretionary because you had asked about the distribution. 50, 50, whatever the number is. If you don't understand how a distributor gets paid, that salesperson has a system price that shows up and they get paid on the difference between what the system price is and what they sell it for. If a rebate program is generated with a corporate entity and their product is $100 but they have a 3% rebate which brings them to 97. And I think my math is still okay. But the near competitor at distribution shows a $98 price in house. Who's the salesperson going to sell every day? So there are some simple mechanics that simply have to get addressed and adjusted in order to make this all work. Well. Now there are some large distributors that get that pricing local. Most don't. Of course. This is all editorial. Beauty of the lighting industry bane. And the blessing is that if you write slightly more than 50% of the time, you probably already have a job. You know, we'll always have. That's the blessing. The bane is that if you're just right slightly ahead of 50%, you always have a job. So you know, you've got a little bit of both. The challenge really is very far reaching. 1. We have seen consolidation and the pendular swing for many, many years. We are just fast forgetters. You know, we have seen L. A try to go into Las Vegas and San Diego. We have seen Portland try to go into Utah and maybe into Seattle. We've seen Seattle try to go to Spokane and into Alaska. We've seen Illinois try to go to Iowa, not that far away or Indiana and have to retract. You know, shoot. Even back then in the old days in the northeast, we're just repeating what we once had. It will all boil down to the fact that the business is local and it better appear as local. And that means, you know, again, it's not to use the relationship euphemism, but what does it mean? It means that I know what you do and I know who you are. If you sign with, if you sign, sign up with one particular agency that has a huge broad territory and you high five. And you know, you and I have, have done this that have. But I kept, kept them contained to just that state. No you didn't. Your price is exposed across the entire territory that they represent because I guarantee you they have a centralized system. I worry about. Bootlegging used to be a bad thing. You know, Manufacturers that bootlegged you'd, you'd fire them if you were a high end spec spec firm. Today you have profit centers that are established to take a look at a schedule, process it and ship it to that job. Whether you rep it in that territory or not. If these regional sweeps take place and they're perpetuated by manufacturers, that rug is pulled right out from underneath you. You will be managed by a general manager that that regional is interested in having in place.
- [47:15]
C
I want to take a moment to recognize a team that understands what every designer already knows. Light isn't a fixture, it's the soul of a space. For almost a century, Targeti has shaped how people experience architecture using precision optics, performance and that unmistakable sense of Italian design to elevate every moment a space offers. Because light isn't just seen, it's felt. It drives emotion, guides the eye and transforms intention into atmosphere. For Targeti, light isn't simply the medium, it's the identity, it's the craft, the legacy and the commitment behind every solution they create. Experience it for yourself. Visit target USA.com now let's jump back into this conversation.
- [48:03]
B
No, you don't have crystal ball, so don't pull it out. And I don't expect you to. But in your own opinion and educated mindset, where do we go from here?
- [48:13]
A
We don't have in industry, think tank shouldn't all be like minded. People should be diverse. But it should be required to produce an outcome, a recommendation, something for viewing and discussion and certain action items to drive forward from. We can't stay in stasis, we can't be as disparate as we are in the thought. We have to make people feel safe to speak. If we can't create that space, we're all in a lot of trouble. And then I say you've got to start picking some stuff off. Look, we're riding on a wave, right? Some of the things that we're talking about are elements of the ship, right? It's been constructed this way. We row using this type of ore, we try to put it on this water. But what about this? In roughly 1996, I'm going back a ways, design build activity was maybe 15% of the market that we serve. Whatever that was sized at in 2025, it was 35%. By 2030, it's anticipated that that goes to 50%. What's your plan?
- [49:41]
B
There's nothing against a designer working at a contractor's office. There's all these optics around. Why that's not a good thing.
- [49:47]
C
But the reality is people are people,
- [49:49]
B
and maybe they just all formally sit under one umbrella.
- [49:53]
A
More often happening today, I mean, there's a large one down in Florida, most of us know about that, that designs it, inventories, distributes it, and builds it.
- [50:05]
C
The customer wins. The customer gets what they want.
- [50:08]
B
And, you know, you can say you have every option and everything, and it's the best solution, but if the best solution doesn't come together at the right price, at the right time, with the right people in the right relationships, and then solve the problems and go back and forth in a fluid manner, you're done.
- [50:22]
A
It doesn't feel very purposeful. If my thought never translates that I went to school to learn how to create a signature that would be uniquely mine and beneficial to the customer. The design community is not established to work around, and I don't know if anybody's old enough to remember Granimals. I thought they were great because I was really bad. And some may suggest even today in this interview, I'm still bad at picking my clothes. But the beauty of geranimals was that all you had to do was go get the shirt that had a giraffe on it and go get the pants that had a giraffe on them. And if you bought those two things and wore them today, you were going to look okay. That's not what you go to school to do. Right. You look to have a palette that you can paint from that creates the best possible outcome, and that needs to be respected as we drive forward. We can't have an industry that's dispiriting in the way effort translates and the way we motivate our associates forward. It's full of talent and good ideas. It continues to inspire me and fill me with passion despite some of the frustrations that we've talked about. I think the one thing is that this is solvable. This is solvable. I mean, I won't leave today thinking, okay, you know, nice chat, but nothing can be done. And I have to believe that you do this for the same reason that with the information and the education, we can solve some things together. Awareness matters. At this stage of my career, I've seen a lot of landscapes. I've traveled many of them successfully and some not so successfully. But I've learned find those people that can teach you how to get an A, connect to them, and drive yourself forward accordingly. This industry needs you.
- [52:50]
B
Thank you. I appreciate it.
- [52:53]
A
Thanks so much.