Smartlabs Inc. Chief Executive Rob Lilleness entered a meeting this past summer at Microsoft Corp. headquarters expecting software development work.
He left the conference room on the sprawling campus in Redmond, Wash., a launch partner for the company’s developing smart-home ecosystem, joining an exclusive club that includes Google, Philips and Samsung.
“We’re in,” Lilleness told executives gathered around the table, which was outfitted with various Insteon products, much to his surprise and delight. Smartlabs is the parent company of the Internet of Things technology provider.
A welcome homecoming, indeed.
The longtime investor and industry insider, who splits his time between Seattle and Orange County, spent six years at the software giant, managing commercialization of the Windows NT Server, the foundation of Microsoft’s networking and computing enterprise.
There he helped grow the business line from about $40 million in revenue in 1992 to over $500 million by 1998, an impressive track record that he brings to his new role.
“It felt good to be back home,” Lilleness told the Business Journal last week.
He replaced Joe Dada at the helm in July after Irvine-based Smartlabs was acquired by Richmond Capital Partners on undisclosed terms.
Lilleness is managing partner at the Seattle-based private investment firm he formed this year.
Smartlabs, founded in 1992, is the parent company of Insteon, an smart-technology provider, and Smarthome, a website that sells smart-home automation products. The combined companies employ about 60, the vast majority in Irvine.
The Business Journal last year estimated Smartlabs’ annual revenue exceeded $200 million.
Quick Job
It took Insteon engineers less than a month to integrate their technology into voice-activated Cortana, Microsoft’s answer to Amazon’s Alexa and Apple’s Siri. It had already been integrated into Windows 10, making the update easier and quicker, according to Lilleness.
The voice-activated Harman Kardon Invok speaker is the first product geared for Cortana Home.
The speaker, which costs about $200, is made by Harman International, a wholly-owned subsidiary of South Korea-based Samsung Electronics Co. Ltd., the world’s largest consumer electronics manufacturer with 2016 sales of $44.6 billion.
Insteon sells a hub that allows users to operate its own line of connected products through an app or Web browser—such as switches, outlets, thermostats and light bulbs—as well as devices made by other manufacturers. Its technology relies on wired home systems and radio frequencies for wireless connectivity, allowing devices to communicate with each other.
The global smart electrical control market is projected to grow to $10.8 billion over the next five years, according to a Richmond Capital Partners forecast.
“Now we’re in the phase of IoT computing,” Lilleness said.
Other Cortana Home launch partners include smart thermostat maker Google Nest and Philips Hue, the lighting products unit of Netherlands conglomerate Koninklijke Philips N.V.
Cortana is used by more than 145 million people around the world.
Insteon earned a similar designation two years ago in the initial lineup of Apple Inc.’s much-anticipated HomeKit, which offers consumers a selection of services for connected home devices. It’s also worked on connected-home devices for Alphabet Inc.’s Google.
The partnerships, along with Insteon’s base of millions of smart lighting and electrical products in homes and businesses, and consumers’ growing appetite for connected devices, have provided an opportunity to capitalize on market shifts in the home, which has about 80 outlets and switches on average.
Smart-speaker owners, typically first adopters, tend to follow up the purchases with Insteon products, according to Lilleness.
“There’s pretty decent attach rates for consumer devices that are Insteon-powered,” he said. “More customer demand should result in more Insteon products, which means stronger sales for us.”
The company now also has some financial muscle behind it.
“Millions of dollars have been put in,” said Lilleness, who hopes to mimic his past sales success at Smartlabs, which has hummed along for decades without a dedicated sales team, marketing or public relations.
“Just imagine if we start to fortify those.”
Lilleness nearly tripled revenue to $300 million as chief executive of Seattle-based Medio Systems, a predictive analytics provider to the mobile device industry that was acquired in 2014 by NOKIA HERE on undisclosed terms.
He was president and chief operating officer of Santa Ana-based Universal Electronics Inc. from 2001 to 2006, a period when the universal control maker nearly doubled sales from $119 million to $236 million.
“My background,” he said, “is commercializing tech.”
