Wang and Wu’s Friendship Was the Secret

Like many Costco shoppers I have been eying large flat screen TVs every time I walk past them en route to the dry good section for cafe supplies. I’d just love to see an HDTV on my wall.

One brand that has the most tantalizing price point is Vizio. I read tonight in the WSJ about William Wang, the very smart Taiwanese-born chairman of this upstart company, who is giving both Sony and Samsung fits over his rising market share. He does it by partnering with, instead of squeezing, his supplier.

He began with a company called V. He mortgaged his house in Southern California and borrowed from friends, raising $600,000, for a dream. He had seen the $10,000 Phillips flat screen that was being sold as a luxury item and thought he could make it cheaper. That’s because he has a background in computer monitors and a friend named Alpha Wu who eventually built up a big Taiwanese component maker called AmTran. The friendship was the key, since the secret of Vizio’s success is that they are 23% owned by Wu’s manufacturing company.

While the big guys do their own manufacturing and spend big on R&D, nimble Vizio uses its partnership with the maker to get preferentially consistent supplies, and sometimes free shipping. Wang told the WSJ how different his approach is. “Instead of making money by squeezing the supplier, we work with our vendor.”

He got a big break when he met with Costco’s buyers in early 2003, and pitched them a $3800 46″ plasma TV. It was half the price of competitors and Wang confidently said he wanted to be the next Sony in five years. The Costco people laughed, but five years later sell Vizio’s sets in 385 stores.

Last year Vizio had sales of over $2 billion, yet Wang is tempering his aspirations. “Our goal is the be the next Sony in 20 or 30 years,” he said.