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Business Observer Friday, Aug. 28, 2015 3 years ago

They've got game

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A little more than five years removed from a tumultuous and complex bankruptcy, a software firm disguised as a golf cart accessories business seeks a broad expansion.
by: Mark Gordon Managing Editor

Executive Summary
Company. GPS Industries Industry. Software, golf, hospitality Key. Firm wants to expand to different industries.

It was just a few months ago when the company Kevin Carpenter works for, GPS Industries LLC in Sarasota, passed a significant milestone: The number of software engineers on the payroll at the firm, which develops and sells high-end GPS systems for low-speed vehicles, primarily golf carts, surpassed the number of accountants.

For a company with 50,000 screen devices inserted on golf carts across 500 courses worldwide and employees in two states and a dozen countries, it's not an insignificant fact. “That,” says Carpenter, vice president of business development at GPS, “was our tipping point.”

It was actually one of several recent tipping points in the sometimes-contorted history of the business, which dates back to the early 1990s. And more tipping points could be forthcoming as the company looks to expand outside golf for the first time.

“We built a product that does so many things and does so many things well,” says Dave Saslow, general counsel and executive vice president at GPS. “We can grow this company in a lot of different ways. The opportunity is to bring this technology into other markets.”

Those markets, say GPS officials, potentially include master-planned communities, college campuses, manufacturing plants and military installations. Saslow, for example, says resort officials have talked to GPS about using its software to function like Uber on the property grounds. Another industry to target could be rental cars.

One choice is to grow that non-golf business organically, through reaching out to customers. Another choice is to hire a business development firm and have it chase customers and find new industries. For now, the company is taking the first route, says Saslow, but that could change.

GPS was founded in 2009, the conglomeration of several companies, including one, GPS Industries Inc., that filed for a complicated bankruptcy that same year. The current version of the company, owned by New York investment firm Falconhead Capital, has an investor/advisory board that includes golf legend Greg Norman.

Executives with GPS decline to disclose sales figures, but growth abounds. For one, the amount of lease deals the company has signed to insert its 10-inch color screen devices into golf carts has doubled, from 100 agreements in 2011 to 200 in 2014. A lease deal, signed with a golf course or golf course management firm, tends to last four years and covers at least 72 golf carts. Several lease agreements are considerably larger.

Executives project the firm will do at least 250 deals this year, even with the move into new markets. “We've been doing pretty well,” says CEO Ben Porter, a former professional golfer on the European Tour.

Shift the focus
While the future looks bright, the company's history is more tattered.

The origins of what makes up GPS today started in 1994, when Ann Arbor, Mich., entrepreneur David Chessler relocated to Sarasota and launched a company called ParView. The company, backed partially by IBM, developed technology that could display information on a small screen attached to a motorized device.

The original idea was to attach the device to grocery store shopping carts, says Saslow, and fill them with ads and coupons that directed shoppers to products. But the early versions of the device were too heavy, which made attaching the screens to carts a nonstarter.

So Chessler, with a background in software development, shifted the company's focus to golf. The move worked: ParView grew significantly in five years, in sales and national attention. Chessler was a finalist for multiple entrepreneur awards, and he won the Ernst & Young Florida prize in 2000. Chessler eventually recruited two buddies from high school — Carpenter and Saslow — to come down from Michigan and work for the company.

ParView soon merged with another company in the industry, and after a few other consolidations, the company Chessler was at the helm of was named GPS Industries Inc. That company, with mostly the same technology and products, filed for Chapter 11 bankruptcy in August 2009. It had $30.8 million in losses in 2008, and when the firm went to bankruptcy court it had $3 million in assets and at least $19 million in debt, records show.

The bankruptcy, says Saslow, was the culmination of several bad decisions made by management at some of the companies ParView and Chessler teamed up with. The recession, which crushed the golf industry, also put a dent in sales growth.

There was more drama. The company, right around the time it filed for bankruptcy, says Saslow, had spent about $1 million in research and development to change the systems in its products from 900MHz to cellular. Any viable plan to exit bankruptcy would require that kind of technology.

The way out started with Norman. The iconic-golfer-turned-businessman invested in the GPS under a deal with Chessler and Falconhead Capital. The new company kept the GPS Industries name, only it operates as a limited liability company.

Saslow says the bankruptcy process, overall, was a mess. “It was a miracle of miracles,” he says. “There were so many moving parts and personalities. I thought there was no way we could pull this off.”

Easy-to-use
Chessler is no longer with the company, but he remains connected to golf, and lives in Sarasota. He's the managing director and chief investment officer of the Great White Shark Opportunity Fund, where he works with Norman on loans and investments in small businesses.

And GPS Industries, while heavily involved in golf, will continue to looks for ways to grow outside that segment. Company officials believe they've got several advantages there. One, says Carpenter, head of business development, is the device is rugged but has “an intuitive Apple-like feel.”

The easy-to-use technology was a key selling point for GPS' first major non-golf contract, which it signed late last year with Casa de Campo, a 7,000-acre resort in the Dominican Republic. The resort is replacing its fleet of golf carts that guests use to get around the property, and sought a technological upgrade.

The GPS Industries system, under the firm's Visage brand, provides basics, such as directions to restaurants and announcements, and advanced resort-specific features, including promotions on off-site excursions. Another feature of the software: It can display on-screen overviews of real estate listings for sale on the grounds when a cart drives by a property.

With such a high-tech product, it's easy to see why GPS has so many software developers. The company has 65 employees in total, with about 44 in its Sarasota headquarters. The staff there, with access to a putting green just off the front lobby, includes a few former pro golfers in customer service who work on troubleshooting with golf course managers. Most of the software developers are based in Sarasota, and a few others are in the company's office in Austin, Texas. GPS also has offices in Great Britain and Hong Kong, with employees scattered across Europe and Asia.

GPS executives say another advantage in the quest for market share outside golf is a recent decision to move product assembly out of Mexico and into the United States. The motherboards for the systems are made in other countries, but moving assembly to the Sarasota headquarters has cut down on “dead on arrival” products, says Saslow. GPS hired six people for production, but overall assembly costs have dropped.

“The quality control is much higher,” says Carpenter. “Now our people are there at the end of the product.”

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