EOTech was one of the founders of the entire electro-optics industry, with one of the first heads-up sights on the market. The company’s sights have been well regarded durable and fast on target, and were widely adopted as the weapon sight across military and LEO communities. In 2016, EOTech updated its branding and began to diversify its products to include a high-quality line of variable optics branded as EOTech Vudu under the L3 ownership. That progress stalled shortly after, when L3 slowed down the brand. Much has happened since then, including EOTech again becoming a privately-held company under American Holoptics. We had an opportunity to talk with both Ed Schoppman, President North American at American Holoptics, and John Bailey, VP Marketing EOTech, about the acquisition of EOTech and the new direction of the company.
TR - Can you talk a bit about the sale of EOTech by L3?
Schoppman - American Holoptics signed a letter of intent mid-March 2020 with the expectation to close on the acquisition of the EOTech brand by mid-2020. The acquisition is now complete and EOTech is now back as a privately held brand under the American Holoptics umbrella that also owns Elite Defense, HEL (Holographic Edge Lighting) Technologies. If we would have written a script it could not have come together better. There are four big points of needed change including support & business development, new technology, overall a cultural change and personnel.
EOTech’s innovation and growth needed some breathing room away from a corporate environment to grow beyond the military contracts L3 was solely focused on. Overall EOTech needed much stronger R&D and domestic and international dealer/distributor support. With Elite Defense’s international distribution and regulatory compliance services, we have one of the strongest distributor service and customer service infrastructures in the industry to support US and international dealers. Elite Defense delivers beyond typical distributor services and will add several layers of support previously unavailable to the EOTech dealer community.
A world-class optics company needs R&D and that is where HEL adds to our portfolio. HEL Technologies LLC was formed to continue, progress, and complete a lot of the holographic R&D that was strategically needed. To date, HEL Technologies has developed and secured four patents related to its Holographic Edge Lighting design that will bring game-changing innovations to the small arms weapon sight market and electro optics. In addition, HEL will have the only USA based emulsion lab dedicated to developing new applications for its holographic R&D. We expect great things to come from HEL which they are already developing into technology EOTech can leverage as well as other industries.
TR: What other shifts and changes do you have planned for EOTech?
Schoppman: We are essentially restarting EOTech top to bottom, including the culture. EOTech and its employees were suffocating a bit under the L3 corporate structure as the only consumer product L3 owned in a sea of commercial B2B and government solutions. The result was that L3 did not really understand what was required to push EOTech into the commercial market and made decisions to solely focus on the fairly static and highly price-sensitive military and LEO contracts. This created a lot of frustration within the management and employees, who wanted to pursue the high-growth consumer marketing opportunities. L3 was doing what it knew, but the reality is the customer support, marketing, distribution and promotion needs for consumer market growth really suffered.
We took the creative restrictions off the employees and are creating a much more open and agile company. We brought back much of the original EOTech team that fought hard to push against the L3 corporate strategy and ended up driving its largest growth and expansion years. For example, John Bailey was the VP of Marketing at EOTech and drove the introduction of the Vudu variable optics line, and we brought him back, as well as many others.
TR: John, how are you able to approach the market differently now?
Bailey: There were just so many restrictions for us at L3 that it made it almost impossible to pursue non-military sales. As you might recall, we really had to push hard to even rebrand EOTech with a more current image, because even in the LEO and military markets, our image was lagging, and that led to a perception that we were not current, when in fact, the EOTech HWS were very mature and evolving.
Under the American Holoptics ownership, we have finally targeted the consumer market — and with the right support, promotion and marketing behind it. It is a very exciting time to really be able to push the EOTech sight and Vudu optics lines into the hunting, sporting and competitive markets. We certainly still support the government and LEO communities, and they will see the benefits of new product developments on the consumer side.
From a product perspective, the Vudu 1-6 FFP, 1-8 SFP, and 5-25 FFP variable optics have been huge hits and offer something very different than anything else in the high-tier optics market. The 1-6 delivers the advantages of an illuminated EOTech sight in a variable optic, with a reticle that morphs a bit as you zoom, from a large, very fast shooting circle-dot to a precision MRAD or MOA reticle at highest power. We are seeing a lot of agencies prefer a variable optic for the flexibility, and certainly in the consumer market, low-power variables are one of the hottest selling categories. The 1-8 offers a simple BDC-style reticle in a very wide 1-8 range with amazing clarity. The 5-25 is a uniquely short optic for such high power, with a length that is three to six inches shorter than competing optics for a more compact form factor without any sacrifice of optic performance. With the choice of MD3 or HORUS reticles, the 5-25 is a great optic for the long-range precision hunting and shooting sports.
TR: How will dealer support change?
Schoppman: Dealers are going to get a lot more support through Elite Defense and through EOTech. Their programs are not going to change, but they will see changes in how we are supporting the products and certainly with product availability. We want the product to get to market, and a lot of that is a closer relationship with the dealers than ever before.
TR: What are the plans for product expansion and development?
Schoppman: Right now there are really only two companies doing true holographic sights, which delivers the big advantage of the widest FOV. I think we can address some of the battery consumption issues through HEL Technologies R&D. From a product perspective, there will be a broader expansion into pistol sights, smaller-format red-dots, and potentially the Vudu variable optics.
Under L3 ownership, there were some product expansion plans and products that really did not make sense. We decided to wipe the product roadmap out and start over with some new cool expansions with an expanded line and add more product diversity. There really is no reason why we should not have a complete set of optics options for customers with net new products hitting the market starting in 2021. We have put some accelerators around the engineering team to help them get ideas off the drawing table and into the market faster, with more resources than they had in the past.
TR: Can you talk about some of the background of American Holoptics and some of the expected strategic shifts?
Schoppman: Our investment and management team has a lot of experience growing businesses, with a lot of experience and holdings in real estate. A few years ago, we decided to diversify to more stable investment industries and started looking at commercial high-tier security and defense based products. A lot of the strategy started around our acquisition of Elite Defense, and the concept formed that we could build a very strong and unique defense products company with Elite, HEL Tech and EOTech. Pair that with our real estate and facilities experience to help with infrastructure, and that is a strong portfolio to support R&D, manufacturing, distribution, fulfillment and service.
Some examples of where we are making big changes are our production and forecasting product seasonality. From a labor perspective, we can make thousands of EOTechs a day, which can increase margin and reduce cost, but that is dependent on availability of labor, and the current location’s labor pool was constrained. We are moving quickly to other geographic areas for a broader labor pool and where we also already own low-cost commercial space. Ultimately, we want everything we sell to be made or assembled in-house in the Detroit areas. The product portfolio seasonality was really difficult to understand. We are investing heavily in very powerful demand analytics systems to help us understand customers’ demand cycles and how service response history and time to resolution impacts those cycles on the distribution and service side. We are now tracking everything that touches the customer, with laser focus on having the best delivery, fulfillment and service in the industry.
As we have seen, a few competitors have really shaken up the optics and defense markets with simple focus on R&D, support and fulfillment, and attention to creating an innovative product line — and we know that EOTech is on a very strong similar path. After all, EOTech has remained a recognized brand in the industry and even seen some expansion under a lot of very tight restrictions. We know that with more investment, the restrictions removed, and more support, EOTech and American Holoptics can really drive some great growth and innovation in the electro-optics market.
