The revolution at Evolution

Studies have shown that 70 percent of family businesses fail to survive to the second generation. Centennial-based Evolution Digital LLC is a different kind of family business that not only survived, but is due to bump revenues from $14 million in 2010 to $109 million in 2014 to $200 million this year.

Sounds pretty good, right? You ain’t seen nothin’ yet, folks, because in the next three to five years the company looks forward to sales more in the region of $500 million. These are a couple of reasons the company won the Association for Corporate Growth’s Outstanding Corporate Growth Award this year.

Evolution is a manufacturer-wholesaler of digital set-top boxes ranging from the well-known TIVO Premiere DVR to its new Pre-Integrated Hybrid IP Video Platform, a complicated name for a brilliant new box. More on that in a minute.

In a way, Evolution Digital is the opposite of a traditional family enterprise. Rather than ownership passing from the older generation to the younger, it took the other way around: Son and CEO Chris Egan co-founded the company in 2005 and recruited his father, Cable Hall of Fame member John Egan, to help out.

Chairman John Egan, 67, is the former chair of Arris Group Inc. and the former president and CEO of Antec, a leading pioneer in the development of optical transmitters and receivers. He took Antec public in 1993 and retired in 2002.

So Chris Egan, 41, had some awfully big footprints to follow, which he did with a seeming minimum of angst.

“When we started out it helped a lot that everybody in the cable industry knew my father, and respected him,” says Chris Egan. “My father always treated everyone as family. That’s our approach here, too.”

Evolution Digital’s business is family in reality and also metaphorically. Evolution is family not only vertically — through majority ownership and the leadership of CEO Chris Egan and Chairman John Egan — but horizontally—through its attitudes toward its 30 employees.

In February, for instance, Evolution shut down the office to treat its employees and spouses to an all-expenses-paid vacation in Puerto Vallarta, Mexico.

“Getting to know everybody and doing things together are pretty important,” Chris Egan says.

It also should be noted that Evolution Digital is not apurely family-owned business. Founders Chris Egan, CTO Brent Smith and CFO Kyle Gielow each own a piece. It is, however, majority-owned by John and Chris Egan and Chris’ brother, John Egan Jr.

In 2002 Chris Egan, Smith and Gielow started Evolution Digital’s predecessor company, Evolution Broadband, to sell cable TV products such as switches, coaxial cable, connectors and splitters.

The company sold Evolution Broadband in 2010 once its focus on Evolution Digital started paying off. After selling set-top SD (standard digital) cable boxes in a smallish way to Canadian operators, Evolution broke through in 2008 with an order of 100,000 boxes from MCTV in Masillon, Ohio, then in 2010 through an order of 700,000 units from Englewood-based WideOpenWest, or Wow!, cable TV. Evolution soon went global with sales now totaling 4 million units to Mexico City-based Cablemás, which remains the company’s biggest customer.

A couple of huge steps marked the company’s move toward the half-billion-dollar range.

First, Evolution succeeded in persuading the Federal Communications Commission to approve DTAs, digital terminal adapters – digital-to-analog converter boxes that cost about $50 apiece – enabling smaller cable operators to go digital. This in turn drove significant sales to cable’s 800-pound gorillas, Cox Communications and Comcast.

The next step toward $500 million in revenue is the Pre-Integrated Hybrid IP Video Platform.

“We are acting as the liaison between old-school cable and new school IP streaming, says Chris Egan. “We are trying to say to cable, ‘quit fighting them; befriend them.’ And we’re saying to the (IP) guys, ‘quit fighting them; they have every eyeball in the U.S. All you care about — Netflix, Amazon, Hulu — is getting your app on every TV set possible.’”

Watch for full product launch midyear. Watch a television revolution in the making.