Head-Fi.org › Forums › Head-Fi Special Forums › Head-Fi Bloggers › Jason Stoddard › Schiit Happened: The Story of the World's Most Improbable Start-Up
New Posts  All Forums:Forum Nav:

Schiit Happened: The Story of the World's Most Improbable Start-Up - Page 213

post #3181 of 19456
popcorn.gif
post #3182 of 19456

3, 2, 1, ...

post #3183 of 19456
Quote:
Originally Posted by Rudiger View Post
 

3, 2, 1, ...

 

Yup.  Just sitting here banging on my refresh key...

post #3184 of 19456

Nooooo you ruined my end, I wanted Jason's post to be just after mine ! (Just kidding)

post #3185 of 19456
Thread Starter 

Chapter 33:

Black Friday

 

Business. Let’s get back to business.

 

There’s been a lot of technology and philosophy in the chapters above, and that’s fine, because in a tech company, there’s gonna be a lot of tech, and in any company, there should be a defined philosophy (or mission, or whatever other corporatese you’d like to call it) to define why the company does something, because otherwise you’ll just be a reactionary company, and that usually doesn’t work out to well. Companies without focus, who respond by trying to please everyone, will usually find that they end up pleasing nobody.

 

So, this chapter is about choices. Let’s start with the title subject, specifically two business choices centered around the new American “tradition” of Black Friday.

 

 

Setting the Scene

 

Okay, at the time of these choices, it’s October-November 2013. We’re still in the Schiithole, but we won’t be there for long (that’s the next chapter.) Vali is getting ready to launch. We’re deep into Ragnarok, and beginning to realize that it will be a lot more difficult than we first thought, after a not-stellar showing of a rough prototype at Rocky Mountain Audio Fest. Yggdrasil is still going through questions about D/A architecture, and we’re beginning to realize that there may be some deeper questions we have to answer before we get that product into prototype form. At the same time, several other products are in the hopper.

 

It’s a busy, even somewhat insane time, and it’s the first time that Alex decided to load up on ordering for the holidays, so we’d be able to avoid the Schiit ‘completely out of stock before the end of the year’ syndrome. Alex threw away our predicted numbers and ordered what he thought would truly reflect sales—and, in the end, he was very close to keeping us in stock on everything.

 

The Schiithole, at this time, is insanely overstuffed. We’d brought in a container so we could store a lot of packaging and other bulky stuff outside in the beautiful patio area, but one container only went so far. Metal, packaging, boards, and finished products were stacked to the rafters, and more was coming in.

 

And, in the middle of all of this, we got a shipment of Valhalla, Lyr, and Bifrost chassis. Cool.

 

Except they’re painted black, not brushed clear-anodized aluminum.

 

 

Black Schiit?

 

I suppose we were at least partially to blame. We’d talked to the supplier about alternate finishing options, and we’d had a couple of silver-painted, and black-painted chassis made as prototypes.

 

But what were we going to do with a whole bunch of black chassis—especially since we’d always told prospective customers, “Nope, only available in silver?”

 

Note: This is the first choice. We chose silver only for reasons I’ve gone into before—we liked the look, and we didn’t want to stock an infinite amount of variations of our products. Consider Bifrost: it would have a total of 8 variations, if we offer black and silver. It’s already painful enough to have Uber, Standard, USB, and no USB variants.

 

So what do we do?

 

“Sell ‘em,” Alex said. “They look good.”

 

And they did. The black powder was very nice—completely unlike what you’d expect to see on a painted product. It wasn’t grained and anodized, but it had a very finely pebbled and consistent texture that looked nice.

 

“And charge more,” Tony quipped.

 

I groaned. “And then what happens when we have to stock black and silver forever, into infinity?” I asked Alex.

 

“Make it clear it’s just a one-time special,” he told me.

 

“If that works,” I said. Visions of Theta, where everyone ordered silver when we had black in stock, or vice-versa, came back to me.

 

“I don’t want to stock it as an ongoing thing, either,” Alex said. “But we have it. Why not sell it? The guys who have been asking for black will be thrilled.”

 

Alex was right. We should just sell it and go from there. It would make some people very happy. And, I thought, It’ll give us a better idea of what demand is like for black products.

 

This is the second decision: to run with what we had, and use it as a learning experience.

 

Which is how, in mid-November 2013, I ended up announcing a limited run of black Schiit products on head-fi.org.

 

 

And We Waited

 

When I made the announcement, I also made it clear that this was a limited run, and when they were gone, they were gone. For all the emails we’d gotten asking for black products, I thought I’d have to sit over the website admin, ready to turn off ordering in very short order.

 

And I waited.

 

And waited some more.

 

A few orders trickled in. But not the anticipated flood. I went on head-fi to answer a few questions about whether the black products were going to be an ongoing thing, and made it clear that, with the current response, they certainly weren’t going to be.

 

A few more orders trickled in. But again, no gigantic wave.

 

I was really surprised. For all the emails we’d gotten, the insistence that black was “make or break,” the people who’d actually taken our products and anodized them black themselves, sales were slow.

 

How slow?  It easily took 3x longer than our normal sales cycle to sell out a very limited run of black products. Now, this isn’t to say that some customers weren’t delighted with their black products. And I’m thrilled we were able to make them happy.

 

But, in the end, the noise around “gotta have black” eclipsed the reality of the demand. And that’s a learning experience (AKA, ‘you got boned, remember not to do this again’.)

 

And that lesson, I think, is one of the most important ones for any company, start-up or not: the clamor doesn’t always equal the demand.

 

Why is this? Well, I think for stuff that’s mainly cosmetic, the reality is that if you have a great product at a great price, people are going to buy it anyway. If you like, say, Jura espresso machines, you may want one with the red side panels, but if it’s only available in black, that probably won’t break the order. Or vice-versa.

 

Same thing goes for stuff that is very niche. Niche features or functionality can evoke a lot of passion—and, while that passion may translate into many emails, it may not translate into sales.

 

If we had simply said, “Yes,” to all the requests we get (or tried to accommodate them), it’s quite possible that, say, Lyr 2 would be:

 

  • A DAC/amp rather than an amp
  • Available with an external power supply that costs more
  • A balanced amp as well, and have balanced inputs too
  • Available with several tube options, some costing +$300 over the stock ones
  • Capable of all kinds of data rates that you can’t buy content for
  • Orderable with fancy power cords and fuses
  • Delivered in at least two functional levels, one more expensive than the “standard”
  • Available in at least 4 colors

 

It would also:

 

  • Cost a lot more
  • Make the possibility of shipping screw-ups much higher (oh, you wanted black/uber/power supply/etc)
  • Be much more difficult to service (need to maintain docs for all variations)
  • Be more confusing to buy, possibly leading to paralysis by analysis

 

And so on.

 

So, after our brief black experiment, we made another choice: that we weren’t going to add black to the line as a standard option. Nor would we speculate on whether or not we’d have black again.

 

Now, this doesn’t mean we won’t have it again in the future (black, we realized, is a great way to refinish chassis that cannot be re-grained). But, as before, we won’t speculate when it may be.

 

 

So, What’s This Got To Do With Black Friday?

 

Well, other than the fact that the black chassis were introduced shortly before Black Friday, it’s all about choices. Yes, more choices.

 

Many companies, both retailers and manufacturers, choose to participate in Black Friday through special deals that start the day after Thanksgiving. Some do a lot more than participate—they actively flog the upcoming deals and whip people up into a buying frenzy so people can ruin a good chunk of the spare time they might otherwise be spending with their family, or simply dozing in a good turkey-coma.

 

Of course, this is US-centric, and perhaps other countries around the world don’t have this yearly buying orgy. If so, you’re fortunate.

 

Because it wasn’t always like this. The stampeding, deal-crazed, sometimes murderous customers-trampling-customers thing is really recent. As in, last decade recent. And each year, it seems to get whipped up more and more.

 

Why? I suppose the theory is that “if ya ain’t got customers right away, y’aint gonna do well this season.” Or something like that, translated into corp-speak.

 

The real reason why? Because companies choose to participate.

 

That’s a choice.

 

Companies (like Schiit) can also choose not to participate. And we don’t. But one company did us even better last year. And because of this, they have my ultimate respect.

 

What company? Cards Against Humanity. Instead of offering discounts, or remaining neutral, they actually raised prices on Black Friday.

 

Nicely done.

 

Sometimes the hardest thing to do in business is to not just opt out, but stand against a trend. Kudos to them. It’s a choice—a powerful choice.

 

So what am I going to do this Black Friday? I don’t know. Turning off ordering is tempting, but I’m thinking of simply doing a banner like this:

 

Really? Shopping today?

How about spending some time with the people you care about?

After all, the prices will be the same tomorrow.

 

 

Coda: More Choices

 

It’s funny. I just came back from Rocky Mountain Audio Fest. It was a great show. But I’m simple. Any show is a good show when we remembered to get our hotel rooms, ship all the right products, and our products performed as expected and no smoke came out of the latest prototypes we were showing.

 

But it was a great show, because I noticed a trend with some of the visitors who stopped by our booth. Over and over, I heard, “Wow, there are actually prices in the brochure,” and “Wow, this is actually affordable!”

 

And, during the course of the show, we had some pretty big-time visitors, including a prominent audio technology blogger, a very big-name audio design engineer, and a high-level TI engineer, amongst others. The audio design engineer and the TI engineer seemed very taken with my straight answers on our products, how we achieved the performance levels we did, and the overall look, feel, and construction. That was part of a trend where I noticed that the people closest to the design and manufacturing side were most impressed—from product design and engineering to the DIY community.

 

“How do you do this…for this price?” they asked.

 

“Well, we’re simple,” I explained. “We don’t do fancy chassis, because that would dominate the cost.” I showed them how we do all the punching, machining and finish work, then fold the metal. They nodded, understanding.

 

“And we don’t have a dealer network, because we’re not living in the 1980s anymore,” I said. “As soon as you choose distribution, prices will—“

 

“Double!” one of them finished for me.

 

“Or more,” his friend added.

 

“And we don’t have to advertise very much, because the value is clear,” I said. “If we were doing a bunch of products that were very similar to other stuff at the same price point, we’d have to do a lot more advertising.”

 

“Or you could just make mega-price gear,” the friend said. “Though that’s getting crowded as well.”

 

“And then we’d have to deal with the audiophile nervosa,” I said. “We’re not really set up to convince people to buy our stuff. I need to do a shirt that says, ‘Schiit sales departmement org chart’ on it, with an empty box below.”

 

They laughed. “Yeah, upstairs is about $130,000 turntables with no arms, $30,000 players that are computers in billet chassis, and $50,000 amplifiers that would have cost $3K a couple of decades ago,” the first opined.

 

“That’s a choice,” I said. “They chose beauty, fine finish, and distribution. We’re a lot more functional.”

 

They laughed. “And that’s why everyone’s down here in this room!”

 

We talked for a while longer, they had a listen to Ragnarok and Yggdrasil, and listened to Mike Moffat say, well, whatever he says at shows (sometimes I don’t want to know.)

 

And in the end, they nodded and grinned, clearly understanding.

 

“Good choices,” they said.

post #3186 of 19456
Quote:
Originally Posted by Jason Stoddard View Post
 

They laughed. “Yeah, upstairs is about $130,000 turntables with no arms, $30,000 players that are computers in billet chassis, and $50,000 amplifiers that would have cost $3K a couple of decades ago,” the first opined.

 

“Good choices,” they said.

 

I agree that the trend to ultra-expensive gear without any real functional performance value is extremely silly. I really appreciate how Schiit is releasing the $79 dac/amp combo that can allow new-comers on a tight budget to tip their toes into this hobby.

 

I do love sniping amazing deals during black friday & cyber monday, and I personally would have loved a black Lyr 2, but I do agree with the choice for consistent low pricing and less options over higher mark-ups to allow for holiday discounts. also, there was a ice cream study that showed that when confronted when more flavors, people ended being less likely to purchase something.

post #3187 of 19456
Regarding the black chassis, I love the look (I've got a Black Valhalla 1), but teh cheapest of those three models is still $349. That might be cheap when it comes to audio gear, but it's hard to justify an impulse "OMG SCHIIT HAS BLACK FINISH" purchases. So even if someone really really really wants the black Schiit, they might not rush to purchase it, even with the "Limited Time Only" banner.

So at the risk of opening another "when will you offer black Schiit?" discussion, I will say that a black finish on the Magni/Modi class of products might actually sell better compared to the normal silver ones. I could be wrong, and it may not even be possible (I'm not in materials, so I don't know what you do to the steel chassis).

At any rate, thanks for selling products with supplier screw-ups smily_headphones1.gif

Oh, and Black Friday sucks. Maybe you can get some good deals, but it's a nightmare working the other end of that.
post #3188 of 19456

Yeah, Black Friday sucks, and as Jason has mentioned, it seems like it has gotten almost exponentially worse over the last 10 years or so. Back when I was still single, and in my mid to late 20's in age (mid to late 80's), my Mom and I had a tradition on Black Friday where we would go out and grab some lunch somewhere, and the catch a matinee at the movies. After that, we'd go back home and enjoy a few adult beverages and maybe play some cards or a board game while listening to music. Good family oriented fun spent with loved ones.

 

Now, I avoid Black Friday like the plague. It would take an emergency to make me leave home. just not worth the aggravation.

post #3189 of 19456
Quote:
Originally Posted by StanD View Post
 

I can't believe anyone would use that in a quality audio product. Isn't that a CDS photo resistor? I remember some nasty volume pedals for electric musical instruments that used these, yuck, they were bad.


The Morley brand?  ... With the built-in 60Hz hum?

post #3190 of 19456

Well darn.  I wish I'd known about the black accident because then my Lyr would be black.  But no matter.  Excellent chapter and I look to the future!

post #3191 of 19456

Good chapter, but I wouldn't mind if you guys did limited runs with different colors every few years or so.

post #3192 of 19456

Really interesting write up from someone at Cards Against Humanity here explaining the Black Friday price increase. I love those guys.

 

http://blog.maxistentialism.com/post/68844686496/cards-against-humanitys-5-more-black-friday

post #3193 of 19456
Quote:
Originally Posted by Jason Stoddard View Post

 

They laughed. “And that’s why everyone’s down here in this room!”

 

Damn skippy!  :smile:

post #3194 of 19456

you can't call it Black Friday anymore:

 

The war on Thanksgiving has officially begun.

Macy's confirmed to The Huffington Post Tuesday that it will open stores to Black Friday shoppers at 6 p.m. on Thanksgiving day -- two hours earlier than it opened last year.

 

Happy Thanksgiving

post #3195 of 19456
Thread Starter 
Quote:
Originally Posted by jsiegel14072 View Post
 

you can't call it Black Friday anymore:

 

The war on Thanksgiving has officially begun.

Macy's confirmed to The Huffington Post Tuesday that it will open stores to Black Friday shoppers at 6 p.m. on Thanksgiving day -- two hours earlier than it opened last year.

 

Happy Thanksgiving


Oh gawd, people are crazy.

 

More crazy does not usually equal "better."

New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: Jason Stoddard
Head-Fi.org › Forums › Head-Fi Special Forums › Head-Fi Bloggers › Jason Stoddard › Schiit Happened: The Story of the World's Most Improbable Start-Up