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Schiit Happened: The Story of the World's Most Improbable Start-Up - Page 45

post #661 of 17522
Originally Posted by yoyowiggle View Post

HAHA! Thats awesome... :beerchug: 


Maybe there is a 1000 watts per channel THOR out there...

Yeah, what component would possibly live up to that name!?  The Schiit Thor ... :basshead:

post #662 of 17522
Originally Posted by USAudio View Post
Originally Posted by yoyowiggle View Post

HAHA! Thats awesome... :beerchug: 


Maybe there is a 1000 watts per channel THOR out there...

Yeah, what component would possibly live up to that name!?  The Schiit Thor ... :basshead:

A high powered e-stat amp. That'd make sense.

post #663 of 17522
Looking at Jason's pics, and thinking of the theme of the next chapter, I guess you know it's time to move production out of your garage when you go from "You can never have too many tiny screwdrivers" to "I have too dang many tiny screwdrivers!"
post #664 of 17522

Too many for $800 in screws? Please.



post #665 of 17522

Tomorrow it is...

post #666 of 17522
Originally Posted by BournePerfect View Post

Too many for $800 in screws? Please.




Wait... you guys can get multiple screws for $800? I've been overpaying all these years...






Warning: Spoiler! (Click to show)


... still worth it though :ph34r:

post #667 of 17522
Originally Posted by Armaegis View Post


Wait... you guys can get multiple screws for $800? I've been overpaying all these years...






Warning: Spoiler! (Click to show)


... still worth it though :ph34r:

Getting screwed overpaying.  :biggrin:

post #668 of 17522
Originally Posted by CJs06 View Post

It would be a pretty simple answer, I do recall Jason stating they use the Schiit out of monoprice cables. Which as far as I'm concerned is the best value/quality cables I could find that I can have delivered to my door in two days for very cheap.

For example, I recently bought a Toslink to mini-Toslink 3ft monoprice cable off of Amazon with next-day shipping for literally $8.99.

I don't like Monoprice very much since they are crappy and made in China and definately not made to last. I know people don't care at that pricepoint but I do like to support US made, which is why I prefer to support Schiit. The PSYT cables that Schiit sells are made by Straight Wire in the USA. Straightwire is a great company and similar to Blue Jeans Cables. The difference is that BJC is custom made to order where most Straightwire comes prepackaged. I think SW were quite big in the 80s-90s.


The Schiit interconnects are only $20 which is a good deal for Made in the USA and great quality. If you need longer cables order from BJC, they are so helpful and honest, you can give them a call and just chat with them even. I ordered my 10 gauge speaker cables from them for less than $1 a foot and Made in the USA. The interconnects are a little more but you can choose solder free welded connectors for extra strength, they are the only ones doing that.


Originally Posted by davidsh View Post

Damn.. All that stuff I didn't really understand about bias and amp classes.. Bet the Lyr is good wink.gif

The Lyr is an excellent amp as is the Valhalla. What I like about Schiit is that they focus on minimalist beautiful design. The tube amps especially have a futuristic look that I quite like and all of them sound amazing (my favourites being the Valhalla and Lyr).

post #669 of 17522
Originally Posted by baronkatz View Post

I don't like Monoprice very much since they are crappy and made in China and definately not made to last. 

I like monoprice for usb and hdmi cables, the cables I have bought from there seem sturdy and very well made for the price. Digital is digital. I don't think I would buy interconnects from there though. 

post #670 of 17522
Thread Starter 

Chapter 10:

Our First Employee, Our First Boardhouse


In business, there are a lot of invisible lines that, once you cross them, it’s hard to go back. I already covered one of those: getting incorporated. Incorporation comes with additional fees, costs, administration, etc—but it’s invaluable if you want to keep your business and personal assets separate.


Now, I’m going to cover what’s arguably the biggest invisible line: having employees.


A business can be quite successful without employees—there are some single-person consultancies and specialized job shops doing excellent work and making good money while doing it. And there are plenty of advantages to working that way. Not least of which is that you absolutely know who’s doing the work (you), what their capabilities are (yours) and who’s responsible for delivering on-time and on-target (again, you.) You don’t have the additional burden of a payroll, or the additional administration of managing payroll taxes, withholding, etc, or paying a service to do so. It’s simple. It’s easy.


But it’s also very limiting. What if you want to go on vacation? What if you are laid up? What if you get a once-in-a-lifetime opportunity that’s simply too big for you to take on? That’s when the single-person consultancy or job shop model breaks down.


So, you get employees. Sounds easy, doesn’t it?


Nope. With employees comes a lot of responsibility. The baseline is that you have to meet payroll—and, with a growing business, you’re probably running most of your profits back into production to expand. Can you afford it? Will it affect your ability to keep expanding? You need to run some numbers before you hire anyone, and plan for putting in money if things get thin.


And now you have more administration. I mentioned payroll taxes, withholding, etc, which can be handled by a payroll service at minimal cost. But you’d also better keep records of who you interviewed and who you ended up hiring. You’d better have an offer letter that spells out duties and expectations. You’d better make sure the language in that letter doesn’t end up binding you in an implied employment contract. You’d better have a clear probationary period, and make sure the employee knows it. You’d better provide clear sick leave and vacation policies. You’d better provide health care. And you’d better plan on keeping a record of any feedback or disciplinary actions you take, in case things go south. And you’d better have an employee manual, so that everyone knows the rules of the game.


Sounds terrible, I know. I made the whole thing sound like a war between employer and employee. In reality, it usually isn’t. Most of the time, people are fundamentally decent, and you usually don’t need to worry about armor-plating your ass in five inches of legal armor.


But if things go bad, you want it there. In the 20 years at Centric, we’ve been threatened with legal action twice by employees. Nothing ever came of either, but I’m very, very glad we had policies and procedures in place, just in case.


So, did Schiit have all that in place when we brought on our first employee?


No. Of course not.



Beyond the Invisible Line


Before Lyr, Schiit could have existed comfortably as a no-employees “hobby business.” In fact, we planned for it. We modified our house and added storage in the attic to house some of our stock. We also seriously looked into building a shop in back of our house in order to be Schiit’s permanent home. This 400 square foot box sounded palacial in comparison to the 50 or so square feet we were eking out between the cars in the garage at the time.


An aside: It’s pretty hilarious to look back on it today, as we start reaching the limits of 5300 square feet—we just racked everything three levels high and leased a forklift to manage our space better.


But after the Lyr introduction, it quickly became clear that Schiit needed help. Rina couldn’t build boards fast enough, even with Jean’s help. At that time, Rina was also shipping everything we made, usually after burning them in overnight on the day after we made them. And I was getting tired of coming home every night from Centric and building ten or twenty amps. And I needed to spend more time with Mike, getting our first DAC hammered out (more on that later.) And the next run of Lyr boards had just come in, and we needed to do runs of all three amps. And the order rate continued to accelerate.


Bottom line: we needed help, and we needed it fast.


As luck would have it, a very old friend of mine had been watching our progress (not coolly and dispassionately, like Wells’ Martians, but actively helping along the way, making some custom tools that made assembling the early Asgards much easier.) He was a frequent visitor at the house, coming up for barbecue or wine or just to hang out. This old friend was Eddie.


When I say, “old friend,” I mean, “old friend…” I’ve known Eddie since 7th grade, and he was involved in my first business, Odeon Loudspeakers…


Time Machine: Set Dials for 1989


Okay. Imagine you’re just out of college. You’ve been into audio for a few years. You have big Carver amps and you build speakers. You’ve even sold a few of them. Some of them even sound pretty good. You have no money at all, and no experience with running a business.


So what do you do? You start a company, of course.


You try to run it while working another engineering job full-time. In the pre-internet, pre-direct-sale world of 1989. You know, no email, no internet, cellphones the size of bricks that cost $1200 and $45 per month if you didn’t use them at all, and $0.45 per minute when you did, and had like 2 hours of battery life.


What’s more, you decide to build them all yourself. First on the patio of your parents’ house. Then in a 300 square foot unpermitted, unheated, uncooled, unpowered shed you built with $1000 of lumber from Home Depot in the back of a friend’s house, and finally in a run-down, 1000 square foot industrial space in Sylmar, next to a meat packer and a body shop. And by build, I mean build. As in, sheets of MDF and gallons of paint would come in, and speakers would come out. All made with a Frankenstein arrangement of pin router jigs and templates, coupled with the world’s most hot-rodded and dangerous table saw (no shields, no guards, 5x the power it was designed for, blade usually sticking out at least 4” above the table surface, and an 8-foot extension built for the guide.)


This was Odeon Loudspeakers, my first company.


Eddie worked at Odeon.


Odeon had no money. Almost literally. We were so strapped, we cut our own Styrofoam for packing material using the table saw. Yes, the modded table saw. No, nobody ever lost a hand. We should have. Of course, the place should have blown up any amount of times when the air was full of sawdust (we had no dust collection system) and the kerosene heaters were going full blast.


Odeon is why I always win the “we once did this stupid thing at CES” stories. If you’ve been to a CES dinner with a bunch of other audio industry guys, you know what I mean. “Well, there was this one time when nothing got delivered for the booth, we had to make do with rental plants and couches,” or “Well, there was this one time when the prototype wasn’t ready, so we had to assemble it the night before in the hotel room.” Things like that.


Our Odeon/CES story goes like this:


In the old days, there were two CESes per year. One in Vegas, one in Chicago. Vegas was pretty easy. Throw stuff in the back of a van and drive there. An easy 4-hour trip.


Chicago? Not so much. Odeon couldn’t afford airfare, much less freight for over a thousand pounds of speakers (yes, we made some big stuff.) But Odeon couldn’t afford not to go to CES, either. We lived on orders made by distributors and dealers, and the only place we had contact with them was at shows.


(Pre-internet, remember? Distribution held all the cards.)


So we had to be at Chicago. Which meant, in the infinite wisdom of less than a quarter of a century on this planet, meant: we pack up the van and drive. From California to Chicago.


Or, more precisely, Eddie and Jose drove. (Jose, my other business partner at the time, now runs a very successful specialty costume shop…you’ve probably seen their work in tiny little movies like Thor, the Avengers, Tron, Spider-Man, etc.)


Why didn’t I go with them? Because I was able to fly out with Sumo. Sumo had money. Sumo shipped things and flew places. Odeon didn’t.


Now, the sheer insanity of driving from LA to Chicago in an overloaded 1970 Dodge van that was literally held together with Liquid Nails would be funny enough, but what wins the Stupid CES Stories Folly is what happened once I flew in.


After dropping stuff at the Sumo hotel room, I headed down to the show sub-level, which was where the high-end stuff was being shown that year. I found the Odeon room, and two very tired-looking co-workers.


“Dude, Zagnut bars are real!” Eddie said, proudly whipping up a table skirt to show me what looked like ten gross of Zagnut candy bars, most still bundled into factory display packs.


“What?” I asked, completely confused.


Eddie pulled out one of the candy bars and dangled it in front of my eyes. “Zagnut! Like in Beetlejuice! They’re real!”




“So we picked up a bunch of them,” Eddie said, gesturing at the boxes and boxes of candy bars.


I didn’t know what to say. They’d found a candy bar…that they saw in a movie… It didn’t make any sense.


Jose came to the rescue. “So we need some money.”


“Money?” I asked.


“Dude, you gotta try one, they’re good!” Eddie cut in.


“We ran out of money,” Jose said, waving him off. “We’re staying at a friend’s house, but we really need to get a motel or something, and it would be good to have some real food for a change…”


“You ran out of money?” I echoed.


Jose nodded and pointed at the giant pile of Zagnut bars.


Suddenly it clicked. “Wait. You spent all the trip money on candy bars?”


Jose nodded.


“But it’s worth it!” Eddie said. “Everybody’s gonna trip when we get home. These are real!”


“And you didn’t have money for a motel.”




“And you’ve been eating nothing but candy bars…” I said, trailing off.


“For a day and a half,” Jose said. “Since we got here.”


Right. These were my business partners. Now you see why I win the Stupid CES Story Award, every time. And why that business didn’t last long.



So Why’d You Hire Eddie?


Because 1989 was a long time ago. People change. And, most importantly, Eddie was:


  1. There
  2. Willing to work
  3. OK with piecework


“Piecework?” you’re probably saying. “What’s that?”


Piecework is where you tell someone, “Hey, I’ll pay you $X for each product you finish.” It works great in cases where you’re confident your employee isn’t going to sacrifice quality to make numbers. And Eddie was, if anything, an insane stickler for quality. So we didn’t have any worries there.


Now, to do piecework legally, you still need to either pay someone at least minimum wage (with piecework on top), or you need to have them not as an employee, but as a contractor. Which is what we did to start: Eddie worked for us as a contractor. Which had a lot of benefits in itself. Since he wasn’t an employee, we didn’t have to worry about withholding, health insurance, etc—just pay him and give him a 1099 at the end of the year.


“Well, that’s great!” you say. “I can avoid all the headaches with employees by using contractors.”


Not so fast. There’s a pretty specific legal definition of what a contractor is, and it may vary by state to state. If you’re trying to skate by and call employees “contractors” to save cash, and the Powers That Be decide they’re not contractors, but actually employees, you’re in for a world of hurt.


Contractors must typically, among other things:


  1. Be able to set their own hours
  2. Use their own tools
  3. Not have to work in a specific facility


With Eddie, we were pretty much in compliance on all 3, though he never actually took products home to work on them. He could have, though, and we wouldn’t have cared.


But the fact was, we were still a small business. Eddie was working in our garage. It wasn’t such a big deal—he was happy for the work, and we were happy for the help. The first few hundred amps he actually made standing up, between the 1966 Corvette and the garage shelf where we burned-in and shipped the amps. His total work area was probably about ten square feet. I sat at the bench, testing, and Rina took his space during the day to ship orders.


And we slipped into that pattern for a while—Eddie coming in every evening, throwing something on the grille, then going out into the garage to work on Schiit. It wasn’t a bad setup. And Eddie was very helpful in pointing out ways to make things easier, stuff we could change to make assembly go more quickly.


So, yeah, Eddie. He’s the kind of friend who’ll show up at 3AM to fix your busted car, or hop out in the middle of an intersection to pick up a pipe wrench someone dropped, or tell you everything the body shop did wrong to your car, or will put together amazing things on a weekend just because he can, or hook you up with machining or bead-blasting, or make Schiit. He’s also been the go-to guy for ultimate finish work on specialty costume, like on Thor, and he was the reviewer in Centric’s experiment with internet video back in 2006 or so, called “Wineass.” A quick YouTube search will pull up a few of the 140 episodes we shot. He’s a bit of a character—and a great choice for our first, well, contractor.


He’s also still our lead assembly guy to this day—he’s probably put together 35-40,000 products by now.


Completing the Story: The Boardhouse


With Eddie on the team, we were now able to keep up with production, and even get ahead. The bottleneck was now in boards. Rina and Jean were overloaded—in fact, I probably ended up stuffing about 20 Lyrs out of the first run.


So we had the choice of either adding more staff, or going to a PC board assembly house. Mike Moffat was always in favor of the latter, and on the second Lyr run, I finally took his counsel.


“I used to use these guys—Robert, he’s still in Simi Valley, I think. We could have them do it,” Mike said.


“But how much will it cost?” I asked. “Do they even do through-hole stuff? How fast can we get it done.”


“Dunno, dunno, dunno,” Mike said. “But you can pick up that antique communication device that you loathe—the phone—and ask them.”


“Why don’t you do it? They know you’re legit.”


“You’re just being lazy. You can’t email for everything.”


“Right. And when was the last time you helped put stuff together? And how about that DAC we have to do?” I shot back.


“I have ideas for the DAC,” Mike grumbled. “But I hear you. I’ll call them.”


“Don’t call them. Go ahead and take them the Lyr kit.”


“Without a quote?”


“If we want to ship, without a quote.”


And here’s the funny thing. The next day, Mike went down to the board house and dropped the Lyr kit with them. A week later, we still didn’t have a quote, but we had a full run of boards. Beautiful boards. Better than we ever did.


I was sold. We’d never make boards by ourselves again.


(And when the bill came in a few weeks later, it was insanely inexpensive. Lesson learned: there are some things that it’s best not to do yourself.)


That’s how, in the process of a few weeks, we went from a hobby business to something much more real. We were still a tiny diversion in the board house’s big runs, and Eddie was still working primarily with Jose, and Schiit still wasn’t producing enough money to pay Mike or I a salary, but it was starting to feel like something that was, well, going to go somewhere.


A final aside: today, we’re the board house’s #2 customer…a fact I find pretty hilarious—and appropriate.

post #671 of 17522
This is my favorite chapter yet.

I'd like to hear more about odeon, though in not sure if we will anymore in this book or not. I googled odeon loudspeakers, and they looked pretty impressive, especially considering your descriptions of where you were making them.
post #672 of 17522

Another great read, thanks

post #673 of 17522

My new favorite comment to use as a non-sequitur when business meetings are becoming boring:  “Zagnut! Like in Beetlejuice! They’re real!”  :etysmile: 

Edited by Ableza - 4/2/14 at 9:10am
post #674 of 17522
Some photos please Jason ! 😀
post #675 of 17522
Originally Posted by Jason Stoddard View Post

Chapter 10:

Our First Employee, Our First Boardhouse




A final aside: today, we’re the board house’s #2 customer…a fact I find pretty hilarious—and appropriate.

Now that's funny! :biggrin:

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