Jason Stoddard
Sponsor: Schiit Audio
2017 Chapter 5:
Back to the Past
I've said before that you'll think we're crazy. And, given that it’s April 1 as we announce this, you may think this is a joke…even though it isn’t.
But with this announcement, you'll really think we've lost it. Because this is about the wildest thing we've done...I mean, we're talking a serious turn-around, a trip right back to the 19th century, a complete inversion of how we do business, a 100% super-surprise retro thing that even I never expected we would do.
Aside: this is the fourth Manhattan-project level event that I mentioned in passing in the end-of-2016 wrap-up chapter. I'd just had an epiphany about how to make it work...and I'm thrilled and a little shocked that this is the first of our truly wacky ideas to become reality.
And yet, even though I never expected to do what we're doing, I'm oddly excited about it. In a year of exciting product launches, this thing has me thrilled. Maybe it's just that it's so different. Maybe it's just the potential. Maybe it's just--
(loudly, from the back) "Ah, shaddup already and tell us what it is! You've bloviated for, like 12 tweets now, and we still have no idea What you're talking about!"
Okay, here it is: we're opening our first retail store.
Yes, you read that right. Retail store. As in, a place where you can go in, sit down, and listen to a whole bunch of Schiit. As in, a place where you can hear both desktop systems and speaker systems. As in, a place where pretty much the whole line is set up, and you can compare to your heart's content.
(Yes, I know, bring the smelling salts.)
"Way way way wait a second!" The voice at the back bellows. "Are you talking about bricks and mortar?"
Yep! Or, well, more accurately, 2x4s and stucco, with a fake kind of southwestern glaze on the outside. Because earthquakes. We don't really do bricks that much in SoCal. But if by "bricks and mortar," you meant, "physical store where people can buy stuff," yes, that's what we're talking about.
(And no, none of us have been institutionalized lately. At least as far as I know.)
"But, wait!" That voice at the back comes again. "A retail store? As in, that thing you've done so well at avoiding? Why start now? Why do you think you'll do any better at this than any other dealer on the planet? What can you possibly hope to accomplish with this?
Okay. In order, yes, yes, because it's something people have been asking for and we're a little crazy, we don't, and to learn lots about this whole new (to us) side of the business.
And, an aside: it's not a dealer.
But I'm getting ahead of myself. First, let's talk about the whys.
Why Go Back to the Past?
I know I've been hard on dealers at times. I've railed against the distribution model and its now-unnecessary-in-the-21st-century inefficiency and costs. I've attributed a big part of our success on our avoidance of dealers, on selling direct.
But, in all that time, I always gave credit to dealers for one thing: providing a place where people can come and compare a whole bunch of different gear, before they buy. There's definitely a value in that.
Aside: assuming the deck isn't stacked to favor the products with the highest margins. Yes, I know, honest dealers don't do that. That's why, if you buy from a dealer, you choose carefully.
Aside to the aside: and what we're talking about still isn't a dealer. But let's get through the whys first.
So, first why: Because it would be nice to allow people to compare our products before buying. Especially with the line getting big. We now have a wide selection of desktop products, DACs, preamps, accessories...and we'll be selling affordable stereo amps before long.
But there's more to it than that. We also get an increasing number of people who ask if they can pick up an order at the factory, or if we have a demo room at the factory. This is a problem, because there's always a lot of next-generation stuff running around the main SchiitBox (and it might even be sitting on Alex's desk, right next to the entrance), plus people talking about what's coming, or meeting with vendors who are involved in next-generation products, or...you get the point. Picking up products is usually fine, albeit disruptive, but having people in the shop for any length of time is not the greatest idea if we want to leave the leaking of new products to myself and Mike alone.
And there's even more, but this one is more about attitude and curiosity: I've always wondered what it takes to create a successful audio retail experience. I've talked about it with some other audio manufacturers, and the talks have always ended in a kind of stunned exhaustion. Because once you start adding up the costs to open one retail store, including fixtures and staffing, and then replicate it a dozen or twenty times, you get into some seriously intimidating figures. It always gets too big, too fast. And we shut down the discussion, walk away, and have a drink.
But it always comes up again...what if you could do retail? What if you could really make a go of it, without making the costs so high it makes the company non-competitive? What if it worked?
And that, of course, was on the back of my mind, as we started to wind down Centric last year, and I sat staring across the desk at Tyler. And that's where this thing really took off.
"We Should Do Retail": A Convo With Tyler
Tyler, if I haven't introduced him before, is our head of finance and admin. Finance, because we need someone who's responsible to head that up, and admin, because there are lots of loose ends in our business, loose ends that are best not left to Mike and I. In reality, this dual title means that Tyler does our bookkeeping, interfaces with the bank and the accountants, does wires, some POs, HR stuff (famous Tyler quote: "I got dental and vision coverage for the employees for free, I'm telling you so you know, but I know you don't care, because the overall coverage costs are less."), and a whole bunch of miscellaneous stuff that I'm sure he'll have to shovel off on to a lieutenant some time in the future. Tyler has always been of the opinion that we need to do retail.
"I've been looking at lease rates in Old Town (Pasadena) for a SchiitShop," Tyler told me one day. "It's not that bad."
"Plus staffing, plus fixtures."
"Set it up so it sells coffee during the day, hookah at night, cover the costs with that," Tyler shot back. We'd discussed stuff like this before: having some kind of hangout attractor that could cover the basic costs, so this wasn't so surprising.
But still, inwardly I groaned. Because having a location in Pasadena—32 miles away—would be cool and all, but it would also involve staffing, fixtures, security, a long-ass lease, and who knows if it would work.
"You know you want to do it," said Tyler. "Make it the polar opposite of the Apple Store, all black and aluminum."
"Apple has, like, a trillion dollars to spend on stores," I told him.
"They had to start somewhere."
"Yeah, they started with only ten billion or something like that." I shot back. But Tyler was right. There were lots of people asking if they could listen to our stuff, even locally.
"Plus, what happens when we open one store, and everyone wants one in New York. Or Chicago? Or Atlanta? Or San Francisco? Or, hell, worldwide? It's a can of worms," I added.
Tyler laughed. "That's when you tell them tough, it's in beta."
"Yeah, that'll go over well," I said.
But still, in the back of my mind, something stuck. Something about that idea of "beta." Just like Gmail a decade ago: Gmail (beta). It was good enough that people used it, but it got some slack by not claiming to be the be-all-end-all-perfect-product.
What if we could do something like that? I wondered. Maybe not in Pasadena, but right here? Centric was winding down. We had a cool space in Old Town Newhall, which was starting to really get turned around, with a gastropub and a winery and a wine/cheese/coffee shop and a smokehouse and a brewery...and we'd been leasing that space so long it was month-to-month and cheap. And that space was really kitted out for high-end retail...
But then I started thinking about what it would cost to staff it, and how much we'd have to sell to cover the costs...and it all fell apart again.
That is, until December 2016, when I had my epiphany.
In December, my decision to leave Centric was made. I'd seen the numbers, and it was time to move on. Which meant clearing out the old office, since the guys who would take the company from here worked remotely. Which meant, I was sitting there one day, alone, writing the year-end wrap up for Schiit 2016, staring at the reality of that very cool space, and wondering, How can I make retail work?
This time, though, the answers started falling into place.
An approximation of my thought process would have gone something like this:
The big problem with retail is that retail is costly. The three greatest costs are in staffing, rent, and fixtures. We had fixtures largely covered, because the person who'd had the office before Centric had kitted it out as a high-end wine shop, and spent, literally a hundred thousand dollars in solid custom hardwood shelving and cubbies, polished concrete floors, hand-finished plaster, and on and on. It was a really nice place to spend time. A few thousand dollars worth of table, couch, chairs, and signage, and we'd be done with fixtures.
We also had a head start on rent, because, as I mentioned, we were already month-to-month and the overall rent was pretty inexpensive. Still, it wasn't an insignificant cost. If there was a way to bring it down by half, that would make it a no-brainer. We'd have fixtures and a retail space for a year for the cost of three or four ad placements in the hifi mags.
Or, I realized, we could have the SchiitShow at this location, and that would cover fully half the rent! SchiitShows are expensive. Really expensive. But if we moved them up here, and expanded out into the patio space we shared with the restaurant next door, and had them cater the event...then the remaining rent really looked like a pittance.
Epiphany Number One: you can offset rent with the SchiitShow.
Wow. Now, that was exciting!
But it still came back to the ever-painful sticking point: how did we afford to staff it? Even one full-time staffer would be much more costly than the rent. That was a real problem, and that was something we'd have to deal with, for real, if we wanted to make this work. I mean, we couldn't just pull someone off the line and say, "Hey, this is your job now, have fun selling stuff." Even though lots of our staff would probably be happy to spend a day just sitting around and listening to our gear.
Cue me sitting back thunderstruck. Because, really, we had enough staff that we could cover the retail space with people working a half day a week. And it would serve as a way for everyone to get to know the products better, which a lot of people wanted to do. We could see if we had enough volunteers to cover the time.
Epiphany Number Two: we might not have to staff!
And if that worked, we now had a way to open a retail store—at minimal cost—and staff it—at minimal cost—and experiment in this brave new world that we knew nothing about.
I sent an email to Alex and Tyler, outlining the idea and asking Alex if he thought we'd have enough volunteers. Alex's reply: "Hell, I'll spend one day a week there."
And, as we thought the idea through, more good ideas came out: we could also use the space for seminars (Mike or I talking about various aspects of digital or analog stuff), we could have product intros there, we could bring the press there, we could have "tech nights," where we'd have a technician there to hook up bizarre combos of products or try new permutations with customer gear.
Done right, the retail space could be much more than a retail space.
But one thing was certain: it definitely wouldn't be a dealer.
Introducing the Schiitr: (Not) A Dealer
"Schiitr? Is that what you're calling this? What a dumb name," someone mutters at the back.
Yeah, well, lots of people thought our name was dumb when we started. Including lots of "big" audio companies that are now looking uncomfortably over their shoulders at us (or staring at our backs.)
Aside: now, don't take that as a guarantee this crazy idea will work. It may crash and burn. That's the way with betas. It may not be around a year from now. It may break even and become an important way for us to interface with local clients. It could go big and we could roll it out in multiple locations. Any of these things could happen. Or something completely unexpected. We'll see.
So why isn't the Schiitr a dealer? It has to do with our decisions. And those decisions include:
"Wow, that sounds fantastic!" Some people are saying. "What's the catch?"
Sure. You bet. Lots of catches. Switches in the back and all that. So here you are:
So if you'd like to come out and see us, we'd like to see you. Come in, sit down, relax, have a beverage, and enjoy some stacks of Schiit. Join our mailing list and we'll keep you up to date on what's going on there, from Tech Nights to seminars to the next SchiitShow.
Talk to us, and let us know what's working, and what isn't. We'll tweak and improve...and hopefully start an entirely old revolution, in the revival of the company store.
Back to the Past
I've said before that you'll think we're crazy. And, given that it’s April 1 as we announce this, you may think this is a joke…even though it isn’t.
But with this announcement, you'll really think we've lost it. Because this is about the wildest thing we've done...I mean, we're talking a serious turn-around, a trip right back to the 19th century, a complete inversion of how we do business, a 100% super-surprise retro thing that even I never expected we would do.
Aside: this is the fourth Manhattan-project level event that I mentioned in passing in the end-of-2016 wrap-up chapter. I'd just had an epiphany about how to make it work...and I'm thrilled and a little shocked that this is the first of our truly wacky ideas to become reality.
And yet, even though I never expected to do what we're doing, I'm oddly excited about it. In a year of exciting product launches, this thing has me thrilled. Maybe it's just that it's so different. Maybe it's just the potential. Maybe it's just--
(loudly, from the back) "Ah, shaddup already and tell us what it is! You've bloviated for, like 12 tweets now, and we still have no idea What you're talking about!"
Okay, here it is: we're opening our first retail store.
Yes, you read that right. Retail store. As in, a place where you can go in, sit down, and listen to a whole bunch of Schiit. As in, a place where you can hear both desktop systems and speaker systems. As in, a place where pretty much the whole line is set up, and you can compare to your heart's content.
(Yes, I know, bring the smelling salts.)
"Way way way wait a second!" The voice at the back bellows. "Are you talking about bricks and mortar?"
Yep! Or, well, more accurately, 2x4s and stucco, with a fake kind of southwestern glaze on the outside. Because earthquakes. We don't really do bricks that much in SoCal. But if by "bricks and mortar," you meant, "physical store where people can buy stuff," yes, that's what we're talking about.
(And no, none of us have been institutionalized lately. At least as far as I know.)
"But, wait!" That voice at the back comes again. "A retail store? As in, that thing you've done so well at avoiding? Why start now? Why do you think you'll do any better at this than any other dealer on the planet? What can you possibly hope to accomplish with this?
Okay. In order, yes, yes, because it's something people have been asking for and we're a little crazy, we don't, and to learn lots about this whole new (to us) side of the business.
And, an aside: it's not a dealer.
But I'm getting ahead of myself. First, let's talk about the whys.
Why Go Back to the Past?
I know I've been hard on dealers at times. I've railed against the distribution model and its now-unnecessary-in-the-21st-century inefficiency and costs. I've attributed a big part of our success on our avoidance of dealers, on selling direct.
But, in all that time, I always gave credit to dealers for one thing: providing a place where people can come and compare a whole bunch of different gear, before they buy. There's definitely a value in that.
Aside: assuming the deck isn't stacked to favor the products with the highest margins. Yes, I know, honest dealers don't do that. That's why, if you buy from a dealer, you choose carefully.
Aside to the aside: and what we're talking about still isn't a dealer. But let's get through the whys first.
So, first why: Because it would be nice to allow people to compare our products before buying. Especially with the line getting big. We now have a wide selection of desktop products, DACs, preamps, accessories...and we'll be selling affordable stereo amps before long.
But there's more to it than that. We also get an increasing number of people who ask if they can pick up an order at the factory, or if we have a demo room at the factory. This is a problem, because there's always a lot of next-generation stuff running around the main SchiitBox (and it might even be sitting on Alex's desk, right next to the entrance), plus people talking about what's coming, or meeting with vendors who are involved in next-generation products, or...you get the point. Picking up products is usually fine, albeit disruptive, but having people in the shop for any length of time is not the greatest idea if we want to leave the leaking of new products to myself and Mike alone.
And there's even more, but this one is more about attitude and curiosity: I've always wondered what it takes to create a successful audio retail experience. I've talked about it with some other audio manufacturers, and the talks have always ended in a kind of stunned exhaustion. Because once you start adding up the costs to open one retail store, including fixtures and staffing, and then replicate it a dozen or twenty times, you get into some seriously intimidating figures. It always gets too big, too fast. And we shut down the discussion, walk away, and have a drink.
But it always comes up again...what if you could do retail? What if you could really make a go of it, without making the costs so high it makes the company non-competitive? What if it worked?
And that, of course, was on the back of my mind, as we started to wind down Centric last year, and I sat staring across the desk at Tyler. And that's where this thing really took off.
"We Should Do Retail": A Convo With Tyler
Tyler, if I haven't introduced him before, is our head of finance and admin. Finance, because we need someone who's responsible to head that up, and admin, because there are lots of loose ends in our business, loose ends that are best not left to Mike and I. In reality, this dual title means that Tyler does our bookkeeping, interfaces with the bank and the accountants, does wires, some POs, HR stuff (famous Tyler quote: "I got dental and vision coverage for the employees for free, I'm telling you so you know, but I know you don't care, because the overall coverage costs are less."), and a whole bunch of miscellaneous stuff that I'm sure he'll have to shovel off on to a lieutenant some time in the future. Tyler has always been of the opinion that we need to do retail.
"I've been looking at lease rates in Old Town (Pasadena) for a SchiitShop," Tyler told me one day. "It's not that bad."
"Plus staffing, plus fixtures."
"Set it up so it sells coffee during the day, hookah at night, cover the costs with that," Tyler shot back. We'd discussed stuff like this before: having some kind of hangout attractor that could cover the basic costs, so this wasn't so surprising.
But still, inwardly I groaned. Because having a location in Pasadena—32 miles away—would be cool and all, but it would also involve staffing, fixtures, security, a long-ass lease, and who knows if it would work.
"You know you want to do it," said Tyler. "Make it the polar opposite of the Apple Store, all black and aluminum."
"Apple has, like, a trillion dollars to spend on stores," I told him.
"They had to start somewhere."
"Yeah, they started with only ten billion or something like that." I shot back. But Tyler was right. There were lots of people asking if they could listen to our stuff, even locally.
"Plus, what happens when we open one store, and everyone wants one in New York. Or Chicago? Or Atlanta? Or San Francisco? Or, hell, worldwide? It's a can of worms," I added.
Tyler laughed. "That's when you tell them tough, it's in beta."
"Yeah, that'll go over well," I said.
But still, in the back of my mind, something stuck. Something about that idea of "beta." Just like Gmail a decade ago: Gmail (beta). It was good enough that people used it, but it got some slack by not claiming to be the be-all-end-all-perfect-product.
What if we could do something like that? I wondered. Maybe not in Pasadena, but right here? Centric was winding down. We had a cool space in Old Town Newhall, which was starting to really get turned around, with a gastropub and a winery and a wine/cheese/coffee shop and a smokehouse and a brewery...and we'd been leasing that space so long it was month-to-month and cheap. And that space was really kitted out for high-end retail...
But then I started thinking about what it would cost to staff it, and how much we'd have to sell to cover the costs...and it all fell apart again.
That is, until December 2016, when I had my epiphany.
In December, my decision to leave Centric was made. I'd seen the numbers, and it was time to move on. Which meant clearing out the old office, since the guys who would take the company from here worked remotely. Which meant, I was sitting there one day, alone, writing the year-end wrap up for Schiit 2016, staring at the reality of that very cool space, and wondering, How can I make retail work?
This time, though, the answers started falling into place.
An approximation of my thought process would have gone something like this:
The big problem with retail is that retail is costly. The three greatest costs are in staffing, rent, and fixtures. We had fixtures largely covered, because the person who'd had the office before Centric had kitted it out as a high-end wine shop, and spent, literally a hundred thousand dollars in solid custom hardwood shelving and cubbies, polished concrete floors, hand-finished plaster, and on and on. It was a really nice place to spend time. A few thousand dollars worth of table, couch, chairs, and signage, and we'd be done with fixtures.
We also had a head start on rent, because, as I mentioned, we were already month-to-month and the overall rent was pretty inexpensive. Still, it wasn't an insignificant cost. If there was a way to bring it down by half, that would make it a no-brainer. We'd have fixtures and a retail space for a year for the cost of three or four ad placements in the hifi mags.
Or, I realized, we could have the SchiitShow at this location, and that would cover fully half the rent! SchiitShows are expensive. Really expensive. But if we moved them up here, and expanded out into the patio space we shared with the restaurant next door, and had them cater the event...then the remaining rent really looked like a pittance.
Epiphany Number One: you can offset rent with the SchiitShow.
Wow. Now, that was exciting!
But it still came back to the ever-painful sticking point: how did we afford to staff it? Even one full-time staffer would be much more costly than the rent. That was a real problem, and that was something we'd have to deal with, for real, if we wanted to make this work. I mean, we couldn't just pull someone off the line and say, "Hey, this is your job now, have fun selling stuff." Even though lots of our staff would probably be happy to spend a day just sitting around and listening to our gear.
Cue me sitting back thunderstruck. Because, really, we had enough staff that we could cover the retail space with people working a half day a week. And it would serve as a way for everyone to get to know the products better, which a lot of people wanted to do. We could see if we had enough volunteers to cover the time.
Epiphany Number Two: we might not have to staff!
And if that worked, we now had a way to open a retail store—at minimal cost—and staff it—at minimal cost—and experiment in this brave new world that we knew nothing about.
I sent an email to Alex and Tyler, outlining the idea and asking Alex if he thought we'd have enough volunteers. Alex's reply: "Hell, I'll spend one day a week there."
And, as we thought the idea through, more good ideas came out: we could also use the space for seminars (Mike or I talking about various aspects of digital or analog stuff), we could have product intros there, we could bring the press there, we could have "tech nights," where we'd have a technician there to hook up bizarre combos of products or try new permutations with customer gear.
Done right, the retail space could be much more than a retail space.
But one thing was certain: it definitely wouldn't be a dealer.
Introducing the Schiitr: (Not) A Dealer
"Schiitr? Is that what you're calling this? What a dumb name," someone mutters at the back.
Yeah, well, lots of people thought our name was dumb when we started. Including lots of "big" audio companies that are now looking uncomfortably over their shoulders at us (or staring at our backs.)
Aside: now, don't take that as a guarantee this crazy idea will work. It may crash and burn. That's the way with betas. It may not be around a year from now. It may break even and become an important way for us to interface with local clients. It could go big and we could roll it out in multiple locations. Any of these things could happen. Or something completely unexpected. We'll see.
So why isn't the Schiitr a dealer? It has to do with our decisions. And those decisions include:
- We'll only be selling Schiit. No other brands. We won't be carrying headphones or speakers. We won't be selling music servers or disk spinners. We won't be pimping $3000 cables and turntable mats and magic stones and hologram stickers. Of course, we'll have a selection of headphones and a couple of speakers to demo, but nobody is going to be taking those home. Sticking to selling only our stuff saves us a massive amount of headache and admin work for those times when people decide to return stuff that isn't ours, or when they get something that isn't ours that doesn't work. That kind of admin work can eat us alive. We have well-developed procedures for dealing with our own returns and exchanges, but not so much for anyone else. Plus, selling only our stuff saves us from the inevitable fisticuffs that will result from not stocking (insert your favorite headphone brand here) or not stocking (that one special-edition model of your favorite headphone brand here.)
- We will not be selling, period. The people who staff the Schiitr will vary—from hardcore audiophiles to guys who test the product, to people who screw them together. They're not salespeople, they are not expected to be salespeople, they are expected to babysit the products, answer the questions they can answer, and ask you to leave if you spend all day there drinking the free coffee and never buying anything.
- We will not guarantee an answer to every esoteric, tech-nerd, or audiophila nervosa question. As mentioned above, some staff will know the line backwards and forwards. Some will not. Some will have strong opinions about what sounds good. Some will not. Some will be highly techy. Some will not. Hell, I'll be there from time to time, and I can't guarantee I can answer all your questions. So there.
- We will provide free drinks. No, not alcohol. Holy crap, I don't even want to think about the liability there. But if you want (good) coffee or tea, feel free. But remember, there's only one bathroom, and the walls are thin.
- We will leave you alone to listen as long as you want. Unless, of course, there are a bunch of people waiting. Or we're closing. You get the picture.
"Wow, that sounds fantastic!" Some people are saying. "What's the catch?"
Sure. You bet. Lots of catches. Switches in the back and all that. So here you are:
- There's only one Schiitr. It's in Newhall, CA. That's about 30 minutes away from downtown LA on a good traffic day. However, it is literally right across from the Metrorail station, so if you want to ditch the car, you can take the train. You can also look forward to hearing the train's horn blaring in the background as you listen. Yes, we know, this is unfair to everyone who doesn't live in Southern California. But hey, look at it this way: it's also unfair to people who DO live in Southern California, given our traffic and our crappy public transportation. But until we invent a teleporter, well, that's the way it's gonna be. And if we invent a teleporter, expect me to be a little too busy being, oh, the first multi-trillionaire for a while.
- It's not going to be open all the time. Our initial hours are Tuesday-Saturday, 10AM-6PM. Yes, I know, this is entirely unfair towards Mondays and towards people who work normal hours. But that's part of the compromise necessary to keep staffing costs down. Ah well, we'll see how it goes.
- We won't be perfect from Day 1. It's an experiment. Beta. We won't have every single permutation of our products available at every moment. We won't have every single detail worked out. This is a test. Give us feedback. We can improve. But everything hinges on this location working out first, before we go any farther. Remember, we still don't have a firm plan on how to expand beyond this one location (though we're talking about a couple of bizarre ideas that, if they work, will be very, very interesting). And remember, we will not impale ourselves on this idea—if we can't make it work, so be it.
So if you'd like to come out and see us, we'd like to see you. Come in, sit down, relax, have a beverage, and enjoy some stacks of Schiit. Join our mailing list and we'll keep you up to date on what's going on there, from Tech Nights to seminars to the next SchiitShow.
Talk to us, and let us know what's working, and what isn't. We'll tweak and improve...and hopefully start an entirely old revolution, in the revival of the company store.
