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

Discussion in 'Jason Stoddard' started by jason stoddard, Jan 23, 2014.
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  1. kothganesh
    Will Head-fi start an institution for pardoning/rehabbing audiophile addicts? I don't want to necessarily wean myself from this but its good to confess once in a while [​IMG]
  2. crazychile
    I would agree with that. But I guess the point I was trying to make is that business school doesn't really teach you much about doing business. The truly useful content I learned from a BA in Business Administration could have been boiled down into a weekend seminar. But by that time I had already managed small businesses and a lot of people, so most of what I learned was on the job. The MBA program I went through was even more worthless. It was like repeating a light version of my undergrad studies, only with a lot of case studies and powerpoint presentations.
    I did the wake-n-bake a few times too during college :)
  3. bigjohn1
    You are correct with both points, however I will point out that for every person who made it big without graduating college (Bill Gates, Mark Zuckerberg, Michael Dell, etc.) there are about 10,000 others that have tried or are still trying to "make it big" without education.
    There are hundreds of businesses that are started and fail each year in this country because someone has a good idea, but no business sense at all.  Not everyone understands how to price a product or service, how to (or more specifically, how NOT to) market their business, the legal implications of starting a company and providing a product or service (and how to protect yourself and your personal property - LLP, LLC, Corp., etc.)
    So, to make a sweeping statement indicting all business education as a waste of time is misleading at best.
    That being said, I will agree with the sentiment that an MBA will not magically transform you into a business leader and lead you to millionaire status.  It is the type of degree that is good for people in certain career situations, or that have a specific goal in mind for the education that you will receive based on the school that you attend.  In that case, it is more important what school you attend, rather than just getting an MBA degree.  Some programs are specifically focused on entrepeneurship, some are focused on Financial management (perfect for those wanting to go into the Investment banking field, or fund analyst and management for a large investment company).  So it depends on the student to identify their ultimate goal and find the right focus for them.
    Sorry, I will get off of my soapbox now.  Back to reading the adventures in Schiit and discussing great audio products! [​IMG]
    Argo Duck, Ableza and ThePianoMan like this.
  4. ThePianoMan
    Didn't make a sweeping statement, just commented about some people I've seen who follow the trend. Business school of course has its purpose! (And there's a big element of luck in Business. Back to the important Schiit now!
  5. Byronb
    Real problem is to be a "business leader" you have to be a leader, and unfortunately those skills are not taught at the university level. 
    ThePianoMan likes this.
  6. Jason Stoddard
    Chapter 25:
    Dead Media Ain’t Dead: NYT Strikes
    Look. Nobody is perfect. No matter how many degrees they have, no matter how high they scored on their IQ tests, no matter how many years of experience, no matter how many companies they’ve launched. Period. Puffery and pontification about the One True Way and instant dismissal of any alternative viewpoints may be the sign of great learning—but it’s also the sign of a deeply insecure, lazy person.
    But, at the same time, a learned caution and reliance on “what you know” can sneak up and bite you in the ass as well. It’s not a light-switch change from being young, enthusiastic, and open to new ideas, to a grumpy, set-in-your-ways know-it-all. It’s a continuum.
    And I was at least thirty percent down that road to the grumpy know-it-all when we had our butts handed to us on a platter late in 2013.
    The further irony? I got bit not because I was old-school conservative, but because I’d drank the new media kool-aid for a bit too long.
    What am I talking about, you ask?
    Hold a sec, and let’s talk a bit about pushing the limits, common wisdom, experience, and the fiction of modern marketing.
    Lessons from the Leading Edge of Marketing
    I founded Centric, my marketing agency, in 1994, the same year that Netscape Navigator was released. Now, these two occurrences were not coincident; Netscape came on the world about 10 months after I started Centric.
    This is important because, over the next few years, the world of communications saw the growth of its most important medium, ever.
    Yes, ever. Don’t argue with me. I’m at least 25% leading-edge to this day. And if you want to argue with me, name one other medium that disintermediated the distribution of content in the way the internet did, and one medium that resulted in the significant shrinkage of other media. The common wisdom of my college years was that all new media was additive—that is, radio didn’t replace newspapers, as TV didn’t replace radio, etc. I argued vehemently that this wouldn’t always be the case, even way back in 1988…but my professor was less impressed about my gut feeling than his statistics. Hey, bite me, prof. Who’s right today?
    But it wasn’t just the appearance of the internet that drove Centric to always be on the leading edge. I’d been doing marketing for some time before Centric, and had always relied on “desktop publishing” programs, as the entrenched typesetters and color separators of the time diminutively referred to them as.
    “We do real typesetting,” I was told, with a sneer, more than once, when I asked about camera-ready or film output from my files.
    Yeah, and you’ll be out of business in a few years, I thought. The economic benefit of computer typesetting, and, later, computer-based full layout and color separations was too compelling to ignore. And those early desktop-publishing programs opened up the field to a lot more people—it democratized design, in a way never seen before.
    (If you’re too young for this dinosauric crap, just consider that the way you used to lay out brochures included sending your copy out to have typeset and output on an optical typesetter, then actually pasted to an art-board, which you sent to the printer along with any color separations you had done—from film—to make your brochure. The first brochure I did for Sumo had a hand-painted gradient that was sent out for photography and color separation. Think about that next time you use Illustrator and create one in 2 seconds.)
    In any case, by the time the internet came around, I was absolutely ready to jump on its leading edge. When I first saw it in early 1995, I literally got chills. This will change everything, I thought.
    Which is why Centric had one of the first ad agency websites online (27th listed on Yahoo at that time—there were 8 when we started development.) It’s why we did some of the first e-commerce work, including the first online leasing system for Compaq. It’s why we built some of the first customized product configurators. It’s why we built our own content management systems. It’s why we embraced search engine optimization and online marketing back when you could only buy keywords from GoTo.com (which Google later copied and turned into Adwords, the powerhouse that drives most of its revenue today.) We did some of the first database-connected personalized banner ads. We did some of the earliest Flash sites, games, and COPPA-compliant virtual worlds. And we did some of the first social marketing stuff out there for Warner Brothers, Cotton, Inc, and other big names. Hell, we built HP’s outpost in Second Life, and created a virtual environment for David Rumsey Maps that was profiled in MIT Tech Review.
    What I’m trying to say here is that, in terms of marketing, our leading-edge cred is way, way up there.
    Which is perhaps one reason I dismissed the power of the conventional press when I started Schiit. We were so past that. It belonged to the era of paste-up and color separations.
    And, to be fair, it was starting to look pretty unhealthy, on lots of fronts (hell, we had one industry—data storage—in which the industry print publications all folded up before the turn of the century, so we knew where things were going.)
    So, when Schiit got rolling, we pretty much just ignored the conventional press, except for sending them press releases when we launched new products. Yeah, we were happy for the coverage in Wired and such, but I was far more jazzed about Gizmodo, Engadget, and TechCrunch. Those were publications of the present day, reinventing press as we knew it on a real-time basis. They were what mattered. We’d eventually get money to do some Adwords, and roll it into more online, measurable ads as time went by. And that’s how you did things in the Shiny New World of the 21st Century.
    Or so I thought.
    But Social, Oh, Social, and the Fiction of Online Marketing
    You may have noticed that I haven’t mentioned one of what’s considered the most “leading edge” marketing vehicle out there, though: social media.
    That’s for very good reason. Even in 2010, we were pretty much done with social. After 4 years of pimping MySpace, Facebook, Twitter, etc, we’d learned some hard truths. Namely:
    1. If you’re an entertainment company, social marketing is the greatest thing since sliced cheese. It should absolutely be front and center in your plans. Every entertainment social media program we did produced 10-100x the results of an equivalent investment in conventional media
    2. If you’re not an entertainment company, social marketing is really, really dumb—easily the biggest time-sink and resource-eater out there, with returns 1/10 to 1/100 of an equivalent investment in conventional media*
    *I can’t tell you how much hate mail I got when I “came out” against social media. It’s nice to see some recent studies corroborating our experience.
    “Wait, what?” you might be saying. “I still hear that talking to your customers on Facebook, doing videos to put on YouTube, and Twittering your latest office party pictures (and Instagramming, or Pintresting, or whatever) is the way to have an authentic conversation with your prospects and create engaged brand ambassadors.”
    In short, no.
    Sorry, guys. People are on Facebook to talk to friends. Not shills.
    They’re watching YouTube for funny cat videos, not smooth-talking tours of your factory set to some hip music.
    They’re on Twitter to get celebrity tweets.
    Et cetera. If you want to talk to your prospects effectively:
    • Clearly communicate the unique benefits of your products on a good, easy-to-use website.
    • Have a memorable brand.
    • Provide fast responses to any inquiries.
    • Take care of customer service before it spreads to Facebook.
    • Make sure the press (online and off) know when you have something new and cool, but otherwise stay out of their face.
    • Invest carefully in measurable marketing vehicles such as Adwords, reinvest in successful vehicles and revise or discontinue underperforming ones.
    • Continue improving your product so someone doesn’t have a clear, unique benefit over you before you know it.
    And that is that. Social media will take care of itself, at that point.
    “But wait, does that mean we can pretty much ignore social media?” you ask.
    To be blunt: yes.
    This “ignore social media” advice is even more relevant if you are a business-to-business company—that is, selling products or services to businesses. Do not spend a single second on social media. Concentrate on the 7 points above. Don’t dismiss 1 and 2 because you’re B2B. And you’re done.
    Sure, there are gray area companies (such as audio companies like Schiit) which have rabid fans and may get some small benefit from social media, but your marketing dollars are better spent on more conventional advertising and PR. And then there’s micro-social (like this site), where there’s a very concentrated niche audience that is absolutely relevant to your products. Then, be there. Yourself. Regularly. Don’t leave it to an agency. Don’t use paid shills. And don’t be a dick.
    Still not convinced? Fine. Cool. You want to get into social media? Answer these questions:
    1. Who’s going to create the content? Note: this is not just posting funny pictures on Facebook. This is about creating an article every week for a blog, or a video every month for YouTube, or doing cool imagery for Facebook. Are you going to do it? Or are you going to hire an agency to manage it for $200/hour? Yeah. There you go.
    2. Who’s going to respond to comments? Social media is social. You’ll get comments. You’ll get hotheads. Someone has to manage it. Is it you? Or more $200/hour time?
    3. Who’s going to decide what’s OK to say? In larger companies, this is a HUGE problem, usually involving a team of lawyers. But even for smaller companies, this is no joke. What will reflect well on you? What will reveal competitive info you’d rather keep under wraps?
    4. Who’s going to measure and manage it all? Social media is still evolving. Who’s going to be the oversight to determine what to spend where, based on the sales you’re making? What metrics software will you use, and what metrics will you track? What will you do when Facebook changes its algorithms yet again?
    Yeah. Have fun. Unless you want to cheat. See below.
    A Bold Prediction
    Now, I haven’t scratched the surface on social. Because it’s a lot more than companies posting contests on Facebook these days. Social is, more and more, a bot-infested, paid-propagation-driven exercise.
    Which, in English, means:
    1. Much of the content you see on social media wasn’t posted by a human at all, but by software—a bot
    2. Much more of the content you see on social media was posted by offshore shill accounts paid a pittance to say, well, pretty much anything
    3. And even more of the content was posted by people just like you who want to get something for cheap (or free) and are doing so to get referral credit towards their shiny new object of desire
    So, social media is less and less about “an authentic conversation with real people,” and more “prospect-powered advertising.” Or, to be more topical, crowdsourced advertising.
    And in an environment where anyone can be a shill, and their financial motives aren’t known, credibility disappears.
    Which leads me to my bold prediction: that in the next decade, we’re going to see paid, conventional advertising in big-name venues become the most credible source of information, and word-of-mouth the least credible.
    “Wait, you’re saying that we’ll trust paid advertising more than our friends?” you say, aghast.
    Why? Paid advertising in big-name venues:
    1. Requires a large investment that the company wants to pay off, meaning the company is at least successful enough to make the investment.
    2. Subjects the company’s claims to scrutiny by individuals and by regulators, which the company can be held accountable for.
    3. Has significant repercussions if those claims don’t gel with the customers’ experiences—as in, class-action lawsuits, etc.
    With that on the line, paid advertising could very well be more accurate than the offshore shell account shilling the latest hot gadget, or even your friend, who may just be parroting fake claims in the hopes of getting something he wants.
    Crazy? Perhaps.
    But we’ll see.
    On to the Old Media
    “So, after all this blathering, are you actually going to tell me what happened?” you ask. “I’m dying of suspense!”
    Yep. Here’s what went down.
    In summer 2012, I was contacted by a writer for the New York Times, who asked if he could get a Bifrost to review for an upcoming story on DACs. And let’s be clear: no matter how new-media biased you are, here’s what you do when the New York Times asks for a review sample: you say, “Yes.”
    Same goes for if the national TV news wants to talk to you, or if the Wall Street Journal wants to have a phone chat, or Wired wants to do a profile on your company, or, hell, if Ladies Home Journal wants to try some of your cables. It’s big exposure. You say “yes,” and make it happen.
    Aside: well, actually, first you do a quick Google search on the writer’s name and the publication title, to make sure he’s really who he says he is. If it checks out, then get that product out the door.
    So I sent out the Bifrost to our guy Roy at NYT and kinda forgot about it. Because sometimes these articles don’t happen for a long time. Or ever. And that’s fine. Editors have their own agendas. And you’ll live through a missed opportunity or two.
    I forgot about it, at least, until early in September, when Roy gave me a call.
    “Wow, this is a great DAC,” he said. “Really, really good.”
    “Cool,” I told him, or something lame like that. I’d probably forgotten who he was, and was trying to put the pieces together.
    “It was the crowd favorite,” he enthused. “But I’m not sure if the Times editors will let me actually say that. I want to, but there’s limited space, and, you know, stuff like this is a little controversial anyway.”
    Aha. Times. Everything clicked. “Stuff like this?”
    “High-end audio. Subjective reviews. It’s kind of, well…”
    “Too much voodoo?” I prompted.
    Roy laughed. “Voodoo. Yes. But it’s real voodoo. It’s just, well, we have to be careful not to go too over-the-top. But great gear really deserves more coverage.”
    “Roy, I spent 20 years in marketing. Believe me, I understand.”
    “No, it’s not the advertisers or anything,” he corrected. “It’s just, well, everyone seems to have a price in mind for any piece of audio gear, and if something goes over that price, but the specs aren’t any different, well, it’s hard to explain how and why it’s so much better. I don’t understand why some companies can make great-sounding stuff, but so much gear out there just sounds, well, awful.”
    “But measures good,” I added.
    I agreed it was unfortunate, and let it go at that. But if I’d had a few drinks, I probably would have told him something like, It’s because nobody ever got fired for engineering a product that meets specs, but sounds bad. And it’s because most people don’t really care that much. The first is understandable in a highly regimented, performance-review-oriented, hypercorporate environment. The second is understandable, too. Some people don’t give a crap about cars. Some people don’t give a crap about audio. Some people don’t give a crap about cuisine. That’s just the way it is.
    Aside: And, while I’m absolutely for introducing everyone to great sound, we’re going to meet plenty of people who don’t care. And we have to be careful not to be tiresome proselytizers. Imagine if every Jehovah’s Witness suddenly converted to the Church of the Perfect Sound and started going door-to-door with Audeze LCD-3s and a Mjolnir/Gungnir rig to spread the word. Yeah. Just as irritating.
    In any case, Roy and I talked a bit more about audio, about what was different about Bifrost, and that was that. I kinda forgot about it in the craziness of the next week.
    Then, suddenly, we got a huge explosion of Bifrost orders, and the email loaded up…not with our normal, relatively technical questions, or questions about “is Asgard or Lyr better for my headphones,” but with a ton of super-noobie questions like “Can I hook up Bifrost to my flat panel TV,” and “how can I connect Bifrost to an AVR?” and “what’s an optical cable?”
    An email from Roy confirmed what I had suspected: the article—“A Sound System as Resonant as a Concert Hall,” had gone live.
    What I didn’t expect was that it would hit the actual print version of the paper.
    And I certainly didn’t expect the response. No way. No how.
    In fact, before the Times article, Alex and I were feeling rather smug. We’d pre-ordered and scheduled a double run of Bifrosts in anticipation of the holiday rush. We were well-set to sell a ton of Bifrosts. There was no way we’d go into backorder on them.
    Until that article. In the space of 3 weeks, our double run of Bifrosts was gone. Completely annihilated. Suddenly we were staring at a big, long backorder, right in the busy time of the year. I scrambled on orders for metal, boards, parts, etc, but there’s only so much you can do when your metal lead time is 6-8 weeks. You can beg a bit faster, but that’s about it.
    And that’s how we ended up, not just with a single backorder that fall, but also a second backorder at the end of December, as the second double run we’d done also disappeared out the door. A good chunk of that was the Times article. The noobie questions continued well past the end of the year, and we continued to sell Bifrosts into homes that probably didn’t even know what a DAC was, before reading that article.
    So, if someone says, “Old media is dead,” laugh at them. They don’t know what they’re talking about.
    Or, if someone says, “We can’t convert new audiophiles,” laugh louder. We absolutely can. We just need to get more attention in the mass media. And continue our inroads on sites where younger people discover stuff, like Reddit.
    And that can be done.
    But it won’t be done with $40,000 preamps, $3,000 USB cables, and $500 magic pucks. It won’t be done with aspie-level obsessive in-fighting about formats and provenance. It won’t be done with religious fervor to spread the word about the One True Sound or the One Perfect Measurement.
    And—this is the important one—it won’t be done with magic name-branded processing tricks, or deceptively-named mediocre technology, or the breathless hype of the Truly Established Big Names. Because that’s one thing about marketing that’s really changing…people today see through the BS much faster. And if they don’t, their friends do, and they spread the word. That’s the real power of social media, and, believe me, that’s something the billion-dollar audio behemoths don’t want to learn about.
    So how do we break into the mainstream, and introduce more neophytes to great sound? Well, call me biased, call me old-fashioned, but I believe it will be done in only one way: with quality product made at a price that’s fair for its performance, construction, and looks.
    And that’s what we’re focused on. It’s astounding how many Magnis and Modis we sell to first-time audiophiles.
    It’s a small step, yes.
    But just think: that person could have ended their journey with an iPod.
    A Counterpoint
    There’s a counterpoint to the Times story.
    This is a story about a review we got in a major audio magazine (which shall remain nameless.) This was a big deal for us, because they usually aren’t so hot on direct-sale product, especially from relatively new manufacturers. And, outside the headphone community, we’re not very well known.
    It was a glowing review. We got our name on the cover.
    And, remembering the New York Times review, we stocked up on Bifrost with another double run (actually quadruple, since we doubled the first run amount as a standard.)
    But this time, the sales didn’t materialize.
    “What the heck?” you’re probably asking.
    Yeah. So were we. Sure, there was a minor bump—maybe 10% over our standard run rate—but nothing like the Times review. And there was another bump in emails—but this time they were 8000-word essays about how they got into audio, owned tons of very expensive equipment, and contained 18 questions about tiny, tiny details about the product, usually regarding buzzword compliance with the lastest press-propagated meaningless terms of the day.
    Why? My best theory is the old marketing adage of “one ad does nothing.” If two other reviews of Schiit products had followed the first one, maybe things would be very different. But that’s not likely, given the focus of the magazine. They’re more on the two-channel side of things, and we haven’t yet made a big dent in that market.
    But, in the Times, one review did a lot.
    And that’s a valuable lesson. That there are still huge opportunities out there…sometimes where you least expect them.
    Stay open. To new things. And to old ones.
    Schiit Audio Stay updated on Schiit Audio at their sponsor page on Head-Fi.
    https://www.facebook.com/Schiit/ http://www.schiit.com/
    jt-pdx, Sapientiam, O8h7w and 14 others like this.
  7. superjawes
    So on the conversion of new audiophiles front...sites/communities like The Tech Report are bringing in new people (albeit in a roundabout way). In fact, I'm only here because I wanted to upgrade my PC's audio, and the common wisdom at TR is to skip the PC/gamer branded crap and get what the audio enthusiasts recommend. A few trips to Head-Fi a couple of hundred dollars later...

    But yeah, there are plenty of people who can be converted. For the most part, I think they just need to realize that this world exists and their ears will do the rest--as long as there are products that sound great without breaking the bank.
  8. Tardcore
    After seeing a dedicated Schiit Modi/Magni review on LinusTechTips YouTube channel a few months ago, I have wondered how much of of Schiit's customer base is made up from PC enthusiasts versus the traditional Audiophile or casual consumer crowd and how that ratio might inform marketing efforts.
    These days most primarily PC hardware focused channels feature reviews of audio gear/headphones and the there is very large industry catering to PC gamers/enthusiasts.
    ScubaMan2017 likes this.
  9. Ableza
    Another beautiful chapter.  Very well done and I agree 100%. 
    This line: "18 questions about tiny, tiny details about the product, usually regarding buzzword compliance with the latest press-propagated meaningless terms of the day." had me rolling.  Way too many of those kinds of audiophooles out there.  :)
  10. reddog
    I really enjoyed this chapter Jason, the bit about every Jehovah's witnesses converting to the church of the audiophile had me roof. A very insightful chapter to read.
  11. Matias
    "18 questions about tiny, tiny details about the product, usually regarding buzzword compliance with the latest press-propagated meaningless terms of the day."
    This sums up nicely all the discussions in digital audio today.
  12. BydoEmpire
    I can just imagine the Jehovah's witnesses knocking and saying "Can we interest you in some schiit?"
    ScubaMan2017 and Currawong like this.
  13. Ableza
    Isn't that what they do now?  <rimshot>  [​IMG]
  14. aamefford
    I think that truer words were never spoken.  Any industry, any company that delivers a quality product at a fair price will (hopefully) have success with that product.
    I was also fascinated with your take on social media, given your youth, (younger than me, though I think Mike gives me a run for the calendar) and given the market that Centric seems to be in.  As a "casual, not that involved outside looking in" user of social media, I agree with your take.  I have watched social media change from being a place where friends connect with friends, to a place where 3rd parties try to break into the conversation, and sometimes even use my friends, to help separate me from my money.  Save for about 5 folks that I am only in contact with via my twice monthly or so sojourns on Facebook, I'd deactivate the account.  It really borders on useless to me.  You can tell that I am not in the entertainment business.  I don't require that all know my business all the time.  Hell, I'm not that entertaining.
    I digress - another killer chapter - thank you Jason.
  15. aamefford

    I've been that guy, at least a little.  I try really hard not to be that guy any more.
    Wildcatsare1 likes this.
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