2015 Chapter 15: Tales of Odeon, or How Not To Start An Audio Company I’ve mentioned before that I had a speaker company right after I got out of college, and I’ve shared a couple of anecdotes from it, perhaps the most famous being the tale of Eddie and the Zagnut Bars. I think that story, in itself, says everything you need to know about Odeon. But you’ve asked for more, so here we go. Hopefully at the end of this chapter, you will: Have better understanding of what it takes to start your first business from literally nothing. Gain a little respect for the need for some tiny amount of capitalization in a company. Not think I am brain-damaged, crazy, or certifiable. Note: I am busy digging up some old Odeon photos, which are from a pre-digital era. For the moment, you'll have to imagine what I'm talking about with a few crappy photos of some of the survivors, shown here. Yes, I still use Odeon speakers. Buckle up. This’ll be a long chapter. Paleolithic Odeon So how’d I get started with speakers? Well, to answer that, you have to go all the way back to college. I’d always been into audio, which in those days meant things like Sony receivers and 10-band equalizers and eventually SAE surplus equipment being closed out through DAK (a wonderfully odd wholesaler in the San Fernando Valley from those days when you actually had to get off your ass and drive somewhere if you wanted to buy things—well, or do mail order—there was no internet.) And that’s what I was listening to at the time I decided to make my own speakers: an SAE integrated, a Mitsubishi CD player, some cassette deck I forgot (if you were into car stereo, and I was, you had to have cassettes), and Technics speakers. Hardly high-end. At that time, I’d also started dismantling and reverse-engineering various bits of car audio gear, but my junior-level engineering really wasn’t up to the challenge of switching power supplies, so I quickly realized that building stuff like that was beyond me. I could do simple stuff like parametric EQs and crossovers (small signal stuff), but you couldn’t build a car audio company on that—you’d need amps. Plus, all the metalwork and tooling…I was 20, I didn’t even know where to get started on that. But I was already working audio into my college curriculum. I was planning on doing a novel single-ended noise reduction system* based on spectrum analysis and frequency-variable switched capacitor filters (and when I was a senior, that’s what I did, complete with a near-production-worthy case.) *Remember noise reduction? I designed and built something that was essentially a noise gate—that would sense when there was enough high frequency content in the music to mask noise (tape hiss, this is still when cassettes were viable, remember) and allow it to pass through, but then would reduce the bandwidth to mask noise when there wasn’t enough high-frequency content in the program material. In real time. Without encoding. I eventually got something that worked pretty good, but the era of noise reduction was ending…it wasn’t viable (though my experience with switched-capacitor filters did get me my first job, so hey, not all bad.) But anyway, back to speakers. The speakers I was using were perfectly OK, if you liked boring square wood-veneer boxes with three drivers up front. In other words, they were like most speakers of the day. Being young and idealistic, I figured I could do better in two different ways: one, using more drivers so that each could be more optimized for its frequency band (please stop laughing) and two, in an aesthetically pleasing truncated-pyramid design that was both functional (less internal reflections) and cool. And it wouldn’t have fake bark on it. Yeah. I hated wood. So I started researching drivers and sketching up ideas. There was a place called Speaker City nearby in Burbank, which is where I ended up getting most of the drivers—mostly Vifa stuff, except the 15” driver for the bottom woofer, which I forgot what it was. Yes, you read that correctly. My first speakers used: A ¾” tweeter A 1” tweeter A 3” dome midrange A 6” midwoofer A 10” woofer A 15” subwoofer Yes, in one speaker. Not only that, in one speaker that was about 12 cubic feet in a truncated pyramid arrangement. This translated into a speaker that was about 50” tall with a 32” x 24” base. In other words, friggin HUGE. Now, I didn’t have a shop to make these speakers in. Nor did I have good woodworking tools. Nor did I have any experience woodworking. Did it matter? No. I bought some ¾” particleboard (not MDF), got my dad’s ancient Craftsman circular saw and Black and Decker jigsaw, bought a 6’ long rule, and started cutting away. On my parent’s patio. Yeah. They were very understanding of their son’s mental disorder. They became less understanding when the weather turned bad and I had to bring the speakers into the living room, as-yet-unfinished. And finishing was one thing I hadn’t figured out very well. I ended up using tons and tons of Bondo, a long finish sander, and a gallon of house paint in bright white, plus black spray paint for near the drivers. But eventually they did look a lot like professionally-made speakers. I put together the crossovers (based on calculations from Speaker Builder magazine, much like the calculations that determined cabinet size and port size) and lined the boxes with fiberglass. Then I fired them up. How did they sound? Glorious. Pure perfection. Like nothing I’ve ever heard before. And that’s why you should be very careful with the stuff you build. You lose perspective. In retrospect, they didn’t sound as bad as they could have, but they were very very far from good. The upward-pointing ¾” tweeter was relatively innocuous, but the complex crossover, bizarre mix of drivers, and big boomy sub were not ideal. But they did sound, well, BIG. Eddie loves them. In fact, he has them to this day (a second-generation “improved” pair that were much the same.) From there, I went on to build a small bookshelf speaker (6” woofer, ¾” dome tweeter on front, ¾” dome on top—I had a weird thing for top-firing tweeters, thinking they would sound more “airy.”) Again, in a truncated pyramid box. These actually sounded pretty good. I still have them. In fact, they sounded good enough that I sold a few pairs of them during my senior year in college. And they looked good enough to impress my notoriously hard-to-impress artsy friend Jose. Enough that we starting wondering if we could actually make a business out of it. Which led us to driving to our first CES in Vegas, to see what the business was like. Yeah, I know. Stop laughing. The Dreams and Reality of CES I remember the drive out to CES, because I thought I had finally found the path to fortune (and away from the work-for-a-defense-contractor path that seemed to be the inevitable fate of engineers from my school.) Jose and I had grandiose dreams: if we could capture only 1% of the total market (as estimated by TWICE, a trade magazine), we’d be a $75 million dollar a year company. We talked about fantastic ideas of building cities on the hilltops and cliffsides in the surreal desert landscape on the way to Vegas. We talked about using the money to start a car company with design that didn’t suck. In short, we were insane. Learn two things from this: When someone comes to you with a grandiose business idea and says, “I only need to get 1% of the market (or 10%, or whatever), RUN. Fast. They have no idea what business really is. Don’t count your money before: You have a company You have a product You are selling it You are selling it at a profit You have paid for all the parts You have paid all your people You’ve been doing this long enough that there is money left over after (e) and (f) And even then, know there will be gotchas. Yeah, we were young and naive. Now I have Schiit and an agency and Jose has his own company doing specialty costume for giant movie franchises. So, if you want a positive message from this, it’s this: don’t give up. At CES, though, we found only more fodder for our grandiose fantasies. We didn’t spend any time in the high end ghetto (we didn’t even know it existed back then), but went straight to the main floor. In those days, the main floor was dominated by big audio and video names—from Pioneer to Rockford-Fosgate. They all had big, glitzy booths and impressive displays. The one thing they didn’t have: interesting-looking speakers. Square wood boxes as far as the eye could see. Jose and I rubbed our hands together in glee: how could they miss the nascent demand for stylish loudspeakers? After the excitement of CES, we knew what we’d do. We would make speakers. And we would change the face of the speaker industry. Yeah. Dumb. I know, I know, I know. Building Our Shop While we may have been idiots in terms of basic business, we were smart enough to realize one thing: my parent’s patio was not a factory. We needed something bigger. Something, preferably, enclosed. And something cheap, because I was just starting my first engineering job out of school and I had no money.* *Let me define “no money.” No money means, “everything I was making went to either paying bills or chipping in to the speaker company, the speaker company had no cash flow, and Jose was living with his parents as well with only sporadic work. This is no money. This is not like starting Schiit, where I could put in some money and had income from other sources so the company could continue to reinvest in growth. So, what did we do? We built our first shop in back of Joses’ parents’ house. This setting is worth a few words. Jose’s backyard was big, which was good. It was also a blasted apocalyptic landscape dominated by the dead stump of a giant olive tree. Some years past, the family had tried to unearth it, but had never completed the job, so it just sat there like an arboreal meteorite in a crater several times its size. This somewhat limited the size of shop we could build, as did a number of eucalyptus and smaller olive trees in the yard. But we found a space, roughed out a plan for a 20 x 20’ shop with a slanted tin roof, and an actual working door and window. Since we didn’t have the time or money to do a real foundation, we decided to make it a raised floor on 4x4s pounded into the ground. The exterior and interior were unfinished plywood. The whole thing cost only around $1100 in wood and materials and only involved minor injuries in its construction. Very palacial, huh? And permits? Ha! The neighbors were far enough away in general, and probably had unpermitted stuff on their property. We didn’t bother. After construction was complete, we found a couple of little glitches in our plans, most notably, well, lack of power. We hadn’t even thought about electricity, and we needed decent power to run a table saw, a jointer, a radial arm saw, a sander, a drill press, and an array of hand tools. And yes, you read that right—we were actually setting up as a wood shop, to actually make speaker enclosures. Pure, unadulterated craziness, yes. A few extension cords later, we had our power. One other little problem was lack of heat, though. To fix that, we picked up a big kerosene heater. And yes, you read that right as well—we were running a kerosene heater in a wood shop…with no dust collection system, and with a reasonable amount of high-VOC painting going on. It’s really amazing we didn’t end up blasted to the moon. I did almost lose another chunk of finger in the jointer one day, though… Aside: funny, that half-baked shop lasted through the 1994 earthquake, 6 years later. Now that we had our home, Jose turned his attention to improving our aesthetic designs. While the truncated-pyramid look was different and distinctive, he was shooting for designs that were much more radical. And they did look amazing. Jose took the basic idea and ran much farther with it than I had ever imagined. His stuff was absolutely amazing. After Jose was done designing, we had arguably the most distinctive line of speakers around (see the photos, and consider this is 1989.) Radically angled and futuristic, they looked like nothing else out there. There was only one small problem... Designs Near-Impossible to Make If the earlier speakers were hard to make, these reached into the heights of near-impossible. The top speaker, a 6’ tall monster, featured a seamless wraparound grille on its central spike, which was inset into a stepped base. It was also slanted both front and back, making the cabinet work a complete nightmare. It also needed close-tolerance, high-precision construction that was very, very difficult in a backyard shop. The only answer in the short term was lots of bondo and finish work (we eventually set up a set of pin router jigs that made things a tiny bit easier). And note that I said “speaker line.” As in, Jose designed a complete line of 4 different speakers, from the monstrous “Point Ones” to the bookshelf-sized “Point Fours.” You know, so we could look like a serious speaker company. Hint: this is a very, very astoundingly bad idea. When you’re starting up, you should start with a single product. Get it right. Sell some. Prove you can make it consistently and that there are no gotchas. Then move on to the next. DO NOT start with a line. Lines are about ego. And ego gets you in big trouble. We did our best with the line, though, using our anechoic chamber (the backyard) and some primitive measurement equipment to run frequency response plots and tweak crossovers, drivers, etc. Were they stellar designs? No, but they weren’t completely crap. We tried. So were 4 speakers enough? Not apparently. I also designed two subwoofers for the bookshelf speakers (a 10” and a 12”). Both of these were very cool looking, but pretty bad as subs go. And more…this was also the era of the Bose Acoustimass sub/sat systems. Everyone wanted Acoustimass. These were horrendously overpriced plastic speakers with a bandpass subwoofer. But they were small, and they had reasonably impressive bass for their size. So, I decided we needed a competitor to them—the Point Five. This used small 4” woofer and ¾” dome tweeter satellites with a bandpass subwoofer featuring two 5 ¼” woofers. In a rare burst of sanity, the subwoofer was a simple rectangle, but the satellites were our neat truncated-pyramid design. I mention this design for several reasons: I still remember putting together the first prototype, holding the tiny woofers, and thinking, “There is no possible way these will sound any good.” I still remember taking them into the living room and firing them up—and standing there with my jaw on the floor. These little, tiny, cheap speakers played better than virtually everything else we made—they were accurate, they played loud, and the bass was amazing from a half-cubic-foot subwoofer. Eddie and Jose came in and stood there, floored. As Eddie said, “Screw everything else, let’s just build these.” However, they were far from perfect. Their impedance was pretty brutal. Run it from a Sumo Andromeda 2, and they sounded like giant-killers (top executives from JBL and Infinity came to listen multiple times the first time we showed them at CES.) Played from a cheap receiver, not so much. Despite being handmade, and sold through a dealer model with dealer margin, they sold for only about ½ of what the Acoustimass did. Yeah. They were arguably the first speakers sold in 5.1 sets for home theater. In retrospect, I should have listened to Eddie and built only the Point 5s. We could have refined the design and made it truly stellar. But we were young…and had egos to feed. So, with such a huge, sprawling line of speakers that were very, very hard to build, the result was that we had to make them pretty much 100% ourselves. Sheets of MDF came in one side, and finished speakers came out the other. We experimented with how to best finish the speakers, starting with Formica laminate, then abandoning it when the laminate peeled right off the speakers in a hot car. Plus, the glue really sucked to use. Plus, it had visible seams. What we finally ended up using for finish was both a blessing and a curse. It was called Zolatone. Some of you are groaning. For those of you who aren’t, Zolatone is a textured, multicolored spray finish which can charitably be said to look a bit like granite (in some of the more sober colors) and is very, very good at hiding small blemishes. Paint a fairly rough box with Zolatone, and it came out looking perfect. Plus, it wasn’t wood. Remember, we hated wood. Plus, it was the 80s. Zolatone was one of those 80s abberations, like putting saxophones in bands that had absolutely no need for them. Zolatone was also pretty easy to use and to spray. It didn’t require expensive equipment. It coated well. It wasn’t horrifically expensive. But…one little detail…the VOC content of Zolatone would probably set off alarms in downtown Los Angeles if sprayed anywhere within 10 miles. This stuff was nasty, smelly, and had more weird solvents in it than I imagined could ever be in something sold over the counter. Painting inside with Zolatone was suicide. Getting a properly ventilated paint booth was out of the question. Getting real respirators wasn’t gonna fly, either. So how did we deal with it? Simple. We painted outdoors. And yes, I know, this is not exactly OSHA-compliant painting procedure. Nor is it particularly environmentally friendly. But we had no money. We were young. We got away with it. And that’s why we did it. Adventures in Sales and Marketing Around this time, we decided it was time to do our first brochure. To do a brochure, we needed pictures. And we wanted to do cool pictures. Sounds pretty normal so far, right? Well, our idea of cool pictures involved taking the whole line out to Vasquez Rocks—this is the place where Kirk battles the horrible plastic lizard in the original Star Trek—and using the bizarre-looking rocks as a backdrop. Did it involve a professional photographer? No. Did it involve picking a great day for photography, like, a day that wasn’t 40 degrees (F) and windy enough to knock speakers over? No. Did it involve getting insurance? No. Hell, we didn’t even know you needed something like insurance. So what did we do? We threw the speakers in Jose’s brother’s van, drove out to Vasquez Rocks, hauled the speakers out to a clearing in front of the rocks, set them up, and began taking pictures. After a while, a park ranger came by on a horse and asked what we were doing. “Taking pictures,” I said, thinking, Well, isn’t that kinda obvious. “Do you have a permit?” he asked. My brain melted. You needed a permit? To take a few pictures? “Do you have insurance?” he continued. “Uh, well…” I began, and trailed off. Because there was no way we could fake our way out of that. So, a few minutes later, we started hauling the speakers back to the van. Now, the photo shoot wasn’t a complete disaster. We actually got some good shots for the brochure. As usual in those days, I did the darkroom work in my bathroom, set up a brochure in Pagemaker, and then took the photo to be married to the layout and printed (back then, scanners were a little too insanely expensive—hell, we were considered pretty high-rent because we actually had a fax machine!) A few hundred bucks later, and we had a brochure. Which meant we could start marketing. And by “marketing,” I mean, “Driving around to stores and showing them our speakers, while they looked very, very confused.” Because this was the pre-internet era, remember. There were only three ways to get your stuff in front of prospective customers: Get individual stores to carry it. Which is what we tried to do. Sign up distributors, stores, or chains at trade shows. I’ll get to shows. Get a rep and have them do both of the above. We didn’t know about reps. In the end, the “driving around to stores and showing them the product” strategy got us exactly zero dealers. The dealers seemed very confused by our new, stylish, futuristic, non-square, non-wood product. It seemed like, maybe, just maybe, the market for adventurously-styled speakers was not as big as we thought. Our Savior: Trade Shows So how did we sell anything? Simple. We went to trade shows. Specifically, CES. This is when we discovered the “high end ghetto.” High end audio wasn’t on the main floor of CES. It wasn’t in the ballrooms off the main floor. It wasn’t on one of the other specialty main floors, like they had for car audio. It wasn’t even in the rat-mazes of smaller booths that flanked the main floor. No, it was in the oldest, ugliest, and smelliest hotel we’d ever been to: the Flamingo. And, as an added bonus, it was grouped together with the adult video exhibitors. Yes, you can see where high end rated in the EIA (now CEA) world. And the first show was pretty exciting. We’d gone out of our way to bring the whole line, but we ended up playing the Point Fives most of the time. They were impressive enough that most people thought the 6’ tall Point Ones were playing. Eddie had to walk over to the tiny subwoofer and cover the bass port to kill all the bass to make them believe it was those tiny boxes. That’s the show the JBL and Infinity engineers came by, then brought their engineer friends, then brought some upper management. Very exciting! If they thought we had something, maybe we did. Of course, we did all we could to get attention, which meant we didn’t fit in very well. To put it mildly. You see, Eddie was in charge of the music. And Eddie had less than 10 nanoseconds of patience with boring audiophile music—you know, simple female vocals, string quartets, smooth jazz. Eddie called it, “Music that would sound good on a walkie-talkie.” So Eddie played pretty much whatever the hell he wanted. This ranged from Kraftwerk to 2 Live Crew to Kiss. Usually at earbleeding volume. And everytime he cranked it up, people streamed into the room, blinking and grinning, as if they just coming off being extras in Apple’s 1984 commercial and were trying to acclimate to the real world. Aside: I seriously wonder if we were the first people to play stuff other than jazz, classical, and vocals at a CES. Because people certainly acted like it Now, while Eddie was blasting 2 Live Crew, the room next door was a little less than thrilled. The room next door was actually occupied by Avalon Acoustics, one of the first companies to jump in on the ultra-price bandwagon with some $15,000 speakers. Of course, they were trying to play their jazz trios and string quartets at 80dB and look all serious and audiophilic for the press that was coming by. After several complaints (including one that said we’d knocked the pictures off the wall of their room—with our two 5 ¼” woofer sub, ha ha), we finally reached a truce: we’d turn it down when they were doing serious demos or when they had press. Ironically, we didn’t have to turn it down much—all the traffic was coming to the Odeon room. They didn’t like that, either. And that first show got us enough interest, and enough orders, to think we really could make something of Odeon. We actually took several cash-in-hand orders from international companies. Suddenly we had distribution! And people who seemed to understand what our cool-looking speakers were all about. We even picked up a couple of dealers. Maybe this would go somewhere. But the problem was, in-between shows, not much happened. We were 100% dependent on shows to keep the orders flowing…and between our sprawling product line, late deliveries, some quality problems, and other growing pains, we never really had steady growth. But Eddie continued to give great demo, and in general be a character. I linked earlier to the story about the Zagnut bars (and why we always, always win the Stupid CES Story of the Century), but I didn’t cover all of his escapades, which included fun stuff like using the megadollar tube amps we’d borrowed for one show as burger warmers (they fit perfectly between the tubes) and asking one prominent press personality if he’d jumped out of a helicopter and landed on his head, after he “grounded” his shirt to the carpet with nonconductive plastic wires and roach clips. Eddie was, in reality, the original heart and soul of the communication style behind Schiit—he unknowingly shaped a lot of what we did. A Real Shop? During the course of Odeon’s growth, we did eventually move out of Jose’s backyard. We found a relatively palacial cinderblock building with a roll-up door in Sylmar for cheap, next to the National Guard Armory and a meat-packing plant. One thousand whole square feet of wonderful space! Of course, the heat and AC didn’t work, but (as Mike said) it was cheap. Now, did we finally put in a dust collection system? No. Did we fix the heat? No. We kept using the kerosene heaters. Did we fix the AC? No. We sweated. Did we buy better tools? Not really. Though we did Frankenstein our table saw into a 5-horsepower monstrosity with an 8-foot fence and no safety guards at all. Again, it’s amazing people didn’t lose limbs at Odeon. And we did get better at production, largely due to Jose’s brother setting us up with some pin router jigs for the bigger pieces, and Jose building his own set of jigs for some of the smaller and more complicated parts. We got to the point where we were building a good product, and were able to deliver it on time. And we did some very cool stuff. The later Super 5s and Super 3s (which I still have to this day) edged into the “seriously good” category, largely due to heroically thick cabinets, minimal crossovers, time-aligment, and lots of measurement and tweaking. We only made one pair of each, though. If they had ever sold, they would have been very expensive (in Odeon terms—$2000-3000 a pair.) But… bottom line, the orders didn’t take off and multiply. We made enough to keep the doors kinda open, in that we could pay for parts, and pay Eddie and Bob (Jose’s brother) a pittance, but Jose and I never took a salary. In fact, most of my disposable salary from my job at Sumo went into Odeon, never to be seen again. And…the biggest kicker for me…I was holding down a more-than-full-time job, in addition to running Odeon—and “running Odeon” meant I did a lot of hands-on production. A typical day had me getting up at 6AM to go into Sumo, do my engineering work, get out and get to Odeon around 6PM, then work to midnight, painting boxes, assembling crossovers, bolting speakers together, stretching speaker grillecloth, whatever needed to be done, until about midnight. Then to bed and start again. Weekends were just more Odeon and less Sumo, but there was tons of Sumo stuff to do on weekends. And to further complicate things, I was beginning to design stuff for Mike Moffat at Theta. After 18 months of 100+ hour weeks, I was well and profoundly burned out. Jose was tired and broke. Eddie and Bob weren’t making enough money to live. And Jose was starting to see interest in his sculpting abilities, starting with a commission from Treasure Island hotel in Vegas. Jose and I agreed. It was time to stop fighting the good fight, and wind it down. Prophetic Words (Ha!) Once we decided to close up shop, I felt two very profound things: Freedom. I wasn’t chained to Odeon anymore. All my money didn’t need to go to Odeon. I could buy things for myself. It was truly an amazing feeling. Loathing. Specifically for self-employment. “I’ll never start another company,” I said, confidently, as money started coming in from the Theta work and things began looking up. I told Sumo’s metal vendor that he was a fool for starting his own thing, working for someone was way better, and paid a lot more. But things change. Sumo stumbled in the post-Asian Financial Crisis market, and Mike and his partner had a falling-out at Theta. Suddenly, my gravy train was looking, well, pretty thin. And that’s what led to me eating my words less than a year later, and starting my second company: Centric. Luckily, that one went somewhere. But it would keep me out of engineering—and out of audio—for another 15 years.