2020, Chapter 10
120 Months of “Flavor of the Month”
If you’ve been around Head-fi for more than a few months, you’ve probably heard the epithet “ah, it’s just the flavor of the month.”
Implying, of course, that the product or company in question is just a flash in the pan, not built for the long haul, euphonically flawed, or all of the above. Here today, gone tomorrow. Not meant to be taken seriously. Like rosemary-lemon dairy-free ice cream, good for a change of pace, but not something you’ll see on the board next month.
Not a classic.
And, of course, “flavor of the month” has been lobbed at us. First with Asgard and Valhalla, then with Lyr, then with Bifrost, then with Mjolnir, then with Gungnir, then Ragnarok and Yggdrasil and Modi and Magni and on and on and on…
And here we are, 10 years in, 120 months of “flavor of the month.”
So maybe we’re not the smoked fennel and guava sour beer, huh?
I Almost Didn’t Do This
I don’t like self-promotion. I don’t particularly like anniversaries, either.
But 10 years…hmm, yeah, maybe that’s worth something. We can’t do a big SchiitShow like we talked about at the beginning of the year, because after a year when a pandemic is “just another thing” and people are wondering when the delegation of Bigfoot show up to petition for membership in the United Nations (or zombies, or zombie Bigfoot, or zombie bigfoot led by a platoon of Elvis clones playing flutes on unicorn-back, because, hey, this is 2020, who knows) the SchiitShow is a nice idea, but we’ll wait a bit on getting a ton of people together, thanks.
Buuutt…doing a chapter? Yeah, maybe.
Doing a graphic for the website? Fine, yeah, okay. For a little while.
Allowing Denise to launch her beloved Schiit Schwag…well, soon. We really need to remember what we are all about—and that’s making fun, affordable audio products. We were supposed to launch Schwag this week, but it’ll be a bit longer, because we would rather ship you equipment than t-shirts and socks and toilet paper.
(Yes, even the long-out-of-stock Bifrost 2, and yeah I know it’s been too long, but we did approve first articles of the analog board, the last remaining obstacle to production, last Friday, and we did start assembly today, so it should be soon.)
Which brings up an interesting point: even after 10 years, we still go into backorder. That hasn’t changed. Other things have. So maybe that might be interesting to talk about….
What’s Changed…and What Hasn’t
Ten years ago is a fantastic gulf. Ten years ago, we were still reeling from the 2008 financial crisis, ten years ago some people still didn’t use smartphones, 10 years ago they still thought low-rise pants were a great idea…
…and ten years ago, Schiit was just me and Rina, running out of the extra space in our garage. As in, the garage still had cars in it. We produced and shipped the products from a desk built into the back wall, a counter built into the side wall, and a folding table that fit in front of one of the cars. Mike wasn’t a day-to-day part of it yet, because, although I’d mentioned it to him, and he agreed to be part of it in principle, none of us were sure it would go anywhere, so I figured I wouldn’t bother him until it actually seemed like it was going to be real.
Aside: the 10th anniversary photo on the home page slideshow is an actual photo of Rina assembling Lyrs (the only run we ever assembled—all the rest went to a PCB assembler) while wearing one of her typically colorful outfits, laying on the hood of one of our cars. This was before we moved that car out so we could have a whole entire car-space to work in…a huge luxury!
Also, “going to be real” had a hugely different definition back then. “Going to be real,” in my mind meant, “a successful hobby business, something we could run out of a small outbuilding in the back yard, something that could help with the mortgage and maybe make a car payment.”
Yes, seriously. The bar was that low. Remember, I almost pulled the plug on this because of $800 in screws (go back and read
this chapter).
I mean, I had literally
no idea what would follow.
I had no idea our first order would be for a product we weren’t making yet (Valhalla). I had no idea that orders would be strong enough to put us rapidly into backorder. I had no idea that Eddie would have to come and help us almost immediately. I had no idea that we’d be using a PCB assembly house out of self-defense in 8 months of operation. I had no idea we’d blast past any idea of a shed in the back yard and be out of the garage in a year and half. I had no idea we’d blow up the first small office—the SchiitHole—and end up in a space I thought far too large for us, in three years. I had no idea we’d add space on space and employee on employee until we are now straining at 15,000 square feet and over 20 employees…which doesn’t count the people we support at two PCB assembly partners and two metal vendors, as well as a parts purchasing and warehousing partner. Schiit has grown far and away larger than I expected, eating my desire to continue with the marketing agency I founded, Centric, (I shuttered it in 2017).
I mean, if you compare it, it’s pretty nutty:
- Maybe 80 square feet of a garage vs 15,000 square feet today
- 0 employees vs 20+
- 2 products vs 25
- Silver-only-dammit vs, okay, silver and black and sometimes black and red as well
- Headphone stuff only vs headphone, desktop, gaming, office, and two-channel products (and a turntable)
- No DACs vs lots of DACs
- No proprietary technology vs Continuity™, Coherence™, Nexus™, Unison USB™, and True Multibit™
- No retail presence to one dedicated retail space, the Schiitr, in downtown Newhall
In short, nearly everything has changed, at least in some metrics. We’ve become a lot larger company, with a much wider product line, with products in more finishes, with a whole bunch of proprietary technologies.
Or, in other words, kinda boooooorrrring. We’ve grown in all the ways you expect a company to. Well, maybe the turntable and the retail store are a bit weird. But in general, we’ve done the things a successful company usually does…we got bigger, we did more things, we have more space and more people. Now is usually the time you read about the founders buying vacation homes at the beach and matching Lamborghinis (the rich person’s Camaro) and getting ready to do even more stupid and folly-making things like building a palatial office and preparing to enter the twilight of their success.
So maybe it’s a bit more interesting what hasn’t changed.
- No Lamborghinis or vacation homes
- No other founder's-ego-elevating bleed-the-company schemes in place
- No change in focus on paying our employees very well and treating them right
- No bank loans (no outside funds, ever—we are entirely self-funded)
- No running at the edge of operational viability—we are fiscally super-conservative and ready for major uncertainty
- No change in focus from “fun, affordable” products—no car-priced stuff on the horizon, no need for it, that is not us
- No move out of the USA—no made-in-low-wage-countries stuff to hit a price point
- No features-for-the-sake-of-features, unicorn format support, or other actual flavor-of-the-month stuff
- No dropoff in interest—both Mike and I are having the time of our lives, and can’t imagine doing anything else
- No complacency—we continue to invest huge time and attention into improving our lowest-cost products
So what do I mean by “no complacency?”
Things like 4 different Magni iterations since 2012: Magni, Magni 2/Uber, Magni 3, Magni 3+/Heresy. Each with higher power and better performance than the one that preceeded it. Each (except Uber) at the same price, $99. And all this despite a depreciating dollar.
Same with Modi: Modi, Modi 2/Uber, Modi 3. Each with higher performance and more features. Modi 3 now has 3 inputs, and much, much higher performance than the original, for the same $99 price. Consider that a $99 single-input USB DAC was a breakthrough in 2012!
Same with the new Modius, which has won over both the objective and subjective crowd.
Same with hardware and firmware upgradable DAC architectures, starting at $699—less than the price of some other “upgrades.”
Same with nearly everything we do. Aegir built on the success of Vidar with an all-new constant-transconductance topology, Ragnarok 2 was a complete re-think of Ragnarok, even the preamps were treated to a Thunderdome where they saw huge leaps forward, especially Freya+ with tube shutdown and much higher performance.
And—as far as complacency—we’ll
keep pushing.
A Sincere Thank You
So what does this all mean? This means we owe all of you a huge thank-you! For our earliest customers, thanks for taking the chance. For everyone who has waited through a backorder, please accept our deepest apologies—even today it’s hard to keep up. For everyone who has made the choice to buy a Schiit product, thank you!
To make this a sincere thank-you, we promise to keep the things that haven’t changed…unchanged. We’re not going to bleed the company dry, or sell it to someone who only cares about profit. We’re not going to stop improving our products. We’re not going to raise prices “just because” or do a new higher-end line to capture the car-priced market. We’re not going to stop making stuff in the USA, or supporting US manufacturers.
And we promise to change the things we can, for the better. We were doing much better on backorders…until COVID hit. Sorry about that. Extraordinary times now mean some extraordinary delays. We’re doing what we can—but without overextending. We’ve been doing better on customer service, and we’re continuing to shore up. We’ve been improving our processes, so your products are more trouble-free than ever. We’ve been carefully expanding our line—but at the same time trying to avoid stuff that’s too far afield.
No lie, it’s a balancing act. Not a day goes by without some neat idea crossing my desk. People want a Modius with a built-in headphone amp for all-in-one functionality. That would be cool, but would it be right? Wouldn’t it be better to do a matching headphone amp? Others want a full-fledged recording interface in the same form factor. Again, neat, but is that us? Better phone preamps, bigger equalizers, NOS DACs, bigger tube amps, heck, speakers and headphones…we get asked about a lot of stuff. And a lot of it is interesting. Maybe not interesting enough to produce, but maybe enough to play with. So we do a prototype. And see if we get excited about it.
And we see if it makes sense. Because with 25 products already, it’s damn easy to turn that into 30 or 40 or 50…and that could be good or bad.
“Good or bad?” you say. “That’s a ton of products! Surely your customers are confused about the line, surely you could do better by simplifying the line and making the choice easier!”
And yeah, I know, paralysis by analysis and all of that. I’ve schooled clients on that back in the Centric days, but it’s super-duper-dangerous to extrapolate to all cases. The clients who needed schooled made simple products they were in danger of making too complicated. They were also usually a new entrant to an already-established niche, or a relatively minor player looking for a niche. In those cases, yep, absolutely, keep it simple.
In our case, it’s more nuanced. Sales data doesn’t support a claim of paralysis by analysis, nor does support. We have a long list of products, but they’re reasonably firewalled off from each other—someone shopping for a speaker power amp, for example, has exactly 3 choices. They don’t have to browse the rest of the line. Also, the broad line has actually served to capture new customers (based on actual data), especially ones who are just becoming aware of us. They see Hel on a YouTube review…and then decide that a Magni/Modi stack is better for them. Or they didn’t even know we do a turntable, and they get that. Or they start with an inexpensive desktop product, and then decide to set up a more serious 2-channel rig.
Are there products that need to go? Sure. We know what they are. Unfortunately, we overbuilt a lot of them (preamps, argh). So they’re gonna be around a while longer. And that’s fine. They aren’t bad products, they just didn’t win the Thunderdome.
Bottom line, after 10 years, we’re still learning. And we learned a hell of a lot in 2019, especially now that Thunderdomes are getting us solid data about what people will buy (based on actual sales, not the usual reading-the-entrails polls and focus groups and market research). I’m sure we still have more to learn.
So, what you can expect is a line that continues to expand with new ideas…and contract when those ideas don’t pan out. Modius is an example of one of those new ideas, but those new ideas could just as easily be swing-for-the-fences crazy stuff. After 10 years, we’re in start-up mode again…and that’s hugely exciting.
So, thank you again, even if it’s just to read my blather and to let us know what you want. I can’t guarantee that we’ll be able to do every product on your wish list (hell, we might not be able to do any of them), but we do listen…and we do respond, when we can, and when it makes sense.
The Reality of Today
Looking back at what I wrote at the end of 2019, not much has changed…except the world.
What do I mean by that?
Well, the stuff I said we were working on, we are still working on. We’re still having a ton of fun doing it. We’ll be doing both inexpensive and more expensive products. None of that has changed.
But…the world itself is completely different. Whenever it seems like we’re getting back on track, something else happens. I mean, seriously, when are the Elder Gods gonna rise up from the chthonian depths? When do the benevolent aliens come down and cure all disease and give us all the gold bricks and diamonds we can eat (I’d settle for them working on our sanity, thank you, but hey, there’s a whole different can of worms…)?
We’ve done pretty well despite the constant, ah, disruptions. As I’ve said, our supply chains are largely intact and working at reasonable efficiency. We’d already started making changes to ensure production in 2019 (and to avoid tariffs). That was good.
Unfortunately, we can’t predict everything that will happen, so some lead times have moved out—in some cases, from 4-6 weeks to 20+ weeks. Some boards we have produced in 20 days are now 60. Some of our suppliers are working through their own challenges for raw materials. We’re trying mightily to maintain production, but stuff is going out of stock.
“Well, hell, why are you bringing out new products like Modius if you can’t keep stuff in stock?” someone cries.
And, without an in-depth knowledge of our processes, that’s a logical question.
But here’s the deal: Modius has been in motion since February of last year, when I started complaining to Mike and Dave that we needed an inexpensive balanced DAC to pair with our larger products. The first prototypes were last summer. The chassis was costed and ordered at that time. Kits were scheduled, chassis deliveries were scheduled, we had staff ready to make them…so, you know what? We’re gonna
damn well make them!
Especially with Bifrost 2 slipping. Believe it or not, I didn’t plan for a three-month outage on Bifrost 2 (while sipping champagne poolside and evilly twirling my moustache). I didn’t want any outage at all. But it’s what happened, when boards slipped, and the boardhouse slipped, and everything kept squidging into the future, like week-old sushi down the drain.
Not only that, we have some more products in the same situation—designed, planned, ordered, ready to rock—that will also be happening shortly. Probably also while we have backorders of other products that you’d reeeeeealllly realllllllllly like to have. Sorry about that. It’s not lack of focus. It’s simply that things have become less certain, because one critical part missing from a kit means everything stops…and if that part goes from 5 weeks to 20 weeks, that can be a looooong wait.
All of this is my long-winded way of saying, “Yeah, the spirit is still the same as the end-of-2019 report, but you won’t see everything I promised.”
I know, I know. It sucks.
But I really really really can’t put anything more on Alex and Amy (Amy especially, who is working 7 days a week to keep up) or on anyone else, other than what’s already in motion. So we have slowed down product development a bit. Not stopped, but slowed. Because cramming more stuff into a pipeline doesn’t make sense…even if some of it is very cool.
“So what does that mean?” you ask. “No transport?”
Well, we’ll see on the transport. That continues apace. Metal has been ordered. Metal’s also been ordered for one other, er, ambitious new product. If we’re lucky, you’ll see both of those this year. And there are several smaller things that are so far down the pipe that we’ll be launching those as well.
But no guarantees—I’m calling this the Bigfoot or Zombies clause, officially.
And, here’s the deal: the slowdown has been nice. I’ve been able to focus on some stuff you might consider monumentally boring, but is actually very important as we grow. Stuff like process control. (One of our boardhouses sometimes cooks parts, one like to do random solder-ball bukkake—these are relatively small percentages of boards, but now now we're actively focusing on helping them improve.) We’re determining where assemblers should do programming and testing for maximum throughput, and where that’s best kept in-house. We’re deploying more automated test. We’re working on ways to simplify packing and shipping (holy hell that takes a long time). We’re improving back-end systems to make things like partial order shipping feasible (necessary for Schiit Schwag, since I mandated that it not impact current shipping).
In other words, we’re doing a lot of grown-up stuff that grown-up companies do. It may seem a bit mundane, but it’s actually helping streamline things tremendously…and it’s improving our products.
What We’ve Accomplished…and Where We’re Going
“You know, you haven’t really talked about what you’ve accomplished,” an astute person observes. “Isn’t that what you usually do on an anniversary?”
Well, I’m tempted to say that I thought anniversaries were more about bad logos, poorly-integrated promotions, and parties at which employees might engage in too much recreational libations. But then again, like I said, I’m not big on anniversaries.
So to disengage my cynicism, I think we’ve accomplished quite a bit. Especially for “the world’s most improbable start-up.”
- Making stuff more affordable. See below. But it’s more than that. I can’t count the times I’ve been told that we’re selling stuff below what we should (or could). Well, yeah, suck my balls, as the man-birds of New York say. We’re doing just fine by making stuff with the same sane margin across the board, regardless of the product. We’re doing fine without bleating about “R&D costs” and “intellectual property.” Yeah, it took 2 person-years for Unison USB. Who cares? Take the cost, apply the multiplier, sell. Done. Want more? We’ve resisted the siren call to go up and up to the car-priced realm. We’ve said that Yggdrasil is our top DAC…and we mean it. So add “not succumbing to price inflation” to the above.
- Helping to mainstream direct sales. I mean, seriously, when we started, selling direct was pretty bizarre. A single semi-well-known example existed in electronics: Emotiva. Yeah, there was Outlaw, too, and maybe a couple of others, but they weren’t exactly top of mind. And I’m being polite. Choosing to sell direct was weeeeeeeiiiird in 2010. I thought long and hard about it before deciding that delivering lower-cost products with a closer relationship to the customer made more sense. I’m thrilled I did, and I’m thrilled that direct is really gaining steam. It’s no longer fringe. It’s mainstream.
- Bringing manufacturing back to the USA. It was super super SUPER SUUUUUPER weird to choose to make things here in 2010. Everyone knew China was “the world’s factory floor” and no sane person would dare to make stuff in a first-world country, at first-world labor prices (and nobody would start employees at almost 3X the national minimum wage in a first-world country, like we do). But we did. And in the face of tariffs and supply chain disruption, this is now seeming a lot more presicent than we ever expected.
- Turning the demographic tide. Largely because of #1 above (which is a helped by #2), we’ve attracted a different demographic. More than 60% of our customers are younger than 36 years old, which is an insane, insane number in high end audio. No “Buick Disease” here. Why? No magic. Mainly because we concentrate on affordable products.
- Changing the tone. When we started, high-end audio was soooooooooooo serious it was painful. We came in with a silly name and seasoned it with a devil-may-care attitude, implying (gasp) that we might actually be having fun! OMG! How could that be? What’s wrong with that company? Hey wait, the products look really good…and sound good…and there you go. Which shouldn’t really be a crazy idea. Music is supposed to be fun!
So where are we going? What does the next 10 years look like?
Honest reply: Oh holy hell, are you kidding? It’s not like we have 10-year plans. Or 5-year plans. Hell, I just told you I thought this would be a cool company to run out of a shed in the backyard when we got started. LOLOLOLOLOL.
And, you want another honest reply: I’ve never known a company with 5-year plans that does well. I’ve also never known a company where the founders step aside for an outside CEO that does well, either. My experience is limited, however, and maybe you guys can name 238 examples where all that works out just fine.
So screw the 5-year plans. Screw bringing in people with fancy titles. Screw the consultants. Screw expectations about what is Good and Right to Do when you’re 10 years old.
Instead, I think:
act like a 10-year-old.
Decide to be an astronaut when you grow up.
Think you’re gonna be the president and bring world peace.
Believe you can change the world.
5-year plan? Hell with that! What 10-year-old knows what they’re gonna be when they’re 15? Hell, they’re playing ball and crashing bikes with their friends. 10-year plan? Hell, 20 is as far from 10 as the moon. 15 doesn’t know 20 either. You don’t know. You
can’t know. You can’t
plan for it.
Instead, let’s think about the next decade as an adventure. We’re sailing off the edge of the world (or at least embarking on a round-the-world spree). Who knows what might come?
Surely some amazing things.
Surely.
