By TIFFANY MONTGOMERY
Skullcandy CEO Rick Alden and President Jeremy Andrus shared stories, advice and insights Tuesday about the wild growth ride the company has been on for the past seven years.
A crowd of 120 people attended the Q1 Shop-eat-surf Executive Roundtable at the Shorebreak Hotel in Huntington Beach.
Here are some of the highlights from the Q+A.
Skullcandy’s “culture of frugality”
Rick shared how the company struggled to have enough money to support its business in the beginning, including putting two mortgages on his once paid off house and having the sheriff’s come to the front door twice to say the home was being foreclosed on.
Rick’s philosophy was the mortgage company was pretty flexible, taking six to eight months before initiating foreclosure proceedings, while the factories that made Skullcandy product were not as flexible, so he paid the factories first.
All that scrimping for money led the company’s culture of frugality, where they slept on floors of friends and stayed in youth hostels in Hong Kong in the early days to save money.
Recruiting
Skullcandy has poached some high profile employees from other brands the past few years, and Rick shared his philosophy on recruiting.
Rick said his philosophy is to hire the best person you can afford. Skullcandy is now in the position to afford top talent, and he believes the more you pay, the better the person is going to produce.
He also said paying a lot adds a lot of clarity. It that person stops producing, it’s a lot easier to “chop wood and move on and get the guy out” because he’s costing so much.
The company also believes every hire should be a disruptive hire. If it’s not disruptive to the company that the hire is leaving, then he probably wasn’t that good, Rick said.
I asked if that approach has ruffled some feathers in the industry. He said although he had promised the candidate not to, he had placed three calls to different company leaders when he was getting ready to make a big hire. Two called him back and he let them know his plans. One didn’t.
If people don’t return their calls, “I’m not going to worry that hard about poaching,” he said.
Creative and analytical mix
President Jeremy Andrus, who oversees most operational issues at the company while Rick is the brand visionary, talked about what he’s learned about working with someone with such a different skill set than his.
The biggest lesson he’s learned is to “never discount the idea – as big, as crazy, as wacky as it is.” Even if the company can’t afford it or he thought it wasn’t the best idea, a lot of the ideas ended up being good ones, he said.
“What makes a brand great is not the status quo,” he said. Pushing forward and trying different things and different ways is what makes it great.
He also learned there’s not a right or wrong to his and Rick’s different approaches, but that there’s value in that natural tension.
Product segmentation
Rick said once Skullcandy began selling to Big Box stores, it new it needed product for different distribution channels. It also released new product for a year to the core first before moving it into broader channels.
The money from the larger retailers has allowed Skullcandy to invest in high quality teams and programs for the core market, he said.
Competition
When asked about the other action sports brands making headphones now, Rick said the high quality brands participating shine a positive life on the category.
He said Skullcandy is in a good position because it was first in the market but it knows it needs to stay on its game, hire better people, and create unique product that stands out.
What’s next
I asked where the company will be in five years. Will it have an apparel line? A sunglass line?
Rick said Skullcandy will pursue categories that make sense for the brand. He didn’t think it would work as a denim brand, but said he’s been surprised at the large orders and great sell through for its simple branded beanies.
The company has struggled to make T-shirts and hoodies over the years, but now has Stever Rapp of +black helping and Skullcandy had a “great apparel show at SIA,” Rick said.
Every brand has a limit how far it can stretch, however, and Skullcandy doesn’t want to cross that limit, but it will pursue the right opportunities.
