Hitting The Mark

Hitting The Mark

Conversations with founders and investors about the intersection of brand clarity and startup success with your host, brand strategist and author Fabian Geyrhalter.

Fabian

EP083 – Schiit Audio: Jason Stoddard, Founder

Strategic Clarity + Verbal Clarity

Jason Stoddard founded an improbable made-in-the-US product company in the HI-FI space that is putting out high-quality, inexpensive units while innovating on many fronts. Fueled by the name Schiit his company has become a beloved brand.

 

Schiit is only 12 years old yet 7 years ago Jason already published a book detailing the eventful journey of the garage startup. Many of you know that I am now also running a Made-in-the-US product startup that plays in the audio world called Toneoptic, so after reading Jason’s book about his brand’s incredible voyage I knew I had to have him on the show.

 

This is a must-listen for any company that seeks to go against the grain, anyone who believes in producing products in their home country, or those who need to be reminded that one can create a seven-figure startup out of their garage with 10k of self-funding, and of course for anyone who loves Hi-Fi. If this is not you, still listen, because this is a great one!

Notes

Fabian Geyrhalter:

Welcome to the show, Jason.

Jason Stoddard:

It’s good to be here.

Fabian Geyrhalter:

Oh, it’s amazing to finally have you. I’ve been trying to get you on the show, really, for a whole lot of reasons. So first, you are running an improbable, Made in the U.S. product company, in the hi-fi space, that is putting out high quality, inexpensive units, while innovating on many fronts and fueled by the name Schiit, your company has become a beloved brand, as I want to call it. Because it is, and Schiit is only 12 years old, if my research is correct. And seven years ago, you already published a book detailing the journey of your startup. There are also quite a few parallels here to my journey, as you and I discussed offline prior. I founded an agency, I wrote three books, and this year, I launched a Made-in-the-U.S. garage product startup for hi-fi nerds, and I’m about to curl up and cry. So, besides that last part, we do have a lot in common.

Jason Stoddard:

Yeah, and that could be a typical reaction to actually trying to make things in the U.S, doing audio gear, just the general craziness right now with, “Can I even get any parts?” I get it. I get it.

Fabian Geyrhalter:

Yeah. Yeah, so here I am, curled up and crying, but I’m still going to hold myself upright over the next 30 minutes or so. Take us back to those first months, kind of where I’m at now. When you started out Schiit, you started it out of the garage, and this is not the typical metaphor, you literally were in the garage.

Jason Stoddard:

Literally.

Fabian Geyrhalter:

Literally. Not only you, there were a couple more involved. What was the drive? Why did you get sucked into this? You were running an agency, life wasn’t all that bad. Why start anew?

Jason Stoddard:

Actually, life was not great. Here’s the thing. This is 2008, global financial downturn. This is the first time in the agency world that I saw business actually slow down across all business sectors. Usually, to be frank, you can switch to a different sector. We went from technology to food and back again, and it was really good, but everything slowed down. And so, I dusted off an old idea of, “Hey, you started in audio.” It’s what I did when I got out of college; I designed audio gear for a company called Sumo. And I was involved with Mike Moffat’s audio company called Theta Digital. And yeah, “Maybe I could do that again.” Which is a really, really stupid idea, because after 18 years in the agency where I was like, “I didn’t know shit.”

Fabian Geyrhalter:

Well, there you go.

Jason Stoddard:

Yeah. I was rusty, but figured it out. And so, I just started spending a bunch of time in the garage, working on the first couple products that we were going to bring out. And there was actually a path to that too, because I started getting interested in headphones, because I was doing a lot of writing at the time. And so, I wanted to shut out the world, so I had been playing with headphones and that got me into headphone amps. And that got me into thinking, “Maybe I can do this better.” And that’s one of the things you’ll see us ask a lot, “Can we do this better?” Not just can we do the same thing or whatever, but do we have something to add to the conversation, product wise?

Fabian Geyrhalter:

Yeah.

Jason Stoddard:

And started doing that, just prototyping and getting the bones around a direct sale audio company. And it took a lot of time. My wife was very frustrated with all the time I was spending in the garage. And that’s actually how the company name came about. She said, “Hey,” very frustrated, she’s like, “All you do is, you say you got shit to do. This is all you ever have to do. You’re always doing all this shit, and you can’t do anything else. Why don’t you just call the company Shit?”

And I’m like, “That is…” and I just stopped right there. I remember, I stopped dead and went, “Wait, that is actually the most brilliant thing I’ve heard,” because we don’t have a lot of money to do marketing. Everyone will remember it. It is something that would get me thrown out on my ear if I proposed it to any of the clients at our agency. So, I love it. And we combobulated that with some Norse mythology type names, because the Norse are great. They named everything. They named not just gods, but our places and parts and things and dwarves. We have names until the end of time, we could have a product line so big that no one would know what the heck we’re doing.

Fabian Geyrhalter:

And that’s the nomenclature there, yeah.

Jason Stoddard:

Yeah. So anyway, we got that off and running, and of course, the first order we got was for the… We had two products, we got an order for the product we had not finished yet. Of course. Of course.

Fabian Geyrhalter:

Because you put it out for sale, even though you didn’t have it.

Jason Stoddard:

Yeah, because we’re idiots. Yeah. It’s like rule number one, don’t put anything out for sale if it’s not ready. But I didn’t know how it’d go. I figured, “Oh, this is a nice little garage business, maybe we’ll, put a shop in the backyard and maybe we’ll make enough money to pay for a car payment or something. And eight months later, we’re doing a million dollars a year out of the garage. It’s starting to get to the point where it’s eating the agency. I’m like, “Oh crap.” So, I guess it’s not a small company, but the path to that was a big mess too, because we actually hired people and they were working in our garage and that didn’t last long and we had to move out into a small office we affectionately called The Shit Hole. It was a shit hole. It was a really old, dusty, nasty office, but it got us going. And then we actually moved to one of the places we are today, which is in Valencia, in an industrial building. We’ve since expanded to take pretty much all of it. And we’ve just expanded, as of last year, into Texas. We’ve bifurcated the lines, we’re doing the less expensive, simpler stuff in Texas, and the more complicated stuff in California.

Fabian Geyrhalter:

Fascinating. There was a week, when two people in the audio world advised me, back to back, I think it must have been two days in a row, that I should read your book, Schiit Happens: The Story of the World’s Most Improbable Startup. I’m now 80% through it, and I’m so glad I took their advice, as I can highly recommend it to anyone listening, who are either starting bootstrapped, especially those in the hardware products space, or of course, for anyone who’s a hi-fi nerd, because you’re getting pretty geeky in certain chapters, which went right over my head, but I’m like, “This is interesting.” And to be honest, it took me weeks after I had the book sitting on my desk, it took me weeks to get myself to start reading it, because I was terrified of all the mistakes that I know I already did and you’d point me to. So, I was kind of like, “Life is already stressful enough doing this startup, I don’t want to read this book either,” but it actually turned into more of an emotional support and quite a kick in the butt for me to keep pushing. Let me read this one paragraph here out of the book, it’s about what starting a garage business can actually mean if you’re serious about it. So, here’s what you wrote.

“What’s the limit of a garage business? A lot higher than you might think. When I finally started looking for space, we were still only using one third of a three car garage for production and shipping. In that space, we just cracked seven figures in sales. I’m using a specific number to illustrate what you can do with a self funded, home based manufacturing business. Remember, we get started with 10k. 18 months later, we’re into seven figures annually, in a garage. This is not intended to be bragging, this is intended to be inspiration for you. Starting your own business is absolutely doable without taking loans, leasing tons of space, hanging your ass out for bankers, gambling on delivering a crowdfunded product on time, or otherwise betting big on getting big.” I think that’s amazing. That idea of hitting seven figures in the garage.

Jason Stoddard:

Oh yeah, it’s completely nuts. If you’d told me, especially manufacturing.

Fabian Geyrhalter:

Yeah.

Jason Stoddard:

Making things. Now, there was additional carnage. We did actually build out the attic and stuff for storage and stuff. We were crammed into it. We were using the house for shipping. There’s probably some photos in there, or photos kicking around of the really early days. But the thing is, if you want to do it, you can absolutely do it. And we were determined to do it without a lot of money, and I didn’t want to deal with banks. I’ve dealt with them before, don’t want to do that again.

Fabian Geyrhalter:

Yep.

Jason Stoddard:

They seem to love you most when you don’t need the money, and then they still won’t give you a line of credit, which is hilarious.

Fabian Geyrhalter:

Yeah.

Jason Stoddard:

So, then they’re like, “Well, you don’t need it.” It’s like, “Well…” Anyway.

Fabian Geyrhalter:

So, how many square feet are you totaled now? And how many employees do you have now?

Jason Stoddard:

We’re about 25,000 square feet, and we are right under 50. I think we’re like 45 employees.

Fabian Geyrhalter:

Wow.

Jason Stoddard:

Yeah, we’re a lot bigger than we were. Audio’s not a big business. We’re definitely one of the larger audio companies. I don’t know where we actually fall, because most of our competitors are private, like us. So, who knows? But just anecdotally, I know that we’re one of the larger ones, and I do know our demographic is very young for the industry, which is probably to be expected given our name and the fact we make $99 products.

Fabian Geyrhalter:

Well, and also a couple $1,000 products now, right?

Jason Stoddard:

Yes, we do. Yeah, it’s a pretty wide range. And it’s really weird, we’re actually starting it out. Oh God, the corporate stuff’s coming in, we’re starting to track what are the top 10 products by sales? And it’s fascinating, because it’s pretty much evenly divided between the inexpensive stuff and the expensive stuff.

Fabian Geyrhalter:

Interesting.

Jason Stoddard:

And the middle kind of falls out.

Fabian Geyrhalter:

Well, that makes a lot of sense. No one’s interested in the middle of the line, ever.

Jason Stoddard:

Right.

Fabian Geyrhalter:

And what’s fascinating to me is, you added pricing of each product in your sub navigation on the website. So, when you actually use the navigation and you see the names of the products, it says exactly like $234 right next to it, or whatever price it is. I love it, first of all, I think it’s fantastic on many levels, but did you do that out of transparency, or does it almost serve as a shopping aid?

Jason Stoddard:

Yeah, it’s a shopping aid. I did that deliberately and we’ve done that since day one. The reason actually being, is if someone is unfamiliar with us, but they’re shopping for, say, a headphone amplifier or pre amp, they probably know one thing. They probably know about what they want to spend, and since everything is in price order from lowest to highest, they know where it falls in the line. So, people can just scan it and go, “Oh, okay. There’s a $100 headphone amp, let’s look at that. Oh, you also have a $1,600 one.” Yeah, it’s a different class.

Fabian Geyrhalter:

Well, and it’s also branding.

Jason Stoddard:

Yeah.

Fabian Geyrhalter:

Because you already, while people search for the 200, $300 product, because that’s how they came into your site, they’re already educated about, “But wait, there’s more.”

Jason Stoddard:

Yeah. Yeah, and it’s a trick that I got when we were actually doing some brand work, website development actually, for Canon. And this was back in the days when they still had film cameras and digital cameras and…

Fabian Geyrhalter:

Yep.

Jason Stoddard:

Video and everything. It was before phones ate everything. And they’re like, “Well, you have to present the brands like this, and this is the sub brand, and this is how you do it.” And I’m like, “I’m just going to throw all that away and I’m going to assume someone doesn’t know anything about Canon, and I’m going to make a site that’s basically what I would do.” And I had that type of navigation, with pricing, because I figured people probably know if they want a digital camera and about how much. They may not know anything else and they don’t care about the brands. No one gives a shit about Canon’s sub brands. So, that’s something that a lot of brands could take to heart.

Fabian Geyrhalter:

It’s really cool. It gets a little messy at times though, when you don’t have that.

Jason Stoddard:

Yeah.

Fabian Geyrhalter:

But you have to have product separators or configurations or something instead of the sub brands. But I totally agree with what you’re saying, and I think it’s fascinating, because you did this with Canon back what, late 90s, early 2000s?

Jason Stoddard:

Yeah, that was probably, actually, 99 or 2000. Yeah.

Fabian Geyrhalter:

Yeah. And I still don’t see it being done a lot.

Jason Stoddard:

Yeah.

Fabian Geyrhalter:

So, this is our little secret that now everyone knows.

Jason Stoddard:

It’s weird. I’d be happy if more people did it, because that’s usually how I shop. I find a lot of things I’m not familiar with, and it’s like, “Okay, guys, take me through what you got.” And it’s like, “I don’t want to click on every one, and oh, this one’s $8,000 and this one’s 400 bucks.” Give me a range.

Fabian Geyrhalter:

Well, and how often in these forums do you see when people ask, “Hey, I want to have a turntable in the $500 range.” Boom.

Jason Stoddard:

Yeah, exactly.

Fabian Geyrhalter:

They don’t ask, “I want a turntable with this kind of cartridge, or this kind of belt.” No, that’s the number, take me from there.

Jason Stoddard:

Yeah. And that is the magic number, that’s why we stopped doing our turntable. We can’t really compete. We couldn’t do a unique turntable, to our standard, at that price point. And so, our turntable wasn’t super popular, I guess would be the politically correct way to put it.

Fabian Geyrhalter:

I didn’t know you had a turntable, that gets me very excited, but we can’t get off track, because otherwise my listeners are going to hate me, but this is very exciting. But what was the price point?

Jason Stoddard:

It was, I think, 899 and up to about a 1,000 with a better cartridge on.

Fabian Geyrhalter:

Yeah. Might have also been timing back then, because now it’s a totally different scene when it comes to turntables.

Jason Stoddard:

Yeah, we came in when it was quite popular, it’s just that, it’s a very weird turntable. It doesn’t look like anything else. So, I think that was part of it; people like the performance, they did not like the convenience or the form factor or the price. So, it’s like, “Okay, cool.” We have had our failures and we learn from them and try not to do them again.

Fabian Geyrhalter:

And one of the failures of that particular turntable was to innovate? Or to do it differently?

Jason Stoddard:

Yeah. Actually, one of the reasons we did it, like I said, we always ask ourselves, “Can we contribute to the conversation?” And the turntables in the market, if you go look at them, they’re pretty much universally an MDF plinth, MDF slab, and with a little short tone arm, sometimes it’s carbon fiber, it’ll have a $100-ish cartridge on it, and you sell that for four to $600. It’s great, there’s a billion of them right now. And we decided, “Oh, we want to do a true uni pivot, low mass, cast aluminum design with a cast aluminum platter, hand assembled, it was a 12 inch tone arm, which is unheard of. And it was a true uni pivot. And it was great, but we couldn’t even put a dust cover on, let’s put it that way. It was so weird looking.

Fabian Geyrhalter:

Of course, yeah, that just occurred to me.

Jason Stoddard:

Yeah.

Fabian Geyrhalter:

Interesting. Wow.

Jason Stoddard:

Yeah, so it was not popular.

Fabian Geyrhalter:

Yeah.

Jason Stoddard:

But we did do something very different from what was out there. It’s just that the market, unless we could bring it in at $500 and have a dust cover, I don’t think the market’s quite ready for that.

Fabian Geyrhalter:

Yeah.

Jason Stoddard:

Maybe we can do it in the future. We’ve learned a lot from it, but yeah, we’re not going at that right now.

Fabian Geyrhalter:

Yeah, definitely some exciting thoughts though.

Jason Stoddard:

Yeah.

Fabian Geyrhalter:

So, it gets me excited. Let keep talking about your site and your brand, because the two, these days, are very interlinked, especially D to C, your site is a huge representation of your brand. When you arrive at Schiit.com, these are the first words that you will read. “Yes, that is our name. Shih-tah. It’s a proud German name.” I’m trying to do this in a German accent, it’s hard for me. “Shih-tah. It’s a proud German name, host to a long line of audio engineers who slaved away in crumbling Teutonic fortresses as lightning lashed the dark lens outside, working to perfect the best amplification devices in the world… Or, well, no. Yep, Schiit is our name, and it’s pronounced, well, like, ‘Hey man, that’s really some good Schiit!’ And now that we have your attention…” And that’s literally the only copy on the homepage, the main copy on the homepage, and then you simply show images of just about 15 big industry awards, and then you mention “up to five year warranty, 15 day money back guarantee, built in California and Texas,” and that’s it. And I just love… To me, that’s brilliant positioning.

Jason Stoddard:

And it really hasn’t changed. That is pretty much, literally, how it’s been for 12 years.

Fabian Geyrhalter:

That’s amazing, because I hesitated from saying this before, but it’s kind of ill timed that you’re on the show now, because I had the founder of Shit That I Knit on the show. And just a couple of shows ago, and I don’t know what show I’m on, episode 80, 85, something like this. And I had her on, it was the same thing, where her sister, at some point, said, “Why don’t you just call it Shit That I Knit?” And literally, it was the same thing. And she is now an official partner of the winter Olympics with her knitwear. And it’s just beyond cool, with a name like that, or very much because of a name like that. But with you guys, from the get go, you went against a lot of the stereotypical manufacturing and marketing techniques in the hi-fi world. How much did the decision to name your brand Schiit affect your early success, you think? Or hindered?

Jason Stoddard:

Oh, I actually think it was key to our success. I think that we’d be maybe a 10th the size we are now if our name wasn’t Schiit. The reason being, is you couldn’t ignore it. Literally the day after we launched, I got a call from, actually, the founder of Headfi.com, Jude. And he said, “Are you guys serious with this?” And he said, “And can you make money at these super low prices, because this is nuts?” And I’m like, “Yes, we are serious. And yes, we can make money. We’re all good.” And he’s like, “Send me some products.” So, we did. And he reviewed them and that’s what got everything started. But the main thing is, it stopped people. People went, “Wait, what? Who the hell would call their company Schiit? Are they crazy?” And it’s like, nah.

Fabian Geyrhalter:

“And what’s up with those prices?” Those two things combined.

Jason Stoddard:

Yes.

Fabian Geyrhalter:

It’s just like, “What?”

Jason Stoddard:

Yeah.

Fabian Geyrhalter:

And that starts a conversation, and that starts intrigue, and like you said, that was most probably one of your first big breakthroughs, when you had that phone call of like, “Hey, well, tell us more. Are you serious? Send me one of those.”

Jason Stoddard:

Yeah, and it was huge. The brand really is our thing, because, right now, okay, if you are… Well, some people in audio, they’re like, “Oh, Schiit, they’re just a marketing company. It’s just all about marketing.” It’s really funny, because I’m like, “You should see how little we spend on marketing. We do almost no advertising, we don’t spend much on the website, things don’t really change that much, we don’t do any printed material. We do almost nothing.” It’s like 0.02% of revenue. It is so low that any CMO would have a stroke. But we have a strong brand. We have a very strong brand. People know who we are because of the name, and because we actually participate in the forums and the places where audiophiles congregate. We’ve done that from the start, because I actually enjoy it. I keep publishing chapters of this book on Head-fi.

Fabian Geyrhalter:

Oh, cool.

Jason Stoddard:

There’s about 10 billion of them now.

Fabian Geyrhalter:

Amazing.

Jason Stoddard:

Yeah, but I average somewhere 10 and 20 chapters a year, as things come out or as things happen. It’s a lot of fun.

Fabian Geyrhalter:

Well, it’s not that you are investing in marketing when you publish chapters of your book slowly. It’s kind of a nice trick, I like that.

Jason Stoddard:

That’s true. Okay, and that’s actually a good question. It’s me investing time in marketing. It’s the founder investing time in marketing.

Fabian Geyrhalter:

Right.

Jason Stoddard:

Rather than, “Okay, let’s throw a bunch of money at magazine ads and things like that.” We are doing our own little audio show and we’ve done those in the past. We have the Texas Audio Roundup coming up, and we are paying for half of that with Emotiva, another direct sale audio company.

Fabian Geyrhalter:

Yep.

Jason Stoddard:

And we’ve done what we’ve called Schiit Shows in the past, to introduce products, where we actually fly out journalists and stuff. So, those are decent investments, but we do it on an average of once every few years.

Fabian Geyrhalter:

And it’s maybe not so much marketing, but more PR. It’s like, “Hey, we have a new thing.”

Jason Stoddard:

Yeah.

Fabian Geyrhalter:

“We have something to talk about. Let’s invite you to listen in.” And that’s pretty much it.

Jason Stoddard:

Yeah, and the most money we’ve probably ever spent on ads, period, was actually tweaking the editor of Stereophile after he called one of our dacs obsolete in a review. And so, I’m like, “That’s a great title.” And so, we actually ran an ad with the title of “Obsolete”, and then all of our other awards for it, and then some words about, a lot of other stuff in audio is obsolete, tubes and class A and discreet, all that stuff is obsolete as well. So, we’re comfortable being obsolete. He thought we hated him. I said, “Dude, you’re British. This has got British humor. We’re just playing with you a bit.” We made up and everything, but it’s funny. People know that we will use the words even if they’re negative, because it’s… Yeah, let’s have some fun.

Fabian Geyrhalter:

Well, and there’s a company out and I had the founder, he’s LA based too, I think he’s from Pasadena up there. He was on the show too, Liquid Death, which is the water company.

Jason Stoddard:

Yeah.

Fabian Geyrhalter:

And it’s the exact same model. They literally push paid advertising out that just has horrible quotes of people saying, “You should die in hell,” and “This is the worst idea anyone ever had.” And it’s part of the foundation of the brand. And it’s so easy for me to talk about it from a brand level, but when you’re, and I talked to you about this before we went on air, but now I’m doing my own startup, and I get these messages daily.

Jason Stoddard:

Yeah.

Fabian Geyrhalter:

People are like, “You are absolutely bonkers. You’re crazy. And why would you want to rotate a record storage unit? And how can you justify this price?” But some of them are pretty harsh, and it’s easy to say, “Well, this is important, you need to have haters so that you can have lovers,” and all the stuff I usually say, but when you’re in the driver’s seat, it’s like, “Whoa.”

Jason Stoddard:

Yeah, exactly.

Fabian Geyrhalter:

Yeah.

Jason Stoddard:

It didn’t hurt that I was actively involved in responding to, I think, pretty much all the emails that came in to us for several years. I think it was three or four years I was doing that. And that actually is great, because that gives you an overall view of what people are concerned with and what people really need. And I can’t do that anymore, but I am still involved. My dev lab is literally in the same office as the repairs. So, I know what’s coming in, if there’s an issue, I can talk to the techs when they go, “Oh, these people are complaining about this or that.” It’s very important to stay close coupled on that and not discount what people say.

Fabian Geyrhalter:

Yep.

Jason Stoddard:

But yeah, there’s going to be some crazies, and there’s going to be some people who just… Well, there’s going to be crazies that love you and crazies that hate you, let’s just put it that way.

Fabian Geyrhalter:

Right, right. And you should listen to both of them to a certain extent.

Jason Stoddard:

Yes.

Fabian Geyrhalter:

And I think that’s very important. There was a CEO founder on the show, I forgot who it was, and he’s doing that. Every week, he reserves at least half an hour to take customer calls. And I think it’s amazing.

Jason Stoddard:

Yeah.

Fabian Geyrhalter:

You need to have that pulse. It’s super important. Let’s talk a little bit about the pricing, which is one of the big brand differentiators, and I’m going to quote from the book again. You’re saying, “Bottom line, you can’t tread water. You can’t stand still. You have to sacrifice your babies. You need to look straight on at cannibalizing your own products. You always have to be asking, ‘What can we do better, less expensively?’ Even if it lays waste to your entire lineup. Because you know what? If you don’t do it, someone else will.” So I, myself, am manufacturing in the U.S. with Toneoptic, proudly so, and it is not treating me very well. You can basically spend a person’s day job just looking for less expensive, yet high quality manufacturers.

Jason Stoddard:

Oh, boy.

Fabian Geyrhalter:

Especially if your product is made of several components that need to be manufactured by several different vendors. What have you learned? How is Schiit able to out price Made in China products in the U.S? Is there any big lesson?

Jason Stoddard:

I don’t think there’s any huge mystery about it. The Chinese native brand, that actually sell for more than us, which there’s a surprising number of. I think they’re more engineered for distribution, so they actually have that extra level of markup built in. We are really a very pure direct sale audio company. So, we don’t have margins baked in for distribution.

Fabian Geyrhalter:

Yeah.

Jason Stoddard:

We’re just basically as efficient as we can be. We make a lot of things, and we are starting to feel the crunch of inflation right now, and we’ve had to raise some prices. But we’ve also introduced new products that perform better, that cost less. So, wherever we can do it, we will. And basically, I’m an old school engineer. We figure out what it takes to produce it, we multiply it by our multiplier, and that’s the price. You’re done. Most audio companies are like, “Well, you leave money on the table, what will someone really pay for that?” And I’m like, “I don’t care what someone will really pay for that.”

Fabian Geyrhalter:

That’s awesome.

Jason Stoddard:

I have no interest. I have no interest in that. Because that’s how everyone else works, and that’s how you guys ended up with an industry where the average purchase age sometimes seems like they’re 87. Oh, the funniest panel I was ever on was this whole thing about, “Oh, the graying of audiophile. Why are audiophiles so old?” And I sat there and listened to them talk about, “Well, the young people do this, the young people do that, and phones and blah.” And I turned to them and I said, “Your stuff’s too bloody expensive.”

Fabian Geyrhalter:

Yeah. Yeah.

Jason Stoddard:

“That’s exactly the problem.” They’re like, “Well, how come you sell to younger people?” I’m like, “Because we make stuff that sells for a $100, not 10 grand.”

Fabian Geyrhalter:

Yeah.

Jason Stoddard:

So anyway, yeah.

Fabian Geyrhalter:

But it’s interesting, because you still have distributors. Internationally, you have distributors. How do you make that work with the D to C? It’s a fine line.

Jason Stoddard:

Not well. Not well. Yeah, it’s a lot of suffering from the distributors. And then they, of course, have to make money, so they have mark it up. So, we are not so much a global brand, because what’s a $100 here might be an equivalent of a 150 Euros. Whereas, if you were a global brand, you’d be looking for parody or less than Euros and less than Pounds, things like that.

Fabian Geyrhalter:

Yeah.

Jason Stoddard:

We’re not there. I don’t know if we’ll ever get there. We’ve actually talked about doing some local manufacturing, to try to get around that, but then you run into that.

Fabian Geyrhalter:

Oh, yeah.

Jason Stoddard:

Yeah, it’s not like sales tax, where it’s just at the end point. It’s when you’re making it too.

Fabian Geyrhalter:

Interesting.

Jason Stoddard:

So, don’t know. I don’t know. Yeah, there are no easy answers.

Fabian Geyrhalter:

Yeah, yeah. No, absolutely. Absolutely.

Jason Stoddard:

Yeah.

Fabian Geyrhalter:

So, in 2015, when you wrote the book, you made a bold prediction. You said 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. Saying that, we’ll trust paid advertising more than we will trust our friends. It’s 2022 now, I thought it’s time to check in.

Jason Stoddard:

Yeah. That has not happened yet, but the walls are starting to crumble a bit. There’s so much conversation about, “Are these real reviews? Are these fake reviews? Is this a paid shill?” And I’m like, “Heck paid shill. Paid anti shill.” And there’s a ton of them out there. And so, there’s more uncertainty about word of mouth. You’re still going to trust your friends, but you may cast a more jaundiced eye on reviews, say, on Amazon or whatever. Conventional advertising, yeah, sure. It’s kind of dying anyway, but I don’t know that it’s more credible, but I think every advertiser knows that, if they make claims, they’re going to be examined with a microscope.

Fabian Geyrhalter:

They’re held accountable, yeah.

Jason Stoddard:

And they’ll be held accountable. I think that’s why they typically don’t make any claims anymore.

Fabian Geyrhalter:

That’s not how you wanted it to be.

Jason Stoddard:

But that’s how the future always is. You can’t predict it. I wrote that in a fairly cynical moment. I think the trends are still going that way, but what’s going to happen is, there’s going to be a left turn and we’re going to end up somewhere even weirder.

Fabian Geyrhalter:

Well, and I think it’s important to bring it up, because it’s a very good way of seeing, “Oh, I trust reviews.” And it’s just not quite heading that way anymore. So, it’s an interesting talking point for sure.

Jason Stoddard:

Yeah. People are learning to, how many reviews, how many actually have text, how many sound like a human? How credible is it that it really is, you have 8,000 reviews and they have a 5.0 star rating.

Fabian Geyrhalter:

Right.

Jason Stoddard:

It’s like, “Hmm.” Yeah, and it’ll get worse. It’ll get worse before it gets better. I’ve had many strong thoughts about this, which I’ll just bury from.

Fabian Geyrhalter:

No, absolutely. And I ordered some lights for my bike, and on the website they had the big logo of, what is it? Trust… What is it? Trust advisor? No, that’s Trip Advisor. There’s this one…

Jason Stoddard:

Yeah, there’s a… Yeah.

Fabian Geyrhalter:

Whatever that badge is. That badge of, “Hey!” And I saw it and I’m like, “Oh, peace of mind, that’s good.” And I ordered it. They never shipped it to me. It was a complete nightmare. And then once I actually looked behind closed doors, on that same site where they had the logo on their website, they actually got two stars out of five.

Jason Stoddard:

Ouch.

Fabian Geyrhalter:

It’s like, it doesn’t even matter anymore, everything is fake in this world if you don’t go deep into it. And I think that’s also why Schiit turned into a brand, and why it’s all success, because you don’t upcharge, you’re down to earth, you’re 100% transparent, and not because it’s hip to be so as a brand in 2022, but because that’s how you started. That’s a philosophy. And with your success and with you coming from the brand and advertising and marketing side, having successfully founded and run an agency for a long time, what does branding mean to you? It’s such a hated word, rightfully.

Jason Stoddard:

Oh, I know. And in the agency days, since we did so many tech companies, we actually had a brand equation that was position plus personality plus those, to the power of time. So, how long you do it is really important. I won’t go into that. To me, a brand is really… Boy. Yeah, I had the answer for this and I’m rethinking it as we speak.

Fabian Geyrhalter:

That’s good, because it’s a living and breathing organic thing, a brand. So, the thought can change.

Jason Stoddard:

It really is.

Fabian Geyrhalter:

It’s a lot of things.

Jason Stoddard:

To me, a brand is having a uniquely strong mind share in your field, essentially. People know who you are. It’s like in computers. Of course, everyone knows who Apple is. Yeah, you just say Apple, you got it. You say Microsoft now, a lot of people don’t even know they make surface products.

Fabian Geyrhalter:

What does it stand for?

Jason Stoddard:

They’re weak.

Fabian Geyrhalter:

Exactly.

Jason Stoddard:

Yeah, exactly. And they’re really weak. You go to an audio show, everyone knows who Schiit is. They don’t all love us, they don’t all hate us, but everyone knows who we are.

Fabian Geyrhalter:

Yeah.

Jason Stoddard:

So, it’s this unique dominating mind share, to me, that’s brand, and you can get it through a crazy name or you can get it through spending a $120 Million share on advertising for 20 years, which is the old CPG way of doing it.

Fabian Geyrhalter:

The power of a great mind.

Jason Stoddard:

If you hear Tide 875,000 times during your lifespan, you probably know it’s a detergent.

Fabian Geyrhalter:

Yeah.

Jason Stoddard:

Yeah.

Fabian Geyrhalter:

No, totally, totally.

Jason Stoddard:

Yeah.

Fabian Geyrhalter:

A question that I ask every founder who makes it through Hitting The Mark, it’s a pretty big question, I usually give people a heads up. What is one word or two words or a short phrase that can describe your brand? So, if you would take everything about the Schiit brand, and I’m not doing shit puns on this show, because I had an episode full of shit puns with the founder of Shit That I Knit. I’m not going there. I’m not going there. But if you take all of that in a funnel and out comes these one or two words that really describe what the brand stands for, what would it be?

Jason Stoddard:

Yeah, and that was a really interesting question. If I have to do one word, if it was just one word, it really is fun. Because oddly enough, audio’s about listening to music. It’s about enjoying yourself. It’s about having fun. And yet, a lot of audio, especially high end audio, it looks really grim. People don’t look like they’re having fun. They’re looking for defects in the recording, and they’re not having fun when they get the bill for their $270,000 system. And I’m not kidding, there was actually a dealer at a show that said, “Well, if the system doesn’t cost a quarter million dollars or more, it’s not serious.” I’m like, “Yeah, that’s nice, I don’t want to be serious, I want to be fun.” So, Schiit is fun. And if it was two words, it’s fun and affordable. And affordable is debatable when we make $2,500 products.

Fabian Geyrhalter:

It’s affordable within the category.

Jason Stoddard:

Yeah. Nothing we make is five figures. Nothing is high five figures, nothing is low six figures, like some of the audio stuff out there, believe it or not.

Fabian Geyrhalter:

Yeah, but you’ve got a $100 unit, right?

Jason Stoddard:

Yes. And we sell…

Fabian Geyrhalter:

Which is amazing.

Jason Stoddard:

Yeah. Tens of thousands of those every year, of each type. So, the $150 and lower stuff just moves, and getting out to Texas helped a lot, because now Valencia is the crafty build, more complex products. And we can do the more complicated things here, the now 250 and up, essentially, products.

Fabian Geyrhalter:

What’s next for the Schiit brand? What are you excited about in the next six months or so that you’re okay sharing with us?

Jason Stoddard:

Well, it may surprise you. We love tweaking people with unexpected stuff, and barbecuing the sacred cows of audio, starting with the name. And actually, recently, we brought back that old school idea of equalizers. And people might think, “Equalizers? My dad had one of those, it sounded like ass and it hissed and it was terrible.” And it’s like, “No, no, no, we fixed all that.” But now we brought back high end tone control. And those things are going crazy. But there’s more. We’re going to really torture some people this year. If I get a couple things out, if I’m real successful with one product, some people are going to stop and go, “Have we been doing that wrong for like 30 years?”

Fabian Geyrhalter:

That’s exciting. That’s awesome.

Jason Stoddard:

Yeah. And I may be right, I may be wrong, maybe like our turntable. Maybe people might go, “That’s stupid.”

Fabian Geyrhalter:

Well, that’s what it takes, one out of 20 products, it’s not a problem. It’s worth it. The risk is worth what could be around the corner.

Jason Stoddard:

Yeah, we do allow ourselves to take risks. Actually, this new, crazy idea I’m really proud of, because it could be a very expensive product. I’m working on the very expensive version of it, but it’s actually coming out at like a $350 price point start, at the affordable price point. And then, if people like it, then we’ll do the big, crazy, stupid thing.

Fabian Geyrhalter:

Right.

Jason Stoddard:

For the other side, which would be 22, $2,300 or something like that.

Fabian Geyrhalter:

Well, you got us excited.

Jason Stoddard:

Yeah.

Fabian Geyrhalter:

Where can people follow your company?

Jason Stoddard:

Actually, our most active thread is at headfi.org, which is where all the headphone people congregate. They have a section in there for, essentially, head-fi bloggers. I am one of them. And that’s where I’ve serialized the book that you’re reading. And also, to be honest, probably 50 or 60 more chapters that kind of follow on. Some of them are going to be business advice, and some of them are going to be like, “This is a new product,” and some of them are going to be technical stuff that’ll melt your brain. So, it is a bit of a mix, but I try to warn people. If you’re not technical, you may not want to do this one.

Fabian Geyrhalter:

Fantastic. That’s awesome. And otherwise, they can obviously go to Schiit.com, which is S C H I I T.com. And yeah. Hey, Jason, this was absolutely awesome. I appreciate your time so much. I’m so glad that we got to most of my questions, there are many more, but thanks again for sharing this story with us.

Jason Stoddard:

Yeah, absolutely. And no, thanks for having me. I do like talking about this, actually, for at least somewhat selfish reasons, it helps me focus as well. But I also just like talking to people about branding. I’d be happy to talk to anyone about branding, marketing, starting and running a stupid hi-fi company.

Fabian Geyrhalter:

The improbable startup.

Jason Stoddard:

I may not be right. Yeah. I may not be right, because there are other approaches. You should probably talk to…

Fabian Geyrhalter:

Well, you may not be right, but you have been right. And that is something that you can put some laurels on.

Jason Stoddard:

And actually, that’s probably a good point. It’s right for you.

Fabian Geyrhalter:

And your approach was very radical. You came in with big… It’s not for everyone, but it sure leaves a dent. And so, it’s super interesting to see how other people go into the same space, or into the similar space. But hey, again, thank you for the time, appreciate it. And yeah, I’m sure we’ll talk soon.

Jason Stoddard:

Yeah, definitely. Give me a call anytime. I’m around.


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