Brian Garofalow - The Systems Skullcandy’s CEO Uses (That Entrepreneurs Don’t)

26:37So things that I don't necessarily want to share. Yeah. But I will say again, in consumer goods, what I'm closest to, and I know the most just an immutable truth of consumers in the US, consumers like consuming and consumers like new stuff. So the newest, coolest model, I want that. The most fashionable thing, the something that nobody has yet, the newest technology, like we want that, we want that, we want that. So we do put a number and we have a KPI, one of the metrics that we measure against what we call the innovation index. And that is we want a specific threshold of product that we sell trailing 12 months to be those new products.

27:18That's telling us that people want the brand and they want our innovations. If it's too much, then we don't have enough of the cash cows or the growing products. If it's too little, it's a leading indicator that the brand isn't incredibly exciting or our products aren't hitting. We're not investing enough in new product. So that's really what's going to start the flywheel, the new products and how we measure it with the innovation index. so the products that come out of that new product introduction and start gaining traction that's what's going into that second category of our growth products the products that have been in market for us with consumer electronics you know on average say it's a three to five year product life cycle so if we have say a quarter of those 10 so two to three products that make it into that cash cow stage, then we're winning.

28:12And then what we have left outside of those three that makes it to EOL, that's what's going to make up your 10 there. I think the big thing to take out of that for people listening is the importance of never resting on your laurels. And you always need to reinvest back into the new to drive the flywheel. The same could be said about marketing for ads. you need new ads that hit to just keep driving the flywheel. And I'll add this. It ends up being a pretty easy math exercise. If you can understand product lifecycle. So if we have a hit from the time you launch that product to the time you're going to end of life that product, that's going to be in general, chop that up into four.

28:55And if you've got say 20 to 30 % of that number coming out as your new products, then you're probably in the safe zone. And if you look at it and say, okay, we've got, say you've got 10 products that last two years. So chop that up into force and you're like, okay, we need two new products every two years. And if you look in the product life or your product roadmap and you're like, oh my gosh, we only have one new product coming out this quarter, you're late and you're going to have to rush some product to market to make sure that you're staying fresh and relevant. Love that. Guys, quick 60 second break.

29:32I am so excited to announce our first partnership. It is the perfect fit for me and what I believe in. And more importantly, you, the audience. I have personally spent tens of millions of dollars on meta ads. At one point, it made up 95 % of my entire marketing budget. That kind of platform dependency is a real risk. One algorithm shift and your whole entire business can stall. This is why I partnered with The Universal Ads, the CTV ad platform powered by the biggest names in TV built for any size business. In under five minutes, you can advertise across the best shows on NBC, Paramount, Roku, and more.

30:04You can reach up to 90 % of the households in the US at social media CPMs, and the platform gives you full control. You can target by viewership, behavior, income, geography, custom audiences, and more, just like you guys are used to seeing on social. I'm giving out$500 in ad credits with my referral code to the first 50 people who fill out the form below. First come, first serve, it's going to go fast. And if you're spending over$300K a month on paid, I have something special for you. Everything's in the description below. Go diversify now and appreciate the support. What do you think is the most important element in building a great product?

30:41Understanding your consumer. Understanding your community. so again when I go back to that kind of people paradigm of who do I want on my team functional expertise and culture fit usually there's that really great mix between those two of helping figure out what is next so we're a company who's going to invest in consumer data and so depending on your industry and your category usually there's going to be services that are going to sell you consumer data that are saying hey here's the whole competitive set Here's all the channels marketing. Here's what's selling in market based on scans or a point of sale data from direct consumer.

31:21Let's get very direct there because we've talked about that in the past and Roan invests a lot of money in that as well too. Where do you get that from? Where do you get this data from? Is this your buying? Is this from credit card companies? Well, look, the one that we invest in and the vast majority of companies like us do is called Serkana. Serkana. Nope. Expensive? Yeah. Sorry, guys. I can't help you there. Maybe there's a light version coming out. And that just gives you the whole entire rubric of what they consume, where they're shopping, the social media, they're on everything. Any question that you can think of about what's sold in my category, myself, or competitive set last week, last month, last year, they're going to be able to tell you that.

32:04Again, two things. Number one, that data set is going to be rear view mirror. That just tells you what's happened. So if you're looking at a, again, like a three to five year product life cycle. So say there's a hundred different products in in market all at the same time. I own 10 of them. There's 90 others out there that are in the competitive set. What are they doing? I want to know. So what price points are they at? What channels are they selling in? What are the features? Is that granular? 100%. So look, this is a great example. This is what we're going to call a true wireless product. So it's your earbuds.

32:41And this is going to be a standard Bluetooth headphone. Okay. So in general, these are the headphone category, right? But two different wear styles. So when I'm looking in the rear view mirror for the last 12 months, I want to understand if this is, say, 70 % of the market people are buying earbuds and 30 % of the market people are buying headphones but over the course of a year if this shifts into 40 headphones and 60 this is the one that's growing if your market is staying flat so that's going to tell me and my entire team hey we should probably be investing more in development of headsets versus earbuds because the market is swinging that direction i need a light version of zircona so you're basically saying too it even goes out to a distribution channel perspective you could say it's 70 earbuds, 30 headphones.

33:37But then if you say 80 % of the volume is in X type of retailer, then you might be selling that type of product into that retailer. 100%. Okay. Now completely forget everything you just heard and then think about the future. So what happened yesterday doesn't determine what's happening tomorrow, right? So that's where culture comes in. If we know our community and our consumer really, really well, you know, we were born on a chairlift. That's the story of Skullcandy. So a snowboarder started this company and had their aha moment when they were snowboarding. So that's where the community was built for Skullcandy over 20 years ago.

34:15It started with board sports athletes and people who are members of that lifestyle, right? And it's very true today. We're just a little bit broader and kind of the 2025 version of ourselves. So if we are really entrenched in the community with our consumer, we're helping build trends and knowing what's happening. So that's where a product like this comes from. So you think when you're thinking about earbuds and everybody has those little tiny pebble cases and they all look exactly the same and you drop them in your bag or in your pocket and you never think about them again. Well, our consumer loves fashion.

34:49They love showing off, they love accessories. So we said, Hey, why don't we put a case that you can clip onto a key chain, a belt loop, a strap of a bag, and it slides open to reveal the buds. And it's really easy to take them out, put them back in. And then this comes in a bunch of colors. It looks cool. It's fun. And that's something that nobody asked for. And it's not showing you in data that's historical, but it's something that we need to innovate with because we know our consumer and our community really well. So the balance between the past metrics and then the feel from the culture and the community.

35:24All things lead to this customer persona. That's how you're going to build a product. I'd love to know what are the frameworks or principles to kind of clearly define that customer persona? How do you look at your customer? Again, always going to come down to two things. I love putting things into buckets and understanding the numbers behind them, but you've got demographics, psychographics. So demographics are going to be the boring stuff. Where do they live? How old are they? What does household income look like? Historically, what do they buy? What types of products? What price points? What features do they want?

35:55All those types of things. And then psychographics, what makes them them? Is this consumption? Not necessarily consumption, but things like, you know, what type of fashion do you like? What type of music do you listen to? What does your friend group look like? What colors, what features of product? What are the things that kind of make you you? And so you've got objectives and subjectives. So if we say, wow, a really deep dive into our community and they're incredibly wealthy and they want really exclusive products, well, your market ends up being this big. Man, our community is really conservative and they don't like to change a lot.

36:39Well, you might have a very small number of colorways that you offer. while our community is really fashion conscious and they always want new stuff, new music, new clothes, new color, new trends. Well, you might have a bunch of different wild wear styles or fashion elements to your product. And this is, like you said, subjective and objective. It's taking the data from Sarkona, but then also just listening to the market, talking to your customers. Obviously, your employees probably are deep into this brand as well. So it's both. Yep, absolutely. Makes sense. I'd love to know just kind of to further go through that exercise, like who is Skullcandy's like core persona, just kind of walking through that exercise.

37:19So talked about the board sports consumer, right? So that is at the core for us. I can send you some fun pictures that we have, but we actually draw this fun pie. So we have three different consumer groups. One is active youth and it's by the name, it's people that are out there doing a lot of activities and they traditionally are young or young at heart. We have content creators. So these are people that like yourself, somebody who's going to be in front of the camera and doing the act of creation to either inspire or enable a fan base to learn something, do something, even if it's just get a laugh.

38:00And then a third bucket is gamers. So gamers are going to be people that are hardcore in the gaming dojo with a$10 ,000 setup and playing a whole lot all the way out to somebody who's on the mobile phone when they've got a little bit of a downtime. So those are three consumers that we look at. And that kind of is our entire pie, right? Our total addressable market that we want to win. And then if you think about that circle, that's the whole pie cut up into three slices. There's three circles in that. core participant fan. So the core market, if you think about the active use consumer, and then you go closest to the bullseye, that's that core market.

38:46That's our board sports consumer. So you think - So this is capital allocation, basically capital attention allocation. 100%. So core is the middle and the most important. Exactly. And that is our skateboarder, surfer, snowboarder. They tend to be in that 12 to 25 year olds range. They tend to be a little more city centric and urban and suburban. They tend to gravitate towards specific likes in fashion, music, art, all those types of things. And then as you go out into, you know, you've got the core there, you've got participants, you've got fans. As you go out, we're spending more conversion dollars and less brand dollars, but the markets get bigger.

39:31as you go out they're also more inspired by the people who are in so if i um you know take me for example i'm so a little bit older not doing those activities as much as i uh normally do or as much as i did when i was a whole lot younger but i'm inspired by the people that do so i look at the athletes that skull candy sponsors and partners with and even though i'm old and lame i look at them and get super inspired and see the tricks they're doing, the fashion that they're wearing, the music that they're listening to. I'm like, oh, I haven't heard of that band. I want to listen to them. So that's where Skullcandy doesn't need to advertise to me.

40:14They need to support that culture because I'm inspired by that culture. So if I go, sorry to finish, but if I go do a search or start looking at content on TikTok based on what those people are doing, Skullcandy then just needs to convert me and chase me around the internet until I go click a button and buy the product. So I think to frame this really well for people listening, you talked about core participant and fan, and it kind of goes down a ladder from influencing, like you're saying from a core perspective, maybe you market through the athlete and then the participant would be the person that maybe plays that sport from an intramural perspective.

40:52And then from a fan, it's just the person that watches all of that. Yep. Here's something I always love to talk about. And this is, this is just one of my personal theories, not something that I really institute in, in the company or push too hard, but break the entire world of 8 billion people up into two buckets, creators and consumers. Very, very small amount of people are going to create and inspire and enable and a huge amount of people are going to consume what those creators create. When you think about creators, it's going to be the athletes, the musicians, the actors, the entrepreneurs, the designers, all of those types of people that are taking the risk to go put something out in the world for all the consumers to consume.

41:37And simple economics, supply and demand, very small amount of creators who do a really good job and a huge amount of consumers, the creators are the ones who get to make a ton of money if they find the product market fit for the consumers to consume what the creators are creating. That's a good segue into just marketing and deciding how and why you choose these people to kind of drive your message. So let's just talk about just overall marketing strategy, just both from like a vision and a budget perspective. What's just like your overall marketing mix? How do you look at marketing?

42:13we could we could do five hours just on this right uh okay so industry category competitive set we're a challenger brand we're a pretty decent sized business but we're this big compared to we compete with apple and samsung two of the biggest companies in the world with unlimited resource of time money and people right but when you think of the the biggest brands in the world they're vanilla ice cream, right? They've got to appeal to the absolute masses and be as much as possible of everything to everyone. Now, you can never be everything to everyone because there's so many different types of people out there, right?

42:56As a challenger brand, we need to be very, very specific and committed again, constant and consistent to our consumer. And if we do a really, really great job with the specific consumers that we want to go attract, we're going to be able to win a very dedicated and loyal small group of the market. So marketing, how do I think about that? First and foremost, it is position. How can we differentiate ourselves from everybody else in the competitive set? So that's going to be things like product price promotion. How is our product different from the big guys out there. The features, the benefits, the style, the industrial design, and then promotion and price.

43:43How are we going to market it? When we sign an athlete like Tony Hawk and we do some really fun and funny content with him and we're sharing that, other athletes and influencers we work with are sharing that, Tony's sharing that, we're advertising against that, we're building displays with that content in there that are at point of purchase and physical retail, obviously merchandising and promotion on our own site. All of those things make us look and are positioned very, very different than an Apple or a Samsung. So the ultimate goal there is just differentiation. Differentiation. But there's always a fine line here of we're going to do our best job to position ourselves how we want to be perceived in the market, but the consumer is always going to perceive us as what they think we are.

44:36So if we can do an absolutely incredible job, then positioning and perception are going to be very similar. But here's a real world example. Five to seven years ago, and I'll own this, we didn't have the greatest product quality. and you know we're talking off camera a bit these are incredibly complex products even though they look nice and simple there's going to be 200 different components in there they've all got to work well together they've got to connect to a source device usually your phone and this absolute magic happens to connect to spotify from a mobile phone or a tablet something like that and put content in there that sounds the way you want it to in your head and work every single time and have long battery life, all that fun stuff.

45:24Okay, but if we want to talk to a specific consumer and we want to be the young, fun, athletic consumer brand that is based and rooted in board sports and has a little bit of that edge to it, you know, you know us for color, you know us for accessibility and being welcoming. Okay, we're going to spend all of this resource positioning ourselves like that. But because we had a little bit of a slip up with product quality five to seven years ago, the average consumer perception today could be, oh, Skullcandy is the cheap brand. So now we've got to go back and do so much more work to figure out how to get the masses to have a different perception of us of our quality is actually above industry index of return rates.

46:16So we have great product quality, but we want people to think about us as young and fun and exciting and fashionable while also being affordable. I want to lever up for someone that's in the early stage of starting a company. So ultimately it seems as though it's figure out that customer, anything and everything about that customer, and then do this kind of, it's almost like a mix of a SWOT analysis, brand positioning, and ultimately figure out price, product, and promotion, and just see how you sit and differentiate yourself from everybody else. I think something that's always important for entrepreneurs to be thinking about with startups is you've got product market fit, but what is the real total addressable market over the long term?

47:04So thinking about time and when time is linear and you say, okay, there's a hundred million consumers out there that we can go win that are in our absolute target. of that 100 million, realistically, there might be a couple hundred thousand that move as fast as you think the company needs to move. So if you're an apparel brand and you have a new logo, new design, new positioning, and some new fashion and innovation, 100 ,000 people might be totally engaged with you and see the new product you come out with within the first 30 days that you come out with it and with all the channels that you're working on.

47:47But in reality, that a hundred million people you think you're going to attract might take you five to 10 years for all of those people to see you. So again, being constant and consistent in your messaging, by the time a hundred million people see who you are, you might've changed your brand positioning three or four times over the course of five to 10 years, right? Why consistency is so important there too, in the brand messaging. 100%. Let's go deeper into the promotion part of that price product promotion. How are you balancing kind of brand marketing versus performance marketing, like holistically from a budget perspective?

48:22We spend significantly more on performance marketing than we do brand marketing. Again, I'm not going to go deep into the details there, but brand is incredibly important for us. So we do have a big chunk of resource that we're always going to invest in brand marketing. For D2C marketers out there, you're thinking top of funnel and how do we get people to discover us? For us, it's things like how are we supporting and pushing culture and community forward? So we sponsor athletes, we sponsor influencers, we produce our own events. Just this past weekend, we partnered with the X Games in Salt Lake City.

49:02you'll find us at music festivals we don't just show up and put logos on stuff you know a good example is there's a three-day festival called kilby block party in salt lake city so we're based in park city we do a lot of local events and local support so kilby block party three-day music festival you know new contemporary music and we produce an event called the crusher cup there where we show up with our athletes and we do a skate competition over the course of three days, which in between music sets, you know, we'll have massive crowds there that are seeing professional athletes that are skateboarders do their thing, um, under the umbrella of Skullcandy.

49:49And then when you go watch music, you know, you're going to see our advertisements on the Jumbotrons and things like that as well. And are you just, is it a completely separate budget from performance and brands? 100%. So we'll have brand that lives in marketing. We'll have performance that lives in direct consumer. That's good to know. And from a brand perspective, what type of KPIs are you looking at? Or is that just more X amount of dollars allocated? That's goodwill and that just helps accelerate the message. We very much have KPIs attached to those. They're more difficult to measure, but that's going to be things like our organic social growth, our organic social engagement, our media mentions through PR channels, and then the traffic to our skullcandy.com sites globally that come from places like organic social referral from media, our affiliate programs, things like that.

50:42So from a granular perspective, that's like looking in like GA4 and just literally looking at that itemized lines. 100%. That's Google Analytics 4, by the way, for people listening. Two things in particular. If organic traffic is growing, it is an indicator that our brand marketing is working. If our Google search traffic is growing, then our brand marketing is working. That's some great advice for people listening. Let's just talk about partnerships. We're going to get into the big partnership shortly. Zooming out, what's your overall framework for how and why you do a partnership with somebody?

51:15Again, it's got to be two things. we've got to have an organic fit with the partner and when we say organic fit we have a clearly defined system of values for the company so if we share values with the partner we're usually pretty aligned that this is going to be something that we want to do. And it's just like core values of the company. Exactly. If we're a company who really loves sprinting we probably don't want to be a partner with a company who likes to run marathons. So So number one is going to be kind of that culture and values fit. And then number two is audience. So we don't necessarily want to partner with companies where we have the exact same audience, because why do you want to talk to yourself?

52:02So if we can do a partnership with another brand or a company that exposes us to a new audience who we think we can win and have them come back as returning customers, then it's a huge win for us. Guys, that's very, very simple, practical advice. Aligns brand and culture DNA. Go find us new people and bring them in the funnel. Really that simple, right? 100 % then look you're going to have lots of subjective stuff outside of that so doesn't make sense you know do do we want to partner with a company that we get a one plus one equals three formula can we go build a product together that's really going to add value to our consumers you know one of the one of the people that we work with I'm a huge fan of Bima Williams so if you don't follow him highly suggest it but he's gonna take you into the collab lab and talk about every one of the most important sneaker collabs that comes out on a regular basis and he always loves to talk to the audience of do you think this is a hit or a miss and there's so many of them just after consistently watching his content that like oh man this is so obvious like yes i get it these companies should work together but the product they made it's not super exciting.

53:20It's not adding value to me as something that I want to wear. But sometimes two companies come together and make something that's just like, wow, that's mind blowingly amazing. Like that's a collab that I need to own. All right. So we're just going to go to the elephant in the room here. How and why and what happened with Skullcandy partnering with Bose? What was the thought process behind that? Because when I saw that, I was very, very confused to say the least. And then the more and more I thought through it and now kind of going with what you're saying right now, it makes a lot of sense. So tell me what the thought process was.

53:52Here we go. So thought process is first and foremost, why? And then this one is a whole lot more complicated than it looks just on a surface level, right? So why would we want to do this when we both make the same product and sell it in the same channels and have some overlap in consumers. So starting to peel back the layers of the onion, what is our reason for being as a company? What are our values? What are theirs? What are their values? When we started, you know, discovering all these things and just becoming more friendly as brands and, you know, competitors here is understanding, hey, you know, we really think we're complementary audiences.

54:39So we started as a lifestyle brand. Again, going back to the story of our founder, Rick Alden came up with a product when he was literally riding a chairlift. We say this story all the time, it's born on a chairlift. So let me go down the rabbit hole really quick. But Rick at the time owned an event production company. He was at the Canyons Resort in Park City, which is three miles from where our headquarters is today. He was producing an event. He was on a chairlift on a mountain of snowboard event. It's 2001. He has a mobile phone and an MP3 player in his pocket before your traditional mobile device that you have today.

55:17And he had a wired pair of earbuds and he's listening to music and then gets a phone call, has his aha moment. Oh, I wish I could just go switch back and forth from my phone to my music. So the very first product that Skullcandy created, Rick's idea was called the Skullcandy Link. So it was a pair of wired buds that had a split jack and a toggle switch. So you could plug it into two different devices and with just a swipe of a thumb on this big toggle switch, phone, MP3 player, phone, MP3 player. A product built with the idea from a snowboarder when he was snowboarding and able to use it, adding value to him when he's wearing gloves on a chairlift.

55:59And who did he go to deliver the product to? snowboarders and the distribution channels specialty retail started in the u.s which was skate shops surf shops snow shops so now we're talking about community so what do these people want other than just the practicality of that product they wanted fashion um 100 of the headphone market at that time black boring basic industrial design so skull candy then comes with the lifestyle of these people, the music they're listening to, the fashion they're wearing. 100%. This is now something meant to be worn, not just used. So it's an accessory. It's a part of an outfit.

56:39So that comes really cool industrial design and color, CMF, color material finishes, all those things. So Skullcandy on a side one, lifestyle brand meant for the consumer who wants fashion connection to music value adding to their lives when they're participating in the lifestyles they love of board sports where it started i'd also say affordable price too 100 and that's where you go into those demos so you know uh 2003 when the company started you think about average board sport consumer young don't have their own income streams usually relying on a family or the part-time job to pay for things, you're not talking about a$400 set of Bose headphones.

57:27So on the other side, Bose started 60 years ago by Dr. Amir Bose, an electrical engineer from MIT, who is a passionate music lover. And he literally built speakers to have the most incredible sound to listen to the most incredible music. Now is definitely not to say we don't care about those other things. but when you go into the office and see the culture of skull candy very very different than the culture of bows who is a very product and engineering driven company for a passionate music fan who wants the best most innovative uh uh products and features and it comes at a very high price point right so this is straight out of the deck when bg pitched all right so now let's talk about, I mentioned it before, we had this, we had a little bit of product misstep five to seven years ago.

58:27There's a perception issue in the market. So we're thinking, you know what, if we have the partnership with Bose, there is that perception in the market that people trust them for quality of product, quality of sound. So if we can take that magic of Bose, put it inside the wrapper of really fun, cool product of Skullcandy. And back to your point, give consumers, our consumers and the consumers, you know, in that bullseye around the edges, that lifestyle brand and the fun and the fashion that comes along with it. But the quality of the two to$300 product at a price point that's back in the Skullcandy's world of a hundred bucks, we think we've got a winner.

59:16Guys, for people that are listening, you must watch the episode with Caleb Ralston. This is a masterclass in association here. You guys are basically saying that you had a problem on the product side and then you basically utilize their product to fix that straight up. Look, I would say that's not the whole reason that we went to do this, but that was definitely something that was a help, not a hindrance. And then like, I never want to speak on Boz's behalf, but I do have a high level of confidence that they would say they were very excited about partnering with us because we're exposing the Bose brand to a new audience, right?

59:51So we traditionally see with the data, going back to that data source of looking in the rearview mirror, the people that purchase our product are different than the people that purchase Bose product. The price points of which people buy Bose product versus Skullcandy product are different. the channels in which people buy the majority of Bose product versus the majority of Skullcandy product are different. So we see a pretty great compliment to each other of different reasons for being in the marketplace and different consumers who are buying the product, different wants and needs and thought, Hey, if we came together, we definitely think there's white space in the market and we can have a one plus one equals three scenario.

1:00:37And you think it's just such a big story that from a distribution perspective, both on like the earned media side and in stores, it's just going to be net new customers for both of you. Yes. So this is another interesting part about our category and kind of being a, I've never worked in consumer electronics or headphones before in my career. So having to come in and learn the industry and the category and what makes it work, I will say a ton of product is sold online more than in other categories that I've seen. Now I'm looking at, hey, what are the sources of traffic that are driving all these online sales?

1:01:11And what are the marketplaces that people are buying product online? How do we infiltrate the core sources there of all of that traffic and go drive them to make that purchase where the consumer is clearly showing us they want to purchase? There's a gate behind that because a lot of them are the YouTubers, the affiliates, the media sources that only cover a small amount of products. And you have to do something really special to earn that airtime. You can't just go buy it. And some of them you can go buy it, but the price tag is a little intimidating. So we also took a look at this and said, okay, if we can make a...

1:01:54a design that is as interesting as the story. we think people are going to have their interest piqued by the story and then get really excited about the design and then have their hair blown back by the price point so we actually went and launched this product at a big in-person media event in manhattan a few months ago that was another exciting thing for kind of that that media and influencer industry is there haven't been a lot of big events like that in quite a while so when you think about the resource allocation our strategic initiatives, our OKRs, this is one of those things that boils all the way down to the bottom of decision making.

1:02:38We're going to allocate quite a bit of resource to an in-person launch event and really phenomenal creative to go share at that event. So two big resource buckets that we went to say, hey, this product and the story warrants that amount of resource. And all the data is telling us it works. Our intuition of knowing our community and the culture will tell us it works. So we're going to go take this risk. And for context for people listening, how long is this kind of the life cycle here from when you sent that first email to when it's live? How long did that take? The first time we were in a room together was December of 2023.

1:03:23The product was launched where you could go hit buy and have the product delivered to you mid-April of 25. Wow. I'm very curious. How did that occur and happen? Did you email them? What happened there? You got to tell us that. It's not that exciting. We know each other. So this has been a strategic initiative by Bose with their sound by Bose platform to be able to deliver this incredible technology they have in different ways with different partners. So again, because we know each other, this was a, this was an easy phone call of, Hey, we're cooking up something pretty cool over here. Do you guys want to come take a look?

1:04:06I think a big thing to take out of this too, for the people listening, there's no better marketing, I believe than just a great product. 100 % agree. And I think this product did the marketing for you. Absolutely. I could never agree more. I think most successful entrepreneurs, especially direct-to-consumer business owners, will say the same thing. When you have something that is new and exciting, you're going to win early adopters. When it delivers on its promise, then you're going to win reviews. You're going to win word of mouth. All of those things take your customer acquisition costs down and gives you the ability to reach so many more new consumers a whole lot faster than you think and cheaper.

1:04:48I would take that a step further and say adding on top with an undeniable offer, which you guys have done with a great product at$99, right? Exactly. Amazing. Let's dive a little bit more back into marketing. I'd love to know, you've been in the game a while. What's a common marketing belief or tactic that you strongly disagree with? Oh, wow. Um... Uh, that's a great question. And I'm going to, uh, I'm going to give you a terrible answer for it. It depends on the time, the place, the category. Look, the majority of my background has been in board sports world. Um, so, um, a, a big part of what made board sports brands successful in the early two thousands was your relationship with athletes.

1:05:37Quicksilver became a billion dollar business because they were attached to Kelly Slater. And for those of you that don't know surfing, Kelly Slater is Michael Jordan of surfing. The GOAT, the 11 time world champ, everybody who paid attention to surfing wanted to do whatever he wanted to do, wear whatever he wanted to wear, do the, you know, create trends based on what he was starting. And that's really expensive for a growing business, emerging categories, you know, having a media landscape, a competition landscape, all those types of things. So, you know, at one point, whoever had the biggest name athletes and the broadest athlete roster that had those athletes aligning with the position of brand, they were winning.

1:06:19You know, a big company I did that at was DC Shoes, Danny Way, biggest legend in skateboarding, Rob Dyrdek, the absolute media mogul and the biggest entertainer, Colin McKay, one of the most technical core skaters and invert in the world, Josh Kalis, one of the best street skaters in the history of the world. All of those people made DC. But when all these different market forces are creating headwinds instead of tailwinds, now you may end up with an incredibly large brand marketing budget that is contracted and you're getting a lower than expected return on that investment. So now over time, you look at today, it is very, very rare that you're going to see a brand in the board sports community build an athlete roster like that.

1:07:11And honestly, the only two that I can even think of today aren't even providing apparel or equipment for that lifestyle. It's Red Bull and Monster Energy Drinks. Which have unlimited budget. they got a lot a lot of budget so today um you know if you asked me that question i would say hey if i go start a board sports brand today i am not dedicating the majority of the resource to an athlete budget 100 yes i will figure out how to do brand marketing with athletes because i don't believe you can be authentic without doing that and supporting and pushing forward a community and culture and working with those athletes to help make the right decisions on behalf of a brand if you want to be authentic in the space.

1:07:57But that's one example. So spending money in the right ways. So what is your thesis then on, let's just call it influencer and partnership marketing today? So are you guys just sending out a lot of free product and then just seeing who authentically engages with the brand? Yep. I'll ramble for a while because I had this conversation quite a bit over the last few months. So for those of you out there that are skateboarders, surfer, snowboarders, maybe in a certain age demo, and remember what life was like in the 2005 to 2015, 100 % of the global youth market was being fed content from MTV in Hollywood.

1:08:37And MTV was the place you went to go get inspired by whatever was happening in music, fashion, in sport, no matter where you were in the world. And they were doing a great job at it, but they had the pipeline and then the content that they were delivering through that pipeline was Ryan Sheckler, Bam Margera, Rob Dyrdek. Wow. I remember those days. Yeah. And they were great days for me in that business. But today who owns the pipeline and what is the content that's being put through that pipeline? MTV does not exist the same way today that it used to. The pipeline is owned by the big tech companies.

1:09:15So the majority of content consumed by that same demo, the use market all around the world is coming from meta and really Instagram and TikTok, and then a couple other partners around that. And the content going through those pipelines is infinite. So instead of being delivered Rob Dyrdek and Ben Marger and Ryan Sheckler, consumers are being delivered billions of different options. And then on top of that, if somebody actually is going to go into a movie theater or sit in front of a TV screen at home or most likely YouTube, again, infinite options. So the competition is so much more intense. So what does that mean for me and tying this back into how do I think about marketing?

1:10:04One, you've got to be constant and consistent and deliver on the vision and your thesis. Again, for us, I look at those consumers, you know, three buckets and then those three rings and then having authentic people to those consumers inside our business to help us make the decisions. What's important for this community, for this culture. Okay. We know this is what we care about. So we're going to invest in these types of things. And some of those are athlete relationships, creating specific types of content, producing our own specific events. But then it ends up being a lot of test and chase. So we know, hey, of the infinite options out there, here are 50 content creators that fit in our or have an audience that fits in our target demo and also aligns with our values.

1:10:56Okay. We're going to try things with them instead of investing in commercials on a show on MTV. they are MTV today. So we're investing in them. And then we got to be committed to a long enough time. You know, for the math nerds out there, I always talk about statistical significance. If we have an audience of a hundred people, we need to be able to reach a minimum of five of them to have statistical significance for what the entire hundred is going to do. So if we reach them with the right message enough times to get statistical significance, then we're going to be able to understand, okay, we spent$10 today to reach that number.

1:11:39Now we know what's going to happen if we go spend a million. So we want to test and then chase. What I think is really unique and advantageous for entrepreneurs today is if you look at that customer persona ring, the core, the participant, and the fan, back as early as probably 10 years ago, you would get disproportionate returns and only get real brand awareness through the core. Now you can find people as low as the bucket. I'm not trying to say that you're lower than the core and the participant, but you could go to a fan that could have a super engaged audience of 2 ,500 people and get a significantly better deal.

1:12:15So that offers unlimited options for anybody because they can just basically send it to anybody. Yep, exactly. So a good example, if we're talking about total addressable market, I think there's 1.5 billion people in the world that could and should buy Skullcandy products. When I think about our three slices of the pie there and that board sports one that's closest to the center, 12 million people. So if we do a really good job of winning those 12 million people, we don't have to spend a whole lot of money to win the 1.488 billion others because they're so inspired by what's happening at the center of that.

1:12:55center that pie. All right. I want to put a tie on marketing. You have so much good frameworks and exercises, the product price and promotion, the core participant and the fan. From a marketing perspective, is there any other exercises or frameworks that you think are necessary for anybody at any stage of their brand to just refocus down on clarity with the customer? I think always something to think about what is in your control and what's out of your control. So everything that we talked about essentially is in your control. What's out of your control? Things like competition. One of the things I would say early in my career and a lot of entrepreneurs don't spend enough time understanding the entire market that they're competing in and what their competition is doing.

1:13:46So if I'm selling this product, which is true wireless earbuds, and it's in what we look at as a$100 to$150 price bucket, what are all the products that compete in there? Who's making them? What are they selling? What are the features and benefits? When do they go on sale? How much are they discounted for? So with price, look at two things. SRP, suggested retail price. ASP, average selling price. So if a product has$199 SRP, that's what they go to market at. They might have$150 ASP, which is going to mean 50 % of the time that product is discounted all the way to$99. So that could be a strategy that a no-name brand wins on because they're just flexing price so far down.

1:14:39So we've got to know that. If we have competition that's stealing share from us because they're just doing a pricing strategy like that, we have to understand we have to play either defensive pricing strategy or an offensive pricing strategy to go beat them at their own game to take share from them. I mean, that also just blatantly tells you that was probably just priced wrong as well, too. If you just see deep discount there. It could be, but there's a million different forces, right? So we use contract manufacturers. So we will design a product. We'll work with a factory to go spin up a line, make that product.

1:15:15We will buy it from them. We'll go sell it to somebody else. Some of the competition is the factory and the factory is making their own products. So they have more margin to play with and do that pricing game, right? But yeah, what's everybody else doing? So it's really just an obsessive focus on just price, promotion, and product in any and all the distribution channels, and then just position yourself in any of the white space. Yep. Look, this is also very important for everybody to pay attention to. Category of business, is your category growing or shrinking? so when you think of new and innovative categories that maybe didn't even exist so the rise of ai today so what three years ago you or i didn't talk about ai and if we were talking about it we probably didn't know what it was today there's a new ai company popping up every single day getting funded doing something new and interesting that category is growing like crazy there could be other categories out there, I don't know, let's say corded telephones in homes, they essentially don't exist anymore.

1:16:25So that category is completely shrinking almost to the point of zero. Our category is growing very, very slowly. So it's a mature category, but it has a ton of staying power. So if our category is the entire universe of headphones all around the world, say we sold $100 as a category last year. And if we're forecasting next year, we're only going to see 5 % growth. So the category is going to turn into$105, the entire category. If we want to grow 20%, but the category is only growing 5%, that means we're going to have to steal share from somebody. So again, what is happening with all of our competitive set and trying to be laser focused on we're going to win share from this company by doing something better than they're doing.

1:17:17For people listening, go to chat GBT. It's called CAGR, C-A-G-R, the Compat Annual Growth Rate. Look, I would say this. If you are entering a category and you understand TAM, Total Addressable Market, okay, so there's, again, there's$100 in this category of product that you're going to make. And tailwinds, the category is growing just by showing up. You might be able to grow. Headwinds, category is shrinking. It's going to be significantly harder to go build and grow that business. If you can just show up today with a couple of smart people and build an AI business, it's going to be pretty easy for you.

1:17:59If you want to go into the market today and sell corded telephones for your home, good luck. I just, I've talked about it on one of the past episodes, you can't out muscle not only a small TAM, but a shrinking TAM. And I would way rather be the 11th best apparel t-shirt company versus the number one random tertiary category that the TAM is shrinking. It's got to go where the puck is going. All right. I want to fire away a couple more questions in product and sales distribution. Then we're going to get into the lightning round. From a product perspective, I want to get into a little bit of the non-sexy stuff, especially on the product and sales and distribution.

1:18:36What do you think is the biggest mistake leaders make in the supply chain? Biggest mistake leaders make in the supply chain. That's a question that not many people ask. Not a lot of people ask that one and it's really, really tough. So I think about the functional work, the operating rhythm of our chief operating officer. He's phenomenal at his job. And one of the things in, so, you know, us and time and place with supply chain in the US and consumer goods and majority of our supply chain starts in Southeast Asia. We've got to know everything all the time. Like plain and simple, the market is changing so fast with our administration.

1:19:20There's a lot of uncertainty and we don't know a tariff rate for our category of what it will consistently be over the next few years. We don't know when we're going to get that tariff rate locked. So we've got to take some guesses on how much we're going to invest in inventory. We've got to take some guesses on where the best country of origin is to go build that inventory. We've got to take a little bit of risk on how we're going to transport that inventory from its original destination to the U.S. specifically. This is our biggest market. we've got to take a little bit of risk if we're going to put that in a container on a cargo ship if we're going to put it on a fast boat if we're going to put it on a plane because there may be different rates at the customs and border control of when that product enters the u.s so all of those things are incredibly tough but then again very complex products there's going to be engineering that's done that's going they're going to be manufacturing lines that are built there's going to be products or components that are made in-house there's going to be subcomponents that are purchased from other suppliers.

1:20:31Those are all going to come from different points of origin. There could be geopolitical conflicts between countries that are getting subcomponents. And then where the final assembly point is, literally knowing everything all the time. Good luck. You said something interesting there. Another exercise, and I've mentioned it before too, is just a simple SWOT analysis. You talked about the threats there, like going through that and seeing everything that's coming around the corner, so important. A couple more questions on product and I want to move on. What was the biggest learning lesson you had during either A, the COVID disaster, or B, the tariff situation?

1:21:06Okay. Yeah, great question and two very different things. So I think if you look at both of them in the macro sense, there is always opportunity and uncertainty. So when you've got a big headwind, like either one of those things that happens, deep breath, take a step back, and try and understand where opportunity is going to lie. So there could be an opportunity to win a new distribution channel. There could be an opportunity for a new marketing story to win new consumers who are very concerned with an issue, social, political, or other. There could be a new consumer you can win because what you do delivers something that they need tomorrow that they didn't know they needed today.

1:21:53There could be something to do with price if people are very concerned with price and you find that you've got a little extra margin points that you can lose today to go win market share and then keep those consumers coming back when price is no longer an issue. When on LTV? 100%. So I think that's the big learning lesson there is take a step back, look at the holistic market, understand where there could be opportunities, and then get creative. Good quality of a CEO is being calm and collected. That's a great answer. That's exactly how I would look at that as well. So obviously the product can't succeed without the right kind of marketing and sales.

1:22:35What is your thesis on how product marketing and sales should work together when you're bringing something to market? I love that one. Again, holistic, holistic, holistic. So think about that operating rhythm of a business. We have somebody who manages our go-to-market process. Go-to-market is cross-functional. So when we're at the very beginning of concept stage of what products do we want to go start developing over the long term, we want our product teams, our sales teams, our marketing teams, and ops and finance all in that room, understanding what should we make? why should we make it and then having visibility of what are we going to make so by the time that product comes to market we've got all those reps in being constant and consistent that we know the dates we know the stories we know how we're going to go market it where we're going to sell it and what promise we can go deliver on and i'm sure we've both had instances in the past where we've got an incredible market ready to go launch that the product team is very excited about and then the marketing team says, what?

1:23:41I had no idea you were even making that. That's a pretty tough situation. And this all, I think just ultimately as the CEO, it just needs to be backed against a calendar that can hit the cultural significance of anything that anybody in your core persona cares about. That is the one big thing that I've seen over the years is just sticking to the calendar. That's everything. Operating rhythm. Besides top line revenue, what sales metrics that you personally obsess over?

1:24:14I think it's the merch mix by channel. What products do we have in what places? How are we serving specific consumers with the right products? So I want to make sure specifically, again, going back to the method 360 ANC here, I want to know exactly where this is being sold, the price points it's being sold at and the consumers it's reaching. So a great example here is we know that a part of the product benefits here is incredible active noise canceling. When we can marry incredible active noise canceling with a very accessible price point, one of the channels I want to make sure this product is sold in and not just make sure it's sold there, but make sure it's being promoted incredibly well is the travel channel.

1:24:59So in the US, the travel channel is really airport stores. Globally, it's a lot of train hubs, bus stations, and airport stores. And oftentimes, you're going on a long trip, and you show up to the airport, or maybe you're rushed to get there, and oh my gosh, I forgot to pack my headphones. So we know that we can have a really attractive product with phenomenal performance of noise canceling at a really great price point because when that consumer shows up at the airport and they forgot their headphones, they might not want to go spend 500 bucks, but they are about to get on an airplane and they want really great audio quality and specifically noise canceling.

1:25:42That's white space for this product and a great opportunity for those retailers to be able to turn this in high volume. So not only does it need to be there, and we've already been there in a big way, but that was a big channel that our team needed to do a great sales job of not only getting the product sold in, but hey, on this date, in this peak travel season, in this geo, we want a display in the front of the store. We want advertisements on the digital billboards, and we want people to know and get trained as sales associates. If somebody has that use case and sense of urgency to buy something for an affordable price, point them at that product.

1:26:24That's product distribution fit. That might answer, you might have some more answers on this next one, is what's the secret to driving sell-through at retail? Different strokes for different folks. There really is nothing that moves the needle-like price. If your brand is great, if your product performs with a high level of quality and you are just slightly cheaper, you're going to win. And there's nothing that can dispute that fact. Outside of that, there are products and channels that fit. So like I just described with the consumer who forgot a pair of headphones and they're about to get on an airplane.

1:27:01If there's a consumer who walks into a sporting goods store, chances are that they're an active person or they're working out. And if they're looking for headphones to fit an active lifestyle, it should be the type of product that can perform when they are running or in the gym or whatever it is. So we're going to put those types of products in those types of stores. And then you've got anticipation and marketing with, again, with this product, we did about a 30 day tease of something big is coming, a lot of excitement behind this, something you'll never expect. And then big launch event, worked with a lot of media, worked with a lot of YouTubers and social media influencers and came out with a big bang, big ad budget, et cetera, et cetera.

1:27:48That drives a lot of anticipation for launch moment timing. I feel like you would know better than anybody just given your experience in the space. Anything else outside of getting end caps and POP in store, a co-op marketing? Is there anything else that you've seen work in a big way with a specific retailer? Absolutely. I think the first thing that comes to mind is seasonality. um so uh times of the retail calendar where a you know again if we're talking about wholesale and physical retail you've got uh like spring breaks and easter holidays you've got dads and grads you've got back to school of course you've got the big holiday shopping season but back to school and headphones is a big one a lot of students need headphones for studying or if it's a quiet time in class or the teacher wants them to consume a specific type of content.

1:28:39So there's going to be opportunities for retailers to say, hey, we need to deliver a certain offer to a consumer that's not going to be on the standard planogram, not going to be a product on a peg in the headphone section. This might be on a display in a high traffic area where we just put features in and out. So if we have the ability to deliver that retailer the right offer of, here's the type of product that you want to have available for this consumer at the right price, that can be really exciting for a big back to school sale. That's a huge opportunity to go win a big amount of sales with a national retailer that you're not necessarily planning for on your annual plan of we've got 12 products on the pegs at Best Buy.

1:29:29What would you say is the biggest mistake brands are making when they're expanding into retail? That's a great question. I think this is always too much focus on sell-in and not enough focus on sell-through. You've always got to sell the product twice. So if you have the great fortune of winning some shelf space at a big national retailer. And it's a huge opportunity for growth for the company, but that product sits on shelf and doesn't sell through. It's either getting discounted heavily or coming back to you. So you've got to put in those two efforts. Number one, do something special enough to get sold in to the retailer.

1:30:06And then number two, make sure you're selling through. And look, if you're a small brand, if you're an entrepreneur, are like always highly, highly suggest focus on making that brand and making the quality of your product. Just so absolutely incredible that the demand is driving the retailer to call you, not you to call them. So when a brand grows, um, you know, and even, even for small brands to, two most important things that are going to keep a business healthy are your cash and your inventory. So if you're a small brand, say you're a$10 million brand and you get a$5 million purchase disorder from a giant customer, that's going to throw you in a tailspin of how do you manage the business.

1:30:47So now you're going to go need access to more cash to go build the inventory. You're going to create a ton of inventory that's more than you've ever dealt with. And you've got to make sure that sells through or else that's going to put you in a world of hurt six, nine, 12 months from now. So make sure you're ready. Greatness leaves clues. It's about the sell and not the sell through. That has probably been said in three or four episodes already. Completely agree. What's your method for prioritizing these different sales channels? Closest to the consumer, that you want to be a part of their daily lives and their community, and then expanding from there.

1:31:25Skullcandy is a great example on a couple of the channels that I talked about. Number one, most important to us is winning that board sports consumer. So they shop direct to consumer and they shop at specialty retail. So that's most important for us to start. Outside of that, we're headphones. So if we want to be one of the world's best headphone brands, that second point of distribution is premium consumer electronics. Like a Best Buy? Yeah. In the US, the biggest retailers of consumer electronics like us are going to be Best Buy, Amazon, and Walmart. Believe it or not, with Walmart, people tend to think about a everyday low price leadership business, but you go into Walmart and they have a lot of really great premium product in this space.

1:32:11Outside of that, where other places that consumers need and want to buy headphones. And then that gets a little further away from our core. And that's where you get into places like the travel channel, you get into the mobility channel, a sprint and AT &T, places like that. Certainly get into the club stores where you're going to be Costco, Sam's Club, BJ's, places like that. Ultimately, you would just say of those three tiers, the core participant and fan, it's about serving just the core first at where the most volume is? 100%. With a brand like ours, and again, we're always going to think about ourselves and want to position ourselves as a lifestyle brand, first and foremost, ahead of a headphone company or a consumer electronics business.

1:32:53So where and when and how do the people want to buy who live the lifestyle that we're a part of and we want to help push forward. And it's all about authenticity. So then you've got the prioritization and exactly what you're talking about. We've got to go one, two, three closest to the pin and then further away. And again, that's parallels with that, you know, the consumer diagram we were talking about with the three rings of core participant fan. You're going to have the demographics and psychographics of all those different types of customers and their habits. Where do they shop? How do they shop?

1:33:30What price are they willing to pay? All right. I want to go a little bit into expanding globally. You've been a part of a bunch of huge brands. And I think for a lot of the listeners out there, they may be at an inflection point, they're doing five,$10 million in sales. And they're like, okay, we have two, three, five, 10 % of our web traffic is international. Do we go direct? Do we go with a distributor? Do we do a licensing deal? I would just love to know just ultimately your thought process and what you've seen in the past and what you're doing now on how should you approach international as a brand owner?

1:34:03So I think about this one very similar to going back, talking about employees at the company. So number one, we want the competence with people to go do their jobs really well. And number two, we want the cultural fit. So the thing about international expansion, number one, the competence, it's a math question. Are there enough people there to get you the return on the investment that fit in the court demo. And then it's the psychographics and the cultural fit. Okay. Is it a culture in that country or region that makes sense for our product and our positioning? Skullcandy example again, when you think about at our core, our heritage, our authenticity, that boards, boards, consumer, if we are starting there, it is very easy and can't deny American brand.

1:34:52A hundred percent of your marketing until it's not is based in the US, US positioning, US fashion, US athletes, all those types of things. And English as our first language. So where are consumers that are similar to American consumers and what is culture that is similar to American culture? And then let's go layer on how much is it going to go cost? What are the resources that we need to deploy to get into this market? All right, Canada. Number one, easy for us. A lot of the consumers, a lot of the cultural fit, and also it's relatively easy to move product in and out, move money in and out. Australia, similar.

1:35:33UK, similar. And then outside of that, we look at Western Europe, but Europe is very, very complicated. Languages, cultures, customs, and then how to run a business there. And from a resource perspective, like you might need to do all new marketing materials because they just speak differently. 100%. But most of Europe is at least going to at least they all speak English. And that's a gross generalization. But most of Western Europe, even if their native language isn't English, they grew up learning English. When you get into most Southeast Asian markets, much more difficult. And they're also not using a similar alphabet.

1:36:11So it's a lot more difficult translation. All right. Now, also, when you think about markets like Europe as a generalization, you know, you've got the European Union, you've got the Euro and you've got English, but so many different customs and cultures, it is incredibly complex and difficult. And then I always highly recommend think about opportunity costs, not cost. So if I'm going just to Canada, if I'm starting as a US brand, if I'm going just to Canada and my resource allocation, time, money, and people, all of it, again, just for easy math, use the number 100. If I'm spending 100 % of all of my resource allocation on the US market, and then we say, okay, we're ready for international expansion, we're going to Canada, and we're going to take 10 % of that resource and use it to go develop the Canadian market, hire people, lease an office, get a 3PL, do marketing activity, et cetera, et cetera.

1:37:12You're now taking 10 % of your resource pool and subtracting 10 % of your opportunity as cost to what you do in the US. So can you still go get 100 % return in the US and grow that business with only 90 % of the resource that you had yesterday because you just took 10 % of it to go build a market in Canada? You might actually lose net because you're going investing in a different market and it might be more challenging than you think. I feel like from a brand positioning perspective, it's very important to not get blinded by a lot of people just look at their online traffic and they say, hey, 10 % of our sales are in India, but they're not going through the thought rubric that you're going through.

1:37:54And then they just go. What about just starting small though, and just potentially just turning on the lights to ship internationally on your website? Do you think there's anything wrong with that? Absolutely not. 100 % go do it. If there are people all around the world that find you because the world is so globalized with social media, then 100 % go do it. Just know it's this much. And you're going to add a lot of complexity. So you think about, you know, if you've got a 3PL that can go do cross-border shipping for you, fantastic. But also know, hey, overnight, all of a sudden I'm shipping to 30 different countries.

1:38:28Customer service looks a whole lot different. The cost of doing returns looks a whole lot different. That's a great, great thing that a lot of people would overlook. All right. I think we're going to fire off into a ton of random lightning round questions. Are you ready? Fire away. What is the best piece of advice you've got from Dave Allen, the CEO of Igloo? Dave Allen has given me so much good advice. I don't know that I can boil it down to one thing, but I would say Dave has done a great job at helping me think holistically. He's the person who invested in me going from a brand person and an e-commerce business owner to a CEO.

1:39:11So I think the best piece of advice he's given me is understand the big picture. So getting good at finance, getting good at operations, getting good at identifying people that can go build a team and I can trust in to go run and do their jobs really well. So that's probably the, you know, it's broad in general, but definitely seeing the whole picture. Good follow-up there then is transitioning from CMO to CEO. What is the biggest difference you see? I joke about this all the time. I don't do anything anymore. You've known me for a long time. I'm a doer. I'm a blue-collar guy. I like to get my hands dirty.

1:39:52And now I'm a coach. So my job is to set the vision, build the team, make sure the team is resourced and then own the operating rhythm and make sure we're going forward and making progress. But I don't get in the weeds of running an e-commerce business. I don't get in the weeds of building a brand. So that's the biggest transition for me is going from really a player to a coach and understanding that my value is the business, not building the brand. Do you miss it? 100%. I can't get away from the weeds, man. I love it in the mud. I can't lie. First mover or fast follower and why? Depends on what you want the outcome to be.

1:40:37First mover, higher risk, more reward. Fast follower, lower risk, lower reward. I'm more of a fast follower guy nowadays, to be honest with you. Yeah, you're getting old. For context for everybody listening, we were actually introduced through Brian from Mellon a long time ago when I was in my mid-20s. I was very, very lucky that Brian and Corey and the team at Mellon invested in bringing you in to teach me a lot of these frameworks and principles, a lot of the same ones that you had, I don't even know, 10, 15 years ago, now stay true to now. So I'd love to just ask in relation to that, one word to describe the brand Mellon.

1:41:12One word to describe Mellon, passion. One word to describe Brian McDonald. Passion. One word to describe 26-year-old Mark. Hustler. I'll take it. What's harder, starting a brand or reviving a brand? Starting a brand. Why? All right, long answer incoming. If there was one point in a brand's history where they had success, there is usually always going to be some part of that success that lingers for a long, long time. And it's always easier to revive that than to be able to, or than to try and go make it from day one. The tactical application of what I'm talking about, brand awareness. So 100 times out of 100 in my first year at Skullcandy, when I told people what my job was, when somebody asked, the answer was, I remember Skullcandy.

1:42:11And that is worth an incredible amount of resource, time, money, and people to get that much awareness. With the market who is aware of it, They also tend to have some affinity towards it. So if we can do a great job of going back and turning the lights on and making it really exciting in today's day and age, we don't have to win new consumers. We just have to re-engage consumers because there's already trust built with that awareness of I know Skullcandy, I've bought Skullcandy product in the past. I felt a certain way when I owned the product. And while it's looking really exciting again, I'm willing to go spend my money on them again.

1:42:51Ultimately, it's less touch points just to get them down the funnel. It's not first time, takes 15 times to see it to sell, take two, three, four times to remind them. And look, math problems again for all the entrepreneurs out there. When you went from zero to a million dollars in sales, that's an absolutely incredible achievement to be able to win that many consumers to give you their money and trust in you. but a million dollars in sales is that big. So when you think about an entire total addressable market of what you could go win with whatever brand and whatever category you're building, the fact that the historical version of Skullcandy had so much awareness, 8 billion people on earth, hundreds of millions of them know what Skullcandy is today, that costs an incredible amount of money over the 20-year history of the business to go get that much awareness.

1:43:49We're not talking about zero to a million dollars at this point. We're talking about hundreds of millions of dollars worth of eyeballs and brains that know who Skullcandy is over that much time. That is a huge asset for me to have that awareness out there and just go re-engage the consumer base. Great answer. What is the biggest lesson you learned from working at Ruka? Yeah. Culture. Pat Tenori is one of the most creative, innovative people that I've ever met. He went zero to one. I talk about that a lot. And that's another great book that I love. I'm sure a lot of your audience knows it. Peter Thiel's zero to one, the act of inventing something didn't exist and now it exists.

1:44:34And how can you, how do you create it? And then how do you protect it? And ideally best business to build is going to be a monopoly, right? Because then you've got pricing power so uh petition is for losers that's zero to one so pat's an absolutely incredible i don't even want to say networker because it sounds too cut and dry in business he's just an original and an iconic person and he's one of those people that walk into a room and it just lights up and you want to be around him like there's this energy around him and he took that and built a brand that had never existed before in Ruka and being able to work, work for him and help bring some of his vision to life.

1:45:17That was something where I really understood, like, how do you build community and how do you push culture forward inside a community? You know, lessons I'll never forget from watching him do it. Biggest lesson you learned from working at DC Shoes? Ken Block, lead and don't follow. Huge impact on my life. Somebody always get emotional about thinking, may he rest in peace. you know he did it bigger and better than anybody else in the era of doing it big and better dc supported danny way to become the danny way we all know of dc supported rob dyrdek in a small way of becoming the rob dyrdek that he became dc defined skateboarding culture globally for a solid 10-year period and it was all about ken's thought process of if we're going to do something we're going to go do a big and leave our mark and everybody else is going to see us and they're going to try and do what we did.

1:46:16And you always remember the first. So you've been on the leadership team now with two PE backed companies. What's your best piece of advice for someone who has private equity funding? Understand what it means to, to be private equity owned. So for those of you out there, not familiar, I always like to explain this like, you know, a real estate developer and, And everybody's seen those cool house flipping shows on TV, right? So PE can be similar to that. They want to buy an asset, add value to an asset, and sell it at an increase in value. So to be able to do that with leverage, which is borrowing a lot of money, like if you're going to go buy a house, fix it up and flip it, and the house costs a million dollars, you don't pay a million dollars for the house.

1:47:01You put 20 % down and you're borrowing 80%, but you're paying the interest on that 80%. very similar, not the same, but very similar in private equity. A PE company is going to go buy an asset. They're going to leverage a lot of it. That asset being the company like Skullcandy is going to have to pay the interest against that debt. So cash and inventory, two most important things that we've got to pay attention to is operating the business. Part of that cash is now going to repay debt instead of going to invest in building the business. So it's another layer of complexity to go add value to the asset.

1:47:36So that's number one, understand how the game works. And then number two, the people factor, you're going to be managing a board and the PE company is always as the owner, they're always going to have managers on the board. So before getting into this, are you aligned with their vision? And then as again, the CEO, I'm not the founder, I'm not the entrepreneur. I have to understand what is my vision and how am I going to operate the company? What is their vision? How do they want me to operate the company? And the principle I always have with this is under promise over deliver. If I know with 100 % certainty that I can go deliver$100 in sales this month and$10 in profit, I'm not going to walk in the room and say we can deliver$200.

1:48:25Pretty basic stuff. When I go deliver$105, they're going to say, that's fantastic. We want you to do more of that. If I go say, we're going to deliver 200 and deliver 100, then that PE company is going to say, hey, we will now be meeting every day. I'm going to watch every single thing you do. I'm going to make sure you do it right. And that's no way to run a business. What about, what do you look for when you're hiring key leadership talent? Okay. Now we're going to go from those two things to three things. Number one, competence. I want them to be just on the absolute all-star team in the hall of fame for whatever function they're going to go lead.

1:49:08Culturally, I want them to be very good fit with the values that we have as a brand. And then number three, which is going to be a big factor with leaders, inspirational. So I want every single person on that team to look up to their functional leader, their ELT member, and think that's somebody that I want to go into battle for and with. If we have, again, going back to that leader of our e-commerce business, she's an absolutely incredible, competent leader. She's got a cultural fit with our business. And she's also somebody that people on her team can look up to and say, I want to be in that job someday.

1:49:46And I want to do it like she does. Specifically in a leadership role, do you believe in potential? 100%. I mean, somebody believed in me and my potential. Everybody's got that big job for the first time once, right? So I am very fortunate in that way. You asked about Dave Allen. He's the person who saw it in me. We've got another, you know, our board chair, Stephen Shire. So he's very similar in my life like that and believed in me to go take this jump to a CEO role. I'm a huge pay it forward person. So I've got half a dozen people I meet with on a monthly basis of mentoring them and seeing the potential in them and doing what I can to help them advance their skill sets, their careers, reach their long-term goals.

1:50:30What is your strategic advantage against the billion dollar companies you're up against? Speed. Well, look, I'd say there's two. Number one is really, that agility of being able to do things a little bit quicker, react to things quicker, innovate quicker. And then number two is being that lifestyle brand. I know I do, and I know a whole lot of our team does. We really, really care about our culture, our community, our consumer. When you care about something, you're going to put in more effort. And I see that every single day with our team. How do you evaluate risk?

1:51:10Math, and then I'm a big if-then person. So number one is just every single thing that's going to have a metric attached to it. We're going to run it through a model with our finance and operations teams. And then number two is going to be the if-then scenarios. So if we go take this risk, what are very likely outcomes? And if those are negative or positive, what's our potential for pain? What's our potential for gain? Great example, going back to this one, this is a very big risk for us, you know, financially with our brand positioning, with our consumer perception, all of those types of things.

1:51:48So we did a big, big evaluation, both financial and then thinking, thinking subjectively about this as well. You have some sort of like risk rubric where you're taking X amount of, let's to say medium to high risks with medium to high rewards versus stuff that you know is a definite single or double? Yes. And I won't share that. Love that. What is the single hardest part of your job? Let's see another pretty tough one. But I think you mentioned a little bit earlier about being cool under pressure. I think any given day within the holistic idea of Skullcandy and running the business, I'm going to have 10 things that are going poorly and 10 things that are going well.

1:52:33Sometimes that balance gets shifted one way or the other, and I've got to stay calm in every situation. I always be thinking about three steps ahead, what happens next year, three years, five years from now, what is a short-term issue that needs some of my attention, what's a long-term strategic issue, if it's negative or positive that we really need to think about. So the hardest thing is keeping that even keel because I'm also an emotional person. I'm also here because again, I love this culture. I love the community and I want to get so excited about the things that we went at. But I know when I do that, the culture inside the business can shift.

1:53:11And if people get too excited, then we're not paying attention to what are the risks and what are the bad things going on enough. And three, six months from now, bad things can happen. And, you know, we can be on top of the world with the success of a product like this and all of a sudden not pay attention to a cash and an inventory position of some other products, some other channels, and three to six months from now, now we got to mark down some products. We got to take some product back. The balance sheet gets upside down. I firmly believe that if you're a CEO, you have to stay paranoid 24-7.

1:53:45That's what I believe. I'm not necessarily in that camp. I don't like to say paranoid. I'd like to say objective. There you go. A last question before the ending. How do you see AI being integrated into the future of audio?

1:54:00The coolest stuff ever is coming out in a very short amount of time. 2025? Oh yeah. Yeah. We have AI in product that will be in market this year. We already have AI in almost every single facet of the business. AI is impacting the Skullcandy consumer in ways that they don't even see it today. But with the product specifically, it's wild what's out there, what's being developed and what you'll see in the next short term, one to three years. Thinking about AI being able to isolate noise, being able to cancel outside noise where you want it canceled, being able to amplify noise where you want it to be amplified.

1:54:44You and I can be having this conversation in a subway in New York City through headphones in different parts of a subway car. Then you think about all the health benefits, what can be measured inside your ears. You think about your headphones telling you it's probably time to go eat a banana because I'm measuring your health inside your ears. Thinking about going to a foreign country and translate languages in real time without ever having to know a language again, going to a specific place and being, having a geo tracking and tell you, Oh, I Mark, I know you love this type of fashion. Did you know right around the corner from this place is a Balenciaga store in Milan?

1:55:24You might want to go check it out. All of that type of stuff is pretty dang cool. You've put some thought into this. I say I'm excited for that. All right. Ending last three questions we got here. Favorite book or podcast and why? hmm it changes all the time i'm a big seth godin guy being a marketing person so i think one of the classics the purple cow i'm talking about the product is the marketing and that's always a good one podcasts uh today i like prof g a lot i'm scott galloway ex-nyu professor i like his takes leans a little more political a lot of times for my liking but i like to think how he thinks about big picture and globalization.

1:56:01And then similar, but not the same. Definitely like the all-in podcast. Entrepreneur or brand that you want to give flowers to and why? You're giving someone the platform here. I love what Brian's doing at Mellon. Found that white space, worked his butt off. Is the most passionate person that you got to see in business. So we'll give him some flowers today. I just spoke to him recently and I just, I want to bring him on the podcast and we're just waiting for that special moment because the amount of shit that guy has gone through. I mean, I was there, I was there right from the beginning. And when they told me the idea, I mean, it's been, I think now it's probably almost been 15 years from idea to in market.

1:56:44And yeah, I can't say enough about the grit that guy has to get where they are today. If you guys have never heard of Mellon, check out the hat company Mellon. All right. So how big of a brand can Skullcandy be? Give me a number, Brian. Let's see. I think at its peak within the next 10 years, Skullcandy should be a$5 billion business. Wow. We're going to end it on that. An amazing time, man. Where can they find you? Well, Skullcandy at Skullcandy on every single platform. myself I usually go by BG yeah BG Y E A H and then I'm not super active most of my accounts are private for the business stuff I am on LinkedIn quite a bit and that's just my name Brian Garofalo and what about specifically to get this sound by Bose skull candy look I always love people to go to skullcandy.com you can get that pretty much anywhere around the world other than that literally anywhere headphones are sold you should be able to find that product amazing man thank you thank you very much Appreciate you having me.