Whether you’re a regular consumer, producer or DJ, there’s not much fun to be had if you can’t hear the music the way that you’re supposed to. So in order to gain some insight into the world of headphones, I tracked down the leaders of one of the hottest consumer headphone companies in the world: SOL REPUBLIC.
Having been started by 3 guys, Kevin Lee, Seth Combs and Scott Hix, the company has bee growing rapidly, and has seen immense support from the EDM community, with DJs like Steve Aoki, Rusko and Deadmua5 all endorsing their headphones. From the public community of supporters, called SOLdiers, to the group of professional artists and athletes that endorse their products, called Saviors of Sound, a wave of positivity has surrounded SOL REPUBLIC’s products and brand. I interviewed one of the company’s leaders, Scott Hix, and learned tons about the company’s goal, brand, product manufacture, views on competition and much more.
So I know that there are 3 main MEN behind SOL REPUBLIC’s success: Kevin Lee, Seth Combs and you, Scott Hix. How did the 3 of you end up forming this company together, and what was the driving factor for you?
We all 3 have a deep-rooted love of music, but we were also 3 very close friends that grew up in the consumer electronics space. Kevin and Seth were the 2 that first developed the concept to create a company. They didn’t know what they wanted to call it, or what the product would look like, but they knew it would be based on music lifestyle. We also had pretty diverse backgrounds. Kevin working at Monster Cable, obviously a pretty famous company, and he was the catalyst and creator of the “Beats by Dre” phenomenon. It was actually his brainchild, and he connected the dots of Monster, as the technology company and manufacturer, along with Jimmy Iovine, Interscope and their artists, to help create that partnership. Along that route, Kevin had contacted me. We had been friends in the industry for about a year, and he would bounce ideas off of me as a friend. He brought Seth in when Monster was looking for someone who really understood digital and social marketing. Seth was a quite the marketing savant from the Bay area, and grew up understanding how to market to this generation and demographics of consumers. So Seth helped Kevin to launch “Beats” within Monster, as the brand strategist. If we move forward from that, to 4 years ago, they both had an itch to scratch. They both wanted to create a company on their own, and felt that there was a great opportunity, given their knowledge of the music and audio space. So the 2 of them contacted me, and we began to have discussions about the market and it’s growth, and what we wanted out of a company if we were to create it. That became the origin of SOL REPUBLIC.
Has your role at the company changed in any way since it’s inception? Do you do anything differently job-wise, now that SOL REPUBLIC has become what it is?
Well, I’m the President, and so I run the company on a day-to-day basis. Kevin tends to be the audio, acoustic and product expert. He has a good sense of strategy and a very good flavor for marketing. Seth is the CMO (Chief-Marketing Officer), and he really lives and breathes the brand. The reason that they contacted me was that I had spent most of my career in large public companies, building multi-hundred million-dollar businesses on a global scale, so I was brought in to help fund the company and basically drive strategy into fruition. Like all start-ups, 3 years ago, we started out doing everything ourselves. Sure, we had all “C” titles, like CMO, CEO and so on. But we were also the janitors, the clerks, the product design team, the sales team, etc. So like all start-ups, 3 years ago, we did all the jobs in the company, and then eventually, the 3 of us became 10 of us, 10 became 30, and now we’re over 100 people.
That’s quite the story. And unless we’re not mistaken, you’ve had a fair share business experience before starting up SOL REPUBLIC, as former VP for Planar and as CEO for Chillin Solutions. Where does your job at SOL REPUBLIC rank in your list of past work, in terms of difficulty, excitement, personal satisfaction and reward? Have you been able to apply your skills from past work at SOL REPUBLIC?
Absolutely. I don’t know if I would rank them. Like all things, life’s kind of a bunch of building blocks. From the first sales job I ever had at Infocus, to my highest paid, most senior-title executive role over the last 20 years, everything has contributed to what we’re doing SOL REPUBLIC. Everything builds off of experiences, both the things you’ve done right, and frankly, often times more so the things you’ve done wrong. You learn from those. This is without a doubt a company that it’s easy to be passionate about, and fall in love with everyday.
That’s nice! It’s certainly something to strive for. So, what kind of background did you have education and experience-wise that led you to this point?
I went to Portland State, here in Oregon , and then I went right into the tech industry at a young age after college, to a startup called Infocus, which was a pioneer in the display industry. We helped to create front projection technology that most kids are using in classrooms and boardrooms to this day. I was really blessed to be part of a fast-growing company that went from 0 to almost $1 billion dollars in 7-8 years. If you cut me open, I bleed sales and marketing, so about 4 or 5 years into my career, in my mid-20’s, our CEO made the mistake of asking asked me what I wanted be when I grow up, and I told that I wanted his job. He was a pretty good character from IBM, named John Archer, and he quickly began to stick me in jobs that were, frankly, not the most glamorous, but if I was to become a CEO, were required. So I began to run product strategies, and business development strategies, and I launched consumer initiatives for the company, which forced me learn to operation and engineering and finance. As I got more mature in my career, now you see me running companies. I’m obviously leveraging all of that diversity that I touched upon in my past.
And you don’t feel like the task of running these million dollar companies becomes too much of a challenge? Does the pressure weigh on you?
Just the opposite. At the some point in time, it begins to become commonplace. It’s like any person that does something over an extended period of time. Inevitably you gain experience to do something like this, and it’s not so intimidating. When SOL REPUBLIC. came along, there was nothing we had to do from funding the company, to setting up the legal structure, to developing a sales channel, to creating a product road map, to finding out how we were going to create the product that got me worried, because I’d done all of that before. Now, whether or not you’ll be successful, a lot of external factors factor into that, as well as internal capability and fortitude. But no, I’ve never woken up worried on whether we could pull it off. We were acutely focused on what we wanted to do. We had a very well-vetted plan, and I think from the beginning, we had a high degree of confidence that if we just put our heart, soul and right amount of time into this company that it would take off.
That certainly reflects in how successful the company has become. But what’s the biggest challenge for a company like yours in an overly saturated headphone market, where there are a lot of headphone products to compete with, and how have you been tackling that challenge?
Well, for me it’s a simple phrase of “focus precedes success”. The biggest challenge is that this is a very ubiquitous technology, meaning that headphones aren’t necessarily a technical marvel. You could go to China, and any company that wants can find a headphone reference, and have a product in 6 months. The trick though, is knowing that we’re much more than a headphone company. We’re much more rooted in music lifestyle than anything else. Yes, we do happen to do headphones today, but at the end of the day, it’s truly been about creating a brand that consumers can relate to. Meaning, that when we design the product and market the brand, it’s with a 15-28 year old in mind. They’re highly social, but through their technological devices. So it’s all about Facebook, Twitter and Instagram for them. They don’t really watch TV in terms of watching them for commercials. They don’t drive down the freeway, see a billboard and get influenced by the brand. They don’t go to a sports venue and care about who paid the most money to get their name inside the arena. They know that if it’s trending and relevant and cool, that they’re going to hear about it through their friends and peer group, and it will become instantaneously validated. So authenticity is more critical to this new demographics of consumers than any amount of money I would spend, like most companies try to. So for us, yes, it’s a very saturated market, but the fact is, as in any market, if you can differentiate yourself with your product, your brand strategy and, more importantly, connect to that consumer, you have a really good chance of succeeding. That’s what we’ve done early on.
I can definitely resonate with that, since I walked into Guitar Center and saw a pair of SOL REPUBLIC headphones that I thought were cool, and bought them.
Yeah, I’m really glad that, experientially, we have consumers discovering us through retailers. But when you go to our website or Facebook page, you’ll see that we have over 25,000 SOLdiers , which have been developed in less than 10 months. Carla is a great example. She lives in Canada, and had never had a pair of our headphones on her head, since we weren’t in Canada at that point. But she shows up on our website, and then our Facebook page, and asked what number she was, and she happened to be the 7th SOLdier that was brought into our SOLdier family. She showed up a week later, with a SOL REPUBLIC tattoo, our logo, on her back, which freaked me out as a father, since I have 3 daughters. Here’s a 20-year old kid up in Canada who’s inked our brand on her back, and we’re only 9 months in the market. What happens if something goes wrong?! I met Carla about 5 months later. She had come to San Fransisco on her own dime to spend time with our team, and I had to ask her the question, “Why did you do that? Even though I’m thrilled that you have our logo on your back, and it’s great PR for us, but why put it on you permanently?”. And I’ll never forget driving with her in the car, and she said “You know, growing where I did, life wasn’t always easy as young lady, and going through school can be a tough time for all of us. Music was always my escape, that how I was able to get through. As I began to discover your brand on Facebook, and got to know the other SOLdiers and your team that would interact with me socially, I felt for the first time that brand had my back. So that’s why I did it” That says it all right? So when you ask “How do we differentiate?” We make sure that we’re a brand that those SOLdiers and fans feel have their back. THAT’s how you differentiate. Other companies, they’ll come out next week with a new headphone, going “Mine’s got this driver, etc”. That’s the old-school mentality of consumer electronics. We’re different. We will always deliver on the promise of a differentiated product, but it’s a lot more than that. We want to give people an emotional tie as a lifestyle brand to us, a reason to be a part of SOL REPUBLIC beyond just the product.
That’s quite the goal. It certainly seems to have set you guys apart from a lot of competition. Let’s talk a bit about how you guys have done financially since you started, looking at last year and things year. SOL REPUBLIC experienced tremendous growth in 2012 with a $22 million investment collection in July, correct?
Yeah, that was our series B round. We’ve had 2 investment rounds since we launched the company. If you dig into it, you’ll discover that during series A, our seed round, about 2 ½ years ago, we raised $5 million to launch the company, and after a very successful year, we raised $22 million in our series B round. Regarding how things have gone this year, it’s been very exciting. If nothing else, a year ago, we had 11 products based on four platforms, all based in the US. We had about 1200 retailers, with Best Buy and Apple as our US retailers. Here we are a year later, we’re in over 56 countries, with 15,000 thousand retailers selling our products, and the company has almost 5X’d in terms of size. From all measurements and metrics, it’s been a really good year. We launched a new series of products with our over-ear Master Tracks and a new series of in-ear solutions as well, and we’ve expanded our on-ear to include everything from collaborations with TokiDoki , Steve Aoki and deadmau5, to our anthem series. So it’s been good all-around.
Awesome! Let’s touch on the Saviors of Sound concept. What were the thoughts behind reaching out to artists and athletes? Did you target any names in particular, or did they reach out to you personally?
A little bit of both. This where the brilliance of Kevin and Seth, and their backgrounds came in. I’ll give it to those 2. Remember, we’re taking about 2 people who created the “Beats By Dre” phenomenon. The analogy I use when talking about the “Beats By Dre” model is the “Air Jordan Effect”. Back when I played basketball, we all wore $30-$50 sneakers at best. Then in the 80’s, this guy called Michael Jordan shows up, and everybody wanted to be like Mike, and Nike started to produce the shoes called Air Jordan. So for $150, you could get those sneakers, and the emotional theory around it was that you could probably jump a little higher, or walk on air like Michael. Frankly, it was another pair of sneakers. It might have been no better than the $50 pair, but it was that aspirational thing that you wanted to be a part of. But how many kids could afford it? Now, let’s move forward to today in terms of headphones. That’s what Seth and Kevin were able to achieve with “Beats By Dre”, and they did it by using that same effect. Where there was a Michael Jordan sneaker, now Jimmy Iovine and Monster brought together everything from Dre to the Black Eyed Peas, to Lady Gaga, to the first time Kevin put a pair of headphones on Lebron James and the world of athletics was changed overnight because he took it to the Cavaliers and then to the Olympics, and then Kobe wore a pair, and then boom, it exploded from there. That approach has been very effective. It’s more of a top-down, high awareness approach. It’s a kind of transformation that you do with consumers. So when we started SOL REPUBLIC , we said “Hey, in order to be authentic, we can’t copy somebody.” We thought about what kind of brand we wanted to create. Beats is kind of a loud and proud brand out there. We wanted to be a little more grassroots and subtle in how we built things up. So Seth and Kevin came up with this concept of creating a “Saviors of Sound” strategy. What we would look for is, frankly, more of the local artists with a higher degree of potency, as opposed to high awareness.
Let me give an example of what I mean: If we grab 500 people off the street and ask them if they knew about the Black Eyed Peas, all of them would probably say that they know who they are. If I then said to that same group, of different ages and demographics, “The Peas are going to be in downtown Portland tonight, and they want you to come down there, take off your clothes and run around the square.” Probably, not a lot of people would do that. Even though they knew the Black Eyed Peas, they wouldn’t think it was a publicity stunt, they’re getting paid, or whatever. So let’s take someone else. If we asked the same 500 people “Do you know Steve Aoki?” more than half of them would say “no”, unless they were all kinds between 18-22, since his awareness isn’t that high. But if you took those fans who knew Steve Aoki, and “Steve’s gonna be in downtown Portland tonight, and he’s gonna throw cake all over your face, and you’ll get to meet him”, every one of those people would wanna go. So we decided to create the Saviors of Sound program, to work with grass-root development of artists. Kevin was a genius about it. 3 ½ years ago he said “Guys. We need to focus more on the DJs. It’ll fit perfectly into this approach”. So the goal was to start with the DJ community, but then to expand out to musicians, artists and athletes.
We weren’t about to go out and write big checks to people. A lot of other companies do that. They get such-and-such an artist and they try to get them to wear their headphones and tell kids that it’s cool, after signing a check to them. We did it a bit differently. We met the artist, asked them to come in, and would never write a check to them. First they had to like and what the brand was about, understand our philosophy, which you can see on our website and Facebook page. Then we got them to together with our marketing team, in order to develop their brand around the product on social media. That’s what our Saviors of Sound program became, and in our first year, we grew to 50, and now it’s over 250 Saviors of Sound and growing. The fun part is that now their coming aggressively at us to be part of the family. I suspect we’ll have over 500 Saviors of Sound by the end of the year. It’s a great program, and Michael Phelps is a great example of that. He called us, we didn’t call him. He makes millions a year in endorsements, and we didn’t write a check to him. He really connected with the brand before we even met with him, by going to our Facebook site. He liked what it stood for and what it was about, and so we partnered with him.
Your flagship product has thus far been the on-ear Tracks model, but you’ve also recently introduced the Master Tracks over-ear model too. Can you talk about why there was this progression from on-ear to over-ear, when other brands are what are dominating the market?
First of all, when you go back 3-4 years ago, being that we had seen the growth of Beats By Dre, we were pretty clear about where the market was at. In order to do primary research, we spent a lot of time with a lot of our target demographics for about 6 months, and their main comment to us was that they loved headphones, and if we could fix the main problems they had, they would buy them from us: One, they were way too expensive. Unless they were of a cheaper variety, like Skull Candy, they would cost $300-$600, and they said that wasn’t accessible for most of them. So they asked for us to design a headphone for under $100. That was the magic number. So by nature, that started to define more of an on-ear model. Two, they also said that headphones broke all the time, and asked if we could make something that they could bend and twist without breaking. Most headphones with hard plastic and hinge points would break easily for them. Three, could we make it possible for them to customize it for their own look. Change colors and that kind of thing. All of that led us down the path to what became “Tracks”. When we launched “Tracks” we knew that there were 3 segments of the market. There was the on-ear, which no-one was focusing time on. Everyone was racing to over-ear. So we said, “Let’s go establish our brand at this more accessible price point, and create an amazing product for less than $100”. We also realized that the average user has 3+ headphones, and typically, whether you’re an on-ear or over-ear, you also have an in-ear pair. So we did a lot of work on 2 of our new in-ears which we wanted to bring into the market at the same time as our “Tracks”, which were the “Amps” and “Amps HD”. Sure enough, after a year of being in the market, the market started to develop and said “You belong here. We want to be part of this” So as a brand, you wanted to start at a place where everyone else is not, and eventually migrate up, and so now we have a family of products that consist of in-ear, on-ear, and over- ear, and you’ll see us expand past that in the next 12 months.
So it’s safe to assume that producing an over-ear model is more expensive the on-ears.
Yeah, that’s why you see the price difference in the market. We’re using different sized acoustics, drivers, space and materials, so there’s always going to be a price premium in the in-ear VS the on-ear and the over ear. The exciting part is that what we were able to do with the on-ear at $99, where the cheapest ones out there were typically $200, we’ve now done to our over-ear at $199, and done a better job than most of the other brands, which are at $500. So the whole idea was to make the price affordable.
For the sake of those who have yet to try the ”Master Tracks”, if we put the price of SOL REPUBLIC’s “Master Tracks” aside for a moment, and compared them to any other popular and established over-ear brand of headphones, say “Beats By Dre”, do you think they measure up quality-wise?
Yes and no. First of all, I’m a big fan of “Beats”, and they do a lot of good things with their product. But it depends on what sort of over-ear you’re looking for. As an example, ours has noise isolation, but doesn’t have noise cancellation. So it doesn’t have batteries built into it, or any slots where you can insert them, to cancel out noise. But from an acoustic, comfort and value standpoint, these are the best over-ears out there. At a $199 you can’t get any other headphones like this. Now, if “Beats” sold headphones at $149, which I doubt they would, since they wouldn’t make any money, could they be competitive? Sure. But would you be able to remove the drivers? Would they be indestructible still? It’s kind of like asking if someone would prefer a Mercedes to a BMW. In that case, it becomes all about what brand you prefer. They’re both good headphones, is my point.
Do you have any predictions for how the headphone market will grow or develop? Do you foresee an even greater saturation, with more brands coming out with their own models, or do you think that brands like Beats, SOL REPUBLIC and Skull Candy will maintain and increase their market share?
No, in fact, here’s the good news. We predicted about 3 years ago that a lot of companies would try to get into this market, since the barriers of entry are pretty low. However, we also predicted that a lot would try to get in, and then realize after a year or two that it was too difficult, because they don’t have enough money, and there isn’t enough room for all of them. And so a couple would be left standing, and fortunately it looks like we’ll be one of those. So I think in the next 3-5 years, even though the headphones market is going to continue to grow, since the mobile device market is continuing to grow as well, most companies that are here today won’t be able to stick around. Most of them tried the “Beats” model, by the way. “Headphones by so-and-so”, and I think they’re realizing that trying to be “me too” in this space very difficult, because companies at the end of the day, need to grow and be profitable in order to sustain, and there’s a lot of brands out there that I know are struggling to get their products to sell. As nice or cool as they might to have their brands associated with an artist or an athlete, it’s not the magic formula.
What’s the next step for SOL REPUBLIC ? Any special summer plans or fall surprises down the road?
There are some big ones. We’ll have a pretty major announcement in June, and then you’ll see a number of things happen as a result in the back-half of the year. I can’t talk too much about it, since my PR team is getting everything ready, but we’re not taking our foot off the gas pedal. There’s a lot more that we’re going to do with this brand, both with the current platform and new platforms that we’re not in today. So it’s going to be a pretty exciting and eye-opening back-half of this year for everyone following us
Well thanks for talking to me Scott! I certainly looking forward to seeing what new developments SOL REPUBLIC announce in as the year goes on. I encourage everyone to check out SOL REPUBLIC’s website, Facebook and Twitter, to get more info on their products, and keep up with the company’s progress.