Jason Stoddard - Schiit Happened

The Story of the Worlds Most Improbable Start-Up

By Jason Stoddard
Co-Founder, Schiit Audio

Copyright 2015 Jason Stoddard

EPUB Edition

All rights reserved. No part of this publication may be reproduced, distributed or transmitted in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher.

To Mike, for going along with this crazy idea.

To Rina, for support, naming the company, and tolerating the whole mess.

To Eddie, for helping us really get started when we needed it most.

To Tony, for testing dang near everything weve made.

To Alex, for taking over, making things right, and running the show.

To Dave, for doing the hardest stuff.

Christmas Presents Until the End of Time?

So, do you think itll go? Do you think theyll sell? Mike Moffat asked, looking at the first assembled Asgard on the engineering bench in my garage. He was being Mike-fidgety, rocking from heel to heel in the small, chilly space.

Well, on paper it looks good, I told him. But you know how that works. Theyll either sell, or well have Christmas presents until the end of time.

Mike laughed, a little nervously. Because he knew how these things go. You can plan and plot, do endless market research and cost studies, run focus groups and get tons of input from key prospects, and do all the little things that companies do to procrastinate and dither and second-guess before releasing their next productand things can still go sideways.

But this isnt a story about stuff like that. This is a story about gut feelings, good guesses, and not following the herd. And succeeding.

This is the story of Schiit Audio, the worlds most improbable start-up.

Yes. Schiit. Lets start with that as an improbability factor. What company in its right mind would name itself that? I mean, if you were a marketing agency and proposed that name to a client, how would they react? Youd be picking your butt up off the pavement outside their headquarters, post-haste.

But that isnt all that made us a crap candidate for succeeding. Consider:

We started this with no outside funds, no venture capital, no crowdfunding

Wed both been out of audio for about fifteen-plus yearsmore on that later

We went with direct sales, even though that had only really worked for one other companyEmotiva

We started with no staff, in my garage

We decided to make everything in the USA, even though the prevailing wisdom of the time was Chinas the worlds manufacturing floor, why even try to compete?

And, in a complete burst of insanity, we decided to start with inexpensive products

Ah, and its now probably past time I introduce myself. Im Jason Stoddard, Co-Founder of Schiit Audio. Mike Moffats my business partner. Our official titles are Head and Number 2 respectively. Hey, Mike asked for it. No, we dont take ourselves too seriously here.

I wont bore you with our full CVs (thats fancy-speak for wut we dun), but you may have heard of Mike Moffat. He was the founder of Theta (the first one, the analog one), in the late 1970s. You can blame him, at least in part, for resurrecting tube audio. He was the first person to use 6DJ8s in audio. He installed Philip K. Dicks stereo systems. He sold amps to L. Ron Hubbard (no, you cant make this schiit up). Then, in the 1980s, he became the Father of the DAC with Theta Digital. His DSPre was the first standalone DAC on the market, and it was a showstopperits own digital filter algorithms running on Motorola DSPs so powerful they couldnt be exported into the Soviet Union, for a start. Theta mopped up in the DAC world for several years, then Mike founded Angstrom, the maker of the worlds first upgradable surround processor. From there, Mike moved into entertainment, creating complex systems for digital movie distribution. At least until I tempted him away with Schiit.

Imwell, Im confused. Im a published, award-winning science fiction author (strangeandhappy.com), a summa cum laude BS Engineering analog geek (schiit.com) and twenty-year veteran of the marketing wars at another company I founded (centric.com). Ive done stuff as strange as lecture Harvard professors on virtual world marketing, and as driven as earning my way to Vice-President, Engineering at Sumo at age twenty-five, which nominally made me Ed Millers bosshe was the founder of Soundcraftsmen, Sherwood and Great American Sound, and head of engineering for SAE, to drop some names. Not that Ed cared, he just did his own thing. He was cool.

Im the one writing this book. You can blame it all on me. I have no illusions of this being a best-seller, or of it changing the world. But I think we have an interesting storyone that others can learn from, both in and out of audio.

Oh yeah? you ask, leaning back and crossing your arms. Well, I aint gonna read no hunnert thousand words about some small-time company just to get few phrases that belong on Sucksessories posters.

Cool. Gotcha. So Ill cut to the chase. If youre only interested in business intelligence, you wont have to read any further than the next seven bullet points:

1. Shooting to be the next billion-dollar mass-market company is insaneyou might as well buy lottery tickets.

2. Niche is where its atspecifically a niche where people can get in fistfights over the color of a knob.

3. Pick a niche you know and love, and do something nobody else can dome-too never works.

4. Be memorablethis isnt about getting everyone to like you, this is about getting some people to love you.

5. Go directdistribution is a poisonous remnant of 19 th -century economics in a disintermediated world.

6. Run from both conventional marketing wisdom and the social media mavensboth of them are geared towards the mass market with eight-digit ad budgets and multiple decades to build a brand.

7. Dont think thisll be easythis is hard work, but youll also be having a whole lot of fun if youre doing it right!

Okay, now youre skeptical. Youre thinking: But I just read a book from (insert the name of some multibillion-dollar-valuation corporate CEO here), and he said its easy to reach the masses and change the world, and it seems like anyone can do it, why would I shoot for less than that?

Thats cool. That is, if youre lucky enough to come up with something different enough to merit venture funding, if you get through all the rounds with the team and product intact, if something better doesnt come out of nowhere, if the public whims dont change, if you dont get ousted before the real money starts, if youre cool with hundred-hour weeks and lots of travel and losing touch with the real fun of creation and becoming a new salesman with his dog-and-pony show for the money guys in Silly Valley or Singapore or wherever the money is in this moment, more power to you. Go ahead and create the next Amazon, Apple, Facebook, or Google. This book isnt for you.

But I have a lot of friends who have gone down that route. Brilliant people. Hard workers. They dont have any problem with all of the above. They go even further, begging and scraping to keep the team stapled together when the money gets thin, mortgaging everything they have on the One Big Idea

and doing it again when the first one doesnt get past angel funding.

and doing it again when the second one doesnt get its second round.

and doing it again and again and again, as many times as it takes.

Bottom line, there are plenty of billion-dollar ideas out there. Making one into a real company that succeeds isnt just a lot of work. Its about money, luck, connections, money, luck, money, and luck. And more luck.