A couple weeks ago I attended the Young Entrepreneur Founders Organization (YEFO) Summit event at BYU. At the event I was able to meet fellow entrepreneurs and exchange ideas of what works and what doesn’t. The peak of the conference was when Rick Alden the founder of Skullcandy spoke to us.
To Win Big, Be Willing To Lose Big
Business = problem solving. Scalable Business = Problem solving for lots of customers. That’s Rick Alden’s formula for business success.
He started Skullcandy because he was annoyed with how hard it was to listen to music and accept cell phone calls while on the slopes. A dongle that connected a single pair of headphones to both devices was the product that put Skullcandy in business. Previous to Skullcandy Rick started and sold several businesses and was able to pay off his home. Living mortgage free felt great, but Rick is an entrepreneur at heart. When the new business needed more cash to get going, Rick refinanced his home to fund it. He told his wife that it was risky business and they could go broke. Worst case, they could go bankrupt and be reduced to living in a small apartment with their 4 children. His wife Holly said, “We’ve done it before and we can do it again.” In 2008 Skullcandy had a yearly revenue of $85.5 million, and 2009 looks to be more than double that.
Know Your Customer
During his speech, Rick emphasized that if you want to be successful you must know your customer. Know who they are, what they like to do, where they like to go, and what they want to be. He says the best way to do that is to be the best version of your own customer. Rick is an active snow and skate enthusiast and the Skullcandy headquarters even has a half pipe built right in. I’d say it makes sense that his primary target audience is the snow/skate/hip hop community. How better to know what your audience wants then to be a part of your audience?! Rick showed this video about a real life product called the Wunder Boner to illustrate his point.
Aside from this video being embarrassingly comical, the Wunder Boner actually looks like a decent product. The obvious problem here is the name and branding of the product. If I remember right, I think the product was initially launched in Australia where it saw moderate success. However, when the product launched in America, attention was not paid to the new audience. Had the creators of Wunder Boner understood American consumers, they would have known to change the name and branding of the product. It just goes to show, you might have a good product, but if your brand is off, you may not find the success you’re looking for.
Brand Is Everything
Rick emphasized that the #1 job of a CEO is to be the “cultural filter” for the company. According to him, a company’s brand is everything. I couldn’t agree more. It’s important to build a brand with your audience. Each of us as individuals has an identity or a brand, and it’s the same for a company. When someone buys your product they buy your brand. In the beginning, Skullcandy had more difficulty selling headphones because it did not have an identifiable, trusted public identity. To consumers it was just another (cool looking) headphone. As time went on sales increased as a skater/hip hop image was marketed for the company. Eventually Skaters & Snow Boarders accepted Skullcandy as a a product that helped express who they were. They felt understood by Skullcandy, and with it’s products they could better express themselves. People wanted to have Skullcandy headphones because of what it said about them. That’s good branding. Once you have established a brand like that, selling your product becomes much easier. With proper branding, the biggest problem you’ll be faced with is manufacturing enough product to meet demand. Think for a minute about several brands you accept. What does it say about you if you own an Apple product, a Google phone or a BMW? Behold the power of branding.
It Pays to Be Lucky
It seems to me that most wildly successful entrepreneurs credit luck for much of their success. Rick is no different. He mentioned how lucky it was that products like the iPod were released during the same time that his products were launched. Rick said there are just too many things he could have never predicted that went right.
Since we were at BYU for the conference it’s understandable that just as he attributed much of his success to luck, someone raised their hand to comment. “Don’t you think it was really a blessing rather than just luck?” the audience member interrupted. Rick responded with something like, “Well maybe so, but to be honest, I just don’t think God cares whether I sell another pair of headphones. I think He might have better things to do. But I do feel blessed to have had these successes and I do think God cares that I support my family.”