December 8, 2024

charmnailspa

Technological development

Zound Industries CEO Reveals What Makes His Business Tick

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The name Zound Industries may not be instantly familiar, but if I were to mention Marshall headphones and speakers, adidas headphones or Urbanears, the cool Swedish audio lifestyle brand, you’d probably know what I was talking about. Zound Industries is the company behind these big consumer audio brands and it’s a company with a fascinating story and a progressive set of values that mark it out as the kind of business with a strategy necessary to thrive in today’s increasingly competitive and image-conscious consumer electronics market.

To find out a bit more about the company, I recently spoke with Jeremy de Maillard, the youthful-looking Frenchman at the helm of Zound Industries, successfully steering it at a time when the world’s financial situation is about to become a little more stormy, although you wouldn’t know it considering the success Zound Industries has been enjoying with the recent launch of the updated Marshall Emberton II Bluetooth speaker, one of the most successful products the company has ever made.

I recently wrote a review of Marshall Emberton II and was incredibly impressed with this latest product from Zound. I wanted to know how old Zound Industries is and how it came into being. I was keen to find out if de Maillard was involved with the company from the very beginning. So, I asked him to tell me more about Zound.

“I wasn’t working with Zound from the beginning,” explained de Maillard, leaning slightly forward in his chair. “Zound Industries began in 2008 and was founded by eight Swedish guys. They were all very rock and roll and entrepreneurial. The whole thing was originally created by Konrad Bergstrom. He and the original group of eight entrepreneurs created the Urbanears brand and launched the company’s first product, the incredibly successful Plattan headphones.

“At the time, most headphones on sale were dull and grey with everything in silver or black and rather boring. Urbanears changed everything by creating a range of well-designed, high quality yet affordable headphones in a rainbow of colors. These days, colorful and fashionable headphones are a given, but back then it was revolutionary. We added a microphone to the audio cable of the headphones so our customers could make phone calls. I think it was this feature and the array of colors that shook the entire headphone industry.

“Ten years on and almost every pair of headphones in the world includes a microphone. And even from a packaging standpoint, Urbanears was the first brand to start using tonal packaging where the headphones tone in with the background of the box. Now almost everyone does this.

“The company disrupted the electronics sectors. We had a great run with hardly any traditional advertising at the beginning. Then, in 2010, we signed a licensing agreement with Marshall, the iconic company that’s been making guitar amplifiers since the 1960s. The first product out of our partnership with Marshall was the Hanwell speaker, which was a fantastic product. Then the brand moved into a full range of headphones and speakers over the following years. In 2019, we also signed a license with adidas and now we’re the company making and designing adidas-branded headphones. Today we have Urbanears, Marshall and adidas in our portfolio of brands.”

I wondered if there was a special connection between those first eight founders of Zound that enabled them to start such a successful company. To get eight people running a business where everyone is equal would be a feat for anyone. They must have been very good friends to get it to work. I wanted to know if all the founders were still involved in the business, or had they now moved on?

“Most of the original founders are now out of the day-to-day business,” explained de Maillard. “Two are still with the company, working in the design department, and they are still two of our most influential designers.”

“Let me give you an interesting nugget about Zound,” enthused de Maillard. “When the company started, the founders were one of the first to experiment with crowd investing. They reached out to their network of friends of contacts in the industry and beyond. I was one of their first investors when the company began back in 2009 when it was no more than a PowerPoint presentation.

“I’ve followed Zound from the side-lines for a long time before I joined as CEO two years ago. As of today, we have about 400 shareholders. Many are still from the network of the eight original founders. At the time, I was working for adidas, and I thought Zound’s founders were thoughtful when it came to who they were asking to invest in their company and how those investors could help them. The investors became ambassadors for the company. I think it was a really smart thing to do back then.”

I agreed that it was unbelievably farsighted at the time, and I asked de Maillard if all the shareholders were driven by the same passion for music and design.

“It was a pool of musicians, tech, business, fashion and sports people, and entrepreneurs. It was an interesting mix, and we all came with our different perspectives while sharing a set of common values, both personally and professionally. This symbolizes the creativity that has always been the core of our business and contributed to the unique culture we have built over the years”

Has Zound switched to a more corporate culture with the departure of most of the original founders?

“The ownership has changed, and we now have three main owners: Zenith Group, a Swedish VC fund and largest shareholder, T4G, a European growth tech fund, and the Swedish mobile network Telia,” explained de Maillard.

With Zound Industries now being owned by three companies producing three diverse brands in the consumer audio markets, I wondered how stable the licensing business model was for the long term. Are the agreements with Marshall and adidas open-ended or are they renegotiated every five years or whatever?

De Maillard immediately assured me that the Marshall agreement is in place until 2033 and that the partnership with adidas is in a very good place. I asked if he thought there was something about the culture in Sweden that made it a centre of headphone design excellence. There are now other big names in the industry based in Sweden, like Urbanista and Happy Plugs, plus quite a few smaller companies designing and selling earbuds. Many of them have a similar design ethos as Zound when it comes to colors, fashion, and connection with the music industry. I wanted to know why Sweden is such an amazing place for incubating a successful audio business.

“I think Zound started very much as a design-driven company. We also recruited some fantastic acoustic engineers with world-class talent who are working closely with the Marshall team in Milton Keynes. Sweden is a country that is grounded in design and very much part of the Scandinavian DNA. If you pick fashion, architecture, furniture, or graphic design, in all these things Scandinavia has always been a hotspot. It morphed into acoustics & engineering.”

“We changed the industry with Urbanears using color a decade ago and now, our ambition is to lead the way with sustainability and progressive values. We dream that 10 years from now, everybody will have followed us and the whole industry will be sustainable and embrace progressive values, diversity & inclusion, and all these things that are important today will become a point of parity.”

I pointed out that sometimes sustainability and progressive values can be seen as a bandwagon, whereas excellent design and solid engineering are timeless and not a social media phenomenon. Using recycled plastic can be seen as greenwashing by some, although companies like Logitech are leading the way with their mice and keyboards designed with sustainability at their heart.

“For me, it’s not an either-or situation,” explained de Maillard. “We have already proven that we can do great design, engineering, and acoustics. What we are doing now is adding on top of these things. We have done a lot with recycled plastic. We never told anyone but some of the Marshall products have the highest content of recycled plastics, but we did not shout about it because we were not completely sure if we could sustain it over time. Now we know so we are going to start talking about it more. We have been working with sustainability for a long time and using recyled plastics is of course only a small part of what we do. We are not where we want to be yet, but our ambition is definitely to lead the way forward.”

I wondered whether the average Marshall fan was all that worried about sustainability as much as, say, an Urbanears fan might be. Marshall fans are rooted in rock’n’roll and I reminded de Maillard that the Marshall rock lifestyle might not be quite so focused on progressive values or sustainability.

“For us, it’s very much about doing the right thing. We are creating products for our current audience, but we are also connecting with the next generation. We need to make sure these topics are a natural part of our business to continue to be successful. It’s something we feel we have to do. We just need to think about our role in society and the planet. We must drive those values using the privilege we have. We must take care of the planet and drive for diversity and inclusion to make our society better. That’s a lot of the things we’re embedding in our products, but the core is still in design, acoustics, and engineering.”

Values are important but sometimes companies can get too absorbed in progressive values prompting the expression: “Go woke, get broke”. Gillette went for progressive values with an advertising campaign that ended up costing a fortune in lost sales. I asked de Maillard if he would be treading a fine line without going too far with progressive values?

“We became that global, fast-growing, innovative, and progressive company with a portfolio of iconic brands. It’s the one thing that’s important to us and I think it’s our strength in the marketplace right now. You’ve seen our results. We just released our results for Q1 and grew 117% vs. last year with healthy profitability. We’re doing well. I think that’s because of our unique positioning with products that represent who people are as individuals and what they care about as a community.

“Apple, Bose, Sony JBL all make good products, great products. However, those products don’t say much about you as an individual. If someone has AirPods it’s kind of: ‘Okay, so you’ve got some headphones, but everybody else has got the same ones too’. But if you see someone wearing Marshall headphones, you’re more likely to think ‘Oh! That’s cool and interesting’.

“Our job as a company is to empower our brands and provide a platform for very talented people to make the best possible products and connect with our audiences in the most impactful and positive way. Again, what’s great about us is that by having those three very different brands we have the potential to capture a larger share of the market opportunity. Our brands also learn from each other. The products are always very different but when we have, say, a solution for using post-consumer recycled plastics then we can scale it and roll it out to any of the teams working across our portfolio.

“Anything that’s very consumer-facing is the business of the brand team. Stuff that’s more a back-end function is for the Zound team. For example, sourcing is a Zound team thing, but as soon as it gets close to the consumer, it becomes a brand team thing, whether that’s design, product development or marketing.”

I agreed that de Maillard had constructed a very clever structure that makes a lot of operational sense, and it was interesting to see a company that is so entrepreneurial and creative but connected to its values.

“Exactly!” agreed de Maillard. “I spent most of my career in Fortune 500 companies working with brands like Vans, North Face, and adidas. These are big companies. Something I’ve always liked at Zound is how unique the company culture is. You enter the workspace and it’s full of extremely creative people being the best at what they do. The highest level of talent is very collaborative and extremely challenging to each other. There’s no animosity at Zound, the atmosphere is very special and that comes out in our products. Our products are humane to the point where they don’t feel like tech products. Our products feel like something made by real people. I saw the way you just held up the Marshall Emberton II speaker. It put a smile on my face because I can see there’s an organic connection between you and that speaker. That’s what is so unique about our brands”.

Despite being a Swedish company, I wondered if the inclusivity and diversity values so close to de Maillard’s heart were reflected in his team. How multinational are his workers? Do they come from all over the world or is it a heavily Swedish workforce?

“Today we have about 250 people across the world. We have our head office in Stockholm. And then we have offices in Shenzhen, China, New York, Paris, London, and Hong Kong. In Shenzhen, we have about 60 people working on production, sales, and marketing. So that’s a big office for us.

“Stockholm is our largest office. I would say a lot of people who work for us are from Scandinavia. However, last year we hired about 50 people and that was the most diverse pool of talent we have ever hired. We started bringing in people from all over the world, with diverse backgrounds. I am also the company’s first non-Swedish CEO. I am Swiss and French, but I lived in six different countries throughout my life. The official language in the office is English.

“We are very international. We also work with these topics on a deeper level. It is extremely important to us. We continuously educate ourselves to be better. Our ambition is to work with proactive local and global projects to find, support and empower diverse communities, non-profit organisations and collaborators.”

And what, I asked, does the future hold for Zound Industries?

“The Marshall brand continues to go from strength to strength, our partnership with adidas is gaining momentum and Urbanears is going through a relaunch. Over the past 18 months, we worked hard on our product portfolio and today, 95% of our products are either updated or completely new. We’re growing in a very profitable way and are in the best shape ever; humanly, strategically, and financially.”

I pointed out that the market for true wireless earbuds must be close to saturation by now. Some earbud brands are good and some are not so good. These days there’s downward pressure on prices. I wanted to know what sort of products Urbanears would be focusing on in the future?

“I think we need to stay connected to our strategy. I always go back to how Zound needs to make products that represent our customers and what they care about as a community. That’s who we are. That’s the reason why you pick up one of our brands versus the others. Consumer spending and purchasing power are under the pressure. I think people are going to gravitate toward strong brands that they know they can trust and that share their values.

“The true wireless earbud market is extremely saturated. Apple owns 75% of the market with AirPods but I think there’s room for brands like ours and for people who want to show who they are. People don’t just want to have a product for the sake of having a product. Look at the Apple ecosystem, it’s a tough one to beat when it comes to connectivity, but Zound stands out in design and acoustics.

“But when it comes to products that echo who you are as a person and what you care about as a community, then, with all of our brands we’ve got something to say. From the rock’n’roll attitude of Marshall to the focus on sport and athletes with adidas and the dedication to progressive and sustainable values with Urbanears.

“We pride ourselves on being a design-driven company that cares about human beings. We don’t necessarily believe in the traditional socio-demographic consumer segmentation approach. We don’t think of consumers as, say, 15- to 24-year-olds. You can be any age and have a rock and roll attitude. We believe in mindsets, and we live in communities that share the same values. We are never shy of doing the hard thing. We challenge the status quo. That’s who we are.

“What’s important to me is our promise which is our commitment to the world and the result of everything we do: we bring life to sound. And that, to me, really defines what Zound is all about. We’re bringing life to sound. We’re making products for human beings who deeply care about each other, our planet, great acoustics and great design.”

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