BOOK REVIEW

The Story of the World’s Most Improbable Start-Up

Schitt Happened: The story of the world’s most improbable start-up, told by the two men who made it happen (and the woman behind the scenes). A great read with lessons for us all.

Schiit Audio is now famous.... or should that be infamous... most likely because of the company’s scatological name. So why the subtitle? Why might the founding of this company have been so improbable? According to its co-founder, Jason Stoddard, also the lead author of this book, there were several reasons it was improbable. He lists them as:

• No outside funds, no venture capital, no crowd-funding.

• Founders had been out of the audio business for 15+ years.

• Direct sales

• Started with no staff, from

Stoddard’s own garage.

• Products built in the USA.

• First products were inexpensive.

Improbability is not a fixed value, as readers of Douglas Adams’ fabulous book Hitchhiker’s Guide to the Galaxy will be well aware.

There are many values of improbability. One of these (point two on Stoddard’s list) should have pricked your ears straight away, because it points to the fact that both founders had previously been in the audio business, so they weren’t newbies. As it happens, they’d both been very seriously in the audio business. So when I tell you that Stoddard’s partner in Schiit was actually none other than the very famous audio amplifier designer Mike Moffat, you might already be dividing whatever previous improbability number you’d decided on by a factor of, oh, say about 10 million.

Back in the 70s, Moffat was partly responsible for the resurgence in popularity of valve technologies, whilst in the 80s he became one of the founders of Theta Digital. He also built the world’s first stand-alone DAC, which used his own conversion algorithms coded into a Magnavox DSP. Moffat also founded Angstrom, which was initially famous for building the world’s first upgradeable surround processor.

As for Stoddard, after leaving university with a Bachelor of Science Degree ( summa cum laude, no less!) during which time he also established his own loudspeaker company (Odeon), he worked first at Magnavox before being appointed Vice President of Engineering at Sumo, an amplifier manufacturing company founded by the late James Bongiorno, which built one the most famous power amplifiers in the USA back in the 70 and 80s.

Stoddard spent five years at Sumo before leaving it to found and run Centric, which described itself as a ‘new media agency working on leading-edge interactive marketing in social media, virtual worlds, and other emerging opportunities.’ Centrics’ clients included Imation, Threshold, Infinity, Pioneer, LA Gear, Canon, Hewlett-Packard, VeriSign, Nestle and Acura and had offices in Los Angeles, New York, and Second Life (this last being a ‘virtual world’).

I have to say that Schiit Happened is a page-turner from its very beginning. This surprised me, because most books about the audio industry are not.

I suspected Stoddard had hired a very good ghost-writer until I discovered that he’s also a published author, with two wellregarded science fiction novels available.

(And if you’re a sci-fi fan, those novels are as entertaining as Schiit Happened.)

We discover that Schiit Happened will be a ‘tell-all’ book right from the start, when Stoddard tells us that “Sumo was, by and large, the company that taught me what not to do.” One of these lessons was not to ship products you know are faulty and so will inevitably be returned, which Sumo did against Stoddard’s advice, which, as he put it, “contributed to an extreme service load that never went away in my five-year tenure.” We also learn that Sumo was not only doing its schematics by had, but laying out its printed circuit board designs by hand as well. Stoddard also learned a lot at Sumo, and not only about PCB layouts! He says it was at Sumo that he turned from a ‘hardcore objectivist to a subjective-objectivist.’ This epiphany came about when he took a Sumo Andromeda II home to actually listen to one on his home system. Not only did Sumo’s amp sound louder than his more powerful Carver amps, they also sounded better.

“Way better,” he says. “Everyone noticed it, audiophiles and non-audiophiles alike.”

Sumo was also where Stoddard met Mike Moffat, because Theta was located in the same industrial park. He not only met Moffat, he started working for him... though it might more precisely be called ‘moon-lighting’ for him since Stoddard also continued to work for Sumo. Stoddard designed quite a few circuits for Theta, including the discrete, current-feedback output stage of the Theta DS Pro Gen V digital processor. He did that one to win a bet, which was that he could do it without using any op-amps at all, and that it would not only sound better than the existing op-amped version, but measure better as well. Stoddard won his bet, and Moffat was impressed enough to incorporate it in the design, despite it requiring 260 parts on a 100×150mm Teflon PCB.

As you would imagine of a man who created a very successful media agency, Stoddard is an outstanding marketer and gives excellent advice about it throughout this book, starting right at Chapter 2 where he says it’s important to get the marketing basics correct, which are your website and e-commerce systems, making sure they work on mobile devices, and getting mentions in the press: “by which we mean mentions and articles both online and off, in an out of the niche press.” He also points out Schiit’s rationale for selling direct to customers, which is that “48–65 per cent of the cost of a product can be in its distribution. So the manufacturer, that is the company that engineers, designs, certifies, tests, packages, ships, markets, supports, warrants and repairs the product gets one-third to half of the retail cost.”

In almost the same breath he admits that customers do lose out when manufacturers sell direct. “Dealers provide a service to customers by letting them compare a whole lot of different products. That is definitely worth something. And we are losing that as they go away.”

For me the book really took off at Chapter 4, where Stoddard explains all the steps that went into starting Schiit from scratch. Don’t get me wrong: It was a page turner from the outset, as I’ve already told you, but after Chapter 4 I found that I was reading faster, and turning pages faster, and using my highlighter even more often. I also discovered that making a chassis was even more difficult than I thought it already was. So when Stoddard describes how he was feeling when he pushed the button to order $800 worth of screws, I felt his pain. What I still don’t quite understand is how he managed to talk his partner, Rina, into hand-soldering printed circuit boards for him, despite her having her own full-time job, or the fact that he’d let her hand-solder around 1,000 PCBs before he tasked the process to an independent assembly house (Jaxx Manufacturing). My wife would have filed for divorce after the first ten PCBs.

I was also amazed to learn that Jason, Rina and Mike really did do everything from scratch, and by themselves… and not just building the equipment, but also building the Schiit website, that website’s e-commerce system, along with designing and assembling the packaging (plus doing the actual packaging), the shipping... the lot. And in this book he tells you exactly how they did it, what they used to do it and how to do it better if you’re thinking about doing it yourself. He even tells you how to get free press coverage for your products (as in not paying for a public relations company, not buying advertisements, and not paying for clicks). If you’re in the business of selling stuff, this chapter alone (6) is worth multiple times the book’s cover price... even if you’re buying the paperback, rather than on Kindle.

If you are planning on growing a company, you really need employees. Or at least one of them. And this is what Chapter 10 is all about. How to go about finding and hiring employees. It’s very US-centric employment contract-wise, but the information about the actual hiring process is good for anywhere in the world. Better than good, in fact: perfect. Chapter 14, where we learn about the ‘Popping Lyrs’ is one of my favourites, not least because it is a perfect example of an elusive fault that is able to be solved without actually ever learning what the fault was in the first place.

Stoddard accurately refers to it as “the most irritating failure mode in the world”. Service technicians around the world will be nodding their heads in sympathy.

Chapter 17 (Resurrecting the Circlotron) is really all about Stoddard designing the Schiit Mjolnir headphone amplifier, which uses a very old, very elegant design topology originally developed for valves, but whilst explaining why he used it, Stoddard also gives very useful descriptions of the various different types of amplifier classes (Class-A, Class-D, Class-H etc), of balanced and unbalanced amplifier operation, and of the different types of devices used in amplifiers (Triodes, Pentodes, BJTs, MOSFETs, JFETs,

SITs) and more. Yes, you can find all this information in several different electronics textbooks, as well as a few hi-fi buying guides, not to mention on-line, but it won’t be as interestingly and entertainingly explained as it is here. In Chapter 18, Stoddard pulls off exactly the same trick, but this time he does so whilst addressing the various digital circuits in common use today.

Believe it or not, 18 chapters in we learn that Schiit’s sales figures are now in sevenfigures yet Stoddard and Moffat are still running it from Mike and Lina’s garage, albeit with a few more employees and a lot more of the assembly being done by outside subcontractors.

Significantly, it’s a garage that is located in a suburb that is not actually zoned for a commercial operation. So it’s here we get to discover how Stoddard goes about finding commercial premises. Once more, he gives a great deal of good advice, interspersed with amusing back stories, which includes that when Schiit finally gets its own commercial accommodation, it’s promptly named the “Schiithole”. You should also be getting the idea that this is not a small book.

Worst. Customer. Ever. That’s actually a chapter heading. With the full stops. And if you thought it might be a bad idea to pay out on your own customers in a book, you’re in good company, because Stoddard agrees with you. But since owning and running a successful company will mean interacting with your customers, you’re going to have to learn to take the good with the bad, and how to ensure you have satisfied customers. Once again Stoddard lays out exactly how any responsible business should approach customer service issues, whether it’s advice, complaints, faults, refunds or simply answering the phone and emails. Those last two are interesting, because Schiit actually recommends you don’t ring the company at all. Its website says: “Email us, we’re really fast. Call us, and we may get to it eventually.” As for Schiit’s worst customer ever, it’s a real pity Stoddard doesn’t actually mention his name, because you could add him to your own ‘black list’ of people to never deal with again. Stoddard keeps just such a list and says ‘Butthead’ (not his real name) is on it.

As he says: “Starting a business? Working with customers? Repeat after me: not every customer is worth having.”

At the moment, and maybe it’s just due to Covid-19, but then again maybe not, a great many audio manufacturers are releasing ‘MkII’, ‘Signature’, ‘Anniversary’ and ‘same model in a new colour’ versions of existing products, which makes Stoddard’s chapter titled ‘Death of a Product’ very relevant, because in it he discusses product life-cycles and how and when (and why) manufacturers make changes to their products (and what to do when it goes wrong!).

There is more in this book: much, much more, including appraisals of DSD, USB and Bluetooth, where Stoddard explains in detail the ins and outs, and the ups and downs of all the various formats and interfaces. There’s more on product development, more on how to put someone else in charge of your own company, how to negotiate with real estate agents and property owners, and not least how to develop ‘Blue Sky’ ideas into successful products. In short, there’s ‘way too much to tell you everything I’d like to say about this book in this review.

Stoddard says (on the rear dust-sleeve, which features Schiit’s very first employee) that Schiit Happened was written: “For everyone who didn’t win the venture capital lottery, for everyone who wasn’t born with a trust fund, for everyone who doesn’t have rich relatives… this is how to turn a dream into a multi-million dollar business—without selling out, without spending a mint on marketing and without losing your sense of humour.”

I would agree wholeheartedly with that shameless blurb, but even if you have not the slightest intention of starting up an audio business, but you do have an interest in audio equipment—which, if you’re reading this, you must have—you are simply going to love reading Schiit Happened. I’ve read it three times already and I’m going back for more!