Skullcandy feeds your head

Published April 16, 2009 6:00 pm
Business » Privately held Park City company proving it's a recession-buster.
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"There's a rumor that there's a recession," said Jeremy Andrus, president of the Utah-based Skullcandy headphones company. "But we're not feeling it."

Such bravado demands numbers to back it up, and Andrus freely offers the statistics to underscore the success of the innovative company, launched in 2003, which makes headphones and other personal audio products for a low-attention-span generation interested in listening to music all the time.

In 2005, the company had $1.3 million in sales, while this year it's on track to surpass the $100 million mark. Last fall, the company had about 30 employees. Today, it has more than 60.

The private company founded by Park City resident Rick Alden markets its wares to action-sports aficionados, capitalizing on a niche that seems to be expanding by the minute. And accolades have followed.

In September, Skullcandy was named the 31st top entrepreneurial success by Inc. in its annual "Inc. 5,000 List," an honor roll of the 5,000 fastest-growing privately held companies in the U.S. The magazine also rated the company No. 1 on its list of Top 100 Consumer Product Companies.

Since November, the company has been featured in Fortune , Entrepreneur and Dealerscope , as well as being profiled on CNN. In March, Forbes.com showcased Skullcandy as an example of a small business doing the right things to survive the economic downturn.

All of this success sprang from a simple idea that Alden said came to him -- of course -- on a ski lift in 2002. Listening to music, his cell phone rang, he said in an interview. He searched his pockets and took off his gloves, fumbling for the right device.

Then it occurred to Alden: Why not produce headphones that work in tandem with cell phones and other mobile accessories targeting the disposable-income-rich demographic of 12-to-25-year-olds?

Other unique products have come down the line, from MP3-equipped watches to backpacks and helmets with built-in speakers. But headphones, manufactured in China and ranging from $20 to $50, are Skullcandy's cash crop.

In 2008, nearly 10 million people purchased Skullcandy headphones, which are sold in more than 60 retailers. That catapulted the company to the industry's No. 2 spot, second only to audio behemoth Sony. Brand loyalty is driving Skullcandy's growth. "We're gunning for No. 1," Andrus said, displaying more of the company's trademark bravado.

These headphones don't look anything like nondescript black leather or vinyl earpieces most companies make, or even iPod's trademark white earbuds. Instead, the striking designs draw their graphic imagery from hip-hop culture, accessorized with everything from rhinestones to faux animal skin. This enables the wearer to show that he is into the cool ski, surf and skate lifestyle, as well as showing that snow bunnies aren't the only people to wear the hottest fashions on the slopes.

Hype Williams, one of the country's most heralded hip-hop music video directors, will have a Skullcandy headphone named after him released later this year. "Ever since I've been on the mountain, no matter what, it just doesn't feel right unless I'm listening to music," Williams wrote in an e-mail. "And Skullcandy headphones are the only headphones that matter out there. The Skullcandy brand lets everyone know that you take your music as seriously as you take your board. The two ride together."

Partnering with other brands, including CamelBak, Burton Snowboards and Giro, has helped, while collaborating with high-profile users such as Metallica, Deron Williams, Mix Master Mike and Snoop Dogg also upped the coolness factor.

For example, on May 1, Skullcandy will start selling the Snoop Dogg Skullcrusher, a headphone made with an extreme bass amplifier, perfect for rap. "The Snoop Dogg Skullcrusher is the hottest headphone comin' to a hood near you," said the Doggfather in a product endorsement. "I've been a fan of their products for years and I decided it was time to break bread with them. Our headphones are fly, affordable, and most importantly, bangin' like [my production company] Niggaracci beats. Make sure to scoop a pair in Spring 2009 and be on the lookout for more Snoop Dogg/Skullcandy products, ya dig?"

The company has also designed products for its Utah audiences, including a recent Deron Williams edition. "I had already heard about Skullcandy before they approached me to do a signature headphone," the Utah Jazz point guard wrote in an e-mail. "What they are doing is innovative and different than anything out there, so I had a great time coming up with a design that was unique and had my stamp on it."

In other words, for the moment, Skullcandy -- with its unique name and menacing skull logo -- is cool. "I challenge you to go to a ski parking lot, or a beach parking lot, and find a Sony bumper sticker," Andrus said, alluding to Skullcandy stickers affixed to countless bumpers, snowboards and helmets in Utah.

From all appearances, the Skullcandy headquarters in an unassuming Park City-area office is also a cool place to work. "The vibe is creative," said art director Kevin Horsburgh, who has worked for Alden since the company was just two guys and two desks in the basement of Alden's house.

Alden believes "There's never been a good idea found behind a desk," and his company has lived by that motto, taking all of its employees on surf retreats to Costa Rica to reward good work. A skateboard is the preferred mode of travel within the ever-expanding offices, and a half-pipe is nestled inside the back of the offices -- with the only rule being that it can only be used before 9 a.m. or after 6 p.m., or the lawyers next door get mad.

Alden is still the CEO of Skullcandy, but last year named the 37-year-old Andrus (who graduated from Brigham Young University and earned an MBA from Harvard) as president.

Alden can still be seen in the office, wearing T-shirts and jeans, frequently checking the Internet for snow conditions and eBay for the vintage snowboards he collects.

"We made a decision family-wise to never live more than 15 minutes from a chair lift, as well as within reach of an airport," Alden said. "This is the best place on Earth. I never want to leave."

Why would he? He's got music ringing in his ears, music playing loudly enough that the recession has, for now, passed him and his company by.

Who is Rick Alden?

1986 » Founded first company, National Snowboard Inc., which marketed snowboarding events nationwide

1991 » Sold NSI to the American Ski Association

1995 » Founded second company, Device Manufacturing, which created the first step-in snowboard boot and binding system

1999 » Sold Device Manufacturing to Atomic Ski Company

2003 » Founded third company, Skullcandy

Background » Married for 18 years and has four children. Political-science degree from the University of Colorado.

Skullcandy's growth

In 2005 » $1.3 million in sales.

In 2006 » $9.3 million in sales.

In 2007 » $35.8 million in sales.

In 2008 » $86.5 million in sales.

In 2009 » Sales are projected to surpass the $100 million mark.

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