When Hoby Darling became Skullcandy’s president and CEO in 2013, he was tasked with turning around a company that was in the midst of a serious decline: The headphone brand that had once been all the rage with skateboarders and indie music fans suffered a 30% plummet in sales and share prices that had been on a downward spiral since the company went public in 2011.
But Darling, a Crossfit devotee and Ironman competitor, is not afraid of a good challenge. He believed that Skullcandy’s troubles were fixable. The problem, in his opinion, was that Skullcandy hadn’t focused enough on product innovation in recent years. “Let’s call a spade a spade,” Darling tells Fast Company. “Skullcandy had developed a reputation for being a cool brand, but consumers weren’t sure the product was that great. And if you don’t have great products, you’re only going to last so long.”
What the company needed, Darling thought, was an infusion of research and technology. But Darling also believed that in order to have a competitive advantage in a crowded marketplace, Skullcandy would have to innovate differently from other headphone companies by focusing on aspects of the listening experience that its competitors were not considering.
Skullcandy was founded in 2003 by Rick Alden, a snowboarder who wanted to create headphones that fit seamlessly into an active lifestyle. At the time, other companies in the space, like Sony and Bose, were focused on creating high-quality audio experiences for listeners. But athletes like Alden didn’t want to take expensive headphones to the slopes where they could easily get banged up.
The idea behind Skullcandy was to create a brand that spoke to the young, artsy, outdoorsy consumer. Rather than being sold at electronics stores like Best Buy and Circuit City, Skullcandy products were stocked in skate shops and music stores. If users broke their headphones because they were too rough on them, Skullcandy would provide a coupon for 50% of their value to buy another pair. Skullcandy headphones also stood out for being fashion-forward, with bright designs emblazoned with the edgy skull logo, where many other brands were going for sleek, high-tech minimalism.
“The 18- to 34-year-olds who were buying these headphones were not necessarily interested in getting the highest highs and the lowest lows in their music,” Ben Arnold, a consumer electronics analyst at NPD, tells Fast Company. “They were more interested in what was on the outside of the headphones—how they looked—and identifying with the brand.”
Since the mid-2000s, however, the headphone market has become more competitive, with dozens of new companies cropping up with equally cool-looking headphones and a deep knowledge of consumers’ lifestyles.
Beats by Dre, for instance, which emerged in 2006, had its finger on the pulse of the pop and hip-hop communities, partnering with musicians and celebrities in an effort to appeal to their fans. This strategy worked so well that by 2012, Beats had 64% market share for headphones that cost more than $100, and the company was valued at $1 billion. (Beats did not respond to requests for comment.)
Last year, Apple bought Beats for $3 billion, which is the most it had ever spent on an acquisition. Analysts believe that this move would allow Beats to tap into Apple’s supply chain and elevate the quality of its headphones. “Beats has been knocked for sound quality,” Arnold says. “The acquisition by Apple might allow it to turn that tide a bit. Apple is a premium brand: I don’t see it selling headphones with subpar components.”
Darling believes that across the headphone industry, it’s no longer enough to focus on trendy design and lifestyle. Since Skullcandy’s IPO in 2011, Darling thinks the company has focused too much on sales in an effort to meet shareholders’ demands; it has lost its focus on product development. But he believes that there’s still time to turn things around.
Over the last two years, Darling’s goal has been to transform Skullcandy into a hub of research, technology, and innovation, putting product quality at the forefront of the company’s operations. “If you had been at Skullcandy five years ago and asked how many people work in product, innovation, and quality, the answer would have been five people. That’s it,” Darling says. Today, he says that a third of the company works specifically on product development.
Rather than focusing entirely on sound quality, Skullcandy’s approach to research is to think holistically about how music fits into listeners’ lifestyles, as they wear their headphones to the gym, at the skatepark, or on the slopes, and as they listen to music while working at the office or the art studio. “We moved away from the question of how you can make sound quality more pure, to how you can create more interesting and immersive audio experiences,” Darling says. “We are more interested in how your body is taking in all this sensory data and how we can make the audio experience more powerful.”
Darling has brought on a raft of scientists and engineers led by Jeff Hutchings, Skullcandy’s VP of engineering and category. These tech experts work in Skullcandy’s two connected research labs: Advanced Concepts Engineering, which explores how design and technology can change the way users consume sound, and Sports Performance and Human Potential Labs, which focuses on how audio input affects physiology and psychology. Skullcandy also partners with scientists at institutions like the University of Utah and the University of Southern California’s Center for Body Computing to collaborate on research.
“Skullcandy is in the unique position of building devices that connect to the user from an audio perspective,” Hutchings explains. “There’s a lot of fundamental research that shows that music can have a profound influence on the brain and the physiology in terms of athletic performance, distractions from pain and enhancing memory.”
Skullcandy has invested heavily in understanding how men and women take in sound differently, how music influences athletic performance, and how sound is related to memory, particularly among Alzheimer’s patients. Here are some of their findings:
Skullcandy has devoted extensive resources to creating earbuds and headphones specifically made for women. It is easy to spot these products: They tend to come in feminine designs with explosions of flowers and in a color palette of pinks and pastels. Each set of women’s headphones also comes in a little wallet or clutch, making them more like fashion accessories than consumer electronics devices.
But Darling says the brand has done more than simply taking unisex headphones and then “shrinking them and pinking them.” He says that extensive consumer research and scientific analysis has gone into designing these products, so that they appeal to women both in terms of design and performance.
Women generally have smaller features—from their ear canals to their head size—than men. “What we’ve been able to do is objectively measure a lot of that,” Hutchings says. “We’ve made some significant changes in the design of the headphones in terms of the clamping force, the fit of the ear cup, and the size of earbuds, based on the shape of women’s ear canals.” Skullcandy also takes into account input from female consumers about their everyday use of the product; they’ve used this data to create earpads that resist makeup residue and wires that are not so long that they get tangled in their hair.
In terms of acoustics, Hutchings explains that men and women perceive certain frequencies differently. Women tend to be more sensitive to higher-pitched sounds than men are. So Skullcandy has tuned the headphones in the women’s line to tone down these frequencies, in order to give women a more pleasant listening experience.
Ben Arnold says that NPD’s data show female consumers represent an increasingly larger proportion of headphone dollars. Several years ago, women were responsible for a third of headphone sales; today, that figure has gone up to almost half. “I give Skullcandy a lot of credit for thinking about this segment and not just putting out headphones with pink designs,” he says. “They’re thinking about the way in which women listen.”
Across the headphone market, there’s been an increase in sports-focused products that are designed to be sweat-resistant and stay comfortably in the ear while the listener is in motion. Like other brands, such as Bose and Beats, Skullcandy has developed a line of earbuds specifically for athletic performance.
But in its labs, Skullcandy’s researchers are working alongside academic researchers and athletes to do more fundamental research about how sound influences the body. “We’re interested in questions like how you can use music and audio to prepare you for your event and how it can help you recover more quickly,” Hutchings says. Competitive athletes often use music to pump themselves up for an event so they are optimally charged; Skullcandy’s researchers are now trying to quantify this experience. “You need to have enough adrenaline so that you’re focused,” Hutchings explains. “If you get too aroused, you get sensory exclusion and can’t perform well. But if you’re underaroused, you could be at a competitive disadvantage.”
Eventually, Skullcandy will use these insights to develop more targeted sports-related products, but for the time being, Hutchings says the lab is more interested in doing primary research to gather as much knowledge as possible. For instance, researchers at the lab are measuring athletes’ biometric signals when they listen to different frequencies.
Scientists have found that music can trigger Alzheimer’s and dementia patients to remember things that, on the surface, they seem to have forgotten. The organization Music and Memory, for instance, is devoted to bringing personalized music into the lives of people who are suffering from memory loss.
As part of Skullcandy’s philanthropic efforts, it is working closely with scientists who study Alzheimer’s as well as Music and Memory. The company is using its lab and other resources to help contribute to and support this research. “One of the things we’ve noticed is that people [with Alzheimer’s] have far more vitality, happiness, and just have a better day when they are listening to music,” Emily Cook, the manager at Skullcandy’s sports and human potential lab, explains. “We’ve found that music that people were listening to during their adolescence — and as they were becoming adults — has a meaningful impact on their lives now.”
Cook says that Skullcandy is also exploring how it can contribute to research into how music affects autism. While none of these projects is designed to directly influence the product development process, Cook says they are an important part of Skullcandy’s overall mission as a company, which is to encourage people to “live life at full volume.”
Darling’s strategy to transform Skullcandy into a place where research and innovation are central appear to be paying dividends. According to a report by Rommel Dionisio, an analyst at Wunderlich Securities, Skullcandy is bouncing back, with an 18% increase in sales in 2014, after several years of decline.
The scientists who work at Skullcandy say they are often confronted by shocked expressions when they talk about the kind of research they are doing at a company that is best known for its colorful, skateboard-friendly headphones. Hutchings, who has spent his career in highly technical companies, says these startled reactions are highly entertaining: “Part of the fun is watching people say, ‘Wait a minute, Skullcandy’s doing that?’ I hope we continue to surprise people with the work we’re doing here.”